The security deposit or EMD serves as a sign of seriousness and commitment on the part of bidders participating in insolvency proceedings under the IBC. It is a standard procedure in which interested parties deposit a certain sum to express their genuine intention to acquire the distressed asset.
According to sources, Torrent Investment has begun efforts to recover its $75 crores in EMD, which were deposited in connection with the takeover bid of Reliance Capital.
The administrator is examining Torrent's application, although any final decision on the refund is pending the outcome of the Supreme Court hearing. Torrent Investment's plea challenging the second round of auction for the sale of Reliance Capital is pending in the Supreme Court.
In November 2021, the Reserve Bank of India (RBI) replaced the board of directors of Reliance Capital due to payment defaults and serious governance issues and requested initiation of a Corporate Insolvency Resolution Process (CIRP) in the Mumbai Tribunal of the NCLT. The request for resolution plans (RFRP) was issued on April 26, 2022 and four resolution applicants (Torrent Investments, IIHL, Cosmea Financial-Piramal Group and Oaktree Capital) submitted their bids.
