The insolvency process of debt-ridden Reliance Capital Ltd (RCL) on Tuesday hit a roadblock as the NCLT Mumbai has stayed the resolution process on the plea of Torrent Group.
The stay order was issued by the National Company Law Tribunal (NCLT) as the Ahmedabad-based Torrent Group challenged the revised bid from Hinduja Group, sources said.
Torrent Group, which emerged as the highest bidder with an Rs 8,640 crore offer, had moved the NCLT-Mumbai against Hinduja Group's late revised bid, which it had submitted after the completion of the e-auction process on December 21.
A day after the e-auction, Hinduja Group, the promoter of IndusInd Bank, revised its offer from Rs 8,110 crore to Rs 9,000 crore.
This is the first time that an e-auction of this scale is taking place for the resolution of an NBFC (non-banking financial company) under the Insolvency and Bankruptcy Code (IBC).
The decision of e-auction was taken at the behest of LIC and EPFO, which together control 35 per cent of the voting rights in the CoC.
Torrent claimed that Hinduja's revised offer, after the e-auction, is illegal and non-compliant. The NCLT has asked the administrator to file a reply on Torrent's application, sources said.
The hearing is now scheduled for the next week.
Meanwhile, lenders of RCL in its meeting discussed the resolution plans of both bidders - Torrent Group and Hinduja Group.
Torrent also wants the Committee of Creditors (CoC) to allow it a charge on RCL assets for securing deferred financing, sources said, adding, lenders will continue to engage with the bidders.
CoC has also decided to file an extension application with NCLT to extend the resolution process completion timeline from January 31 to February 15, 2023.
The Reserve Bank of India (RBI) had on November 29 last year superseded the board of RCL because of payment defaults and serious governance issues.
The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.
RCL is the third large NBFC against which the central bank has initiated bankruptcy proceedings under IBC.
The other two were Srei Group NBFC and Dewan Housing Finance Corporation. The RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of NCLT.
In February this year, the RBI-appointed administrator invited expressions of interest for the sale of RCL.