IIHL fails to comply with NCLT order, did not deposit money: RCAP administrator says in affidavit

New Delhi: The Administrator of debt-ridden Reliance Capital (RCAP) has filed an affidavit with NCLT, accusing IIHL of non-compliance as the Hinduja Group firm failed to meet the conditions set by the tribunal in a July 23 order.

The Administrator, in its affidavit seen by PTI, informed NCLT that instead of depositing Rs 2,750 crore in the designated escrow accounts of the Committee of Creditors (CoC) in India and abroad, IndusInd International Holdings Ltd (IIHL) has deposited the money in its own accounts as well as the promoters' accounts.

However, IIHL in a separate affidavit had said it has funds and the same will be transferred once the escrow account is in place which has conditions listed out.

For opening any escrow account, there are terms and conditions which are based on an agreement signed bilaterally and if the terms and conditions are met or not met, the trustee decides the fate of funds accordingly, an IIHL spokesperson said.

According to sources, CoC and administrator are misleading when they say that IIHL has not transferred the funds to the escrow account opened unilaterally.

As per the NCLT order dated July 23, the successful bidder, IIHL, had to comply with certain conditions by July 31, 2024.

These conditions included depositing the initial equity amount of Rs 250 crore in a domestic escrow account designated by CoC and Rs 2,500 crore in an offshore escrow account again designated by the lenders by July 31.

However, the Administrator alleged that IIHL deposited in the accounts of Harsha Ashok Hinduja, Shom Ashok Hinduja, and Ashok P. Hinduja. Similarly, Rs 2,500 crore were deposited in IIHL's own accounts with the Standard Chartered Bank, Mauritius and State Bank of Mauritius.

The Administrator informed the NCLT, Mumbai bench that as per the order, the escrow accounts were opened well in advance and the details of the same were shared with the IIHL on July 27 but the company failed to deposit the money in the CoC designated accounts.

Besides, IIHL has failed to provide the details of the binding term sheets for raising Rs 7,300 crore debt to the Monitoring Committee.

None of the conditions have been complied with and IIHL is in contempt of court's July 23 order, the Administrator alleged.

The Administrator has appealed to the court that the interlocutory application filed by IIHL seeking modifications in the July 23 order is nothing but a delaying tactic, and should be rejected.

The hearing on IIHL's plea at NCLT is scheduled for next week.

After IIHL's delay on the third deadline on May 27, the NCLT in July 23 gave the entity time till August 10 to conclude the deal. The Hinduja Group firm cited pending regulatory approvals and compliance requirements as reasons for the extension.

The National Company Law Tribunal (NCLT) on February 27, 2024, approved IIHL's Rs 9,650-crore resolution plan for Reliance Capital.

In November 2021, the Reserve Bank 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.