NCLAT asks RBI to respond to Srei ex-promoter co’s petition

On 8 October, 2021, the Kolkata bench of the National Company Law Tribunal (NCLT) had admitted Srei into the corporate insolvency process, and an NCLAT bench In December 2022 rejected Adisri’s plea challenging the NCLT order.

Senior advocate Ranjit Kumar, on behalf of Adisri Commercial, argued that its initial appeal was dismissed based on a delay in the filing process. He said the case wasn’t evaluated on merits, as no notice was given, and the company’s plea was swiftly dismissed after admission, which he said ‘violates natural justice.’ Kumar insisted the company does not owe any debt as claimed by the RBI, and it was not given the opportunity to demonstrate the absence of debt.

Kumar also sought leniency due to the covid-19 pandemic’s impact on the filing process, adding this oversight shouldn’t be grounds for dismissing its petition. He said insolvency rules allow the tribunal to recall the dismissed appeal and address jurisdictional concerns.

In response, Gopal Jain, senior counsel for the RBI, contended that Adisri Commercial’s actions showed a lack of seriousness and commitment throughout the legal process. Jain argued that recalling the dismissed appeal would disrupt the Corporate Insolvency Resolution Process (CIRP), reset the timeline and create a dangerous precedent. The RBI counsel mentioned that even the Supreme Court had dismissed the appeal, raising doubts about the possibility of recalling the order.

In October 2021, RBI had superseded the boards of Srei Infrastructure Finance and subsidiary Srei Equipment Finance due to concerns over governance and default on loan repayment obligations. On Wednesday, RBI explained that this was done due to significant defaults, and the initial appeal wasn’t rejected solely due to timing issues. The RBI argued that Adisri had pursued the matter through multiple courts, from the Bombay High Court to the Supreme Court.

The bench requested both parties to provide some previous judgment on whether recalling a dismissed appeal is permissible. The tribunal will hear the matter again on 25 September.

According to NCLAT, the promoters submitted that substantial injustice was caused to Srei and its shareholders by the Kolkata NCLT’s insolvency order, which was issued without serving notice to the company or its promoters as required under law.

The two lending companies of Srei Group—Srei Equipment and Srei Infrastructure – owe around ₹30,000 crore to creditors, of which the share of banks is ₹20,000 crore, and the rest is in the form of non-convertible debentures, external commercial borrowings and others.

The three resolution applicants include a consortium of Varde Partners and Arena Investors, National Asset Reconstruction Co. (NARCL) and Authum Investment and Infrastructure.

Updated: 16 Aug 2023, 10:46 PM IST