Skip to main content

No supporting documents for insolvency circular: RBI tells HC

By

The Reserve Bank of India (RBI) on Friday told the Gujarat High Court (HC) that there was no supporting document to its June 13 press release, directing banks to initiate insolvency proceedings against 12 non-performing assets (NPAs), including Essar Steel.
The submission was made during the hearing of Essar Steel’s petition, filed on July 4, against insolvency proceedings initiated against it at the National Company Law Tribunal (NCLT) by the State Bank of India (SBI)-led 22 banks’ consortium as well as the Standard Chartered Bank (SCB).
The single-judge Bench of Gujarat HC has reserved its judgment for Monday. On Thursday, it had asked the RBI to present any documents other than the press release that supported its June 13 circular. The RBI counsel on Friday told the court that the press release was issued after a high-level committee meeting of the RBI decided to issue the directive.
Essar Steel, in its petition, has challenged the RBI’s directive as “arbitrary” and an impediment to its recovery process amid debt restructuring talks with banks.
Both the RBI and SBI counsels on Thursday had argued that Essar Steel had suppressed facts that it was taken by surprise by the RBI’s June 13 press release by not mentioning the same in its original petition. The SBI counsel submitted minutes of the June 22 joint lenders’ forum (JLF) meeting to support their arguments.
However, the Essar Steel counsel maintained that the company had not suppressed facts since its petition was directed at RBI’s directive and not against NCLT proceedings. The counsel countered the respondents’ arguments that Section 238 of Insolvency Bankruptcy Code (IBC), 2016, overrode other laws on insolvency and liquidation by maintaining that the RBI circular was subject to IBC 2016 and violated the company’s fundamental rights.
Essar Steel’s counsel also argued that in the June 13 and June 17 JLF meeting, the core committee had deliberated on Essar Steel’s debt restructuring proposal and sought clarification on over 25 points before finalising the proposal, which proved that the lenders had not considered insolvency as an option.
The Business Standard, New Delhi, 15th July 2017

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more

E tailers global warehouses may come under tax net

By
E tailers  global warehouses may come under tax net Warehouses of e-commerce companies based in countries such as Australia, Japan, Italy,  Spain, the Netherlands, and Russia may not be exempted from paying the income tax in India  once the multilateral instrument (MLI) to prevent base erosion and profit shifting (BEPS)  comes into force. BEPS refers to the reporting framework mooted by the Organisation for Economic  Co-operation and Development (OECD) and signed by over 100 countries, including India, to  prevent exploiting gaps and mismatches in tax rules to shift profits by multinational  companies (MNCs) artificially to low-tax regimes. The representatives of 68 countries on June 7 this year signed an agreement (MLI) in Paris  to amend their tax treaties to bring them in alignment with measures to prevent BEPS.  However, there is still time for synchronising tax treaties with the multilateral  instrument. India has submitte...
17 comments
Read more