RBI issues corrigendum to NCLT, court defers hearing of RBI-Essar case

The apex bank, Reserve Bank of India issued a corrigendum in a press release on the 12 accounts that have been identified for referral under Insolvency and Bankruptcy Code. While dismissing the line which signaled that such cases will be prioritised by the company law tribunal. The directive of RBI has come in line with the bank’s commitment to the Gujarat High Court.       

RBI removed the line, "Such cases will be accorded priority by the National Company Law Tribunal (NCLT)" from the directive released on June 13, 2017.   

The Gujarat High Court had expressed displeasure on the cited wordings in the RBI’s press release while hearing a petition filed by Essar Steel, that challenged the RBI’s directives to the banks, as well as its criteria for the selection of the 12 identified accounts for referral under Insolvency and Bankruptcy Code.

According to the various press reports, RBI agreed to delete the controversial wordings from its press release after the Gujarat court affirmed that the wordings implied that the RBI was directing a judicial body, National Company Law Tribunal, over which it did not have any jurisdiction.    

The Gujarat High Court also issued a directive to the National Company Law Tribunal, preventing the judicial body from conducting anymore proceedings against Essar Steel till July 12 under the Insolvency and Bankruptcy Code. The firm had contented RBI’s directives to initiate action against Essar Steel, despite the firm’s advanced restructuring programmes.