In a major setback to the lenders led by Andhra Bank, the NCLT on Friday recalled its earlier order allowing withdrawal of the insolvency process of Sterling SEZ & Infrastructure and also directed government to take punitive actions against the senior officials of the lenders for misleading the tribunal with a withdrawal plea.
With this, Sterling SEZ & Infrastructure that owes more than Rs 8,100 crore to consortium of lenders led by Andhra Bank will go for liquidation.
At the hearing on Thursday, an angry bench had ordered the bankers to be personally present for hearing Friday.
Earlier, this month, the committee of creditors had moved an application seeking to withdraw the bankruptcy proceedings after the absconding promoters offered a one-time settlement offered.
The tribunal also excluded the litigation time from the bankruptcy process until further orders.
"The mandated 270 days ended on April 11. But given the extraordinary situation, we have excluded the period of this investigation until further orders," the tribunal said.
A two-member bench comprising Bhaskara Pantula Mohan and V Nallasenapathy directed the corporate affairs ministry to take punitive action against the executive directors/board members of Andhra Bank for misleading the tribunal and warned that their action will have far reaching consequences.
"The lenders virtually acted in defiance of the law of the land and acted without application of their mind, while opting for one-time settlement," the bench said.
Senior banks officials, who approved the loans and one time settlement must also be brought under the scanner of investigating agencies (SFIO), the bench added.
The bench further said the resolution professional shall continue as RP and the company goes into liquidation and fixed Rs 2 lakh as his fee.
The RP is duty-bound to protect the assets of the company and in the same manner but shall report the day-to-day matters to this bench and ministry represented through the SFIO, the tribunal added.
Meanwhile, the bench hearing Sterling group company Sterling Biotech, posted the matter for further hearing on April 30 as saying both the cases are from the same group and therefore the proceedings should move in the same direction.
In another development, the markets watchdog Sebi said informed the tribunal that it is not opposed to the withdrawal of the bankruptcy proceedings against Sterling Biotech, while the corporate affairs ministry, the Enforcement Directorate and the Central Bureau of Investigation opposed the same.
Earlier, the tribunal had sought views from various government agencies after the banks submitted a settlement offer as criminal cases are pending against the promoters.
The lenders had said the promoter had already made advance payment of Rs 173 crore ahead of the settlement out of the Rs 3,100 crore settlement offered. The company owes over Rs 7,500 crore to banks.
The tribunal has asked the promoter whether they could deposit the entire settlement amount in an escrow account.
The NCLT also pulled up RBI for not taking a stand on the one-time settlement offer that the banks have accepted from the promoters of Sterling Biotech knowing they are absconding and facing extradition.
The matter will be next heard on April 30.