Skip to main content

NCLT Bench quashes 75 percent vote requirement

NCLT Bench quashes 75 percent vote requirement
In a trend setting order, the bench here of the National Company Law Tribunal (NCLT) has struck down an attempt byagroup of banks to block an insolvency resolution plan by citing the 75 per cent vote share requirement prescribed under Section 30(4) of the Insolvency and Bankruptcy Code (IBC).
The bench of judicial member Rajeshwara Rao Vittanala and technical member Ravikumar Duraisamy approved a one time settlement (OTS) as agreed to by Kamineni Steel &Power,a Hyderabad based corporate debtor, as part of a resolution plan cleared by a group of creditors with 66.67 per cent voting power.
Speaking to Business Standard on the verdict,VK Sajith, an advocate for Indian Bank that had backed the resolution plan, with four other lenders, said the bench had gone beyond only the interests of corporate debtor and corporate creditors, as the plan involved possible rehabilitation of 450 workers.
Indian Overseas Bank, Central Bank of India and Bank of Maharashtra, with a combined 29.12 percent voting power, had resisted the resolution plan, citing the 75 per cent vote share clause.
The bench rejected this."The dissenting bankers appear to have been guided by 75 per cent as prescribed under Section 30(4), rather than any policy or Reserve Bank of India (RBI) guidelines in that regard. Section 30(4) merely states that the Resolution Plan may be approved byavote not less than 75 per cent of voting share of the financial creditors.

It did not say whether such percentage is out of the total voting share of the financial creditors or those present during meetings of the respective COC (committee of creditors) of financial creditors.Since the IBC isanew Code and still evolving, the above percentage has to be read with various circulars issued by RBI, regulator for the banking sector,” the bench said ina100page judgement.

The registry was told to sendacopy of the order to the RBI governor.The bench approved the OTS presented by the Resolution Professional, based on the consent of five financial institutions —Indian Bank, JM Financial Asset Reconstruction Company, Allahabad Bank, Andhra Bank and Oriental Bank of Commerce.
Kamineni had shut down the operations of its plant in Nalgonda district of Telangana, owing to financial and other difficulties.
The Business Standard, New Delhi, 7th December 2017


Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…