Gujarat HC dismisses Essar Steel's plea against RBI

Gujarat HC dismisses Essar Steel's plea against RBI

Gujarat HC dismisses Essar Steel's plea against RBI

The Gujarat High Court on Monday dismissed Essar Steel's plea against the RBI directive to the banks to start insolvency proceedings against it, refusing to grant any relief to the steel major. While arguing the case in Gujarat HC, the central bank's counsel Darius Khambatta also said that the non-performing assets (NPAs) of Essar Steel rose from Rs 31,671 crore on March 31, 2016 to Rs 32,864 crore on March 31 this year. A senior banker had told The Indian Express newspaper that even if the court judgment does not favour Essar Steel, other firms might also move high courts across the country to delay the proceedings. Essar Steel's counsel Mihir Thakore had argued that the SBI and other lender banks under the Joint Lenders Forum may not have made a decision to approach the National Company Law Tribunal (NCLT) for insolvency proceedings had the RBI not issued such a circular.

Essar Steel owes lenders around Rs 45,000 crore ($6.99 billion), of which Rs 31,670 crore had become non-performing as of 31 March 2016, the Mint newspaper previously reported citing court hearings.

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This is a big boost for banks and it will further make way for fast-tracking cases to be heard against 11 other defaulting firms filed by banks at the National Company Law Tribunal (NCLT). It had said it was in talks with banks about restructuring repayments.

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The action was a violation of his client's fundamental right to equality before the law and equal protection of the law under Article 14 of Constitution, he said. "The company was aware about SBI's action".

Following the RBI direction, a joint lenders' forum led by State Bank of India (SBI) and initiated proceedings in the NCLT under the newly-formed IBC. Essar Steel has a total debt at Rs. 42,000 crore to these banks. You can not play games with the court. According to the RBI, top 12 bad loan accounts make up for Rs 2.5 lakh crore of bad debts, or 25% of the total.

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