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In what is seen as a landmark case on the newly introduced Insolvency and Bankruptcy Code (IBC), the Gujarat High Court on Friday heard all the arguments and submissions made by the counsels representing respondents - Reserve Bank of India (RBI) and State Bank of India (SBI) and Standard Chartered Bank on the petition filed by Essar Steel challenging the insolvency proceedings initiated against it under the National Company Law Tribunal (NCLT).
The court of Justice SG Shah maintained that the matter bears far-reaching implications and impacts other similar cases, where lenders are awaiting recovery from the corporate NPA accounts.
The decision on the case has been kept reserved till July 17, when the court is expected to pass the judgment.
On Friday, Essar Steel counsel Mihir Thakore justified the petition even as the court asked the RBI to furnish supporting directive for its June 13 press release, asking banks to initiate insolvency procedure under the NCLT against the 12 top corporate non-performing accounts (NPAs).
On Thursday, Justice Shah had sought from the RBI the directive, based on which the press release was issued on June 13.
The RBI in its response told the court that there were no supporting documents to its said press release and that it was issued after a decision by high level committee of RBI. The RBI counsel Darius Khambhatta informed the court that the press release was a standalone document and be taken on record.
It was in this press release, the RBI set out the criteria for referring the top 12 NPA accounts for insolvency proceedings under NCLT.
Essar Steel had challenged this criteria and the press release terming it arbitrary and violating its fundamental right of natural justice. Challenging the allegations made by the respondents in their respective arguments about suppressing facts and misleading the court, Thakore argued that the company had not suppressed the facts since its petition was directed at RBI's directive and not against NCLT proceedings.
Essar feared disruptions to the company's operations following the initiation of insolvency proceedings under NCLT.
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