NCLT admits Reliance Home Finance into insolvency proceedings

In a significant development, the National Company Law Tribunal (NCLT), Mumbai Bench, has admitted Reliance Home Finance Limited (RHFL) for corporate insolvency resolution proceedings. The order was passed on 16th September on a petition filed by Invent Assets Securitisation & Reconstruction Pvt. Ltd., a financial creditor to the company.

The tribunal, comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar, found that Reliance Home Finance had defaulted on a debt amounting to ₹7.80 crore, which includes interest. The default date has been set as December 4, 2024.

The financial debt originated from an Inter-Corporate Loan Facility Agreement dated April 1, 2023, with Reliance Commercial Finance Limited (RCFL) for a sanctioned limit of ₹9.50 crore. RCFL initially disbursed ₹4.85 crore to RHFL. Following a court-approved scheme of arrangement in May 2024, RCFL’s lending business was demerged into Authum Investment and Infrastructure Limited.

Authum subsequently disbursed an additional ₹2.15 crore to RHFL between May and November 2024, taking the total disbursed amount to ₹7.00 crore. Despite acknowledging the debt through balance confirmation letters and reflecting it in its financial statements, RHFL failed to repay the amount by the due date of June 30, 2024.

In December 2024, Authum assigned the debt to Invent Assets, which then issued a recall notice demanding immediate payment. RHFL’s request for a one-year extension was rejected, leading to the filing of the insolvency petition.

The corporate debtor had argued that the petition was “misconceived” and premature, claiming the financial creditor was misusing the Insolvency and Bankruptcy Code (IBC) as a tool of coercion. However, the tribunal dismissed these defenses, stating that the existence of debt and default was clearly established and not genuinely disputed.

Key Orders Passed by NCLT:

• Admission of CIRP: RHFL is officially under the Corporate Insolvency Resolution Process (CIRP).
• Declaration of Moratorium: An immediate moratorium is imposed, prohibiting any suits, transfer of assets, or recovery actions against the company.
• Appointment of IRP: Mr. Umesh Balaram Sonkar has been appointed as the Interim Resolution Professional to manage the company’s affairs during the process.
• Public Announcement: The IRP is directed to make a public announcement inviting claims from all creditors.

The tribunal’s decision mandates that the management of RHFL must extend full cooperation to the newly appointed IRP. The process will now proceed with the formation of a Committee of Creditors to evaluate resolution plans for the company’s future.

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