Reliance Capital’s lenders have entered a guilty plea with the National Companies Act Court of Appeal (NCLAT) challenging the NCLT order which denied a request by the creditors’ committee (CoC) to hold a second auction for resolution of the Debt-laden company.
“NCLT has challenged the commercial wisdom of the CoC by declaring both resolution plans suboptimal. NCLT has not appreciated that it should not have exercised its jurisdiction once the CoC has formed the opinion that the offers are sub-optimal and unsatisfactory,” a banking source said.
On Thursday, NCLT’s Mumbai bank rejected a CoC request to hold a second auction for the resolution of Reliance Capital. A two-judge Court declared that this would violate CIRP rules. The NCLT approved the order in favor of Torrent Investment, which had become the highest bidder after the first round of the auction.
“NCLT has failed to appreciate the legal issue that accepting Torrent’s arguments means that CoC potentially agrees to plans that result in a loss of ₹5,010 crore of seed money, which is a waste of public money,” the banker said.
