Gujarat Global News Network, Ahmedabad
The Gujarat High Court on Monday rejected a plea by steel giant Essar challenging the insolvency proceedings against it by the Reserve Bank of India. The apex bank had issued a directive to banks on June 13 directing the banks to start insolvency procedure against a dozen companies including Essar. They have a total outstanding loan of more than Rs.5,000 crore.
Essar steel had contended that the directive was improper as it was in advanced stage of loan restructuring. It said that the company was doing well with annual turnover of Rs.20,000 crore and it should not be treated at par with other companies whose accounts were closed.
Essar Steel was referred to the National Company Law Tribunal despite the fact that it was in an advanced stage of finalising a restructuring proposal in accordance with earlier RBI circulars, it argued.
It wanted to be treated under the second category mentioned in the RBI’s June 13 circular where NPA accounts under Rs 5,000 crore are to be given six months to finalise loan restructuring plans, the company said.
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