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Insolvency case: Essar Steel 'suppressed facts', says SBI to Gujarat HC

SBI is one of the respondents in the steel major's plea to the Gujarat high court

Press Trust of India  |  Ahmedabad 


The of on Thursday told the High Court that had "suppressed facts" while challenging the RBI's to lender banks to initiate against the company.

counsel Ravi Kadam told the bench of S G Shah that had accepted a decision by the joint forum (JLF) of the banks to approach the Tribunal (NCLT) for against the firm.

The is one of the respondents in the steel major's to the high court.

Kadam said the company knew through a June 15 letter from that the was planning to initiate insolvency proceedings, but it "suppressed the fact" by not revealing this before the court.

had made suggestions to the for appointment of a 'resolution professional' too, but its before the HC didn't mention this, Kadam said.

Essar Steel's argument that the proceedings were arbitrary was, therefore, baseless, argued Kadam adding that the HC should vacate its stay to the before the "here and now."

The SBI also defended an RBI press release which had directed the to initiate proceedings under the Insolvency & Bankruptcy Code (IBC) against twelve borrowers including Essar Steel, saying that Rs 5,000-crore cut-off is "recommendation of RBI's internal advisory committee and not a "

The top twelve borrowers including Essar Steel owe Rs 1.78 lakh crore to the and the RBI's recommendation was to recover the largest amount first, Kadam said.

Essar Steel, however, submitted to the court that it was challenging the press release issued by the RBI, and not the JLF's decision.

"SBI's decision is based on the of RBI, and Essar Steel is only challenging the RBI's directive. Therefore, not providing the minutes of meetings with lenders is not suppression of facts," its lawyer Mihir Thakur said.

Thakur also said that the company was initially not told about JLF's decision to initiate proceedings against it before the Corporate insolvency restructuring was discussed as an option by Essar Steel at June 22 meeting of the led by SBI, he said.

Standard Chartered bank, which has also filed insolvency resolution proceedings against Essar Steel at the NCLT's Ahmedabad bench, said it should be allowed to carry on with the proceedings as it is a foreign and not a "banking company" as per the Banking Regulation Act, and hence RBI's directive did not apply to it.

The high court is hearing the Essar Steel's challenging the RBI's circular asking the banks to initiate action against it and eleven other with over Rs 5,000 crore of outstanding each under the

Essar's contention is that this directive was improper in its case, as the company is in an advanced stage of

It should not be treated on par with other eleven accounts, as while these are now closed, Essar Steel is still doing well with an annual turnover of Rs 20,000 crore, the company said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, July 13 2017. 23:07 IST