HYDERABAD: The Telangana High Court has directed two Central government Ministries, the Insolvency and Bankruptcy Board of India and State Bank of India (SBI) to respond in four weeks to a petition, which has challenged the constitutional validity of the Insolvency and Bankruptcy Rules, 2019, vide notification dated November 15, 2019.
The Ministries which have received the HC notices are that of Corporate Affairs, and Law and Justice. The court has also stayed a notice issued by the SBI on August 19, 2020 till the next date of hearing.
A division bench of the High Court, comprising Chief Justice Raghvendra Singh Chauhan and Justice B Vijaysen Reddy, passed this interim order in the petition filed by Sabbineni Surendra, who sought to declare the SBI’s notice as illegal.
The impugned notice was issued demanding Rs 2,130 crore from the petitioner based on a guarantee deed dated March 29, 2014.
The petitioner is the suspended director of a corporate debtor (Coastal Projects Limited) and executed a personal guarantee for the loans raised from SBI. The bank moved the National Company Law Tribunal’s Kolkata bench, with a plea to declare the petitioner as insolvent, following which the Ministry of Corporate Affairs notified the impugned Rules, 2019.
RBI circular aimed at discouraging fraud: AG
Telangana Advocate General BS Prasad, appearing for the SBI, on Wednesday informed the High Court that the RBI circular was brought in with an express purpose to discourage fraudsters, who dupe banks in the name of their companies.
He said SBI alone has lost over Rs 1,500 crore in the loan fraud case and if some other banks’ loss is included, the extent of fraud will be over Rs 4,000 crore, he informed a division bench, which was dealing with a batch of petitions that asked banks to declare suspicious accounts as fraud accounts