Lenders to debt-ridden Reliance Capital Ltd (RCAP) have alleged that Hinduja Group firm IIHL is indulging in delaying tactics, resulting in slowdown in implementation of the resolution plan.
Mauritius-based IndusInd International Holdings Ltd (IIHL) emerged as a successful bidder for acquisition of Reliance Capital.
The NCLT Mumbai on February 27, 2024, approved IIHL's Rs 9,861-crore resolution plan for the debt-ridden financial firm.
According to sources, lenders claimed that IIHL's move to seek approval from the Department of Industrial Policy and Promotion (DIPP) is an afterthought.
It was not even a part of conditions set out by the NCLT while approving the resolution plan on February 27, 2024.
The message sent to IIHL for comments on the issue did not elicit response till the filing of the story.
According to sources, 90 days have passed since IIHL submitted the application with DIPP, but the approval is still pending.
DIPP approval is required as some of the shareholders of IIHL are residents of Hong Kong, a special administrative region controlled by China.
According to Press Note 3, if an entity from a nation sharing a land border with India (namely China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan), or if a citizen or permanent resident of any such country, is the beneficial owner of an investment in India, they are required to pursue investment through the government approval route.
Earlier on August 12, the National Company Law Tribunal (NCLT) directed the Reserve Bank of India (RBI) and DIPP to expedite the approval process to implement RCAP's resolution plan by Hinduja Group-promoted IIHL.
Meanwhile, IIHL has committed for payment of entire consideration of Rs 9,861 crore, subject to receipt of regulatory approvals and resolution of outstanding GST component.
The next hearing by NCLT on the RCAP's resolution plan is scheduled on September 19, 2024.
In November 2021, the RBI superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company.
The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.
Reliance Capital had a debt of over Rs 40,000 crore, and four applicants had initially bid with resolution plans. However, the committee of creditors rejected all four plans for lower bid values and a challenge mechanism was initiated in which IIHL and Torrent Investments participated.
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