Gujarat High Court Asks RBI To Delete A Line From Its Insolvency Directive

Published on 11 Jul 2017 by Team

The Gujarat High Court asked the Reserve Bank of India (RBI) to drop a line its June 13 directive to send 12 large corporate accounts for immediate action under the Insolvency and Bankruptcy Code.

In an earlier hearing, the Gujarat High Court had asked the central bank to explain the part of its statement that read “such cases will be accorded priority by the National Company Law Tribunal (NCLT)”.

The high court on Friday asked the central bank to drop this line while hearing Essar Steel’s petition against the insolvency proceedings initiated by lenders. The court also stayed all insolvency proceedings against the company till July 12 when it will hear the matter once again.

In response to the court’s directive, the regulator said it will issue a corrigendum to its June 13 circular ahead of the next hearing.

Essar Steel had recently moved the Gujarat High Court against insolvency proceedings initiated against it by the company’s lead lender State Bank of India and foreign lender Standard Chartered Bank, in two separate filings.

The joint lenders forum led by SBI had earlier decided to invoke the IBC against Essar Steel at the NCLT. The case was scheduled to be heard by its Ahmedabad bench on July 6 but was put on hold after Essar Steel appealed in the high court.

In June, an internal advisory committee of the RBI had identified 12 large corporate accounts which represented about 25 percent of the total gross non-performing assets (NPAs) of the banking sector, for immediate action under the IBC.

Source: Bloombergquint


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