Hyderabad HC stays proceedings against Anarak Aluminium

The Hyderabad High Court has stayed the proceedings against ai ling Anrak Aluminium Limited in the National Company Law Tribunal( NC LT ), which is currently examining an application filed by State Bank of India (SBI) under section 7 of the Insolvency and Bankruptcy Code (IBC), seeking the initiation of insolvency resolution. The court admitted a writ petition filed by the company requesting the court to declare the Reserve Bank of India(RBI)’s August 28 directive involving a specific set of large corporate borrowers, including Anrak, and the consequent action of State Bank of India(SBI), as illegal, arbitrary and violative of Article 14 of the Constitution of India. Justice AV Se sh aS ai issued the interim orders after the petitioner-director( finance) and the company secretary claimed the company was dragged to NCLT even though a scheme of one time settlement( O TS) in respect of the outstanding loans was agreed toby the consortium of lenders and the same was being put into action even before the banking regulator ruled out the extension of deadline.

“It is submitted by the learned senior counsel that having made the petitioner herein to pay a sum of ~1.25 billion under ‘One Time Settlement’ Scheme, there is no justification on the part of respondent number 2(SBI) to initiate proceedings before the National Company Law Tribunal, Hyderabad bench. It is further submitted by the learned senior counsel that shortly, the petitioner herein is going to deposit another sum of ~2.75 billion by the end of March, 2018,” the judge said while considering the matter for examination.

The court, however, made it clear that the stay orders will no longer exist if the petitioner fails to pay ~2.75 billion as agreed under the OTS.