RBI moves NCLT Mumbai for bankruptcy proceedings against Reliance Capital

The Reserve Bank of India (RBI) on Thursday moved Mumbai bench of National Company Law Tribunal (NCLT) for the insolvency and bankruptcy proceeding of Reliance Capital.

The central bank had superseded the board of the company on Monday, citing defaults and governance issues. The RBI appointed former executive director of Bank of Maharashtra Y Nageswar Rao as the administrator and gave him an advisory board to discharge his duty.

In a statement on its website, the RBI said there would be an interim moratorium on and from the filing of the application till its admission or rejection by the NCLT.

Under rules, the adjudicating authority will declare a moratorium, prohibiting suits or continuation of pending suits or proceedings against the corporate debtor including “execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority.”

The moratorium will also prohibit transferring, encumbering, alienating or disposing off by Reliance Capital any of its assets or any legal right or beneficial interest, and will prevent any action to foreclose, recover or enforce any security interest created by the company regarding its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

An owner or lessor of the property also cannot recover the property occupied by Reliance Capital.

However, the supply of essential goods or services to the company will not be terminated or suspended or interrupted during the moratorium period.

The moratorium will also not apply to any transaction notified by the central government in consultation with any financial regulator, and will not affect any surety in a contract of guarantee to a corporate debtor.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor