The Kolkata bench of the National Company Law Tribunal (NCLT) on Monday admitted a defaulter’s voluntary petition for insolvency resolution, and dismissed a lender’s opposition to it. The tribunal also imposed a moratorium on the ongoing process of bad loan recovery.
ICICI Bank had said that there was malfeasance behind Ramsarup Industries Ltd’s application and that it was aimed only at securing a moratorium on recovery of outstanding loans under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, or Sarfaesi Act, but the bench held the steel maker’s application as admissible.
ICICI Bank’s legal counsel Siddhartha Dutta had submitted that the company had previously defrauded United Bank of India of Rs184 crore, and that the Central Bureau of Investigation (CBI) was investigating it.
He also said Ramsarup should not be treated as a “going concern”—or a business in operation, making profits—and hence no insolvency resolution was even viable.
During the course of hearing over the past five-and-a-half months, the company admitted to owe Rs3,378 crore to 41 banks and financial institutions.
Two other creditors, Axis Bank and Asset Reconstruction Co. (India) Ltd, had also moved the Kolkata bench of NCLT seeking the appointment of a resolution professional, but these were also dismissed because the company had filed its voluntary application first.
The creditors moved the bench on receiving notices from the company after it had filed for bankruptcy.
Sidhartha Sharma, legal counsel for Ramsarup, told Mint the company’s arguments were upheld and that the bench had appointed, as prayed for, Delhi-based Nilesh Sharma as the interim resolution professional.
He had cited during hearing a verdict of the National Company Law Appellate Tribunal, or the NCLAT, in a similar dispute, where it was held that a company filing for bankruptcy under section 10 of the Insolvency and Bankruptcy Code could be disqualified only under the clauses laid down in section 11 of the newly promulgated law.
The bench held that Ramsarup fulfilled all the conditions in section 10 of the code to file for bankruptcy and seek insolvency resolution.
Ashish Jhunjhunwala, Ramsarup’s chairman and managing director, said in an interview the NCLT’s verdict sets aside all charges brought against the company. While admitting that the CBI had investigated an alleged fraud, he claimed the agency could not eventually prove anything.