Reliance Capital Insolvency: NCLAT Issues Notice On SEBI's Challenge To Plan Clause Allegedly Shielding Subsidiary From Penalties

The National Company Law Appellate Tribunal on Friday issued notice on SEBI's appeal challenging an NCLT Mumbai order that refused to recall or clarify a paragraph in the Reliance Capital resolution plan which, according to SEBI, is being misused to claim that all liabilities of the company's subsidiaries also stand extinguished.

SEBI says this interpretation is being deployed by a subsidiary Reliance Exchangenext Limited to avoid a Rs 25 lakh penalty imposed on it for allegedly taking part in the diversion of thousands of crores of Reliance Home Finance Ltd, another Anil Ambani led company.

A bench of Chairperson Justice Ashok Bhushan and Member Barun Mitra directed replies in three weeks fixing the matter for hearing on January 15.

At the hearing, counsel for the successful resolution applicant IndusInd International Holdings Limited argued that SEBI had not challenged the February 27, 2024 plan approval order within the statutory period and had approached the tribunal more than a year later.

He said reliefs granted to the corporate debtor could not be stretched to cover its subsidiaries, stressing that SEBI had been aware of the plan terms. The bench asked whether concessions to the corporate debtor could automatically extend to subsidiaries, prompting counsel to reiterate that all commercial decisions were taken on the basis of permissions granted at the time.

SEBI's appeal arises from the NCLT Mumbai order of September 9, which dismissed its application seeking recall or clarification of paragraph 49 of the plan approval order.

SEBI argued that Reliance Exchangenext Limited, a wholly owned subsidiary of Reliance Capital, was relying on that paragraph to claim extinguishment of its liabilities under SEBI's order dated August 22, 2024.

In that order, SEBI imposed a Rs 25 lakhs on REL and barred it from accessing the securities market and from associating with any listed company or SEBI-registered intermediary for two years. SEBI maintains that such liabilities cannot be erased through a resolution plan that applied only to Reliance Capital, the sole entity admitted into insolvency.

The NCLT held that the plan approval order was appealable and that it was therefore not necessary for the tribunal to hear all stakeholders who might be affected by the resolution plan. It further held that paragraph 49 was unambiguous, and that issuing any clarification would amount to a review of its own order, which the tribunal does not have the power to undertake

Case Name: Securities and Exchange Board of India Vs. Nageshwara Rao. Y. & Ors. 

Case Number: Comp. App. (AT) (Ins) No. 1688 of 2025