38.6c New Delhi, India, Sunday, April 21, 2024

NCLAT asks NCLT Mumbai to decide afresh on PNB's insolvency plea against Mittal Corp

By ROCKY DAS      15 September, 2020 07:47 PM      0 Comments
NCLAT asks NCLT Mumbai to decide afresh on PNB's insolvency plea against Mittal Corp

Reserve Bank of India (RBI) has issued a circular on February 12, 2018, in which it has directed the banks to refer an account as a Non-Performing Asset (NPA) even for one day default over Rs 2,000 crore loan and should be given a time period of 180 days to clear their debts. The circular also has referred the banks to take such default cases to National Company Law Tribunal (NCLT).

Whereas, the Hon’ble Supreme Court of India quashed the circular April 2, 2019, stating it to be “ultra vires” and ordered RBI to make mandatory changes in the circular. Following the order, RBI revised the circular with alter modifications and offered the lenders a 30-day period of time to label their account to NPA.

Punjab National Bank (PNB) with its merging partner bank Oriental Bank of Commerce has filed a plea at NCLT, Mumbai Bench under Section 7 of the Insolvency and Bankruptcy Code (IBC) against the Mittal Corp for insolvency of their debts. Contending the plea, Mittal Corp has stated in its defense that the plea was filed following the circular by the RBI was not applicable as the total debt incurred by the company was Rs 1,077 crores which were less than Rs 2,000 crores.

Moreover, the company has also released a statement saying its Joint Lenders Forum (JLF) has started procedures to clear off the debts by converting their respective stakes with some investors. The JLF of the Company has classified its debt account as Special Mention Account (SMA) following the revised guidelines by RBI and reconstructed a special package for the company. Following such a master agreement has been signed between the Mittal Corp and PNB on March 30, 2015. But later on, the agreement was invoked by the company for not fulfilling the mentioned financial norms and the account then declared as NPA by the bank.

However, NCLT has rejected the plea filed by PNB on December 20, 2019, objecting that the plea filed by the applicant following the circular of RBI has no such substantial evidence and the debt amount was less than Rs 2,000 crores which should not be open to the Adjudicating Authority that is NCLT itself.

Later on, the verdict passed by NCLT has been challenged by PNB at National Company Law Appellate Tribunal (NCLAT). A three-member bench of the Appellate Tribunal, on September 11, 2020, observed the plea of the bank and the rejection grounds by NCLT and asked the NCLT, Mumbai bench to take the plea into immediate consideration and take necessary measures to solve it rapidly.

Share this article:

Leave a feedback about this

Trending Judiciary
SC orders medical examination of 14-yr-old rape survivor seeking to terminate her 28-week pregnancy

Supreme Court orders medical examination of 14-year-old rape survivor seeking termination of 28-week pregnancy. Decision to be made after evaluating impact on her health.

20 April, 2024 11:00 AM


Trending Legal Insiders
Need to safeguard judiciary from unwarranted pressures: 21 ex-judges write letter to CJI

21 ex-judges write to CJI Chandrachud urging protection of judiciary from pressures undermining its integrity and autonomy.

15 April, 2024 12:17 PM
Trending Judiciary
SC notice to ED; declines early date on plea by Delhi CM Arvind Kejriwal against arrest

SC issues notice to ED, declines early hearing on Delhi CM Kejriwal's plea against arrest in liquor scam.

15 April, 2024 03:08 PM
Trending Law School
Call For Chapters: Gender-Based Violence and Religion

Calling For Book Chapters: As an editor, Dr. Amit Anand, Assistant Professor, School of Legal Studies, REVA University, Bengaluru, is inviting people to contribute to a book, entitled "Gender-Based Violence and Religion." This book is scheduled to be published by Cambridge Scholars Publishing.

15 April, 2024 04:21 PM
Trending Top Stories
Cannot stop any public rally, Bombay HC on allegation that Ram Navami processions deliberately pass through Muslim-majority areas

The Bombay High Court calls upon the Maharashtra Police to ensure that no law and order issues occur during a Ram Navami rally in a Muslim-majority area in Mumbai.

15 April, 2024 06:36 PM


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email