NCLT In Better Position To Consider 'Unsavoury Practices' Of Banks, Financial Institutions: Delhi High Court
Sanjana Dadmi
12 Sep 2024 3:20 PM GMT
The Delhi High Court has observed that the National Company Law Tribunal (NCLT) is an appropriate authority to consider issues relating to 'unsavoury' practices of banks, calculating compound or penalty interest in a manner which leads to a situation where it becomes difficult to seek a resolution under Section 12A of the Insolvency & Bankruptcy Code (for withdrawal of corporate insolvency resolution).
The Court remarked,
“Indeed, in such matters where the banks keep on calculating interests on compound interest and/or penal interests, the NPA amount becomes such that at times, it becomes difficult to seek a resolution under Section 12A of the IBC. However, this Court believes that the NCLT is not unaware of such unsavoury practices on the part of the financial institutions and the NCLT would be in a better position to consider and adjudicate upon the whole gamut of the issues raised herein.”
Justice Dharmesh Sharma was considering the petitioner's (Bareilly Highways Project Limited) plea for extension of the interim order passed by the Court on 12 July 2024. Through this interim order, the petitioner-company was granted liberty to submit a 'One-Time Settlement' proposal (OTS) with the SBI (respondent no.2), which would thereafter be considered by the Settlement Advisory Committee.
The petitioner-company contended that after submitting the OTS on 20 July 2024, the SBI officials convened a meeting through video conferencing on 3 August in a mechanical and hurried manner. It argued that no introduction of officials present in meeting was given and that a abrupt decision was taken by rejected its ORS on the same day, which was conveyed by a letter dated 6 September. The counsel for the petitioner argued that the SBI did not conduct the proceedings in a fair and professional manner
On the other hand, the respondent/SBI stated that the OTS was rejected after discussing the issues in the meeting. SBI stated that the reasons for rejecting are disclosed in the Minutes of Meeting dated 3 September. However, the petitioner-company stated that the copy of the minutes of meeting was not shared with it.
The Court took note of the petitioner's arguments that decision should not be taken hurriedly, however it remarked that since the matter was pending before NCLT, it would be the appropriate forum to address the grievances of the petitioner.
“Although, the pleas raised by the learned Senior Advocate for the petitioner have to be appreciated in the context that no decision should be taken in a hurried and apparently unprofessional manner, however, since the matter is pending before the NCLT5, the said forum would be the appropriate one where such grievances be aired and redressed.”
The Court thus did not give any further extension of its interim order and dismissed the petition.
Case title: BAREILLY HIGHWAYS PROJECT LIMITED. vs. RESERVE BANK OF INDIA & ORS. (W.P.(C) 11150/2024)
