Delhi High Court Issues Notice To Jindal Steel And Power On RBI Appeal Against Order On Transfer Of $300 mln To Mauritius Subsidiary

The court has allowed time to JSPL to file its response on the matter and listed the matter for further hearing on Jan 15, 2021. RBI had also pressed for interim stay on the Delhi High Court's previous order, however, no such relief has been granted at this stage.

RBI has moved the court through a Letter Patent Appeal against the previous order by a Single Judge Bench which had remanded JSPL's application to RBI. Directing the central bank to reconsider its decision on JSPL's application, the court had noted that the RBI's order dated 30.12.2019, vide which it had rejected JSPL's application had "serious consequences" inasmuch as the "commitments undertaken abroad with the prior consent" of the RBI would go into default causing huge losses to JSPL.

The Single Judge Bench of Justice Jayant Nath had held, "I may note that there is not even a whisper anywhere that there is any attempt on the part of the petitioner to carry out an illegal transaction or that the proposed transactions are an attempt to siphon away funds out of India beyond the reach of law enforcing agencies. Clearly the rejection of the application of the petitioner on 30.12.2019 is illegal…The matter is remanded back to RBI to reconsider the application made by the petitioner afresh as per law and in accordance with the principles noted above. Needful be done by RBI expeditiously."

JSPL had argued that it had undertaken a corporate guarantee of $864.82 million towards loans by JSPML, with RBI's consent, which the subsidiary had sought to enforce citing unavailability of funds to meet its cash flow requirements. The Steel giant had sought to make additional financial commitments and payments of $300 million to aid its subsidiary, for which it had applied to RBI.

The steel giant claimed to have applied to the RBI as per the norms stipulated in the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 for permission to remit $300 Million to JSPML, by way of equity subscription/loan/corporate guarantee/bank guarantee or through other permitted mode.

RBI had however rejected JSPL's application vide order dated 30.12.2019, seeking the quashing of which, JSPL had approached the Single Judge Bench of the Delhi High Court.

RBI was represented in the matter by Mr Jayant Bhushan, Sr. Advocate with Mr Atul Sharma and Mr Abhinav Sharma, Advocates.

JSPL was represented by Mr Parag P. Tripathi, Sr. Advocate, Mr Gopal Jain, Sr. Advocate with Mr Saket Sikri, Mr Naman Joshi, Mr Apoorv Tripathi Ms Meera Menon, Mr Gokul Plaha, Mr Manish Kharbanda and Ms Priya Singh, Advocates.