The Mumbai Bench of the National Company Law Tribunal (NCLT), on Wednesday, rejected Torrent Investments’ plea for putting a stay on Reliance Capital’s resolution proceedings till the apex court makes a decision on a pending plea.

NCLT said that while SC had reserved the rights of the parties to participate in the resolution process, Torrent Investments neither partook in the extended challenge mechanism, nor submitted a resolution plan.

Further, SC had made it clear that the matter is to be “kept in abeyance until the parties have had an opportunity to obtain circulation and interim orders of stay in the proceedings”. However, even though the appeal was listed before the apex court twice in March and August, SC did not stay the proceedings before NCLT.

The Bench also acknowledged the CoC (committee of creditors)’s claim that the pendency of the resolution plan is resulting in a weekly loss of ₹42 crore to members.

“Considering the aforesaid backdrop of facts and circumstances, it is appropriate that the resolution plan application be heard. With the aforesaid observation, (the plea) stands disposed of as rejected,” the NCLT order said.

Torrent argued that resolution plan should not be heard since the matter is sub judice before SC wherein the challenge mechanism itself is questioned. Further, if the NCLT proceeds to hear and decide the plan approval application, the plea before the SC will be rendered “infructuous and the same will be contrary to the principle of judicial propriety”.

Torrent and Hinduja Group were the only two bidders to participate in the challenge mechanism held in December 2022, wherein Torrent Group emerged as the winner with a bid of ₹8,640 crore. Thereafter, Hinduja Group submitted a revised resolution plan totalling ₹9,000 crore which included additional payments. Torrent objected to this and dragged Reliance Capital to the NCLT questioning the validity of Hinduja Group’s revised bid given that Torrent had been recognised as the winner.

Meanwhile, the CoC decided that the outcome of the challenge mechanism was sub-optimal and unsatisfactory, and proposed an extended challenge mechanism with the existing bidders. NCLT, in February 2023, directed RCap to complete the resolution process based on the NPV (net present value) of the first auction. The matter was appealed in the NCLAT which set aside NCLT’s order in March 2023 and allowed CoC to hold a second auction.

Torrent then appealed to SC, where the final outcome on the extended challenge mechanism is awaited.

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