Kolkata: In a striking reversal, a steel maker has moved the Kolkata bench of the National Company Law Tribunal (NCLT) on its own declaring itself as insolvent and seeking appointment of an interim resolution professional, or an administrator, and one of its key lenders is opposing it, saying the move is aimed at disrupting its efforts to recover overdue loans.
ICICI Bank is opposing the application filed by Ramsarup Industries Ltd, a maker of TMT Bars, because it has already launched the process of recovering its loans under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act.
If an administrator is appointed to take control of the company’s assets and operations at this stage, he could declare a “moratorium on any action to foreclose, recover or enforce security interest" under section 14 of the Insolvency and Bankruptcy Code.
Describing the application as “fraudulent", Siddhartha Dutta, partner, Shardul Amarchand Mangaldas and Co., submitted before the bench that his client ICICI Bank had already taken possession of several assets of Ramsarup under the Sarfaesi Act. He also alleged that the company had not provided a copy of its application to ICICI Bank and other lenders.
Aashish Jhunjhunwala, the company’s chairman and managing director, was not immediately available for comments. Calls made to his mobile phone were neither answered nor returned. The company’s counsel Jishnu Chowdhury, too, declined to comment.
The company owed ICICI Bank Rs60 crore, Dutta said at the NCLT, adding that the lender had started the process of loan recovery under the Sarfaesi Act in 2015.
He also mentioned before the bench that the Central Bureau of Investigation (CBI) had launched an investigation against the company and its key officials for allegedly defrauding United Bank of India to the tune of Rs184 crore.
An analyst, who used to track the company, said Ramsarup owed its lenders at least Rs2,000 crore. The company started to run aground three years ago, when it accumulated interest burden had swelled to Rs1,300 crore, according to this person, who asked not to be identified.
Arvind Jhunjhunwala, a lawyer for Asset Reconstruction Company (India) Ltd, or Arcil, submitted before the bench that his client, too, had not received Ramsarup’s application. The bench ordered Ramsarup to provide copies of the application to Arcil and ICICI Bank.