Veteran lawyer Shardul Shroff has approached the Supreme Court on behalf of Torrent Investments to speed up the hearing on the company’s application to stay the second challenge mechanism in a corporate insolvency resolution process (CIRP) for the Anil Ambani-promoted Reliance Capital.
Torrent Investments, which was also in the fray for the distressed finance company, refrained from submitting a final plan to the lenders concerned.
Currently, the Mumbai bench of the National Company Law Tribunal (NCLT) is hearing the resolution professional’s (RP) application to approve the Hinduja Group-controlled IndusInd International Holdings’ offer – the only plan put to vote.
Gujarat-based Torrent Investments is seeking the Supreme Court’s intervention to list its appeal against the National Company Law Appellate Tribunal (NCLAT) order.
“The very genesis for the second challenge mechanism has been challenged by the appellant,” said an application filed by Shardul S Shroff, executive chairman of law firm Shardul Amarchand Mangaldas & Co (SAM & Co), on behalf of Torrent Investments.
The decision of the Committee of Creditors (CoC) to approve IIHL’s resolution plan and subsequently file that resolution plan at NCLT for approval are ‘conscious steps’ taken by the CoC and the administrator to ‘cause prejudice’ to the appellant, said the application.
The Mumbai bench of NCLT will hear the administrator’s application for the approval of IIHL’s resolution plan on October 25.
“The purpose of this application is to ensure that the matter gets listed in Court on an urgent basis,” said Ashish K Singh, managing partner of law firm Capstone Legal. “The basis of the application is that the Petition before the SC will be rendered infructuous if NCLT proceeds with the hearing,” adds Singh.
At the heart of the dispute is a bid from the Hinduja Group entity given 24 hours after the auction deadline (December 21), trumping the offer made within the stipulated time by Torrent Investments. Lenders decided to hold a second round of auction and that matter is pending before the Supreme Court.
While Torrent was the highest bidder offering Rs 8,640 crore in the first round, Hinduja offered Rs 9,660 crore in the second round. Torrent did not participate in the second round of auctions.
In June, 99% of the lenders voted in favour of IIHL’s plan. The administrator has admitted Rs 25,345 crore of claims from lenders as on June 8, 2023.
Now, Torrent Investments has challenged the view taken by NCLAT about Regulation 39 (1A) of the Insolvency and Bankruptcy Board of India (IBBI) that it does not restrict the rights of lenders to continue negotiation on financials and the decision to do a Second Challenge Mechanism even after its conclusion is not violative of Regulation 39(1A) of the CIRP Regulations.
As per Regulation 39(1A), the bidder must prepare a resolution plan in accordance with the bankruptcy code and submit the resolution plan to the RP within the time given in the invitation made by the RP or administrator in the current case.
In November 2019, the tribunal allowed an application to initiate an insolvency process against the debt-laden financier.
