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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
S.G. SHAH, J.
Essar Steel India Limited & Ors. - Petitioners
Vs.
Reserve Bank of India & Ors. - Respondents
Special Civil Application No. 12434 of 2017
Decided On : 31-07-2017
Constitution of India, 1950 – Article 14, 19(1)(g) and 226 – Insolvency and Bankruptcy Code, 2016 – Section 9 – Jurisdiction – Challenging Decision of the Reserve Bank of India-RBI vide their Press Release directing banks to initiate proceedings against 12 Companies including the Petitioner under the Provisions of IBC and the decision of Consortium of Lenders to initiate Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 and failure of the Consortium of Banks led By State Bank of India- SBI to implement the package of debt restructuring approved by Board of Directors of the Petitioner – Company – Seeking direction or any other writ, order or direction quashing/setting aside the decision of the Reserve Bank of India contained in Press Release directing the lenders to initiate proceedings under Code, 2016 in relation to Petitioner – Held, Court not resist to apprehend that allowing (foreign countries to dump similar goods, which is made by Indian companies, would certainly result into an invitation to old colonial system because, ultimately business groups, who are having huge turnover in particular manner, would have impressive control over administration. But, when petitioner has not challenged the provision of Insolvency and Bankruptcy Code, I have not to deal with such issue at this stage except to dispose of this petition, more particularly, when there is no scope of granting interim relief in favour of the present petitioner – Refusal of interim relief is obvious because petitioner company is in debt of more than Rs. 45,000 Crores for couple of years, its NPA was more than Rs. 32,000 Crores in last year and more than Rs. 31,000 Crores in previous year – It is also clear that when total debt is more than Rs. 45,000 Crores, there is no option, but to leave the issue at the discretion of the lenders to take appropriate steps in accordance with law, thereby, without interference of this Court under the constitutional mandate. However, at the cost of repetition, it is made clear that factual details and on-going process of restructuring plan and other details would be taken care of by NCLT before taking any decision on merits – Respondent No. 1 RBI has to be careful while issuing press releases; it must be in consonance with the Constitutional Mandates, based upon sound principles of Law, but in any case should not be in the form of advise, guidelines or directions to judicial or quasi-judicial authorities in any manner what so ever – Since the press release is referring the earlier press release and since in such press release there is reference of S4A - Scheme for Sustainable Structuring of Stressed Assets, which is also introduced on the same day it would be appropriate for RBI to see that benefit of all its schemes is equally offered and extended to all without any discrimination – It is quite clear and obvious that Court has to see that there is no arbitrariness or discrimination by State or its authorities – It cannot be held that directions under reference is in nature of classification or such classification is irrational, unjust, arbitrary or discriminatory; but it would be appropriate for RBI to see that benefit of all its schemes is equally offered and extended to all without any discrimination. Therefore relief in terms of para 7(a) cannot be granted – Petition disposed of. (Paras 44 and 46)
S.G. SHAH, J.
Heard learned Senior Counsel Mr. Mihir Thakore, with learned Senior Counsels Mr. Saurabh Soparkar, and Mr. Mihir Joshi, with learned advocates Mr. Keyur Gandhi for M/s. Nanavati Associates, Mr. Mahesh Agrawal, Mr. Nisarg Desai, Mr. Raheel Patel and Mr. Shriraj Khambete for the petitioner on 7.7.2017 and 12.7.2017
2. Heard learned Senior Counsel Mr. Darius Khambhatta, with learned advocates Mr. Amar N. Bhatt, Mr. Rajendra Barot, Mr. Nishanth Shashidharan, and Mr. Vivek Shetty for the Respondent No. 1.
3. Heard learned Senior Counsel Mr. Ravi Kadam, with learned Senior Counsel Mr. Anshin Desai, with learned advocate Mr. Nirag Pathak, Mr. Ameya Gokhle, and Ms. Grishma Ahuja for M/s. Shardul Amarchand Mangaldas & Co., for the respondent No. 2.
4. Heard learned Senior Counsel and Advocate General Mr. Kamal B. Trivedi, with learned Senior Counsel Mr. Rashesh Sanjanwala, with Mr. Sandeep Singhi with Mr. Siddharth Joshi for M/s. Singhi & Co. for the respondent No. 3 opposing the petition on 12.7.2017 and 13.7.2017
5. Heard learned Senior Counsels Mr. Mihir Thakore and Mr. Darius Khambhatta, in reply on 13.7.2017 & 14.7.2017 Perused the record including notes of submissions.
6. The petitioner Essar Steel India Limited has invoked jurisdiction of the Court under Article 14, 19(1)(g) and 226 of the Constitution of India in the matter of the provisions of Insolvency and Bankruptcy Code, 2016 (in short ‘IBC) by challenging the Decision of the Reserve Bank of India (in short ‘RBI vide their Press Release dated 13.06.2017 directing banks to initiate proceedings against 12 Companies including the Petitioner under the Provisions of IBC and the decision of Consortium of Lenders to initiate Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 and failure of the Consortium of Banks led By State Bank of India (in short ‘SBI’) to implement the package of debt restructuring approved by the Board of Directors of the Petitioner - Company.
7. The Respondent No. 1 is RBI, Respondent No. 2 is SBI, respondent No. 3 is Standard and Chartered Bank (in short ‘SCB’) and Respondent No. 4 is National Company Law Tribunal (in short ‘NCLT’).
8. The petitioner has prayed for following directions and order in form of a writ by the court:
(a) Issue a writ, order or direction or any other writ, order or direction quashing/setting aside the decision of the Reserve Bank of India contained in Press Release dated 13.06.2017 directing the lenders to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 in relation to the Petitioner.
(b) Issue a writ, order or direction or any other writ, order or direction quashing/setting aside the decision of the STATE BANK OF INDIA of filing proceedings under the Insolvency and Bankruptcy Code, 2016 in relation to the Petitioner;
(c) Issue a writ, order or direction or any other writ, order or direction quashing/setting aside the decision of the Standard Chartered Bankof filing proceedings under the Insolvency and Bankruptcy Code, 2016 in relation to the Petitioner;
(d) Issue a writ, order or direction restraining the respondent No. 4 - adjudicating authority under Bankruptcy Code, 2016 (National Company Law Tribunal, Ahmedabad) from proceeding further with proceedings in the petition initiated under Section 7 of Bankruptcy Code by Respondent 2 and 3;
(e) Issue a writ, order or directing Respondent to place the Petitioner in the category of companies falling in para 4 of the Press Release dated 13.6.2017 directing the banks to finalise the resolution plan within six months;
Pass such other or further orders, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.
9. Since the main challenge in the petition is decision of June 13, 2017 in the form of press release by the RBI, it would be relevant to recollect its contents, as on 13.06.2017; because it has been modified/corrected on July 08, 2017; after the order dated 4.7.2017 by this Court, calling upon RBI to i
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