Gujarat HC adjourns Standard Chartered plea hearing on Essar Steel order
The court adjourned a hearing on an appeal filed by Standard Chartered Bank against an interim order passed on a plea by Essar Steel over insolvency proceedings
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Ahmedabad: The Gujarat high court on Tuesday adjourned a hearing on an appeal filed by Standard Chartered Bank against an interim order passed by a single-judge bench on a plea by Essar Steel Ltd challenging insolvency proceedings initiated against it by its creditors.
A division bench comprising chief justice Subhash Reddy and justice V.M. Pancholi noted that justice S.G. Shah, who passed the interim order, is already hearing a related case. The bench posted the matter for hearing on 17 July.
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Essar Steel earlier this month approached the high court challenging the insolvency proceedings initiated against it before the National Company Law Tribunal (NCLT) by its lenders after being directed by the Reserve Bank of India (RBI) to do so.
Apart from RBI, State Bank of India and Standard Chartered Bank are also respondents in the case that has been filed by Essar Steel.
On 7 July, the court adjourned hearing on the case filed by Essar Steel until 12 July. The adjournment halted further proceedings on the insolvency petition filed against Essar Steel at the Gujarat bench of NCLT until after 12 July.
Standard Chartered filed an appeal in the Gujarat high court on 5 July. The London-based bank said it was not a part of the joint lenders forum of creditors which had been directed by RBI to launch bankruptcy proceedings against Essar Steel.
The bank’s lawyers told the court that Standard Chartered’s decision to approach NCLT to recover debt to the tune of Rs3,400 crore from Essar Steel was its own and should not be seen in connection with RBI’s 13 June directive to creditors.
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Essar Steel, in its case against RBI, said the company had initiated debt restructuring efforts with its creditors and was on the path of recovery when the central bank issued the directive asking banks to refer 12 loan defaulters, including Essar Steel, directly to NCLT for resolution under the Insolvency and Bankruptcy Code (IBC).
According to the 13 June statement, the central bank’s criterion in picking the 12 for bankruptcy proceedings was that the total exposure of banks to a company should be at least Rs5,000 crore and 60% of this should have turned non-performing by March 2016.