Gujarat High Court to hear the case of Essar Steel vs RBI case
The Gujarat high court will hear Essar Steel’s plea against insolvency proceedings initiated against it at the National Company Law Tribunal (NCLT) by its lenders after being directed by the Reserve Bank of India (RBI). A single-judge bench had on 4 July posted the Essar Steel case for hearing on 7 July while directing NCLT to adjourn any case listed before it against Essar Steel until this date. The court had also directed RBI to file a reply till then. “The interim order of the court was not a ‘stay’ in the strictest sense as it had only asked NCLT to adjourn the matter on the next day of the hearing, if the NCLT is taking up the case before 7 July,” according to Alok Prasanna, visiting fellow at the Vidhi Centre for Legal Policy, an independent advisory group. The court’s interim order hasn’t called for the whole thing to stop as soon as the order is effective, he added. Essar Steel had contended before the court that after months of negotiations with its lenders, the company had reached a settlement with the creditors. The company was trying to restructure the package approved by its board of directors but before any concrete decision was arrived at with the creditors, a notification in the form of a press release on 13 June by the RBI came into the picture that classified a few companies whose accounts are disclosed as non-performing assets (NPAs). RBI, after receiving sweeping powers to resolve bad loans through an amendment to the Banking Regulation Act, directed banks to refer 12 identified cases, including Essar Steel, directly to NCLT for resolution under the Insolvency and Bankruptcy Code (IBC).
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