The National Company Law Tribunal (NCLT) on Thursday asked insolvency-bound Reliance Capital's lenders and administrator to file a response by January 16 on Torrent Investments' plea to halt their plans to hold a fresh auction for better realisation.
Torrent Investments -- one of the bidders for the Anil Ambani-promoted Reliance Capital -- has offered Rs 8,640 crore to acquire the firm through the insolvency process.
Earlier this week, Torrent Investments approached the tribunal seeking a stay on the Committee of Creditors' voting to hold a second round of 'Challenge Mechanism' or e-auction for the bidders.
Torrent Investments, represented by Mukul Rohatgi, told the Mumbai bench of NCLT that their bid of Rs 8,640 crore was above the threshold and the matter ended there.
However, on January 7, the Committee of Creditors (CoC) informed that they want to start a fresh round of auction, he stated.
"The extension of 'Challenge Mechanism' is not permissible," Rohatgi added. Darius Khambata, also representing Torrent Investments, stated that this whole process is unfair and the Rs 8,640 crore bid was in compliance with the 'Challenge Mechanism'.
After hearing Torrent Investments' plea, the tribunal comprising Pradeep Narhari Deshmukh and Shyam Babu Gautam asked the CoC and the administrator to file a reply by Monday (January 16).
Under the first 'Challenge Mechanism', the threshold bids amounted to Rs 6,500 crore, while the highest net present value (NPV) offered by applicants was Rs 7,210 crore.
By the time of the second round, the threshold was Rs 7,500 crore, and the highest NPV was Rs 7,620 crore. In the third round, the threshold was Rs 8,500 crore, while the highest NPV was Rs 8,550 crore.
But by the end of the fourth round, the threshold, which was Rs 9,000 crore received the highest NPV of Rs 8,640 crore. Kapil Sibal, on behalf of the CoC, said the Torrent Investments bid in the third round was 'suboptimal' and 'factually incorrect' as it was less than the threshold.
"We are continuing with the 'Challenge Mechanism' for maximising value. Torrent's proposition that the bid was closed after the third round was wrong as the CoC had said it is in the process of evaluating," he added.
Reliance Capital has a consolidated debt of about Rs 40,000 crore. The Reserve Bank (RBI) had applied to initiate Corporate Insolvency Resolution Process (CIRP) against the Reliance Group company at the NCLT Mumbai.
Subsidiaries of Reliance Capital that are pushed for insolvency resolution are - Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance and Reliance Commercial Finance. RBI-appointed Nageswara Rao Y is the administrator of Reliance Capital.