The Gujarat High Court will pronounce its judgment in the Essar Steel versus Reserve Bank of India (RBI) case on Monday, July 17, with arguments by the petitioner and respondents concluding on Friday. On Friday, the Essar Steel counsel resumed his arguments reasserting the petition even as the court asked the RBI to provide supporting directives for its press release published on June 13 in which the central bank had directed banks to initiate insolvency procedure against a dozen stressed companies. RBI counsel Darius Khambata informed the court that the press release was a standalone document and could be taken on record.
Justice SG Shah said that the matter bears extensive implications and effects on similar cases, where lenders are looking to recover from other defaulters. As per the RBI direction, a joint lenders’ forum led by State Bank of India (SBI) initiated proceeding in the National Company Law Tribunal (NCLT) under the newly-formed Insolvency and Bankruptcy Code. Following that, Essar Steel had moved the Gujarat High Court on July 4 and managed to get a stay on all proceedings against the company at the NCLT. In its June 13 press release, the RBI had set criteria to refer the top non-performing asset accounts to the NCLT for insolvency proceedings.
Counsel for Essar Steel Mihir Thakore had challenged the criteria and the press release saying the RBI considered “irrelevant factors in determining the accounts to be referred under Insolvency and Bankruptcy Code and has ignored all relevant factors” and also violated the principles of natural justice. In the argument so far, Essar Steel said that the company had paid Rs 3,467 crore as interest in the last year. However, the RBI told the court that the amount of default stood at over Rs 32,000 crore. Both respondents RBI and SBI have argued that Essar Steel was well aware about all NCLT proceedings. They also submitted relevant documents of their meetings with Essar Steel.