HC adjourns StanChart appeal hearing in Essar Steel insolvency to next week

A bigger bench of the high court (HC) in Ahmedabad adjourned till the coming Monday an appeal of Standard Chartered Bank for quashing of a single judge bench's stay on the insolvency proceedings it had filed against Essar Steel.

The London-based lender had appealed last Wednesday for the quashing, contending Essar suppressed facts. It has said it was not a party to any revival or restructuring package or invited in any lenders' meeting by Essar Steel, unlike what the latter had claimed in its petition before the single judge, S G Shah.

Earlier, the latter had stayed insolvency proceedings filed against Essar Steel by StanChart at the National Company Law Tribunal (NCLT)'s bench in this city till the next hearing, first July 7 and then adjourned to July 12. As directed by the HC, the Reserve Bank of India (RBI) had told the court it would issue a corrigendum on its June 13 circular allowing NCLT to accord priority to 12 major non-performing asset accounts set to face insolvency proceedings.

The June 13 circular reads: "The Reserve Bank, based on recommendations of (its) internal advisory committee, will accordingly be issuing directions to banks to file for insolvency proceedings under the IBC (Insolvency and Bankruptcy Code) in respect of the identified accounts. Such cases will be accorded priority by the NCLT." In its hearing last Tuesday, the court had sought a clarification from RBI on this.

The 12 NPA accounts have debt dues over Rs 5,000 crore each. Sixty per cent of the debt of these 12 companies was termed "bad" by banks as on March 31, 2016. The total debt of these companies is expected to be in excess of Rs 1.5 lakh crore.