SS Mundra says firms free to move higher courts

Mumbai : With some large stressed firms challenging RBI’s directives to banks to initiate proceedings against them under the Insolvency and Bankruptcy Code (IBC) in high courts, Reserve Bank deputy governor SS Mundra on Wednesday said nobody can be prevented from approaching the judiciary.

Last week, the Gujarat High Court had dismissed Essar Steel’s plea against RBI to start insolvency proceedings against it.

  The court refused to grant any relief to the steel major on proceedings initiated against it by the State Bank of India and Standard Chartered Bank at National Company Law Tribunal (NCLT) under the IBC, indicating that all issues raised by the company should be considered by the NCLT.

“Freedom of speech is a fundamental right and approaching the higher judiciary is open to everyone,” Mundra told on the sidelines of a Canara Bank function.

“If an individual company chooses to use that route, I don’t think that can be prevented, but I am sure that in any judicial system past pronouncements create a kind of future direction and that direction has now become evidently clear,” he said.

Essar Steel had moved the high court seeking the court’s direction to quash and set aside RBI’s direction to the banks to initiate insolvency proceedings against the company through a release dated June 13.      The RBI had last month identified 12 accounts (companies) for insolvency proceedings with each of them having over Rs 5,000 crore of outstanding loans, accounting for 25 per cent of the total NPAs of banks. The steel company’s debt has increased to over Rs 42,000 crore.