The Administrator of debt-ridden Reliance Capital (RCAP) has filed an affidavit with the National Company Law Tribunal (NCLT), accusing IndusInd International Holdings Ltd (IIHL), a Hinduja Group firm, of failing to comply with the conditions set by the tribunal in its July 23 order. The affidavit states that IIHL did not deposit the required ₹2,750 crore into the designated escrow accounts for the Committee of Creditors (CoC) in India and abroad.
Instead, IIHL deposited the money into its own accounts and those of its promoters, including Harsha Ashok Hinduja, Shom Ashok Hinduja, and Ashok P. Hinduja. The ₹2,500 crore designated for the offshore escrow account was deposited in IIHL’s accounts with Standard Chartered Bank, Mauritius, and State Bank of Mauritius.
IIHL’s Response
In a separate affidavit, IIHL claimed that the funds are available and will be transferred once the escrow account conditions are finalized. An IIHL spokesperson explained that opening an escrow account involves terms and conditions based on a bilateral agreement, and the trustee decides the fate of the funds based on these terms.
IIHL has accused the CoC and the Administrator of misleading the situation, stating that the escrow account was opened unilaterally.
Non-compliance Allegations
According to the July 23 NCLT order, IIHL, as the successful bidder, was required to deposit ₹250 crore in a domestic escrow account and ₹2,500 crore in an offshore escrow account designated by the lenders by July 31, 2024. The Administrator alleged that these conditions were not met, and IIHL is in contempt of the court order.
Furthermore, IIHL has not provided details of the binding term sheets for raising ₹7,300 crore in debt to the Monitoring Committee. The Administrator claims that IIHL’s request to modify the July 23 order is a delaying tactic and has appealed to the court to reject it.
Next Steps and Background
The NCLT is scheduled to hear IIHL’s plea next week. Previously, the NCLT granted IIHL an extension until August 10 to conclude the deal, citing pending regulatory approvals and compliance requirements. In February 2024, the NCLT approved IIHL’s ₹9,650-crore resolution plan for Reliance Capital.
Reliance Capital, with a debt of over ₹40,000 crore, was placed under the administration of Nageswara Rao Y by the Reserve Bank of India in November 2021 due to governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. Initially, four applicants submitted bids, but the CoC rejected them for lower bid values, leading to a challenge mechanism in which IIHL and Torrent Investments participated.
