Torrent Investments, one of the last bidders of the insolvent Reliance Capital, argued on Thursday before the National Court of Company Law that the second auction proposed by the Committee of Creditors (CoC) for January 19 is a "blatant" attempt to set aside the court's prior order by initiating a second, expanded challenge mechanism.
Torrent, which emerged as the highest bidder in the auction process with an offer of $8,640 crore for Reliance Capital (RCap), approached the bankruptcy court to prevent lenders from considering Hinduja's enhanced offer of $9,000 crores, arguing that accepting late offers violated the rules for the insolvency resolution process.
The CoC submitted a proposal for the new second round of auction on Friday after receiving a revised offer from the Hinduja group. In his NCLT lawsuit, Torrent argued for a suspension of the lenders' vote in the runoff. However, he was unable to obtain temporary relief.
On January 3, the NCLT in its order asked the lenders not to accept the offer offered by the Hinduja group until the next hearing date, thus granting interim relief to Torrent.
Lead counsel, Darius Khambata, representing Torrent, said after the CoC realized that a second challenge mechanism could not be started after the first challenge mechanism had ended, therefore they dubbed it the "Mechanism of challenge extended". "How can you extend something once it's over? This is nothing more than jumping out of the first challenge mechanism and starting a whole new process," Khambata argued.
Responding to Torrent's arguments, Kapil Sibal, senior counsel on behalf of CoC, said he had found Torrent's offer to be suboptimal and ineligible and did not meet the threshold price.
Sibal also informed NCLT that when the administrator wrote to Torrent, he submitted a new offer on January 6 and changed his entire offer. “It is shocking that Torrent did not inform the court of these facts,” he said.
As CoC, Sibal argued that it was not required to approve the resolution plan that has the highest NPV or the highest score according to the evaluation matrix.
A bench headed by Judge Shyam Babu Gautam and Judge Pradeep Narhari Deshmukh sought answers to Torrent's petition and posted the matter for further hearing on Monday.
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