Rcap Resolution: NCLAT Concludes Hearing, Reserves Order On Lenders' Plea

The National Company Law Appellate Tribunal (NCLAT) on Tuesday concluded hearing and reserved its order on the petition filed by lenders of Reliance Capital seeking another round of auction for the debt-ridden firm undergoing insolvency process. Senior advocate Mukul Rohatgi, representing Torrent Investments, concluded his arguments and submitted that the Insolvency & Bankruptcy Code (IBC) intends for maximisation of the value, but the focus should be on the revival of the assets and conclude the process under a time-bound manner.

Rohatgi contended that IBC is not a debt recovery platform and that the Committee of Creditors should look beyond their individual recovery. "Mukul Rohtagi, senior counsel for respondent No 1 (Torrent), has advanced his additional submission to which rejoinder has also been addressed. Hearing completed. Judgement is reserved," said the NCLAT order.

The NCLAT bench, which consisted of Chairperson Justice Ashok Bhushan and Barun Mitra, also permitted parties "to file their short written submissions not exceeding five pages within three days." During the proceedings, Rohatgi submitted that regulation 39(1A) of IBC permits only one challenge mechanism. In the Reliance Capital matter, challenge mechanism was concluded by the lenders on December 21, 2022, with Torrent's bid of Rs 8,640 crore being declared as the highest bid. Rohatgi also submitted that CoC decided to conduct a second challenge mechanism just to help legitimise Hinduja Group firm Indusind International Holdings Ltd's (IIHL) revised bid, which should not be permitted.

On Monday, senior advocate Kapil Sibal, representing lenders, had submitted that the intent of IBC is to maximise the value of the assets and the Committee of Creditors is free to negotiate the terms. NCLAT was hearing a petition filed by Vistra ITCL (India), one of the lenders of Anil Ambani-promoted Reliance Capital, challenging an order of the NCLT which restricted further auction of the bankrupt firm. Hinduja group firm has also challenged the NCLT order before the insolvency appellate tribunal.

The Mumbai bench of the NCLT (National Company Law Tribunal), on February 2, had said the challenge mechanism for financial bids stood concluded as on December 21, 2022, with the bid of Torrent Investments at Rs 8,640 crore being the highest. Torrent Investments had filed a plea on January 9, requesting the tribunal to quash the lenders' plan to hold a fresh auction for the takeover of RCap. Later, the Hinduja group firm also filed a petition challenging the NCLT order. Torrent Investment was the highest bidder offering Rs 8,640 crore in the last round of the 'challenge mechanism.' Reliance Capital has a consolidated debt of about Rs 40,000 crore.