The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday rejected a request from the committee of creditors (CoC) to hold a second auction for the resolution of Reliance Capital.
On Thursday, a two-judge Bench stated that this would violate the norms of the CIRP. The NCLT passed the order in favour of Torrent Investment, which had challenged the lenders’ plea.
“We do not find any merit in the arguments made by the administrator that the applicant has not complied with his NPV financial proposal of ₹8,640 crore,” the Bench led by Justice Shyam Babu Gautam and Justice Pradeep Narhari Deshmukh said in the order. The lenders are likely to appeal the said order.
Torrent Investments had emerged as the highest bidder after the first round of auction. However, a day later, the only other bidder — the Hinduja Group — revised its proposal to outbid Torrent Investments. The latter took Reliance Capital to NCLT, claiming that Hinduja’s revised bid should not be considered and that going for a second auction would be illegal and go against the spirit of IBC. This was after the auction concluded on December 21.
The bench in its order maintained that CoC cannot device an illegal mechanism to circumvent the scheme of code to indirectly be able to negotiate further with the resolution applicants post conclusion of the statutory scheme of challenge process.