The National Company Law Tribunal’s Mumbai chapter has rebuked the country’s largest lender, State Bank of India, for its “lackadaisical approach” in sanctioning a Rs 334 crore loan to Uttam Value Steels.
“On the face of records it seems the profitability in this business has not matched with the quantum of loan granted,” said M K Shrawat, a member judge in the court order.
“It appears the loan facilities were granted or extended even without prima facie due diligence.”
The court has admitted Uttam Value Steels for insolvency proceedings.
Earlier in December last year, SBINSE 0.91 % filed an insolvency petition against Uttam Value Steels Ltd, a company engaged in manufacturing various steel products. The firm had availed term loans from the bank.
But, the company claimed that it had availed only Rs 304 crore and that the promoters have invested Rs 2,000 crore in upgrading and modernisation of the plant.
A few months ago, the RBI discounted all past restructuring programmes directing lenders to use the Insolvency and Bankruptcy Code to recover bad loans.
“If on one hand this corporate debtor is to be blamed for default of non-payment, then simultaneously on the other hand it is fit to say that the bank authorities have adopted lackadaisical approach,” said the court judge in the order.
The court has appointed Rajiv Chakraborty as the interim resolution professional, who will be responsible for running day-to-day company operations during the period of insolvency that can extend up to 270 days.
The financial creditor has furnished several evidences to establish the existence of the “financial debt” plus sufficient records to establish the occurrence of “default”, the court said admitting the Uttam Value Steels for bankruptcy proceedings.
The company has about 2000 employees and workers at its plant in Wardha.