Torrent Investments, one of the highest bidders in Reliance Capital (RCap) insolvency, moved Supreme Court challenging a recent order by National Company Law Appellate Tribunal (NCLAT), a court listing showed .“The committee of creditors (CoC) had voted in favour of Torrent’s resolution plan and after the prescribed timelines passed, Hinduja submitted a better offer. Once CoC approved the resolution plan, no third party can be permitted to submit a fresh resolution plan, especially, because Hinduja did not stick to the timelines given by the resolution professional,” said a lawyer aware of the development.
If Hinduja’s plan is accepted by the CoC and even if it is a better plan, it would create prejudice against Torrent, the lawyer said. “At this rate, there will never be finality and process can continue for a long time which could erode value of RCap assets and affect the chances of value maximization,” he said.
On 2 March, the appellate tribunal had allowed a plea by the CoC of Reliance Capital to hold a second auction for the debt-laden firm. The NCLAT, in its verdict, had set aside an order by the National Company Law Tribunal (NCLT) that had stayed lenders’ proposal to hold another auction.
The appellate tribunal had held that the CoC is fully empowered to further negotiate with one or more resolution applicants, even after completion of the challenge mechanism on 21 December. It had also said the CoC’s decision on 6 January to undertake an extended challenge mechanism is not violative of Regulation 39(1A) of the Insolvency and Bankruptcy Code (IBC).
Then, CoC scheduled the second auction on 20 March.
The legal tussle between Torrent Investments and lenders started after Torrent submitted its bid of ₹8,640 crore for RCap, but rival bidder Hinduja Group through IndusInd revised its bid to ₹9,000 crore. After this, the CoC decided to propose an extended challenge mechanism to get higher value for the company. Torrent’s reason for its legal challenge was if timelines were not adhered, it could hamper the sanctity of the very process.
