Mumbai: The administrator of Reliance Capital, which is undergoing bankruptcy proceedings, filed an affidavit in the National Company Law Tribunal (NCLT) accusing IndusInd International Holdings Ltd of contempt of court for allegedly failing to meet the terms of the resolution plan, as set out in the tribunal’s 23 July order.
Mint has seen a copy of the petition filed by the administrator.
Essentially, the NCLT in its order had directed IIHL to deposit ₹2,500 crore equity component into a designated escrow account of the Committee of Creditors (CoC) in compliance with the resolution plan by 31 July, while granting extension on the implementation of the plan by IIHL to 10 August.
The NCLT had in February approved IIHL’s ₹9,861-crore resolution plan for Reliance Capital which was mandated to be implemented by 27 May. However, the company has been seeking extension citing various reasons.
Under the approved resolution plan, IIHL was to deposit the initial equity amount of ₹250 crore in a domestic escrow account and ₹2,500 crore in an offshore escrow account of the CoC by 31 July. Subsequently, just as the deadline was nearing, last week IIHL filed an interlocutory application before the NCLT, seeking modification of the tribunal’s order. In this regard, the administrator has opposed granting any relief to IIHL.
The administrator's affidavit showed that instead of complying with the tribunal’s order, IIHL has now gone on to file a compliance affidavit wherein it has been stated that the ₹250 crore have been deposited in the IIHL’s promoter’s accounts including Ashok Hinduja, Shom Hinduja and Harsha Hinduja.
IIHL, on its part, refuted charges of contempt of court. In a statement, it said: "IIHL reiterates and confirms that it has completed its obligation of deposit of entire equity capital contribution of ₹2,500 crore and ₹250 crore." The company asserted that there is neither any default nor any contempt by IIHL to comply with its obligations as directed by NCLT.
IIHL is seeking more clarity from NCLT, the Hindujas said. They said the NCLT order required IIHL to deposit monies in escrow account designated by the CoC and not one "operated" or controlled" by CoC.
"Despite this, CoC communicated through administrator, details of bank account of Vistra — operated and controlled by CoC - in complete defiance of NCLT order. CoC has also not provided any escrow arrangement terms and details till date. This left IIHL with no choice but to deposit monies in its own account," IIHL said, adding that it confirms its commitment towards implementation of the resolution plan at the earliest no sooner on receipt of clarity from the NCLT and completion of necessary actions under the resolution plan by all stakeholders.
The administrator's affidavit stated that IIHL was seeking minor modifications of the order, and it was trying to cast obligation on the administrator to implement the plan which was not in accordance with the resolution plan.
Additionally, it mentioned that by seeking a stay on the NCLT order and seeking directions against the administrator and the CoC, IIHL was indirectly ‘seeking extension’ of the timeline in implementing the resolution plan. Therefore, the administrator alleged that the modification application is ex-facie not bonafide and ought to be dismissed.
Pertinently, the administrator also pointed out that the modifications sought by IIHL are not corrections and rectifications but more significantly seek a detailed review of NCLT’s 23 July judgement in the guise of the modification application. It also questioned the NCLT’s jurisdiction in such matters.
“It is well-settled, though the honourable NCLT can correct errors or mistakes apparent on the face of the record in its order, it does not have the 'power' to review its own order/ or make any substantial modifications," the 80-page petition showed.
On the other hand, IIHL has petitioned the tribunal that if the NCLT does not consider the modification of its order then the administrator, the CoC and IIHL will jointly face ‘hardship’ and ‘unexplainable challenges’ in implementing the resolution plan for the Reliance Capital.
Earlier, the NCLT had given 90-days to IIHL for implementing the resolution plan by May this year. However, the implementation is still languishing due to various regulatory approvals that the company is yet to receive. In February, NCLT allowed the Hinduja Group entity to take over the bankrupt Reliance Capital.
The matter will be taken up for hearing by NCLT in the coming week.
IIHL has asked the administrator and CoC to implement certain requirements that were part of the resolution plan and were approved by the CoC itself which are pending actions as on date.
These include, finalization and appointment of the trustee for carving out the assets that are excluded from Reliance Capital, list of the creditors and their distribution break-up as to whom payment has to be made, record date for delisting of equity shares and NCDs of Reliance Capital, application for delisting of equity shares and NCDs of Reliance Capital, formalities for reduction of the share capital of Reliance Capital, escrow agreement for creation of an escrow account, outstanding issue of GST etc. Such requirements are time-consuming and cannot be fulfilled by the set date of 10 August, IIHL’s 30-page petition said.
