NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal from Reliance Realty, a subsidiary of the financially troubled Reliance Communications, which sought to reclaim rental payments and assets from Independent TV, a company in the DTH sector now undergoing liquidation.
The NCLAT reaffirmed an earlier ruling from the Mumbai bench of the National Company Law Tribunal (NCLT) that rejected Reliance Realty’s request, emphasizing that the liquidation of Independent TV (formerly known as Reliance Big TV) must proceed swiftly and efficiently.
A two-member panel stated that the liquidation should not be “disrupted and derailed by the Appellant (Reliance Realty),” which failed to adequately address the issue of asset ownership in the leased space.
“We see no faults in the contested order allowing the Liquidator to remove all movable assets of the Corporate Debtor from the leased premises, and in restraining the Appellant from obstructing the Liquidator and successful bidder from accessing these assets,” stated NCLAT.
Reliance Realty had leased part of DKAC premises (Dhirubhai Ambani Knowledge City) with necessary infrastructure to Independent TV on November 27, 2017, for its DTH operations and storage of goods.
Independent TV took over the DTH business from Reliance on that date under a Share Purchase Agreement along with a draft for premises usage.
It paid service charges, including rental and maintenance fees, until October 2018, but subsequently defaulted on payments.
Insolvency proceedings were initiated against Independent TV on February 26, 2020, and its assets were transferred to a Resolution Professional by the CEO in line with the Insolvency & Bankruptcy Code (IBC).
After failing to secure a buyer, the NCLT mandated the liquidation of Independent TV on March 17, 2023, followed by the issuance of an e-auction notice.
However, during the liquidation, Reliance Realty denied permission for potential bidders to inspect the company’s assets, arguing that Independent TV had not paid rent for five years and demanded reimbursement of rental and electricity charges before granting further access.
Shree Sai Baba Ship Breaking Company was later declared the Successful Auction Purchaser (SAP) of Independent TV’s assets, with a sale certificate and possession memo for 1,874 units of assets handed over on December 10, 2024.
Subsequently, Reliance Realty appealed to the NCLT during the ongoing Corporate Insolvency Resolution Process (CIRP) for the recovery of unpaid rents and other dues. However, the NCLT instructed Reliance Realty to allow the liquidator and SAP access to the leased premises for asset removal without obstruction.
This decision was appealed by Reliance Realty before the NCLAT, which contended that the NCLT had mistakenly permitted the Liquidator to remove assets from the leased premises based on the assumption that the presence of goods during the CIRP established ownership with the Corporate Debtor.
The NCLAT rejected this claim, noting that the NCLT had considered all relevant developments throughout the CIRP and liquidation, along with site visit reports from the liquidator, confirming the presence and control of assets by the Corporate Debtor.
The previous Resolution Professional had conducted a thorough examination to determine the true ownership of the assets during CIRP without any objections from Reliance Communications or Reliance Realty.
“This was not challenged during the CIRP. When the Liquidator took control of the assets in question, there was no objection from the Appellant until the auction concluded,” the NCLAT remarked.
Furthermore, Reliance Realty was not a party to the SPA that facilitated the transfer of the DTH business to Independent TV.
“We concur with the Respondent No 1 (Liquidator of Independent TV) that the true aggrieved party should have been RCom, which signed the SPA but is now in liquidation. The Liquidator has not received any communication regarding asset ownership claims from RCom’s Liquidator,” noted the NCLAT in its order.
