Essar Steel will undergo insolvency proceedings as the Gujarat High Court dismissed the company's plea against the Reserve Bank of India (RBI).
According to a senior lawyer, "Now, Essar Steel has the option of going to the Supreme Court. They will take a decision in a day or to as time is a critical factor in this. IT will definitely set a precedent for other 11 companies who are in the dock and this will help banks."
The Gujarat High Court's order clears the way for no further challenges by any of the companies going to insolvency courts on the grounds made by Essar Steel.
This is a big boost for banks and it will further make way for fast-tracking cases to be heard against 11 other defaulting firms filed by banks at the National Company Law Tribunal (NCLT).
According to reports, Justice SG Shah passed an oral order saying no relief will be granted to Essar. A detailed order is expected later on Monday.
On July 14, it had reserved its order for Monday on Essar Steel's plea against the June 13 RBI circular to banks to act on priority under Insolvency and Bankruptcy Code (IBC) against the 12 defaulting companies including the debt laden Essar Steel. These 12 companies owe lenders over Rs 5,000 crore of outstanding loans each.
Following the RBI direction, a joint lenders’ forum led by State Bank of India (SBI) and initiated proceedings in the NCLT under the newly-formed IBC. S...