RBI files separate insolvency pleas in NCLT against 2 Srei Group firms
In a rare move in the Corporate world, the Reserve Bank of India (RBI) on Friday filed petitions before the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against two Srei Group firms. The Reserve Bank of India filed two separate petitions before the Kolkata bench of NCLT against two non-banking financial companies-Srei Infrastructure Finance and Srei Equipment Finance. These two Srei Group companies owe over Rs.30,000 crore to banks and financial institutions.
RBI’s petitions were heard on Friday by a two-member NCLT bench of Kolkata, which is expected to pass an order soon. The two petitions were filed by RBI through its counsel Sanjay Ginodia, senior partner of R Ginodia & Co. According to Ginodia, he submitted arguments on behalf of RBI before the NCLT bench on Friday.
Industrialist Hemant Kanoria and family-controlled Srei Group is a major firm in Eastern India having several infrastructure operations and contracts in West Bengal, North Eastern States, Odisha, etc. The Group is having lost business in the finance, asset management, and insurance sectors also. A few years back, the Srei Group has taken over Deccan Chronicle Holdings through NCLT and later ran into problems in ensuring court-monitored acquisition.[1]
The move from RBI comes after the Bombay High Court on October 7 dismissed Srei Group’s plea against RBI action on SREI Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL). Srei Group had challenged RBI’s decision to supersede the boards of the two firms and initiate insolvency proceedings against them.
On October 4, RBI had superseded the Board of Directors of SIFL and SEFL, owing to governance concerns and defaults by the companies in meeting multi-billions of payment obligations. RBI had said it intended to initiate the process of resolution of the two NBFCs under the Insolvency and Bankruptcy Rules, 2019. The Central Banker had also said it would apply to the NCLT for appointing an administrator as the insolvency resolution professional.
References:
[1] NCLT directs Deccan Chronicle’s RP to hold CoC meeting on resolution plan – Jul 13, 2021, ET
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