National Company Law Tribunal allows RBI's insolvency plea against Reliance Capital

The National Company Law Tribunal's (NCLT) Mumbai Bench has allowed a plea filed by the Reserve Bank of India (RBI) against Reliance Capital Limited (RCL) seeking initiation of the Corporation Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC)..A Bench comprising judicial member Pradeep Narhari Deshmukh and technical member Kapal Kumar Vohra stated that the interim moratorium which had been granted on the date of filing the petition would continue till the completion of the CIRP or till the resolution plan is approved or liquidation order is passed. ."The Petition filed by RBI is complete in all respects as required by law. It clearly shows that RCL is in default of a debt due and payable and the default is more than the minimum amount as stipulated under IBC. The default stands established and there is no reason to deny the admission of the petition" the order states. .RBI submitted that on November 29, 2021, it superseded the Board of Directors of RCL "in view of the defaults by RCL in meeting various payment obligations to its creditors".It pointed out that there were many financial creditors to whom the RCL was liable to pay and had defaulted, most particularly Yes Bank. Yes Bank informed RBI that RCL had defaulted payment in relation to 9870 secured non-convertible debentures which was ₹14,17,80,51,298/-.The same date, RBI appointed Nageswar Rao Y, ex-Executive Director of the Bank of Maharashtra as the administrator of RCL.The next day it appointed a three-member Advisory Committee to assist the administrator in the discharge of his duties. RBI stated that "in view of the default committed by RCL, there is a need to initiate CIRP against the company. He therefore, urged this adjudicating authority to pass appropriate order expeditiously keeping in view the public interest in the matter"..RBI filed the present plea before the NCLT on December 2, 2021, and as per the provisions under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, the interim moratorium commenced on the same date. RCL informed the Tribunal that they are supporting the petition filed by the RBI..With this plea, RCL is the third non-banking financial company to be taken to bankruptcy after the Dewan Housing Finance Ltd. and Kolkata-based Srei company..RBI was represented by Senior Advocate Ravi Kadam. Advocates Rohan Rajadhyaksha with Nirman Sharma and Abhishek Adke appeared for the administrator. Solicitor DJ Kakalia instructed by Mulla & Mulla & Craigie Blunt & Caroe appeared for RCL..[Read order].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.