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The Supreme Court on Monday allowed lenders to Reliance Capital (RCap) to hold a second auction of the insolvent company, upholding the order of the company law appeals tribunal.

The apex court allowed bidders to participate in the auction for value maximization. However, a detailed order was awaited at the time of writing this report.

Monday’s order follows a petition by Torrent Investments filed on 4 March challenging National Company Law Appellate Tribunal’s (NCLAT) decision to allow a second auction. The top court agreed to hear Torrent’s plea last week.

In its petition before the top court, Torrent Investments said the appellate tribunal erroneously concluded that even after the conclusion of the challenge mechanism, the committee of creditors (CoC) is empowered to negotiate further with resolution applicants and invite bids for the plan.

On 2 March, NCLAT, in its verdict, set aside an earlier order by the National Company Law Tribunal (NCLT) that stayed lenders’ proposal to hold another auction. “The CoC may proceed to fix a date after two weeks for holding a revised challenge mechanism or/and to take any steps for further negotiations with the resolution applicants," Justice Ashok Bhushan and Justice Barun Mitra of NCLAT said in an 80-page order. Consequently, lenders scheduled the second auction on 20 March.

With the Supreme Court giving its go-ahead, CoC will meet on Monday (20 March) and conduct the second auction on 29 March, a person aware of the matter said on condition of anonymity.

The legal tussle between Torrent Investments and lenders started after Torrent submitted its bid of 8,640 crore for RCap, but rival bidder Hinduja Group, through International Holdings Ltd (IIHL), raised its bid to 9,000 crore. After this, the CoC decided to propose an extended challenge mechanism in pursuit of higher value for the company.

On 2 February, NCLT said that the challenge mechanism for financial bids stood concluded as on 31 December, with the bid of Torrent Investments at 8,640 crore being the highest. Allowing Torrent’s plea opposing the second challenge mechanism, NCLT said that the second challenge mechanism could not be held since it is in violation of section 39 (1) of the Insolvency and Bankruptcy Code. Torrent Investments had filed a plea on 9 January, requesting the tribunal to quash lenders’ plan to hold a fresh auction for the takeover of RCap. Later, IndusInd also filed a petition challenging the NCLT order.

ABOUT THE AUTHOR
Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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Updated: 21 Mar 2023, 12:30 AM IST
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