# In the matter of Reliance Communications Limited

> NCLT judgment dated 25 Jun 2024. Citation: TCN-2024-NCLT-01123. This case involves multiple applications filed before the National Company Law Tribunal…

- **Court:** NCLT
- **Order date:** 25 Jun 2024
- **Citation:** TCN-2024-NCLT-01123
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/reliance-communications-limited-eea7ab05

## Summary

### Background

This case involves multiple applications filed before the National Company Law Tribunal (NCLT), Mumbai Bench-I, primarily concerning preferential transactions under the Insolvency and Bankruptcy Code, 2016 (IBC) and the determination of the Insolvency Commencement Date (ICD). The Resolution Professional (RP) of Reliance Telecom Limited and Reliance Communications Limited filed applications (MA No. 3553 of 2019 and IA No. 3555 of 2019, respectively) alleging that certain payments made by the Corporate Debtor to China Development Bank (CDB) and Export Import Bank of China (Exim Bank) constituted preferential transactions under Section 43 of the IBC. These payments, totaling Rs. 117 Crores, were made prior to the commencement of the Corporate Insolvency Resolution Process (CIRP) and were intended to facilitate an Asset Monetization Process (AMP) and secure the withdrawal of an insolvency petition filed by CDB.

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## Facts

The Resolution Professional (RP) of Reliance Telecom Limited filed MA No. 3553 of 2019, and the RP of Reliance Communications Limited filed IA No. 3555 of 2019. Both applications sought a declaration that payments made by the Corporate Debtor to China Development Bank (CDB) and Export Import Bank of China (Exim Bank) were preferential transactions under Section 43 of the Insolvency and Bankruptcy Code, 2016 (IBC). The total impugned amount was Rs. 117 Crores, paid prior to the Corporate Insolvency Resolution Process (CIRP) commencement.

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## Issues and analysis

### Issue 1: Whether the monies received in the Trust and Retention Account (TRA) are properties of the…

**Ratio:** Monies received by a corporate debtor and deposited into a Trust and Retention Account…

**Reasoning:** The Tribunal considered the arguments from both the Resolution Professional (RP) and the…

**Interpretation:** The court interpreted the provisions of Section 18 and Section 25 of the IBC,…

**Application:** Applying this interpretation, the Tribunal found that the funds paid to the…

## Parties

- **Judges:** Prabhat…; V.G. B…
- **Advocates:** For the Applicant…; Sidharth…; +10 more

## Timeline

- **February 26, 2014 — RBI Guide…**: Reserve Bank of India's 'Framework for Revitalising Distressed Assets in the…
- **May 23, 2017 — TRA Agre…**: Trust and Retention Account…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 43 — Preferential transactions and relevant time](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-43)

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