29 March 2019: In a major setback to Anrak Aluminium company, the Telangana high court on Thursday allowed an appeal filed by RBI and allowed SBI authorities to drag the company to the insolvency process at National Company Law Tribunal, Hyderabad.
A bench of Justice Raghavendra Singh Chauhan and Justice T Amarnath Goud pronounced this order after hearing a writ appeal filed by RBI challening the order of a single judge who found fault with an RBI circular and also with SBI for initiating insolvency process even after agreeing to settle for the company’s one-time settlement offer of Rs 1,275 crore.
The company took loans from a consortium of banks headed by SBI and the total dues stand at a staggering Rs 3,000 crore.
Anrak company, a joint venture firm floated by Penna industrial group and Ras Al Khaima of the United Arab Emirates, was supposed to set up an aluminium plant in Vizag Agency area with the help of raw bauxite supplied from AP Mineral Development Corporation.
Following resistance from tribals, then AP government cancelled the agreement to supply bauxite to Anrak. The single judge found fault with SBI mainly on this ground that when the state government had failed to fulfil its commitment, it may not be fair to blame the company.
RBI counsel S Niranjan Reddy, however, said that mere reference to NCLT would not harm the company and the tribunal-appointed resolution professional could suggest a resolution plan that may include restructuring of the company.
Appearing for Anrak, senior counsel Raghunandan Rao told the bench that nothing would remain in their hands if the NCLT admits the plea and commences the insolvency resolution process and the bank may not get even the amount that was assured by them. “We agreed for a settlement of Rs 1,275 crore and have already paid Rs 400 crore. We would pay the remaining amount by the end of March,” he said. The bench did not agree with the company’s arguments. The bench, however, suspended its judgement for a period of one month to enable the company to avail itself of legal remedies.