NCLT admits SBI’s plea seeking insolvency proceedings against steelmaker Reform Ferro, Legal News, ET LegalWorld – Legal Firms

The bankruptcy court has allowed the State Bank of India’s petition seeking to initiate insolvency proceedings against Kolkata-based steelmaker Reform Ferro Cast and appointed Arun Kumar Gupta as its interim resolution professional. State-owned lender SBI had approached the Kolkata bench of the National Company Law Tribunal (NCLT) against the steelmaker after it defaulted on its dues of about ₹267 crore.

“The present petition made by the financial creditor (SBI) is complete in all respects as required by law,” said the bench headed by members Rohit Kapoor and Balraj Joshi in its order of November 21 while admitting the SBI’s application.

The company had originally defaulted on its loans in April 2014 and later the lender approached the Debt Recovery Tribunal (DRT) against the company in June 2015.

Senior advocate Joy Saha, appearing for the steelmaker, challenged the plea filed by the lender with the NCLT. The plea argued that the financial creditor did not sanction the loans on time and there was an inordinate delay on the part of the lender which led to the loss in business for Reform Ferro Cast. It said this caused the corporate debtor to become sick and irreversibly damaged the company.

The company also argued that the original date of default is questionable, as the account of the corporate debtor was classified as non-performing asset much earlier, whereas the petition under the Insolvency and Bankruptcy Code was filed in November 2021. Hence, the company petition is barred by limitation, it said.

Countering this, the lender’s advocates, Manju Bhuteria and Debashish Chakraborti, argued that the SBI’s claim is not barred by laws of limitation as the company has admitted its liabilities and default from time to time in its balance sheet.