This would hurt lenders' efforts to maximize returns on the stressed asset because Hinduja Group he may become the only other unrivaled bidder in the fray.
Earlier this week, the Supreme Court had allowed Reliance Capital's creditors' committee (CoC) to proceed with an extended auction, a move Torrent Investments vehemently opposed.
“Torrent Investments hasn't gotten out of the fray,” one of the lenders told ET. "They informed the CoC that they would participate only if the Swiss challenge auction takes place with their Rs 8,640 crore bid (awarded in the December auction) as the lead bid." In such a scenario, Torrent Investments will obtain the first right to match the counter offer given by Hinduja Band together and take over the company.
However, lenders are unlikely to hold an auction in Switzerland as this would not lead to value maximization, people familiar with the matter said. A sealed bid, in which both parties submit a bid in a sealed envelope, is an alternative option offered by the trustee.
However, this would go against the directive of the Supreme Court, which upheld the CoC's decision to seek an auction of the challenge mechanism, one of the lenders said.
The challenge mechanism auction will also be a transparent process, giving both parties an equal right to submit the best offer, the same lender said. Senior Torrent Investments officials declined to comment. Legal experts said the lenders should proceed with the auction of the challenge mechanism in accordance with the direction of the high court. In the case of Lanco Amarkantak Power, the lenders went ahead with the challenge mechanism auction despite two other bidders: adani power and Trusted Industries – opt out of the auction, citing a violation in the sales process. A consortium led by PFC-REC was declared the winner of the tender.
At the center of the dispute is a bid from a Hinduja Group entity submitted 24 hours after the auction deadline of December 21, 2022, which outbid the bid made within the stipulated time by Torrent Investments.
While Torrent offered to pay the entire Rs 8,640 crore up front, Hinduja offered Rs 8,950 crore including Rs 8,110 crore as upfront payment. Both offers are below liquidation value arrived at by third party appraisers.
