The National Company Law Appellate Tribunal (NCLAT) on Friday issued a notice to IndusInd International Holdings Ltd (IIHL) following a plea by lenders of Reliance Capital, who sought interest on delayed payments. A three-member bench, led by Chairperson Justice Ashok Bhushan, directed IIHL, part of the Hinduja Group, to respond within two weeks.
The petition was filed by the Committee of Creditors (CoC) of Reliance Capital, who are seeking a modification of the 23 July order from the Mumbai Bench of the National Company Law Tribunal (NCLT). The NCLT had instructed IIHL to deposit Rs 2,750 crore in equity into escrow accounts held by the CoC.
The lenders are now urging the appellate tribunal to mandate that IIHL pay interest on the upfront cash amount until 8 August 2024, and also on the debt component of Rs 9,660 crore from 8 August 2024, until the transfer date of the full payment.
Mauritius-based IIHL emerged as the successful bidder for Reliance Capital, a debt-ridden financial firm. In February 2024, the NCLT approved IIHL's Rs 9,861 crore resolution plan to acquire the company. However, lenders argue that the amount, locked in for over a year during voting on the resolution plan, is below Reliance Capital’s liquidation value.
The lenders further requested permission to forfeit the Rs 2,750 crore already deposited in escrow should there be a default by IIHL. They highlighted that, since Reliance Capital has continued operating alongside its subsidiaries, any increase in its value would solely benefit IIHL as the new equity holder under the resolution plan.
The lenders also raised concerns over the losses they have incurred, claiming an approximate Rs 400 crore in damages, largely due to interest rate discrepancies. They argued that the CoC is essentially subsidizing the cost of the extension granted to IIHL.
The case stems from governance and financial defaults by Reliance Capital, a company owned by the Anil Dhirubhai Ambani Group, which led to the Reserve Bank of India superseding its board in November 2021. In February 2022, bids were invited for the acquisition of the company, which had accumulated a debt exceeding Rs 40,000 crore. Initially, four bids were rejected due to lower valuations, leading to a final bidding contest between IIHL and Torrent Investments.
The NCLAT has now scheduled a hearing in two weeks, where IIHL is expected to present its response to the lenders' claims for interest payments and compensation.
