Central Bank Of India Declares Loan Accounts Of RCom Arm Reliance Telecom As 'Fraud'
The credit facilities mentioned by the PSU bank relate to the period before RTL’s CIRP and must be resolved through its resolution plan or liquidation, as per the Code, RCom said.
Central Bank of India has declared the loan accounts of Reliance Telecom Ltd. as fraud, Reliance Communications Ltd. said on Tuesday. The company is seeking legal advice on the matter, according to a stock exchange filing.
RCom, part of the Anil Ambani Group, as well as RTL are undergoing corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. Resolution plans in respect of RCOM and RTL, have been approved by the committees of creditors of the RCOM as well as RTL respectively and awaiting approval of the National Company Law Tribunal.
The credit facilities mentioned by the PSU bank relate to the period before RTL’s CIRP and must be resolved through its resolution plan or liquidation, as per the Code, RCom said. The Resolution Professional of RTL has reviewed transactions flagged by an independent auditor and filed avoidance applications with NCLT, which are currently under consideration. Their treatment will follow NCLT’s decision and the resolution plan provisions, the company said.
It also noted that during CIRP, both companies are protected under the insolvency law from any suits, proceedings, or enforcement actions. Additionally, Section 32A provides immunity to the corporate debtor from liability for offences committed before CIRP commencement, once the resolution plan is approved and management changes as prescribed.
This protection also covers liabilities arising from unlawful transactions identified in forensic audits. Under Section 238, the Code overrides any conflicting laws.
