NCLT admits insolvency plea against Reliance MediaWorks 

The National Company Law Tribunal (NCLT), Mumbai Bench, has admitted a petition to initiate the Corporate Insolvency Resolution Process (CIRP) against Reliance MediaWorks Ltd., following a Rs 6 crore loan default, as per media reports.

The plea was filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 by Netizen Engineering Pvt. Ltd. (formerly Reliance Infocomm Engineering Pvt. Ltd.) on November 20, 2024. The date of the default was recorded as July 1, 2024.

As per the petition, Netizen Engineering had extended a loan of Rs 150 crore to Reliance MediaWorks through an agreement dated May 23, 2011, to be repaid over two years at interest rates of 10.5% and 12%. Disbursements were made in two tranches: ₹100 crore in May 2011 and ₹20 crore in December 2011.

Reports said that while the company allotted preference shares worth ₹120 crore in March 2012 against the principal, it failed to clear interest dues amounting to ₹5.46 crore. A formal demand for ₹12.36 crore — including accrued interest — was issued in January 2024.

After acknowledging the dues in February, Reliance MediaWorks proposed a one-time settlement (OTS) of ₹6 crore in March 2024. A term sheet was signed in April, with payments split into four quarterly installments of ₹1.5 crore, beginning June 30, 2024. However, the company defaulted on the first installment, triggering the present insolvency plea.

Contesting the maintainability of the petition, the company has argued that there was no legally enforceable debt since the original loan was offset via Compulsorily Convertible Preference Shares (CCPS). It further claimed that ₹6 crore was offered as full and final settlement and cited external factors such as economic downturns for the default, requesting a three-year repayment window.

In its ruling, the NCLT held that the OTS crystallized the financial liability, and non-payment of agreed interest constitutes a default, citing NCLAT’s judgment in Base Realtors vs Grand Realcon. It also referred to the Supreme Court’s ruling in Kotak Mahindra Bank vs Kew Precision Paris, affirming that a payment commitment qualifies as enforceable financial debt.

Confirming that the criteria under Section 7 — including existence of financial debt, default, and the minimum threshold — had been met, the Tribunal admitted the petition. NPV Insolvency Professionals Pvt. Ltd. has been appointed as the Interim Resolution Professional (IRP). The petitioner has been directed to deposit ₹4 lakh towards initial CIRP costs.