IIHL fails to deposit money as per NCLT order, Reliance Capital admin tells tribunal; IIHL denies contempt charge

Reliance Capital (RCAP) has filed an affidavit with NCLT, accusing IndusInd International Holdings Ltd (IIHL) of non-compliance as the Hinduja Group firm failed to meet the conditions set by the tribunal in a July 23 order, reported PTI.

 IIHL later in a statement denied allegations saying there has not been any contempt of NCLT order.

Reliance Capital in its affidavit has informed NCLT that IIHL has deposited the money in its own accounts as well as the promoters' account instead of depositing ₹2,750 crore in the designated escrow accounts of the Committee of Creditors (CoC) in India and abroad, reported PTI.

IIHL's denial

While refusing allegations, IIHL said, there is neither any default nor any contempt by IIHL to comply with the directions of NCLT.

The NCLT order required IIHL to deposit monies in escrow account designated by the CoC and not "operated" or "controlled" by CoC, IIHL said in the statement as reported by PTI. 

CoC has also not provided any escrow arrangement terms and details till date, IIHL said. Due to this, IIHL was left with no choice but to deposit monies in its own account, it added.

Reliance Capital's View

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

However, Reliance Capital, the administrator alleged that IIHL deposited in the accounts of Harsha Ashok Hinduja, Shom Ashok Hinduja, and Ashok P Hinduja. Similarly, ₹2,500 crore were deposited in IIHL's own accounts with the Standard Chartered Bank, Mauritius and State Bank of Mauritius, reported PTI.

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 did not deposit the money in the CoC designated accounts.

IIHL has also failed to provide the details of the binding term sheets for raising ₹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 is a delaying tactic and must be rejected. The interlocutory application seeks modifications in the July 23 order.

Next hearing

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, PTI said.

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

In November 2021, the Reserve Bank of India superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. 

Reliance Capital had a debt of over ₹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.

(With inputs from PTI)