Gujarat High court has dismissed the petition of Essar Steel filed against RBI challenging the initiation of banking proceedings against itself. This clears the deck for key lenders like SBI and Standard Chartered Bank to move against the company in NCLT under Insolvency and Bankruptcy (IBC) act in the move towards resolving the bad loans issue clogging banks.
Essar Steel, in its petition before Gujarat high court, challenged the missive by RBI in which the central bank directed banks to refer a dozen cases directly to NCLT. Essar contested a line in the RBI statement which said NCLT will accord priority to these cases. It also objected to being clubbed with the 11 other defaulters and said it had been in inconclusive discussion with banks to restructure debt when the directive was issued. Essar Steel claimed it had paid over three thousand crores to creditors between April 2016 and June 2017 and that there had been a substantial improvement in all operating parameters. The company said it should have been given more time to complete its debt restructuring. Essar Steel said it should have been included in a second category of defaulters that had been given six months to restructure debt, failing which they would be taken to the NCLT for the start of bankruptcy proceedings. This Claim was however turned down by the court. This judgement is likely to push the resolution of bad loans to a fast track process.