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NEW DELHI: The administrator of Reliance Capital (RCAP) has accused IndusInd International Holdings Ltd (IIHL) of failing to comply with the National Company Law Tribunal (NCLT) order to deposit Rs 2,750 crore in designated escrow accounts. The allegations, presented in an affidavit to NCLT, claim that IIHL deposited the money into its own and promoters’ accounts instead.IIHL has denied any non-compliance, stating that the NCLT’s order did not specify that the accounts needed to be operated or controlled by the Committee of Creditors (CoC).
The affidavit, seen by PTI, states that IIHL did not deposit Rs 2,750 crore into the designated escrow accounts of the CoC in India and abroad as per the July 23 order. Instead, IIHL placed the funds into accounts of Harsha Ashok Hinduja, Shom Ashok Hinduja, and Ashok P Hinduja, alongside its own accounts at Standard Chartered Bank, Mauritius, and State Bank of Mauritius.
IIHL responded to the accusations with a denial, claiming full compliance with the NCLT’s directives.
“There is neither any default nor any contempt by IIHL to comply with its obligations as directed by NCLT.”
The NCLT’s order stipulated that IIHL must deposit the initial equity amount of Rs 250 crore in a domestic escrow account and Rs 2,500 crore in an offshore escrow account, both designated by the CoC, by July 31, 2024. However, the administrator alleges that IIHL failed to deposit the funds into these accounts despite being provided with the escrow account details on July 27.
IIHL stated that the order required depositing monies in escrow accounts designated by the CoC, but not specifically operated or controlled by CoC. They highlighted that the CoC failed to provide necessary escrow arrangement terms and details, which compelled IIHL to deposit funds into its own accounts.
“The order of NCLT required IIHL to deposit monies in escrow account designated by the CoC and not ‘operated’ or ‘controlled’ by CoC.”
Furthermore, the affidavit alleges that IIHL did not provide details of the binding term sheets required for raising Rs 7,300 crore debt and failed to comply with any of the NCLT’s conditions. The administrator claims IIHL is in contempt of the court’s July 23 order.
“None of the conditions have been complied with and IIHL is in contempt of court’s July 23 order.”
The administrator has asked the court to reject IIHL’s interlocutory application seeking modifications to the July 23 order, labeling it as a delaying tactic.
The hearing on IIHL’s plea is scheduled for next week.
The NCLT had already extended the deadline for IIHL to conclude the deal by August 10 after the company missed an earlier deadline on May 27. IIHL had cited pending regulatory approvals and compliance requirements as reasons for the delay.
On February 27, 2024, the NCLT approved IIHL’s Rs 9,650-crore resolution plan for Reliance Capital. This development follows the Reserve Bank of India’s move in November 2021 to supersede Reliance Capital’s board due to governance issues and payment defaults. The central bank appointed Nageswara Rao Y as administrator to manage the bidding process initiated in February 2022.
Reliance Capital, with a debt of over Rs 40,000 crore, initially received bids from four applicants with resolution plans. However, all were rejected by the CoC for lower bid values, leading to a challenge mechanism in which IIHL and Torrent Investments participated.
The affidavit, seen by PTI, states that IIHL did not deposit Rs 2,750 crore into the designated escrow accounts of the CoC in India and abroad as per the July 23 order. Instead, IIHL placed the funds into accounts of Harsha Ashok Hinduja, Shom Ashok Hinduja, and Ashok P Hinduja, alongside its own accounts at Standard Chartered Bank, Mauritius, and State Bank of Mauritius.
IIHL responded to the accusations with a denial, claiming full compliance with the NCLT’s directives.
“There is neither any default nor any contempt by IIHL to comply with its obligations as directed by NCLT.”
The NCLT’s order stipulated that IIHL must deposit the initial equity amount of Rs 250 crore in a domestic escrow account and Rs 2,500 crore in an offshore escrow account, both designated by the CoC, by July 31, 2024. However, the administrator alleges that IIHL failed to deposit the funds into these accounts despite being provided with the escrow account details on July 27.
IIHL stated that the order required depositing monies in escrow accounts designated by the CoC, but not specifically operated or controlled by CoC. They highlighted that the CoC failed to provide necessary escrow arrangement terms and details, which compelled IIHL to deposit funds into its own accounts.
“The order of NCLT required IIHL to deposit monies in escrow account designated by the CoC and not ‘operated’ or ‘controlled’ by CoC.”
Furthermore, the affidavit alleges that IIHL did not provide details of the binding term sheets required for raising Rs 7,300 crore debt and failed to comply with any of the NCLT’s conditions. The administrator claims IIHL is in contempt of the court’s July 23 order.
“None of the conditions have been complied with and IIHL is in contempt of court’s July 23 order.”
The administrator has asked the court to reject IIHL’s interlocutory application seeking modifications to the July 23 order, labeling it as a delaying tactic.
The hearing on IIHL’s plea is scheduled for next week.
The NCLT had already extended the deadline for IIHL to conclude the deal by August 10 after the company missed an earlier deadline on May 27. IIHL had cited pending regulatory approvals and compliance requirements as reasons for the delay.
On February 27, 2024, the NCLT approved IIHL’s Rs 9,650-crore resolution plan for Reliance Capital. This development follows the Reserve Bank of India’s move in November 2021 to supersede Reliance Capital’s board due to governance issues and payment defaults. The central bank appointed Nageswara Rao Y as administrator to manage the bidding process initiated in February 2022.
Reliance Capital, with a debt of over Rs 40,000 crore, initially received bids from four applicants with resolution plans. However, all were rejected by the CoC for lower bid values, leading to a challenge mechanism in which IIHL and Torrent Investments participated.
