NCLT Allows JM Financial ARC Limited To Replace BoI in NCLT Proceedings Against National Steel & Agro Industries Limited

A bench of the National Company Law Tribunal (NCLT) allowed an interlocutory application by JM Financial ARC Limited, a third party, to substitute Bank of India (BoI) as a petitioner in insolvency proceedings against a BSE listed steel company. According to the order passed by a bench led by Justice Pradeep Nahar Deshmukh, JM Financial is now the financial creditor in the plea to admit National Steel & Agro Industries Limited in the Corporate Insolvency Resolution Process. (CIRP). Brief facts National Steel & Agro Industries Limited started in 1985. It manufactures galvanised steel, is also a leading importer and exporter of agro commodities like rice, wheat, soybean meal and others.Since 2014, the corporate debtor – National Steel & Agro Industries Ltd - availed a working loan of Rs 1,431 crores from a consortium of banks led by IDBI Bank and committed a default on repayment. Of this Rs 125 crores was from BoI. National Steel owes Rs 1,600 crore to its creditors. The company was declared as Non-Performing Asset in 2018. Bank of India Limited later filed petition under section 7 of the Insolvency and Bankruptcy Code, 2016. JM Financial before the tribunal was represented by Advocate Rohit Gupta along with Advocate Prakhar Tandon instructed by Advocate Agam H Maloo. Advocate Gupta submitted that on 29th September 2021, Bank of India entered into an assignment agreement with them and the entire loan with all underlying interest and rights, titles were transferred to JM Financial Asset Reconstruction Company Limited under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI ACT"). Accordingly, as per Section 5(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, the JM Financial became the deemed lender of the Corporate Debtor in place of Bank of India. Therefore, JM Financial could now prosecute National Steel, it was argued. Along with the Bank of India, other lenders are also in the process of assigning debts to JM Financial ARC. The other lenders include IDBI Bank, State Bank of India, Bank of Maharashtra, Central Bank, Union Bank and Punjab National Bank. After the NCLT allowed JM Financial ARC Limited's application on Friday, the company petition will now be posted for the final hearing on 9th March 2022. About the Company During FY2020-21, the company reported revenue of Rs 1578 crore and a loss of Rs 227 crore.Case Title: JM Financial ARC Limited (Third Party Applicant) in the matter of Bank of India v. National Steel and Agro Industries Limited. Counsel for the Third-Party Applicant: Mr. Rohit Gupta, Mr. Prakhar Tandon, Mr. Agam H Maloo.

NCLT Allows JM Financial ARC Limited To Replace BoI in NCLT Proceedings Against National Steel & Agro Industries Limited

Sharmeen Hakim

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