Reliance Capital's CoC Is 'Clandestinely Doing What's Prohibited', Says Torrent

Reliance Capital Ltd.'s creditors' committee is trying to prove that bids of both Torrent Investments Ltd. and Hinduja Group are sub-optimal, so that it can start a fresh auction without impediments, senior advocate Mukul Rohatgi told the insolvency court on Tuesday.

Arguing for Torrent, Rohatgi said this approach of the CoC is illegal and should not be allowed. The committee is "clandestinely doing what’s prohibited", he said.

The argument that Torrent’s bid is non-compliant is baseless. The minutes of the CoC's meeting along with an e-mail communication dated Jan. 7 prove otherwise, counsels representing Torrent Investments said.

The law only allows a single round of auction and does not recognise multiple rounds, Rohatgi said. The commercial wisdom of the CoC ends at the determination of auction mechanism. Moreover, there is no surety that this would be the last round of auctions, he argued.

Torrent had approached the National Company Law Tribunal earlier this month seeking relief against the CoC’s plan to consider a revised plan submitted by the Hinduja Group.

The court had granted an interim relief preventing the creditors' committee from considering any non-compliant plan till the resolution of the issue. This prompted the CoC to unanimously agree on an extension of first round of auctions in which eligible bidders will be allowed to submit their revised bids. The fresh round is expected to commence on Jan. 19.

Torrent's argument is that this is in violation of IBC regulations, which permit only a single round of auction. However, this is merely an extension of the first round of auction, according to the creditors' committee.

Darius Khambata, counsel for Torrent, supplemented Rohatgi's arguments and said that there is unequivocal admission not just by the CoC but also the administrator that Torrent’s bid is compliant, Hinduja’s bid is non-compliant and that the auction process has concluded.

According to him, the CoC minutes are sufficient to prove that Torrent was compliant. The minutes prove that Torrent has submitted the highest bid of Rs 8,640 crore among all the bidders and not Hinduja, as argued by the committee.

"The minutes also prove the illegality in the plan submitted by Hinduja. There are observations made by administrator as well as the committee that its plan is deviant, that it was submitted after the conclusion of the bidding," Khambata said.

The counsel for Reliance Capital's administrator, while accepting Khambata's observations, argued that this doesn’t prevent the CoC from conducting negotiations and renegotiations with the bidders, so as to realise the optimum value.

The NCLT will continue to hear the arguments on Wednesday.