The National Company Law Appellate Tribunal (NCLAT) has taken a significant step in the ongoing legal battle surrounding Srei Infrastructure Finance by directing the Reserve Bank of India (RBI) to respond to a petition filed by Adisri Commercial. Adisri Commercial, the former promoter of Srei Infrastructure Finance, has contested an earlier order issued by the tribunal.
The saga began when the Kolkata bench of the National Company Law Tribunal (NCLT) admitted Srei Infrastructure Finance into the corporate insolvency process on October 8, 2021. Adisri Commercial challenged this NCLT order in December 2022, only to have their plea dismissed by the NCLAT bench. Adisri’s appeal was initially rejected on the grounds of filing delay, raising concerns about due process and natural justice.
Senior advocate Ranjit Kumar, representing Adisri Commercial, argued that their case was not evaluated on its merits and that they were denied proper notice and a fair hearing. Kumar emphasized that the company disputes the debt claimed by RBI, insisting that they were not given the opportunity to demonstrate the absence of the alleged debt. He also cited the impact of the COVID-19 pandemic on the filing process and requested leniency in this regard.
In response, Gopal Jain, senior counsel for the RBI, contended that Adisri Commercial displayed a lack of seriousness and commitment throughout the legal proceedings. Jain cautioned that recalling the dismissed appeal could disrupt the Corporate Insolvency Resolution Process (CIRP), reset the timeline, and set a concerning precedent. Jain pointed out that even the Supreme Court had dismissed the appeal, raising doubts about the feasibility of recalling the order.
The RBI clarified that its decision to supersede the boards of Srei Infrastructure Finance and its subsidiary Srei Equipment Finance was prompted by concerns over governance and defaults on loan repayment obligations. The RBI argued that Adisri had pursued the matter through various courts, indicating a prolonged legal process.
The NCLAT bench has called for both parties to provide relevant precedents on the permissibility of recalling a dismissed appeal. The tribunal is scheduled to revisit the matter on September 25th.
Srei Group’s lending entities, Srei Equipment and Srei Infrastructure, collectively owe creditors around ₹30,000 crore ($4 billion), with banks accounting for ₹20,000 crore of the total. The ongoing resolution process includes three applicants: a consortium of Varde Partners and Arena Investors, National Asset Reconstruction Co. (NARCL), and Authum Investment and Infrastructure.
The case raises significant legal and procedural questions, shedding light on the complexities and challenges involved in insolvency proceedings and corporate governance disputes in India’s financial landscape.
