Gujarat High Court refuses to grant any relief to Essar Steels

Gujarat High Court refuses to grant any relief to Essar Steels

Mumbai: The Gujarat High Court on Monday turned down Essar Steel's plea challenging the Reserve Bank of India's June 13 circular directing banks to start insolvency proceedings against 12 major non-performing assets. A detailed order is expected later on Monday.

The company had argued before the HC that it should not be treated on par with other eleven accounts (firms) which have been closed now, while Essar Steel is still doing well with an annual turnover of Rs 20,000 crore.

Essar had also argued that proceedings could result in the company's demise when it was "almost in the stage of revival" and working to resolve its debt problems, according to court documents. Essar contested a line in the RBI release which said NCLT will accord priority to these cases. The steel company's debt has increased to over Rs 42,000 crores.

Essar Steel, in its petition, had appealed that the RBI notification arrived even while the firm was trying to implement a board-approved restructuring package. Standard Chartered Bank had also moved the NCLT against Esaar.

Essar Steel claimed that it's financial health had improved during the financial year 2016-17 and it no longer required to be a part of the 11 other NPAs as declared by the RBI and that it deserved to be a part of the other 488 cases that have been provided given six months to restructure. It may be recalled that RBI had asked banks to treat bad loans as per the provisions available under the Insolvency and Bankruptcy Code.

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That RBI's decision in picking these 12 accounts was arbitrary inasmuch as no opportunity of being heard was provided to these companies that were being referred to. "The company was aware about SBI's action".

The National Company Law Tribunal has dismissed a money recovery suit filed by Australian lender Macquarie Bank Ltd against a unit of loss-making Uttam Galva.

RBI counsel Darius Khambata, however, said the steel firm had suppressed facts and misled the court to get a favourable decision. "This court is beingmisled", the RBI lawyer had said.

One of these 12 accounts was that of Essar Steel.

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