NCLAT grants relief to RBI, strikes down stay on repayment moratorium

NCLAT grants relief to RBI, strikes down stay on repayment moratorium

NCLT, Kolkata bench, had passed an order preventing regulatory authorities from taking any coercive steps against the Seri Group

The National Company Appellate Law Tribunal (NCLAT) has given some kind of relief to the Reserve Bank of India (RBI) by lifting a stay that prevented it from taking any coercive action against the Seri Group.

The Kolkata Bench of National Company Law Tribunal (NCLT) had debarred RBI and other banks from taking action against the group and had granted the Seri Group moratorium on repayment.

The RBI had decided to challenge the NCLT order at NCLAT.

"We are of the view that if the operation of the aforesaid direction is stayed it will not prejudice the proceedings pending before the tribunal. Therefore, we deem it appropriate to pass ad-interim order. In Paragraph 34 of the impugned order following direction is stayed till the pendency of this appeal," NCLAT said.

Paragraph 34 of the impugned order of Kolkata Bench of the NCLT read, "All governmental or regulatory authorities shall be stopped from taking any coercive steps, including reporting in any form and/or changing the account status of the firm".

"Till further orders, the creditors (including representative security or debenture trustees) of the applicant company covered under the scheme shall maintain status quo with respect to their respective contractual terms dues claims and rights and the creditors (including security or debenture trustees)," the NCLT had said in its order while granting the Seri Group a moratorium on repayments.

The focal point of the RBI challenge was that NCLT had exceeded its jurisdiction while passing such an order and prevented the statutory body like the RBI to act as a regulatory authority.

The NCLAT observed that the scope of the appeal was limited to the extent that whether the tribunal while exercising the jurisdiction under Section 230 of the Act, was entitled to pass aforesaid directions against the RBI.