RCom appeals NCLT dismissal over Bonn investment advance

Reliance Communications Limited has appealed the National Company Law Tribunal’s dismissal of its case over Bonn Investment Inc.’s USD 82 lakh advance to AZCO Realty, funded from an unauthorised New York apartment sale for USD 83.4 lakh in August 2023. The National Company Law Appellate Tribunal will next hear the appeal on January 7, 2027.

What happened to Bonn’s New York apartment?

Bonn Investment Inc., a US subsidiary of Reliance Infocomm Inc. and a step-down subsidiary of RCom, owned an apartment at 400 W 12th Street #4EF in New York. In August 2023, Bonn’s then director sold the property to a third party for USD 83.4 lakh without authorisation from, or intimation to, shareholders including RCom.

RCom’s Resolution Professional identified the sale through Bonn’s financial statements for the period ended September 30, 2023, which were supplied for consolidation. The disclosure says the transaction lacked shareholder approval, and RCom’s request for clarification from the former director had not produced a credible explanation by the reporting date.

On April 23, 2024, Bonn’s auditor informed the Resolution Professional and RCom about an investment agreement between Bonn and AZCO Realty, UAE. Under the agreement, Bonn, acting through its then director, agreed to invest USD 2.5 crore in AZCO.

Bonn had transferred USD 82 lakh from the property-sale proceeds and recorded it as “Advance towards other Investment (1st Tranche).” The disclosed difference between the USD 83.4 lakh sale value and USD 82 lakh advance is USD 1.4 lakh. The filing does not state how the remaining sale proceeds were applied.

Why is RCom seeking recovery of the AZCO advance?

RCom is seeking recovery because Bonn’s USD 82 lakh transfer was made under an investment agreement that also did not have shareholder approval. The agreement required Bonn to remit the balance of the USD 2.5 crore investment by May 26, 2024.

The agreement further stated that if Bonn did not pay the balance by May 26, 2024, it would be automatically nullified and Bonn would have no right to claim back money remitted from the property proceeds. The filing does not say that Bonn paid the balance or that AZCO returned the USD 82 lakh advance.

Bonn, through its newly appointed director, has examined legal remedies against the former director and for recovery of the AZCO advance. Bonn’s director remains hopeful of recovery, and consequently Bonn has not made a provision in its financial statements for the USD 82 lakh amount.

RCom removed the former Bonn director from the boards of all its US subsidiaries, including Bonn, on August 21, 2024, and appointed a new director on the same date where applicable. According to the disclosure, the replacement director sought answers directly and through counsel, but the former director’s responses remained elusive.

What did RCom’s review find about the property sale?

RCom’s review found that an RCom director whose powers were suspended was involved in authorising the property sale, according to a digital analysis commissioned by Bonn. The analysis covered email correspondence involving Bonn’s former director and RCom’s former director or management.

Bonn received the final digital-analysis report, which was reviewed by relevant stakeholders and their advisers. The filing characterises the transaction as potentially fraudulent but does not disclose a final judicial determination of liability against any individual.

The Resolution Professional emailed the identified RCom director on February 6, 2025 seeking a response about his involvement. The director denied the allegations on February 14, 2025 and asked for the information and correspondence on which the Resolution Professional had relied.

The Resolution Professional provided the requested materials and a response on March 3, 2025. The director subsequently tendered his resignation by letter dated April 1, 2025. RCom’s filing does not state that the resignation resolved the recovery claim or the questions raised by the digital review.

Why did the NCLT dismiss RCom’s application?

The NCLT dismissed the Resolution Professional’s Section 66(1) application on March 10, 2026, holding that the alleged transaction could not be impugned under that provision. The tribunal also said it could not pass an order because of limitations on its jurisdiction concerning the corporate debtor after the commencement of the corporate insolvency resolution process, or CIRP.

The Resolution Professional had determined on March 25, 2025 that the actions of the RCom director amounted to fraudulent trading under Section 66(1) of the Insolvency and Bankruptcy Code. The next day, March 26, 2025, the Resolution Professional filed the application before the NCLT seeking relief against that director.

The matter progressed through notices, replies, rejoinder, written submissions and arguments from June 25, 2025 to January 5, 2026, when the NCLT reserved its order. The filing describes the March 2026 dismissal as based on the scope of Section 66 and jurisdiction; it does not say the tribunal determined whether AZCO must return the advance.

RCom’s Resolution Professional appealed to the National Company Law Appellate Tribunal, or NCLAT. The NCLAT first listed the appeal on May 15, 2026 and condoned the delay in filing. The appeal was last listed on November 4, 2026, with the next hearing set for January 7, 2027.

What is Bonn’s current financial and governance position?

Bonn’s unaudited financial statements have been prepared on a going-concern basis and used for RCom’s consolidated financial results. That treatment accompanies Bonn’s decision not to provide for the USD 82 lakh advance because its director is hopeful of recovery through the remedies being examined.

The filing reports another board change. Lalit Mathur resigned on January 21, 2026 from the directorship of all RCom US subsidiaries, including Bonn. The Resolution Professional is identifying an individual or individuals to replace him, leaving a disclosed governance matter unresolved.

Bonn filed its tax return for the financial year ended March 31, 2024 and paid a tax liability of USD 5.46196 lakh during the previous year, including interest and penalties up to payment. The disclosure does not link this tax payment specifically to the August 2023 apartment sale or the AZCO transfer.

RCom also states that its auditors have drawn a qualification in their limited review report for the quarter and half year ended September 30, 2026. The filing does not quantify an accounting adjustment related to the property sale, the AZCO advance or a possible recovery.

Conclusion

The disclosed sequence is that Bonn’s former director sold a New York apartment for USD 83.4 lakh without shareholder approval and transferred USD 82 lakh of the proceeds to AZCO under a planned USD 2.5 crore investment. RCom replaced the director, investigated the transaction, sought relief under Section 66(1), and appealed after the NCLT dismissed that application.

The next disclosed event is the NCLAT hearing on January 7, 2027. Other matters to watch are the appointment of a replacement Bonn director, progress on legal remedies to recover the AZCO advance, and whether Bonn’s recovery outlook changes enough to require a financial-statement provision.