NCLT BOMBAY ALLOWS RBI TO INITIATE CIRP AGAINST RELIANCE CAPITAL

The National Company Law Tribunal, Mumbai Bench, allowed a petition by the Reserve Bank of India against Reliance Capital Limited under the Insolvency and Bankruptcy Code (IBC) seeking Corporation Insolvency Resolution Process. 

On November 29, the RBI had replaced the Board of Directors of the Reliance Capital Ltd “given the defaults by RCL in meeting the various payment commitments to its creditors and governance concerns which the BOD has not been able to address; adequately.”

RBI then appointed ex-Executive Director of the Bank of Maharashtra-Nageswar Rao Y as the administrator of RCL. The next day RBI appointed three more members as an advisory committee to assist the administrator. 

On December 2, 2021, RBI moved to the NCLT, and as per the provisions of the IBC Rules, the interim moratorium commenced on the same date. On December 6, 2021, Advocate Ravi Kadam appearing for the RBI, submitted that as per the Act, only the regulator has the authority to initiate the CIRP against financial services providers.

The Bench of Pradeep Narhari Deshmukh and Kapal Kumar Vohra stated during pronouncement that the interim moratorium which had been granted would continue. The detailed order is awaited.

Author: Papiha Ghoshal