In the Essar Steel vs RBI case last week, apparently RBI and the banks won. The Gujarat High Court allowed banks to take Essar Steel to the Bankruptcy Court. However it added some crucial sentences in the judgement as mentioned below.
"That such filing (of an application for insolvency in the NCLT) would not amount to admitting or allowing the petition for insolvency with, without offering reasonable opportunity to the company. The adjudicating authority, being the NCLT herein, needs to decide on its own based upon factual; details that whether the insolvency petition is required to be entertained or not".
The insolvency code however was far strict. It said the when the NCLT receives a petition, it has to check only the below mentioned points:
1) Is default more than Rs 1 lakh?
2) Is the form complete?
3) Is the insolvency professional duly registered? and
4) Are there disciplinary proceedings against him?
If these conditions are fulfilled, court has to, in 14 days, summon the creditors and the borrower and appoint an insolvency profession.
So now the questions that arise are:
1) Is not the 14-day timetable in the insolvency act sacred?
2) Can the bankruptcy court reject the petition of the banks against Essar and other defaulters?
3) Can the resolution of Essar and other defaulters get delayed in spite of heading to the bankruptcy court?
To answer some of the questions and the outlook on the case going forward, CNBC-TV18 spoke to Bahram Vakil, Founding Partner AZB & Partners, Sandip Parikh, Founder Finsec Law Advisors, H P Ranina, Corporate Lawyer and H R Loona, Partner Dhaval Vussonji Alliance.
For the full discussion, watch video
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