NCLT allows Essar Steel to file objections to SBI, SCB pleas

The National Company Law Tribunal (NCLT) on Tuesday allowed Essar Steel to file objections to petitions moved by the State Bank of India (SBI) and the Standard Chartered Bank (SCB) to initiate insolvency proceedings against it.

The Ahmedabad bench of the tribunal of judicial member Bikki Raveendra Babu granted time to Essar Steel till July 22 to file objections to the petitions moved by the two lenders against the company after the Gujarat High Court dismissed its petition yesterday. The tribunal posted the hearing in the matter for July 24.

The Gujarat High Court had yesterday dismissed the steel major's plea against the RBI's directive to the banks to initiate insolvency proceedings against it, saying it is not proper for it to interfere in the matter.

A bench of Justice S G Shah had said in its order that with the firm owing a debt of a whopping Rs 45,000 crore, the lenders should be allowed to exercise discretion to take legal steps to recover the amount.

The SBI, which leads the joint lenders forum, and the Standard Chartered Bank have sought initiating insolvency proceedings against Essar Steel under the Insolvency and Bankruptcy Code (IBC).

The RBI had allowed on June 13 allowed the banks to initiate proceedings against a dozen companies, including Essar Steel, under the IBC to recover outstanding loans.

The high court had in its order said that the company can raise its objections against the banks before the NCLT. Based on the order, the company sought time from the NCLT to file its objections.