NCLT orders Hinduja’s IIHL to deposit ₹2,750 Crore in escrow for Reliance Capital resolution

The National Company Law Tribunal (NCLT) on Thursday directed IndusInd International Holdings Ltd. (IIHL), the successful resolution applicant for Reliance Capital Ltd., to deposit ₹2,750 crore into an escrow account designated by the Committee of Creditors (CoC). .The directive was issued on Thursday by a bench comprising Judicial member Virendrasingh G Bisht and Technical member Prabhat Kumar, following IIHL's request for more time to implement the resolution plan.IIHL had earlier been instructed to deposit ₹250 crore towards domestic equity in an escrow account and ₹2,500 crore in an offshore escrow account by July 31, as per the tribunal's order on July 23. However, IIHL instead deposited the amounts in the accounts of Ashok, Harsha and Shom Hinduja, contrary to the tribunal's requirement for a neutral escrow account..During Thursday’s hearing, Senior Advocate Abhishek Manu Singhvi, representing IIHL, argued that the company has complied with the deposit requirements and agreed to submit the binding term sheet to the monitoring committee. Singhvi emphasized the need for more time to obtain regulatory approvals essential for the resolution plan's implementation.He contended that an extension of the timeline does not equate to modifying the order.However, the CoC opposed any modification to the tribunal’s previous order, with their counsel arguing that extending the deadline would not be permissible. Despite this, IIHL maintained that the extension is necessary to meet compliance deadlines and regulatory requirements..IIHL’s application sought adjustments to the deposit conditions, citing difficulties in meeting the original deadlines. The application also highlighted the need for approvals from the Reserve Bank of India (RBI) regarding control changes, securities pledging, and foreign equity, among other compliance issues.In its July 23 order, the NCLT had granted an extension until August 10 for IIHL to conclude the deal, with the caveat that any cash accumulated during this period would go to the CoC. This extension followed IIHL's delay in meeting the May 27 deadline, which marked the third such instance.The NCLT had approved IIHL's ₹9,650-crore resolution plan for Reliance Capital on February 27, 2024. Reliance Capital, once part of the Anil Dhirubhai Ambani Group, had been placed under administration by the Reserve Bank in November 2021 due to governance issues and payment defaults, with debts exceeding ₹40,000 crore.The CoC had initially rejected all four bids for the company, leading to a challenge mechanism in which IIHL and Torrent Investments participated.The tribunal will now deliberate on the matter further on August 12.