Reliance Capital's lenders have filed with the National Company Law Appeals Tribunal (NCLAT) that the Creditors' Committee (CoC) of corporate debtor Reliance Capital Ltd. is being prevented from discovering the best price in the CIRP and NCLT has acted in excess of its jurisdiction at a stage where even signed plans were not submitted to the CoC for consideration.
Earlier this month, NCLAT had issued notices to Torrent Investments and other respondents about a petition filed by Reliance Capital's lender seeking a second round of financial offers for the debt-laden company, which is currently in the process of insolvency resolution. Vistra ITCL (India) Ltd, one of Reliance Capital's CoC members, has moved NCLAT against an NCLT order.
In its written submission to NCLAT, Vistra ITCL said: "NCLT has usurped the jurisdiction of the CoC by arguing that the CoC has to vote on Torrent's Rs 8640 crore plan and IIHL's Rs 8110 crore plan and that the CoC has no jurisdiction to negotiate even over the numbers."
He further argued that NCLT has not even looked into these plans and that there is no Rs 8110 crore plan from IIHL and NCLT has substituted its opinion for CoC's which is not allowed under IBC.
The appellant claimed that Torrent Investments, within 24 days, increased the offer values โโfrom Rs 1,100 crore upfront to Rs 3,750 crore in advance and then within 2 weeks more than Rs 3,750 crore in advance to Rs 8,640 crore of rupees in advance, and the same thing happened with the IIHL.
Appellant held that the CoC therefore clearly feels that there is more value to be discovered and judicial intervention cannot prevent it at this stage.
It has been alleged before NCLAT that as a result of the NCLT order, the CoC of the corporate obligor Reliance Capital Ltd. is prevented from undertaking the extended challenge round mechanism to discover the best price in the CIRP of the corporate obligor.
"The Adjudication Authority (NCLT) has assumed jurisdiction that it did not have. The jurisdiction of the NCLT arises only at the stage where resolution plans are submitted to the NCLT for approval u/s 31 of the IBC. In the In the present case, the unsigned draft plans were still being evaluated by the Administrator and the CoC, and even the approval stage by the CoC, let alone the NCLT, had not yet arrived.Therefore, the request submitted by Torrent was premature and NCLT did not have jurisdiction to consider it." he added he.
Appellant has argued that maximizing the value of the corporate debtor's assets is one of the IBC's most vital objectives and strict adherence to this objective safeguards and promotes the interests of all stakeholders.
The Mumbai court of the National Company Law Tribunal (NCLT) on February 2 ruled against holding a new round of auction for the acquisition of Reliance Capital (RCap) promoted by Anil Ambani and said that the challenge mechanism of financial offers has already concluded.
The court upheld Torrent Investments' request to challenge the bankers' decision to participate in the second round of auctions seeking greater value for the bankrupt company. It allowed Torrent Investments' request and stated that the challenge mechanism for financial offers was concluded on 21 December 2022, with the applicant's offer of Rs 8640 crore being the highest.
In the latest round of the challenge mechanism, Torrent Investment was the highest bidder, offering Rs 8,640 crore. Reliance Capital has consolidated debt of around Rs 40,000 crore.
--IANOS
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