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Court dismisses Essar Steel appeal against bankruptcy proceedings

Reuters  |  MUMBAI 

(Reuters) - The High on Monday dismissed Ltd's appeal against a central order that asked creditor banks to start insolvency proceedings against the steelmaker, lawyers on the case said.

The ruling is a boost to the government, which in May tweaked the banking laws to empower the Reserve of (RBI) to tackle the country's bad debt issue, allowing the RBI for the first time to direct lenders to force defaulters into insolvency courts.

had argued that it should have been given an opportunity to present its case before the Reserve of decided to include the company among 12 defaulters that would be referred to

The company had also argued that proceedings could result in its demise when it was "almost in the stage of revival" and working to resolve its debt problems, according to documents.

After the ruling, said that while it had dismissed its plea, the had indicated that the company could raise various issues before the National Company Law Tribunal (NCLT), which will hear the case.

These issues included the advanced state of Steel's talks with lenders on debt restructuring, the repayment of some loans in the past year and improvements in the company's business performance.

"We respect the decision of the Honourable High and will accordingly be raising these issues for consideration by the Honourable NCLT," the company said in a statement.

The RBI asked lenders in June to start insolvency proceedings against 12 companies as part of new powers it gained this year to help the country cut the more than $150 billion in stressed assets in the banking system.

had 328.64 billion rupees in non-performing loans at end-March this year, up from 316.71 billion rupees ($4.92 billion) a year earlier, Monday's order showed. ($1 = 64.3700 rupees)

(Reporting by Rupam Jain and Devidutta Tripathy; Editing by Christopher Cushing and Adrian Croft)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)