The Gujarat High Court on Monday gave no relief to Essar Steel, which had earlier approached it challenging the Reserve Bank of India’s (RBI’s) direction on bankruptcy proceedings.
The Reserve Bank of India (RBI) on Friday told the Gujarat High Court (HC) that there was no supporting document to its June 13 press release, directing banks to initiate insolvency proceedings against 12 non-performing assets (NPAs), including Essar Steel.
The submission was made during the hearing of Essar Steel’s petition, filed on July 4, against insolvency proceedings initiated against it at the National Company Law Tribunal (NCLT) by the State Bank of India (SBI)-led 22 banks’ consortium as well as the Standard Chartered Bank (SCB).
Essar Steel, in its petition, has challenged the RBI’s directive as “arbitrary” and an impediment to its recovery process amid debt restructuring talks with banks.
Both the RBI and SBI counsels on Thursday had argued that Essar Steel had suppressed facts that it was taken by surprise by the RBI’s June 13 press release by not mentioning the same in its original petition. The SBI counsel submitted minutes of the June 22 joint lenders’ forum (JLF) meeting to support their arguments.
However, the Essar Steel counsel maintained that the company had not suppressed facts since its petition was directed at RBI’s directive and not against NCLT proceedings. The counsel countered the respondents’ arguments that Section 238 of Insolvency Bankruptcy Code (IBC), 2016, overrode other laws on insolvency and liquidation by maintaining that the RBI circular was subject to IBC 2016 and violated the company’s fundamental rights.