As per the reports, NCLT has refused to admit the insolvency petition filed by India Resurgence Asset Reconstruction Company, a joint venture between Piramal Enterprises and Bain Capital against Indian Steel Corporation, calling the petition to be ‘defective’. “For all reasons, the preset Company Petition… fails and therefore, we are constrained not to admit the same as prayed for at this moment,” the Mumbai Bench of NCLT said in its order.
The present petition was filed before the Honorable NCLT as Indian Steel Corporation has failed to make payment of a sum of Rs. 1487.59 crores as of 30th September 2019.
India Resurgence ARC has acquired the debt by way of an assignment agreement in May 2019 from the State Bank of India. The debt also included loans extended to the company by the erstwhile associate banks of SBI, viz., State Bank of Indore (in 2010), State Bank of Saurashtra (in 2013), State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore (all in 2017).
Indian Steel Corporation owed SBI an amount of Rs. 1,829 crores, while the bank sold its exposure to India Resurgence for Rs. 362 crores. The public sector bank took a 61% haircut on the asset.
After hearing arguments from both the parties, the NCLT bench of Mumbai headed by judges Rajasekhar V.K. and Ravikumar Duraisamy said that there is no document placed on record acknowledging the liability in the three-year period commencing from 31.12.2013 or 01.01.2014, which would have the effect of extending the period of limitation in terms of Section 18 of the Limitation Act, 1963. “The petition filed by the Financial Creditor, i.e., India Resurgence ARC is, therefore, defective to the extent indicated,” said the bench.
The order added that the petitioner is at liberty to pursue its legal remedies in the pending proceedings before DRT, Jabalpur. India Steel Corporation manufactures cold rolled coils and sheets, the company has a manufacturing facility in Bhimasar, Gujarat. SBI classified this company as a non-performing asset (NPA) during May 2016.
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