Legal heavyweights join Essar’s challenge to RBI’s bad loan plan

Ahmedabad/New Delhi: Some of the top legal brains in the country are facing off in the ongoing Essar Steel versus Reserve Bank of India (RBI) tussle in Gujarat high court.

Essar Steel has appointed Nanavati Associates, one of the top law firms of Gujarat, along with a battery of senior lawyers such as Mihir Thakore, Saurabh Soparkar, Mihir Joshi, Keyur Gandhi and advocate Raheel Patel to argue the case.

RBI, which is the main respondent in the case, has recruited renowned lawyer from Mumbai Darius Khambata, former additional solicitor general of India and Maharashtra advocate general. Khambata was also counsel in the Tata-Mistry battle in the Delhi high court, which made him an obvious choice.

In addition, the apex bank has also appointed advocates Amar Bhatt and Rajendra Barot.

Neither side is willing to take any chances. That’s understandable, given the high stakes in the legal tussle.

The case was triggered after RBI moved the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against Essar Steel. Eleven other companies are facing a similar fate; it is part of RBI’s new plan to resolve Indian banks’ accumulated bad debt problem of around Rs8 trillion.

Essar Steel has its main manufacturing facility based out of Hazira in Gujarat and the insolvency proceedings against the company by its lenders is listed before the Ahmedabad bench of NCLT.

State Bank of India (SBI), which leads a consortium of banks under the Joint Lenders’ Forum for corporate debt restructuring of Essar Steel and is a respondent in the case, has hired Shardul Amarchand Mangaldas and Co., another top legal firm, in addition to Ravi Kadam, who was the advocate general of Maharashtra under three different chief ministers, senior lawyer Anshin Desai and few other senior advocates.

Standard Chartered Bank, which is not a part of the Joint Lenders’ Forum, has already approached NCLT where its matter was listed for hearing on 6 July; that was before the high court in its interim order directed NCLT to defer the hearing.

Standard Chartered has appointed senior counsel Kamal Trivedi for the matter. The bank, which has also appointed Singhi and Co. for the case, has been made a respondent by Essar Steel in the case for approaching NCLT after the RBI directive on 13 June.

Trivedi, who is the advocate general of Gujarat, has separately filed an appeal case against the court’s 4 July interim order in the Essar versus RBI case. Trivedi was till recently in the running to take over as the attorney general of India.

While the case itself is crucial for the roll out of the bad debt plan of RBI, the presence of such high-profile lawyers guarantees, at the minimum, a high-decibel legal battle.