The National Company Law Appellate Tribunal (NCLAT) on March 2, 2023 allowed a plea filed by lenders to Reliance Capital seeking another round of auction as part of the bankruptcy proceedings for the debt-laden firm.
A two-member bench set aside an order passed by the NCLT and held that the Committee of Creditors (CoC) has the power to negotiate and call for a higher bid. The Appellate Tribunal allowed the CoC to continue with the challenge mechanism and invite bids after two weeks. The NCLAT order came on a plea filed by Vistara ITCL (India), one of the lenders to Anil Ambani-promoted Reliance Capital, challenging an NCLT order that had prohibited further auctions of the bankrupt firm. In the Reliance Capital (RCAP) case, Torrent Investments emerged as the highest bidder with a resolution plan of ₹8,640 crore.
However, the CoC of RCap decided to conduct a second challenge mechanism, and then Hinduja group firm IndusInd International Holdings Ltd (IIHL) placed a revised bid. This was challenged by Torrent Investments before the Mumbai Bench of NCLT (National Company Law Tribunal). NCLT said February 2 That the challenge mechanism for financial bids had expired by December 21, 2022, with Torrent Investments’ bid of ₹8,640 crore being the highest. Torrent Investments had filed a petition on January 9, requesting the tribunal to quash the lenders’ plan to hold a fresh auction for acquisition of RCap. Later, IIHL also filed a petition challenging the NCLT order. Torrent Investments was the highest bidder, offering ₹8,640 crore in the final round of the “challenge mechanism”. IIHL has also challenged the NCLT order before the Appellate Tribunal. RCap has a consolidated debt of about Rs 40,000 crore.