A division bench of Justice Ujjwal Bhuyan and Justice Madhav Jamdar, after hearing both the sides, dismissed the petition in an oral order and said that the court was not inclined to consider the matter further as it had no merit.
Lawyers representing Srei Group had argued that the company had acted on the red flags of RBI and was in talks with two strategic investors who were set to bring in over Rs 4,000 crore of capital.
The counsel also argued that the shortlisted investors were ready to invest in the company if RBI had given them some time instead of initiating insolvency proceedings. He argued that the promoter is ready to give up control to bring the company’s proposal.
Srei Group promoter Manoj Kanoria has challenged RBI’s decision to initiate bankruptcy Proceedings against the group in the Bombay High Court through their company Adisari Commercial Pvt Ltd.
Opposing this, the counsel representing the RBI argued that the central bank was pointing out governance issues in the two non-banking finance companies (NBFCs) in early 2016 and that the company had enough to settle its house. had time.
The counsel for RBI further argued that the inspection report indicated that the group was involved in related party transactions and was also involved in perpetuity of loans.
The banking regulator on Monday removed the boards of directors of Shrei Infrastructure Finance and Srei Equipment Finance citing governance concerns and defaults and said it would initiate insolvency proceedings against the two firms with the National Company Law Tribunal (NCLT). .
The central bank has appointed former Chief General Manager of Bank of Baroda Rajnish Sharma as the administrator of both the companies.
Senior advocate Ravi Kadam and law firm Udvadia & Company appeared for RBI in the matter. While Kanoria was represented by senior advocate Janak Dwarkadas and Amit Naik of law firm Naik Naik & Co.
Shrey is the second finance company against which RBI has initiated insolvency proceedings after Dewan Housing Finance Corporation Limited (DHFL).
The central bank’s action comes in the wake of a consortium of lenders led by UCO Bank classifying loans of credit firms as non-performing assets.
In June, Srei companies had informed stock exchanges that an RBI inspection had identified a loan of Rs 8,576 crore as related party debt. This is about 30% of the group’s consolidated debt of Rs 28,700 crore. Overall, the group has a debt of over Rs 35,000 crore.