Torrent Investments had emerged the highest bidder with its offer of ₹8,640 crore December 21, 2022, for debt-ridden Reliance Capital in the auction conducted as part of its resolution process.
| Photo Credit: Special Arrangement
The division bench of National Company Law Tribunal (NCLT) on January 16 is set to decide Reliance Capital’s proposed reauction challenged by Ahmedabad-based Torrent Investments, which was the highest bidder in the first round of bidding conducted on December 21st.
In the last hearing on January 12, the bench provided the Committee of Creditors (CoC), which has voted in favour of conducting the second round of bidding, time to file its response with regard to the legal points raised by the Torrent Group in its petition.
Also read: NCLT to hear on January 12 Torrent’s plea against second-round bidding in RCap
As per the details, the CoC had conducted the auction through the Challenge Mechanism on December 21, 2022, in which the Torrent Investments had emerged as the winner by quoting ₹8640 crore compared to ₹8110 crore quoted by Hinduja Group, which owns IndusInd Bank.
However, post the auction, in a move seen by many as deviation from the established norms and auction guidelines, the Hinduja increased its bid to around ₹9000 crore, which is also evident from the minutes of CoC meeting on December 23.
The Hinduja’s revised bid was submitted almost 24 hours after the bidding time had ended as per the records of the CoC.
The acceptance of the revised bid submitted post the bidding deadline by the CoC prompted the till then highest bidder Torrent to approach the NCLT, which first granted stay on considering the bid submitted by the Hinduja Group.
After the stay granted by the NCLT, as per the Minutes of the Meeting of the CoC held on January 3, the CoC debated between two methods of conducting a rebid, either through a sealed envelope method or reconduct the electronic auction.
The Hindu is in the exclusive possession of the copies of the Minutes of the Meeting of CoC held on December 23, January 3 and January 6.
Click here to read the Minutes of the Meeting of CoC held on December 23, January 3, and January 6
In its next meeting on January 6, the CoC appears to have belatedly found that the outcome of the challenge mechanism undertaken earlier on December 21 was sub optimal and not satisfactory following the NCLT’s stay on considering the revised bid of one of the bidders.
The CoC in the meeting on January 6 decided to conduct an extended challenge mechanism through another electronic auction or what’s been reported in the media as reauction or second round of auction.
For the second round of bidding, the threshold price has apparently been fixed at ₹9500 crore on a net present value basis (NPV), which would include ₹8000 crore as upfront cash in the first round.
On Monday, the country’s top legal brain like Kapil Sibal for CoC, and Mukul Rohatgi for the Torrent Group will argue the matter before the division bench.
According to lawyers involved in the NCLT cases, it will be interesting to see whether the division bench upholds adherence to process, which bars any acceptance of revised bid after the deadline or commercial wisdom, a view taken by the CoC to seek higher revenue for the lenders by conducting another round of bidding.