Essar Steel had challenged the RBI’s decision to include it in the list and the subsequent decision by State Bank of India (SBI) to initiate insolvency.
In its order, the high court noted that Essar Steel’s claim that the RBI’s directive was in violation of the fundamental rights of the company, does not hold.
In its order, the court noted that refusal of interim relief to Essar Steel is obvious because “petitioner company is in debt of more than Rs.45,000 crore for couple of years, its NPA was more than Rs.32,000 crore in last year and more than Rs.31,000 crore in previous year.” “It is also clear that when total debt is more than Rs.45,000 crores, there is no option, but to leave the issue at the discretion of the lenders to take appropriate steps in accordance with law, thereby, without interference of this court under the constitutional mandate,” the court said.
In its response, the central bank’s counsel Darius Khambatta said the Rs 5,000 crore criterion used to select companies being referred to the National Company Law Tribunal (NCLT) was logical.
When asked by the court for documents supporting its decision to include Essar Steel in the list of 12, the RBI said that no such documents existed.