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TMI Blog2023 (3) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... ving 23.24% of their principal amount, similar to the case of Rajkumar Nagpal. The facts in the present case are identical to the facts in the case of Rajkumar Nagpal. 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. In the present case also, such unscrambling of the resolution process will not only prove time consuming but may also adversely affect the agreed realized gains to the retail debenture holders, who have already consented to the negotiated settlement before the High Court. We find that in the present case also, we should extend the benefit under Article 142 of the Constitution of India to the retail debenture holders. We are inclined to issue such directions to mould the relief in view of the particular facts and circumstances in the present case, which are similar to that in the case of Rajkumar Nagpal. In exercise of the powers under Article 142 of the Constitution of India, the RP preferred by AIIL qua the debenture holders allowed, except the dissenting debentur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets) Directions, 2019 (hereinafter referred to as RBI Circular ). As per clause 10 of the RBI Circular, the lenders may enter into an ICA for implementation of a RP. 3.4 On 26th August 2019, RHFL committed default in relation to the Debenture Trust Deeds issued as well. 3.5 In January 2020, IDBI Trusteeship Services Ltd., respondent No. 3 herein, filed a company petition bearing No. 138 of 2020 before National Company Law Tribunal, Mumbai (NCLT) under Section 71 (10) of the Companies Act, 2013 against RHFL and its holding company Reliance Capital Ltd., to make payment of Rs. 2,850 crore with interest due and payable to the debenture holders of RHFL, which includes the appellant herein. 3.6 During the pendency of the aforesaid petition, a RP for RHFL was submitted by AIIL on 19th June 2021, which, thereafter, was approved by the consortium of lenders who had entered into an ICA. Pertinently, 96% of the ICA lenders approved the RP. On 21st June 2021, a press note to that effect was published. On the same date, the NCLT, in the aforementioned company petition, directed RHFL to repay the debt owed to the debenture holders within five months. An appeal being Company Appeal ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the meeting voted in favour of the RP, i.e., 94.55%. 3.14 While the above proceedings in relation to RHFL continued, a RP for the sister concern RCFL was also submitted by AIIL, which too was approved by the consortium of lenders who had entered into an ICA. The two RPs are substantially similar in so far that the debenture holders of both entities, up to a certain exposure threshold, would get 100% of their principal dues. 3.15 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. The appeal was dismissed, with the Division Bench noting that the SEBI Circular could not be applied retrospectively and that the voting process would be governed by the Debenture Trust Deed. Aggrieved thereby, SEBI preferred an appeal before this Court. 3.16 A Bench of three Judges of this Court, in the case of Rajkumar Nagpal (supra), all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders out of 20,843 debenture holders, having an exposure of upto Rs.5 lakhs, would receive 100% of the principal amount. It is submitted that, even as per Bank of Baroda, which is the lead bank in the ICA, the total percentage of ICA lenders who have accepted the RP is 96%. It is further submitted that if the RP is not accepted, RHFL would be driven into liquidation. In such a situation, 19,353 debenture holders, who are getting 100% of the principal amount under the RP, would not, in any case, get that amount. In such a situation, it is difficult to ascertain as to when and to what extent, the secured and unsecured creditors would recover their portion of the amounts indicated in the RP. 6. Shri Viswanathan has also submitted that they have no objection if the RP is accepted, provided that the amount should be paid prior to the end of the Financial Year 2022- 23, i.e., 31st March 2023. 7. Shri Venkatraman, on the contrary, submitted that there are three types of debenture holders. The first are those who have accepted the RP, the second are the ones who have dissented against the RP, and the third are the ones who have abstained from voting on the RP or were present but had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally disrupt the efforts undertaken by the stakeholders, including the retail debenture holders. Such unscrambling of the resolution process will not only prove time consuming, but may also adversely affect the agreed realized gains to the retail debenture holders, who have already consented to the negotiated settlement before the High Court. 9. In the present case also, small investors, whose exposure is up to Rs. 5 lakhs, are benefiting to the extent of 100% of their principal amount. Even debenture holders whose exposure is more than Rs. 5 lakhs are receiving 23.24% of their principal amount, similar to the case of Rajkumar Nagpal (supra). 10. We find that the facts in the present case are identical to the facts in the case of Rajkumar Nagpal (supra). 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. In the present case also, such unscrambling of the resolution process will not only prove time consuming but may also adversely affect the agreed realized gains to the retail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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