VISA STEEL LTD. Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) In this writ petition the petitioner, being a Company, has prayed to issue direction to the opposite parties to release the details of the resolution framework in terms of Clause-6 of the Press Release dated 13th June, 2017 under Anexure-2 and to allow the petitioner to have a resolution plan in terms of Clause-4 of the aforesaid Press Release. It is further prayed for issuance of mandamus to the Reserve Bank of India, opposite party no.1, to issue details of resolution frame work in terms of Clause-6 of the Press Release dated 13th June, 2017 and a mandamus to the State Bank of India, opposite party no.2, to finalize and implement the resolution plan within six months from the date of release of resolution frame work in terms of Clause-4 of the Press Release dated 13th June, 2017. It is also prayed for issuance of writ of certiorari quashing the initiation of proceeding before the National Company Law Tribunal under the Insolvency and Bankruptcy Code.

(2.) The case of the petitioner, which is undisputedly a loanee, having a default of more than Rs.4000 crores to the consortium Banks of which the State Bank of India is the lead Bank. The petitioner pleads that the Reserve Bank of India (hereinafter referred to as the "RBI" for brevity) in usual course of discharging its duties and obligations from time to time have issued diverse directions and/or guidelines in relation to the cases that may be considered for reference for resolution under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC" for brevity). The RBI on 13th June, 2017 issued a Press Release under the heading "Reserve Bank of India Identifies Accounts for Reference by Banks under the Insolvency and Bankruptcy Code (IBC)" inter alia, recording the decision of the Internal Advisory Committee (IAC) in formulating an objective, nondiscretionary criteria for referring account for resolution under the said IBC. The said Press Release is annexed herewith as Annexure-2 to the writ petition. The case of the petitioner is that the RBI recommended for reference under the said IBC of all accounts with fund and non-fund based outstanding amount greater than Rs.5000 crores with 60% or more classified as nonperforming by banks as on 31st March, 2016. Under the said recommended criteria while 12 accounts were identified. As regards the other nonperforming accounts which did not qualify under the aforesaid criteria, it was recommended that the banks should finalize a resolution plan within six months and in cases where a viable resolution plan was not agreed upon within the stipulated period the banks would be required to file for insolvency proceedings under the said IBC. The details of the resolution framework in regard to the other non-performing accounts were directed to be released in the following days. A corrigendum was issued on 8th July, 2017. While a portion of Press Release was amended by deletion of a portion of Clause-5. The case of the petitioner is that it falls in the other categories of nonperforming account which did not qualify under the criteria mentioned in Clause-3 of the said Press Release. As such in terms of Clause-4 of the said Press Release a resolution plan was to be finalized in terms of the resolution frame work which was to be released in terms of clause 6 thereof. It is the further case of the petitioner is that no resolution framework was or has been released by the RBI till date, as a result whereof no resolution plan could be finalized and implemented. The stipulated period of six months also did not commence to run as no resolution frame work was released. The petitioner has from time to time sought finalization of a resolution plan in terms of the aforesaid Press Release and has also given various proposals to opposite party no.2 being the lead Banker. As neither any resolution framework was released by opposite party no.1 in terms of Clause-6 of the said Press Release dated 13th June, 2017, it was neither possible nor feasible to finalize the resolution plan within six months in terms of clause-4 thereof or otherwise. As opposite party no.2 did not and/or could not comply with the provision of Clause-4 of the Press Release dated 13th June, 2017. Non-compliance of the aforesaid Clause-4 of the Press Release deprives the petitioner from availing a resolution plan, notwithstanding exercise of due diligence and bonafide. The SBI on 21st December, 2017 filed proceeding under Section 7 of the IBC against the petitioner company before the National Company Law Tribunal, which has been registered as CP (IB) 24/KB/2018.

(3.) Learned Senior Counsel appearing for the petitioner submitted that filing of the aforesaid proceeding is not only contrary to and/or inconsistent with the Press Release dated 13.6.2017 and in the absence of a resolution framework in terms of Clause-6 thereof, the petitioner is deprived of the opportunity to finalize a resolution in terms of such frame work. The petitioner has a legitimate expectation that the Press Release dated 13.6.2017 and all its directions would be complied, including that of releasing of resolution framework in terms of Clause-6 thereof. It is submitted that the action of the SBI is illegal, arbitrary and denying/depriving the petitioner from availing finalization of a resolution plan in terms of Clause-4 of the said Press Release, other banks mentioned in the schedule appearing in Annexure-1, would be inspired. As it is necessary to pass appropriate orders/writs by this Court, this writ petition has been filed.