33514 of 2022 in Commercial Suit (L)
Also Read: https://newslaw.in/case-type/civil/remand-of-writ-petition-for-restoration-and-decision-on-merits/
No 162 of 2022 filed by Reliance Home Finance Limited (hereinafter referred to as ‘RHFL’), respondent No 2 herein, under Section 151 of the Civil Procedure Code, 1908 (for short, “CPC”), seeking approval of the Resolution Plan (for short, “RP”) pertaining to its dissolution, in light of the judgment of this Court in the case of Securities and Exchange Board of India v. 3 On 6 July 2019, a consortium of lenders led by the lead bank, i.e., Bank of Baroda, respondent No 4 herein, entered into an Inter-Creditor Agreement (hereinafter referred to as ‘ICA’) in terms of clause 10 of the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 (hereinafter referred to as ‘RBI Circular’).
6 During the pendency of the aforesaid petition, a RP for RHFL was submitted by AIIL on 19 June 2021, which, thereafter, was approved by the consortium of lenders who had entered into an ICA. 9 The SEBI Circular prescribes that the voting by the debenture holders, before entering into an ICA, shall mean an approval of not less than 75% of investors by value and 60% by number at ISIN level. Vide another order dated 12 May 2022, the High Court further directed that the results of the voting would be placed in a sealed envelope before the High Court. 15
For RCFL too, the High Court, in separate proceedings, had ordered for a meeting of debenture holders to be convened. SEBI, respondent No 5 herein, filed an appeal before the Division Bench of the High Court against convening of the meeting on the ground that voting procedure was not as per the SEBI Circular but as per the process provided under the Debenture Trust Deeds entered into by the parties therein.
Also Read: https://newslaw.in/case-type/criminal/presumption-of-genuine-endorsements-in-cheque-case/
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The High Court, vide the impugned order, dismissed the Interim Application, holding that the power to mould relief and approve the RP, as had been done by this Court under Article 142 of the Constitution of India in the case of Rajkumar Nagpal (supra) could not be done by the High Court in exercise of its inherent powers under Section 151 of the CPC.
It is submitted that if the RP in the case of RHFL, which is a sister concern of RCFL, is accepted, 19,353 debenture holders out of 20,843 debenture holders, having an exposure of upto Rs.5 lakhs, would receive 100% of the principal amount. He submitted that the option of opting out of RP, which has been given by this Court in the case of Rajkumar Nagpal (supra), should be given to both the dissenting as well as the debenture holders who have abstained or were present but not voted, i.e., types 2 and 3 of debenture holders. He further submitted that as per the said SEBI Circular, the consent of majority of investors would mean an approval of not less than 75% of investors by value of outstanding debt and 60% of investors by number at ISIN level.
Even debenture holders whose exposure is more than 10 lakhs are receiving 29.96% of their principal amount.
Also Read: https://newslaw.in/case-type/civil/medical-negligence-and-compensation-a-landmark-decision/
In the present case also, we find that a different voting mechanism proposed under the SEBI Circular will further delay the resolution process and potentially disrupt the efforts undertaken by the stakeholders, including the retail debenture holders.
Case Title: AUTHUM INVESTMENT AND INFRASTRUCTURE LIMITED Vs. R.K. MOHATTA FAMILY TRUST (2023 INSC 205)
Case Number: C.A. No.-001581-001581 / 2023
