The Bombay High Court on Thursday dismissed a writ petition filed by two promoters of infrastructure finance firm SREI group challenging the RBI's decision to supersede the boards of two of its non-banking financial companies and initiate insolvency proceedings against them. A bench of Justices Ujjal Bhuyan and Madhav Jamdar dismissed the plea, saying it will give detailed reasons later.

"We have heard the counsels. For reasons to be dictated separately, we are not inclined to entertain the writ petition. Writ petition is dismissed," the High Court said. On Monday, the Reserve Bank of India (RBI) had superseded the boards of two companies of the SREI group and appointed an administrator to run their affairs.

As per the High Court order, two promoters, Adisri Commercial and Hemant Kanoria, had filed the writ petition challenging RBI's action. They said in the plea that RBI had acted in haste and in an arbitrary manner. The petition had also sought a stay on initiating insolvency proceedings against SREI Infrastructure Finance Ltd (SIFL) and SREI Equipment Finance Ltd (SEFL).

The RBI had superseded the boards of SIFL and SEFL, citing concerns over governance and payment defaults, and decided to refer the two NBFCs for resolution under the insolvency law. The two entities owe over Rs 30,000 crore to banks and financial institutions.

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Hemant Kanoria, Founder of SREI Group, in a statement said, “The SREI Group has been making full efforts to repay creditors in a structured manner. It is important to note that the SREI Group had submitted a proposal to pay the full outstanding amount to banks under a scheme filed under Section 230 of the Companies Act 2013 earlier in October 2020. The banks neither accepted it nor proposed a payment schedule acceptable to them. Instead the lenders have been controlling the company's cash flow since November 2020. Almost Rs 3,000 crore has been collected by them, out of which they have been disbursing to themselves and there were no defaults.”

“We were also exploring a fund raise and were in active talks with two strategic icom.nvestors to infuse a capital of Rs.2,000 crore which would have brought relief. We deny all the allegations of diversion of funds against SREI companies and with RBI’s action and now the high court’s decision we will explore various other legal options,” he added.

(With inputs from PTI)

(Edited by : Priyanka Deshpande)