Earlier, senior advocate Ravi Kadam, appearing for RBI, informed the Mumbai Bench of the National Company Law Tribunal.NCLT) Under the IBC, only the regulator has the power to initiate CIRP against financial service providers.
The counsel argued, “Yes Bank was a customer of Rs 987 crore non-convertible debentures (NCDs) issued by the company on October 30, 2017. The default is on the same after which all other events are triggered.” for RBI.
Earlier on November 29, RBI superseded RCL’s board and appointed former Bank of Maharashtra executive director Y Nageswara Rao as the administrator of the company. Advocate Rohan Rajadhyaksha appeared on behalf of the Administrator in the matter.
Darius Jehangir Kakalia, partner at law firm Mulla & Mulla & Craig Blunt & Cairo, appeared for the promoter of Reliance Capital and informed the tribunal that they were supporting the petition filed by the central bank.
A division bench headed by Justice Pradeep Narhari Deshmukh and technical member Kapal Kumar Vohra reserved the order. The tribunal is likely to pronounce its order in the second half on Monday.
RBI said in a press release, the action by the central bank “was taken in view of the default by RCL in meeting various payment obligations to its creditors and serious governance concerns, which the Board has not been able to effectively address.”
Reliance Capital is the holding company for majority stake in insurance firms, an asset reconstruction company, a brokerage firm and a fractional stake in commodity exchanges.
It controls 100% stake in Reliance General Insurance, its broking arm Reliance Securities and RBI-registered NBFC Reliance Financial Limited which is engaged in capital market-linked financing activities.
RCL owes Rs 19,805 crore to its creditors, most of which is through bonds under trustee Vistara ITCL India Ltd.
It is the third NBFC to be taken to bankruptcy court by the RBI after Dewan Housing Finance Limited (DHFL) and Kolkata-based Srei Group.