Essar Steel bankruptcy: Standard Chartered Bank's petition raises transparency issue, says experts

But Standard Chartered alleged that the voting was flawed and illegal.

"These are serious allegations. There is no provision for a core committee under IBC. The petition highlights serious procedural issues," said Alok Dhir, an insolvency law expert and Managing Partner at Dhir & Dhir Associates.

The claim Standard Chartered had admitted a claim of Rs 3,487 crore on Essar Steel. This arose from its $500 million loan to the steelmaker in 2010.

But in this petition, the lender alleged that the core committee of CoC recommends it should receive Rs 60.71 crore, or 1.47 percent of the claim.

"This was paltry compared to what the other lenders got. They got 100 percent of the principal amount and 40 percent of the interest amount," an executive from the industry said.

The core committee, the petition added, includes State Bank of India (SBI), ICICI Bank, IDBI Bank and Edelweiss ARC.

An executive from the industry said Standard Chartered should be paid about Rs 2,900 crore on a pro-rata basis.

"This case will have implications on other insolvency proceedings too," Dhir said.

Petitions Standard Chartered's petition comes after most of Essar Steel's operational creditors moved NCLT, alleging that they have been neglected by CoC. More than 30 of these creditors have filed petitions and their claims top Rs 1,600 crore.

The NCLT will take note of the petitions of the operational and financial creditors on November 28.

The operational creditors petitioned against the resolution plan proposed by ArcelorMittal. The plan, which has been cleared by CoC and filed with NCLT, includes an offer of Rs 42,000 crore for creditors and capex of Rs 8,000 crore in Essar Steel.

But operational creditors pointed out that only Rs 214 crore has been earmarked for them. This is against their total claim of over Rs 5,000 crore that have been admitted by the resolution professional overseeing the Essar Steel auction. Operational creditors include suppliers, customers and contractors and are mostly unsecured.

They highlighted competing offers from Essar Steel Asia Holdings, controlled by the Ruias. Essar Steel Asia Holdings has offered a 'higher financial recovery' in its plan, which involves a total payment of Rs 54,389 crore and includes a sum of Rs 4,995 crore to settle claims of operational creditors.