Last of RBI12, green signalled by NCLT Special Bench for hearing

The final firm of the RBI 12, Era Infra Engineering, on 16 February received the NCLT’s nod for being heard on merits after being referred to a Special Bench..The RBI, had in June 2017, issued a notification identifying 12 (undisclosed) NPA by its ‘Internal Advisory Committee’. According to this Committee, the 12 NPAs account for about 25% of the country’s total bad loans. RBI also issued directions to banks to file for insolvency proceedings and that such cases will be accorded priority by the NCLT. Era is one of those 12 accounts..Although Era Infra’s case was admitted by the Principal Bench early in April, 2017 based on an application filed by operational creditor, it was set aside by the NCLAT due to procedural defects..Thereafter, a fresh application was filed by financial creditor, Union Bank of India. The matter, along with several others, was referred to a (larger) Special Bench of the NCLT for consideration. The Bench consisted of retired Chief Justice M.M. Kumar, Judicial Member Varadharajan and Technical Member Deepa Krishnan..Era is just another case of delay in admission owing to the (multiple) winding-up petitions filed against it. The NCLT order falls short of explaining what stage of winding-up proceedings was Era’s case at. Evidently, somewhere between filing of the petition and appointment of liquidator. This is the reason why the Special Bench passed its order relying on the Bombay High Court ruling in the case of Jotun..In Jotun, although notice had been served on the respondent, the Bombay High Court allowed the NCLT to hear the case on merits for admission, ruling that even after the petition is served, a new proceeding under the IBC may be filed..This, however, only reiterates the existing stance on the question of whether insolvency can be triggered when winding up petitions have already been served.The second question which is left answered, still, is whether insolvency can be triggered once the official /provisional liquidator has been appointed..The Principal Bench will be hearing the Era’s matter (along with the other winding-up petitions pending before it) on 28 March, 2018..(Read the Order)