Lenders to Reliance Capital have filed a plea in the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT order which rejected a request from the committee of creditors (CoC) to hold a second auction for the resolution of the debt-laden company.
“NCLT has challenged the commercial wisdom of the CoC in declaring both resolution plans as sub-optimal. NCLT has failed to appreciate that it should not have exercised its jurisdiction once CoC has formed the view that the bids are sub-optimal and not satisfactory,” said a banking source.
On Thursday, the Mumbai bench of the NCLT 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.
“NCLT has failed to appreciate the legal issue that accepting Torrent’s arguments means that CoC potentially accepts plans that result in a loss of ₹5,010 crore of upfront money which is loss of public money,” the banker said.