Rcap case: RBI moves NCLAT to start insolvency

The Reserve Bank of India (RBI) on Thursday moved the 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The central bank had superseded the board of the company on Monday, citing defaults and governance issues.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 the 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.