Srei Group: Bombay HC rejects Srei Group petition against RBI bankruptcy

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The Bombay High Court on Thursday rejected the petition for brief filed by Manoj Kanoria, promoter of the Srei group, against the decision of the Reserve Bank of India (RBI) to replace the board of directors of the two companies of the group.

A division bench of Judges Ujjal Bhuyan and Madhav Jamdar, after hearing both parties, dismissed the petition in an oral order and observed that the court was not inclined to pursue the case as it was unfounded. .

Lawyers representing the Srei group had argued that the company had acted on RBI’s red flags and was in talks with two strategic investors who were prepared to provide capital of over Rs 4,000 crore.

The boards also argued that the shortlisted investors were ready to invest in the company, if the RBI gave them some time rather than initiating insolvency proceedings. The promoter is ready to relinquish control to achieve a resolution of the company, they argued.

Manoj Kanoria, promoter of the Srei group, challenged the RBI’s decision to initiate bankruptcy proceedings against the group in the Bombay High Court through his company Adisri Commercial Pvt Ltd.

While countering this, the attorney representing the RBI argued that the Central Bank was reporting governance issues in the two non-bank financial corporations (NBFCs) as early as 2016 and that the company had had sufficient time to clean up. in his business.

RBI’s attorney further argued that inspection reports indicated that the group was involved in related party transactions and also engaged in loan renewals.

The banking regulator replaced the boards of directors of Srei Infrastructure Finance and Srei Equipment Finance on Monday citing governance issues and defaults and said it would initiate insolvency proceedings against the two companies with the National Company Law Tribunal (NCLT).

The central bank appointed Rajneesh Sharma, former chief executive of Bank of Baroda, a director of both companies.

Senior lawyer Ravi Kadam and law firm Udwadia & Co appeared for the RBI in this case. While Kanoria was represented by lead lawyer Janak Dwarkadas with Ameet Naik of the law firm Naik Naik & Co, the case.

Srei is the second financial company that the RBI has initiated insolvency proceedings against after Dewan Housing Finance Corporation Ltd (DHFL).

The central bank’s action comes in the wake of a consortium of lenders led by UCO Bank classifying loans from Srei companies as non-performing assets.

In June, Srei companies informed stock exchanges that an RBI inspection reported loans worth Rs 8,576 crore as related party loans. These accounted for nearly 30% of the group’s consolidated debt of Rs 28,700 crore. Overall, the group has a debt of over Rs 35,000 crore.



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