The stage was set on Monday for initiating insolvency proceedings against 12 top companies who have defaulted on the payment of Rs two lakh crores, about 25 per cent of the total debt of Rs eight lakh crores owed by the corporate sector to public and private sector banks.
The matter was stuck because Essar Steel had gone to the Gujarat High Court on the issue and tried to block the insolvency proceedings on technical grounds.
However, on Monday, the Gujarat High Court dismissed Essar Steel’s petition seeking to quash the Reserve Bank of India’s directive to a consortium of lenders to initiate proceedings under the Insolvency and Bankruptcy Code (IBC) before the National Company Law Tribunal (NCLT).
The order strengthens banks’ case to recover money from corporate defaulters.
This has prompted the NCLT-Ahmedabad bench to hear the lenders’ petition on insolvency proceedings against Essar Steel on July 18.
According to data collected by the Central Repository of Information on Large Credits, as on March 31, 2017, the total fund outstanding against Essar Steel with banks was Rs 33,842 crore.
As on March 31, 2016, Rs 31,671 crore or 94 per cent of the outstanding amount was classified as NPA, which increased to Rs 32,864 crore or 97 per cent of the outstanding by March 31, 2017.