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HC puts StanChart's plea on Essar Steel's insolvency proceedings on hold

Standard Chartered appealed for quashing Gujarat HC's stay on Essar Steel's insolvency proceedings

Vinay Umarji  |  Ahmedabad 

HC puts StanChart's plea on Essar Steel's insolvency proceedings on hold

A division Bench of the Gujarat High Court on Wednesday adjourned Bank’s appeal for quashing a single-judge Bench’s stay on proceedings filed against

The London-based lender said in its appeal, a copy of which is in possession of Business Standard, that had “failed to disclose” to the single- judge Bench that the bank was “neither a party to any alleged restructuring package, nor any consent has been obtained to such package”. The appeal maintained that was not a member of any committee of lenders, which was being claimed to be considering Essar Steel's restructuring package.

Earlier, the single-judge bench of Justice stayed the proceedings against by its lender, Bank, at the National Company Law Tribunal (NCLT)'s Ahmedabad bench till the next hearing on July 7. It also directed the Reserve Bank of India (RBI) to explain what it meant by the according priority to the 12 cases of In an oral order, the division bench adjourned the matter till July 11 even as it maintained that it did not wish to disturb the ongoing proceedings of the single-judge bench in the case, said sources. In its stay order, the single-judge bench observed that had repaid Rs 3,467 crore in the past one year and that the company was doing well and serious efforts were being made for its revival. However, Bank claimed in its appeal that had paid nothing to it as part of its overall Rs 3,490 crore repayment. 

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also said had “made false statement on oath” that the bank's decision to initiate corporate resolution process in the was pursuant to directives. "The fact is that no directives have been issued by the Respondent 3 (RBI) to the appellant (Bank)," the bank’s appeal noted, while adding that it had filed the application under section 7 of the and Code (IBC) 2016 before the in its "individual capacity as a financial creditor in light of the statutory right" conferred under the to the bank. The had on June 13 asked banks to initiate proceedings at the against specific cases of non-performing assets, which included steel players like and Bhushan Steel, among others. Among these, even as proceedings against Jyoti Structures Ltd were admitted by NCLT's Mumbai bench, filed a special civil application in the Gujarat High Court to seek stay on such proceedings. 

On behalf of Essar Steel, senior counsel Mihir Thakore and Mihir Joshi argued that the company had been trying to restructure debt. However, before any concrete decision could be arrived at between the parties, the press release came as a sudden development. A senior executive in one of the firms said if the court struck down the circular, the order would be applicable to all the facing proceedings.

While hearing the petition, Justice Shah observed that while had listed whose accounts were disclosed as with the effective date of March 31, 2016, the press release was issued on June 13, 2017.

feared if action was taken in accordance with the release, the administration of the company would go into the hands of an interim resolution professional.

First Published: Thu, July 06 2017. 01:39 IST
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