SEL Manufacturing, the first company under Reserve Bank of India’s (RBI) second list of corporate defaulters, continues to heavily contest proceedings initiated by Financial Creditor, State Bank of India (SBI).

SBI referred the case to Chandigarh Bench of National Company Law Tribunal (NCLT) on October 12, 2017 under Section 7 of the Insolvency and Bankruptcy Code, 2016, owing to a debt amounting to Rs. 1,136 crore. However, the matter came up for hearing only on November 22, 2017 and is yet to be concluded.

This case, however, highlights a question, which has largely remained unanswered: whether some of the companies referred to NCLT by the RBI are actually innocent victims of the tight liquidity policy and mistakes of the banks.

SEL, a company which was under the Corporate Debt Restructuring (CDR) mechanism, has contested the proceedings on several grounds.

It is SEL’s submission that it did not receive the promised loan and working capital due to Banks inability to meet the prescribed capital exposure norms. Furthermore, SEL has contended that the banks further compounded their mistake by not processing the subsidies extended by the Government of India and Government of Madhya Pradesh to textile units.

While the CDR consortium had agreed not to initiate any legal action, SBI sought to exit the consortium, the request for which was denied.

SBI is being represented by Shardul Amarchand Mangaldas, with Pallavi Shroff arguing the matter. SEL is being represented by Senior Advocate Anand Chhibbar.