NCLT reserves order on Bhushan Steel bankruptcy petition
19 July 2017 11:45 PM IST
The National Company Law Tribunal on Wednesday reserved order on insolvency pleas against Bhushan Steel as well as Bhushan Steel and Power even as it 'wondered' as to why RBI had to issue directions to banks to initiate bankruptcy proceedings against big defaulters. A two-member bench headed by Justice MM Kumar reserved its order on SBI petition for initiating insolvency proceedings against Bhushan Steel Ltd and a similar plea by Punjab National Bank (PNB) against Bhushan Steel & Power Ltd. During the proceedings, counsel appearing for Bhushan Steel said that 65 per cent loan shown by the SBI is for working capital and hence it is not a defaulter.
"65 per cent debt shown by the bank (SBI) as a default is for working capital... There is no default notice on working capital but it's for debt," said counsel appearing for Bhushan Steel.
SBI is claiming recovery of Rs 4,295 crore from Bhushan Steel and USD 490 million for foreign currency loan.
However, rejecting the company's argument, SBI's counsel said that it was the bank's money and they want it back.
"Banks made the efforts but at some point, banks need to start moving (insolvancy proceedings). Let the company participate in the resolution process. Time is the essence," SBI's counsel said.
She further added: "Plan has to start with resolution by committee of creditors. Let the committee of creditors and Resolution professional take care of that."
During the proceedings, the bench observed: "We were wondering what was the necessity for the RBI to issue (circular) direction to file... Are the banks not responsible enough?". To this, SBI's counsel said: "We have statutory remedy and we have exercised it."
NCLT was hearing two petitions, one filed by SBI against Bhushan Steel Ltd and another by PNB against Bhushan Steel & Power Ltd. The NCLT, on July 13, issued notices to Bhushan Steel Ltd as well as Bhushan Steel and Power Ltd over insolvency proceedings initiated by their lenders State Bank of India and PNB. The companies were directed to file their reply. MPOST
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