Reliance Capital resolution: NCLT questions ADAVL's delay in challenging IIHL use of Reliance brand

The National Company Law Tribunal (NCLT) on Tuesday questioned why Anil Dhirubhai Ambani Ventures (ADAVL) had not objected earlier to the use of the 'Reliance' brand by Hinduja Group-owned IndusInd International Holdings (IIHL) during the resolution process of Reliance Capital.."You had every opportunity to object before us. You never bothered to file an appeal also," the coram of Judicial member Justice Virendrasingh Bisht and technical member Prabhat Kumar remarked during the hearing..ADAVL recently filed an application seeking to restrain IIHL from using the 'Reliance' brand once the resolution plan for Reliance Capital was implemented. The company, which owns the 'Reliance' brand, had terminated its brand licensing agreement with Reliance Capital in June 2021, citing financial defaults. However, despite the termination, Reliance Capital continued using the brand, leading to the legal dispute..ADAVL had originally entered into a brand licensing agreement with Reliance Capital Limited on April 1, 2014, granting the latter a non-exclusive, royalty-free licence to use the 'Reliance' brand for ten years.However, as Reliance Capital faced financial trouble, the Reserve Bank of India (RBI) initiated the Corporate Insolvency Resolution Process (CIRP) on December 6, 2021. ADAVL terminated the licensing agreement on June 15, 2021, citing financial defaults as a "significant breach" of the agreement.Despite the termination, Reliance Capital continued to use the brand, prompting ADAVL to issue multiple notices before ultimately approaching the NCLT..In its application, ADAVL argued that the ongoing use of the 'Reliance' brand by Reliance Capital violated the terms of the terminated agreement. The company is now seeking an order to immediately halt the use of the brand by IIHL as part of the resolution process..During Tuesday's hearing, Advocate Rohan Kadam, representing the administrator of Reliance Capital, defended the continued use of the brand name. He highlighted that the NCLT's order from February 27, 2024, which approved the resolution plan, clearly allowed IIHL to use the 'Reliance' brand for three years, in line with the existing agreements.Kadam argued that the branding rights were only intended to last until the completion of the CIRP, after which they would no longer be available.He further pointed out that the arrangement to continue using the brand was made to maximise the value of Reliance Capital's assets during the resolution process. He noted that the agreement included a six-month cooling-off period, a standard practice in business takeovers, during which IIHL could continue using the brand..In response, ADAVL contended that the resolution order was obtained by misrepresenting key facts, particularly the availability of the branding rights. The company claimed that the administrator failed to inform IIHL about the termination of the agreement, a detail ADAVL believes should have been disclosed.The NCLT has scheduled the next hearing for Tuesday.