NCLT directs RBI, DIPP to expedite approvals for RCap resolution plan

The National Company Law Tribunal on Monday directed the Reserve Bank and Department of Industrial Policy and Promotion to expedite the approval process to implement Reliance Capital's resolution plan by Hinduja Group-promoted IndusInd International Holdings.

The NCLT Mumbai bench also directed IndusInd International Holdings Limited (IIHL) and the Committee of Creditors (CoC) to jointly hold a meeting to decide steps to be taken for the implementation of the same.

The National Company Law Tribunal (NCLT)—comprising Justice Virendrasingh G Bisht and Justice Prabhat Kumar—directed the Reserve Bank and DIPP to expedite 'the consideration of the approvals' to IIHL that are needed for implementing the RCaP resolution plan.

The tribunal was hearing a petition filed by the Hindujas, seeking modification of its July 23 order and an 'extension to complete the obligations' for implementing the resolution plan.

After IIHL breached the third deadline on May 27, the NCLT on July 23 extended the date to August 10 to conclude the deal. The Hinduja Group firm cited pending regulatory approvals and compliance requirements as reasons for the extension.

Hindujas' counsel Abhishek Manu Singhvi argued that "there are things that are beyond our control, which should be taken into account" like the delay in approvals by four agencies—the DIPP, Securities and Exchange Board of India (Sebi), RBI and Insurance Regulatory and Development Authority of India (IRDAI)—and the GST liability mentioned in the order is an extra liability on the company.

Singvi further informed the tribunal that IIHL has deposited the initial equity amount of Rs 250 crore in a domestic escrow account designated by the CoC and Rs 2,500 crore in an offshore escrow account designated by the lenders.

He also urged for a six-week extension to address issues pertaining to approvals.

To this, Gaurav Joshi, representing the Committee of Creditors said IIHL is seeking to modify the plan, which cannot be done.

"DIPP, Sebi give approval on a structure, and IIHL is changing the structure, which will need re-approval. The period of extension cannot be open-ended, it can only be extended for 15-16 days," he added.

The tribunal has given August 28 as the next date for a hearing on this matter.

The NCLT, on February 27, 2024, approved IIHL's Rs 9,650-cr resolution plan for Reliance Capital.

In November 2021, the Reserve Bank superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company.

The central bank appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.

Reliance Capital had a debt of over Rs 40,000 crore, and four applicants had initially bid with resolution plans. However, the committee of creditors rejected all four plans for lower bid values, and a challenge mechanism was initiated in which IIHL and Torrent Investments participated.