Hinduja-backed IndusInd International Holdings (IIHL) has filed a petition with theNational Company Law Appellate Tribunal (NCLAT) claiming that the NCLT has committed a grave error of jurisdiction in interfering with the commercial decision of the committee of creditors of Reliance Capital to conduct a second round of auction.
According to IIHL, the impugned order by NCLT halts the COC’s decision to continue with the challenge mechanism aimed at maximising revenues for the lenders.
The lenders have also filed a plea with the NCLAT challenging the NCLT order. The Mumbai Bench of the NCLT had rejected a request from the CoC to hold a second auction for the resolution of Reliance Capital. 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 emerged the top bidder after the first round of auction.
“The adjudicating authority (NCLT) has sought to effectively step in the shoes of COC and take over the decision-making process and interfere with the exercise of commercial wisdom of COC. The adjudicating authority has usurped the powers of CoC,” said a source close to the lenders.
IIHL, in their petition, said NCLT has provided undue weightage to the NPV submission of Torrent and has failed to consider that the NPV factor is the outcome of the payment proposition in the respective resolution plans. According to IIHL, NCLT has disregarded the fact that NPV carried only 30 per cent of the weightage as per the evaluation matrix, and that the other criteria prescribed by the COC have to be looked into while considering the aspect of value maximisation and viability/feasibility of plans.
Torrent, on the other hand, has taken a view that its offer for Reliance Capital was based on the bankrupt financial services firm’s net present value (NPV) and meets guidelines lenders had set.