The bankruptcy court ruled in favour of Torrent Investments on Thursday in its appeal against lenders' decision to hold a second auction for the sale of Reliance Capital and a late improved offer from the Hinduja Group after the auction for the bankrupt company ended on December 21.
According to a division bench of Justice PN Deshmukh and technical member Shyam Babu Gautam, the committee of creditors (CoC) cannot devise an 'illegal mechanism' to circumvent the regulations and indirectly negotiate further with the resolution applicants after the conclusion of the statutory scheme of challenge process under Regulation 39(1A).
Torrent was the highest bidder in the previous round of the auction, which ended on December 21, offering Reliance Capital an upfront payment of Rs8,640 crore. The Hinduja Group, however, made another offer 24 hours after the auction deadline, promising to pay Rs8,950 crore, including Rs8,110 crore upfront. Both bids were less than the liquidation value.
Following that, the lenders proposed holding an extended auction with a Rs9,500 crore threshold, including an upfront cash payment of Rs8,000 crore.
On January 3, the NCLT ordered a status quo in the auction process and extended the stay on January 23.
Following that, the CoC petitioned the appellate tribunal, requesting that the bankruptcy court order on the status quo be reversed. The committee, however, later decided to withdraw the application.
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