The Bombay High Court (HC) on Thursday dismissed the petition filed by Srei Group promoters challenging the Reserve Bank of India's (RBI) recent move to supersede the boards of its two group companies – Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) – in preparation for sending them to bankruptcy courts.
The HC dismissed the petition after hearing the arguments of both the sides and will give detailed order later.
The HC was hearing a petition filed by Srei Group promoters, Adisri Commercial Private Ltd, sought a stay against the RBI action of initiating insolvency proceedings against its two group companies.
On October 4, RBI superseded the board of directors of the Kolkata-based SIFL and SEFL and said that it will initiate insolvency proceedings with the National Company Law Tribunal (NCLT).
Interestingly, the RBI move makes Srei the second non-bank lender to be referred to the bankruptcy courts after DHFL.
The RBI had appointed Rajneesh Sharma, former chief general manager, Bank of Baroda as an administrator of the company.
The RBI had said, “In exercise of the powers conferred under Section 45-IE (1) of the Reserve Bank of India Act, 1934, the Reserve Bank has today superseded the Board of Directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations.”
Even a consortium of lenders led by UCO Bank had classified exposure to Srei group as non-performing.
The RBI alleged that they had been repeatedly asking the group to infuse capital in the aforesaid companies but it failed to do so.
Srei Group contended that it acted upon RBI's red flags and was in talks with two strategic investors who are ready to bring in capital of more than Rs 4,000 crore. It further said that the investors are ready to invest now if the RBI gives them some time rather than initiating insolvency proceedings. The Group even argued that the promoter is ready to give up control to bring about a resolution of the company.
It contended that over the last three decades, it has already paid Rs 30,000 crore as interest and another Rs 20,000 crore principal to the banks, it said. There has never been any delay in loan servicing by it in the past before Covid-19 ravaged the country, the group said.
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