RCap ruling: NCLAT seeks Hinduja’s response on lenders’ plea to waive principal

Mumbai: The National Company Law Appellate Tribunal (NCLAT) has issued a notice to IndusInd International Holdings Ltd (IIHL) on a petition filed by lenders of insolvent Reliance Capital seeking forfeiture of ₹2,750 crore as equity component in case the Hinduja group company fails to implement the resolution plan.

The Delhi bench of NCLAT, headed by Justices Ashok Bhushan and Arun Baroka, has asked IIHL to file a reply within two weeks. The court will hear the matter on September 30.

The lenders are primarily seeking a modification to the NCLT order of July 23, which allowed IIHL to take over Reliance Capital for ₹9,861 crore. The lenders have since been at loggerheads with the Hinduja Group over the implementation of the resolution plan.

In a filing before the NCLAT, the lenders have sought payment of interest on the debt component of ₹7,300 crore from August 2023 till the actual date of payment of IIHL.

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The creditors’ counsel said that if the applicant fails to implement the resolution plan within the extended period, it will be deemed to have defaulted on its obligation and the creditors’ committee will be entitled to take all necessary action against the applicant (IIHL). In case of default, the amount deposited in the escrow account will be returned to the creditors, the counsel added.

“The lenders do not oppose the extension of the execution of the plan, but we should have been granted the interest. We have been losing ₹“125 crore in interest every month,” said lawyer Pooja Dhar.

IIHL counsel Bhoomika Batra, to be added in paragraph 7, said the money has been deposited in the escrow account in accordance with the NCLT order. “We are almost in the final stage of implementing the resolution plan,” Batra added.

The resolution plan

According to the approved plan, IIHL was to deposit the initial amount of capital of ₹250 crore rupees in a national escrow account and ₹2,500 crore in an offshore escrow account of the Committee of Creditors (CoC) by July 31.

Subsequently, as the deadline approached, IIHL filed an application before the NCLT last week, seeking modification of the court order. The administrator has refused to grant any relief to IIHL.

The NCLT had partially granted IIHL an extension till August 10 for implementation of the resolution plan.

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Experts said the seizure of money was appealed to secure the interest of the lenders and protect them from further losses that would accrue due to the delay of IIHL in implementing the resolution plan approved by the NCLT.

The petition said a significant amount of public money was involved in this case as a huge amount of debt is owed to pension funds, retail bondholders, insurers including Life Insurance Corp of India, EPFO ​​and the army welfare fund.

Earlier, the CoC had alleged before the NCLT that it was deprived of timely payment of money owed to it by the corporate debtor under the resolution plan. The resolution plan mandates IIHL to pay the lenders within 90 days from the date of the order.

“In the event IIHL fails to make payments within this period and defaults, then it will be liable to pay interest to the CoC for the delayed payment and should also be required to place money in an escrow account which will be forfeited if there are further delays in implementing the resolution plan,” the petition said.

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