Lawstreet Journal

NCLAT asks NCLT Mumbai to decide afresh on PNB's insolvency plea against Mittal Corp

Lawstreet Journal 16 Sep 2020 1:17am

Image courtesy: Lawstreet Journal Business NCLAT asks NCLT Mumbai to decide afresh on PNB's insolvency plea against Mittal Corp

Reserve Bank of India (RBI) has issued a circular on February 12, 2018, in which it has directed the banks to refer an account as a Non-Performing Asset (NPA) even for one day default over Rs 2,000 crore loan and should be given a time period of 180 days to clear their debts. The circular also has referred the banks to take such default cases to National Company Law Tribunal (NCLT).

Whereas, the Hon’ble Supreme Court of India quashed the circular April 2, 2019, stating it to be “ultra vires” and ordered RBI to make mandatory changes in the circular. Following the order, RBI revised the circular with alter modifications and offered the lenders a 30-day period of time to label their account to NPA.

Punjab National Bank (PNB) with its merging partner bank Oriental Bank of Commerce has filed a plea at NCLT, Mumbai Bench under Section 7 of the Insolvency and Bankruptcy Code (IBC) against the Mittal Corp for insolvency of their debts. Contending the plea, Mittal Corp has stated in its defense that the plea was filed following the circular by the RBI was not applicable as the total debt incurred by the company was Rs 1,077 crores which were less than Rs 2,000 crores.

Moreover, the company has also released a statement saying its Joint Lenders Forum (JLF) has started procedures to clear off the debts by converting their respective stakes with some investors. The JLF of the Company has classified its debt account as Special Mention Account (SMA)… Continue Reading...

Tagged: National Company Law Tribunal   NCLT  
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