NCLT refuses Srei Infra's claim for inclusion in committee of creditors

Hyderabad bench of National Company Law Tribunal (NCLT) on Thursday dismissed Srei Infra Finance Limited's petition against removal of its name from the committee of creditors in the ongoing insolvency resolution process of Deccan Chronicle Holdings (DCHL).

Earlier, Srei Infra challenged the removal of its name by the Interim Resolution Professional (IRP) from the committee of creditors that was constituted as part of the insolvency resolution process initiated by the bench in July.

IRP had justified the decision on the grounds that being a share-holder in DCHL Srei can not be a part of the committee of creditors under the law.

While delivering the judgement in Srei petition, the bench has also vacated the interim orders it had issued on the ongoing proceedings in DCHL case at the time of admitting the petition three months ago.

"The bench has dismissed the petition of Srei with regard to its demand for inclusion in the committee of creditors today. We are waiting for the copy of the judgement," DCHL IRP K K Rao told Business Standard.

When contacted, Srei's lawyer said they were yet to see the copy of the orders. He refused to make any comment on the NCLT order.

DCHL had defaulted on payment of loans amounting to more than Rs 4,000 crore to more than 20 lenders and financial institutions, including Srei Infra back in 2012-13.

Invoking the loan agreement clauses, Srei subsequently converted a part of its Rs 220 crore loan into equity and thus became a share holder with 24 percent stake in the debt laden media firm.

In July NCLT had appointed the IRP for the insolvency resolution process against DCHL after Canara Bank, one of the lenders, filed a petition seeking action against the company under the Insolvency and Bancruptcy Code (IBC), ,2016.

Though Srei was included in the committee of creditors, its name was removed later by the IRP citing Srei's share holding in Deccan Chronicle. Srei management is keen to be a part of the committee of creditors, which will have a significant role in the insolvency resolution process including the selection of a bidder.

According to Rao, the appointment of a permanent resolution professional(RP) and the preparation of a memorandum will be taken up before inviting the resolution proposals from potential bidders.