Reliance Capital’s administrator, at the NCLT hearing on Wednesday, proposed holding the second challenge mechanism on January 23, pending and subject to the final decision of the NCLT.

The auction was earlier scheduled to be held on January 19, but has now been extended pending the NCLT’s decision on Torrent Investment’s plea seeking a stay on the second round. A detailed order is awaited as the committee of creditors (CoC) of Reliance Capital is still to complete their arguments.

The NCLT took the administrator’s submission on record and also noted the CoC’s request that neither of the two bidders be allowed to withdraw from the resolution process now. The tribunal will continue hearing the case on Thursday.

Torrent Investments had emerged as the highest bidder after the first round of auction, with the highest NPV bid of ₹8,640 crore. 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.

Mukul Rohatgi, appearing for Torrent, said that the second auction is an attempt by the CoC to bypass the NCLT’s stay order on considering Hinduja’s revised bid. The CoC has gone against the resolution framework, and there is no guarantee that the second auction will be the final one, he added.

Senior counsel Kapil Sibal, representing the CoC, said that the final say on accepting bids remains with the CoC, which has the right to reject the bids if they are sub-optimal. He also pointed out the fact that Torrent Investments’ argument that Hinduja’s revised offer was ineligible is incorrect, as later Torrent too offered to revise its bid by offering the entire ₹8,640 crore as upfront cash.

“The CoC falsely claimed that our bid had some deficiency, and so to avoid any discrepancy, we offered the entire amount of ₹8,640 crore as upfront cash,” Torrent replied, adding that there cannot be “endless wisdom” in the CoC for value maximisation. Darius Khambata, also on behalf of Torrent, questioned how the CoC can call the bids sub-optimal if they are as per the threshold set by the CoC.

Sibal also argued that the CoC has still not received the final resolution plans and that Torrent’s plea is premature and thus should be dismissed, adding that the significant upward revision in bids over the past month indicates that there is more value to be unlocked. 

“CoC reserves the absolute right to annul the resolution process, reject all plans, and call for new resolution plans under law,” Ravi Kadam said on behalf of the administrator.

Published on January 18, 2023