NCLAT Upholds Liquidation of Independent TV, Rejects Reliance Realty's Asset Claim

The National Company Law Appellate Tribunal (NCLAT) has ruled against Reliance Realty, a subsidiary of the debt-laden Reliance Communications, in its appeal concerning the liquidation of Independent TV. The NCLAT upheld a prior order from the National Company Law Tribunal (NCLT) Mumbai bench, which had declined Reliance Realty's plea to recover rental and assets. The tribunal emphasized that Independent TV's liquidation process must be completed promptly and without disruption.

Impact: This ruling is significant as it prevents Reliance Realty from hindering the liquidation process of Independent TV. The NCLAT noted that Reliance Realty had not raised the issue of asset ownership for a considerable period and failed to provide cogent reasons for its objections. The tribunal found no fault with the NCLT's order allowing the Liquidator to remove movable assets from the leased premises and restraining Reliance Realty from obstructing the process.

Reliance Realty had leased part of the Dhirubhai Ambani Knowledge City (DKAC) premises to Independent TV for its DTH business in 2017. Independent TV ceased rental payments after October 2018. Insolvency proceedings were initiated against Independent TV in February 2020, and it eventually entered liquidation in March 2023 after no buyer was found. Reliance Realty later sought recovery of outstanding rentals, but the NCLT directed them to allow access for asset removal. This was challenged by Reliance Realty before the NCLAT, which ultimately rejected the appeal, stating that the assets were in the possession and control of Independent TV during the Corporate Insolvency Resolution Process (CIRP) and liquidation, and their ownership by Reliance Realty or Reliance Communications was not adequately challenged during these phases. The NCLAT noted that Reliance Communications, the signatory to the initial Share Purchase Agreement, is also in liquidation and has not claimed ownership of the assets.

Difficult Terms: * NCLAT (National Company Law Appellate Tribunal): A higher tribunal in India that hears appeals against decisions made by the National Company Law Tribunal (NCLT). * NCLT (National Company Law Tribunal): A quasi-judicial body responsible for handling company law disputes and insolvency cases in India. * Liquidation: The process where a company is closed down, its assets are sold, and the proceeds are used to pay off its debts. * Corporate Debtor: A company that has a financial debt. * CIRP (Corporate Insolvency Resolution Process): The legal procedure under India's Insolvency and Bankruptcy Code (IBC) aimed at resolving a company's financial distress, either through a revival plan or liquidation. * Resolution Professional (RP): An individual appointed to oversee and manage the CIRP of a corporate debtor. * Share Purchase Agreement (SPA): A legal document detailing the terms and conditions under which shares of one company are sold to another. * SAP (Successful Auction Purchaser): The individual or entity that wins an auction by submitting the highest bid. Impact: 7/10