Essar Steel’s statement on the Gujarat High Court verdict

Our request to the Hon’ble High Court was that in view of the specific facts of Essar Steel, i.e., advanced stage of discussions with lenders on its debt resolution proposal, payment of Rs 3467 crores to banks between April 2016 and June 2017, and the substantial improvement in all operating parameters, the Company should have been given time to complete its debt restructuring as we apprehended that referring the company to the IBC at this stage may result in deterioration of the Company’s operations and in fact, may delay the resolution discussion with the Banks.

In its judgement, the Hon’ble High Court while disposing of the petition has indicated that all of these issues should be considered by the NCLT before taking any decision on merits. In this regard, we would like to highlight the following observations made by the Hon’ble High Court:

39 (2): “It is undisputed fact that filing of such application cannot be questioned or that action cannot be quashed, but it goes without saying that such filing would not amount to admitting or allowing the petition for insolvency without offering reasonable opportunity to the Company, which is requested to be taken into insolvency by any such person. Therefore, the adjudicating authority being NCLT herein, which is constituted in place of the Company Court, needs to decide on its own based upon factual details that whether the insolvency petition is required to be entertained as such or not.”

39 (3): “Adjudicating authority, certainly requires to extend hearing and reasonable opportunity to the company to explain that why such an application should not be entertained. In other words, filing of an application may not result into mechanical admission of application as seen and posed by RBI in impugned press release. It would be a decision based on judicial discretion by the adjudicating authority to deal with such application in accordance with law and based upon facts, evidence and circumstance placed before it.”

39 (12) “…However, at the cost of repetition, it is made clear that factual details and on-going process of restructuring plan and other details would be taken care of by NCLT before taking any decision on merit.”

We respect the decision of the Hon’ble High Court and will accordingly be raising these issues for consideration by the Hon’ble NCLT.