Even as banks are hurrying to get cases of insolvency settled at accelerated pace, creditors, particularly non-banking entities are facing tough challenges on ground to recover money from habitual defaulters.
Creditors like Paharpur Cooling Towers have failed to recover any significant dues from the troubled Abhijeet Group, which is now being directed to go for liquidation. Another creditor, Srei Equipment Finance, is trying to get police protection to get its leased assets recovered from Ramsarup Industries.
While the key purpose of the Insolvency and Bankruptcy Code, 2016 is to expedite the resolution processes for non-performing assets, the realities of the Indian judiciary system are weighing on it, a fact even recognised by the courts.
"True to a person about to lose his business clutching at straws, the principal promoter of the company preferred appeals and sought and obtained several adjournments to bring in funds," Judges Sanjib Banerjee and Siddhartha Chattopadhyay said, referring to the Jayaswal family, promoters of group's flagship company Abhijeet Projects, now renamed as Pathbreaking Projects.
As part of their last resort, promoters claimed there was substantial amount due by way of a performance guarantee, which could be released subject to an order of a Nagpur court.
When the hearing at Nagpur court didn't happen as scheduled, Calcutta High court now has ordered its liquidation.
While the promoters have put in a sum of Rs 1.65 crore, the combined value of the claims of the creditors like Paharpur and others is well in excess of Rs 70 crore.
On other end of the spectrum of insolvency and NPA cases, there is the case of erstwhile steel maker Ramsarup Industries, where creditor Srei Equipment Finance has to pay for police assistance for the protection of its assets at the premises of the closed steel plant at Kharagpur in West Bengal owned by Ashish Jhunjhunwala.
These apart, lack of adequate infrastructure is hurting the insolvency resolution processes. There are now about 11 NCLT benches across the country and 25,000 insolvency cases pending, resulting in demand from banks to raise the number of benches, sources in the banking sector said.
OUT IN THE COLD
- Paharpur Cooling has failed to recover significant dues from Abhijeet Group
- Srei is trying to get its leased assets recovered from Ramsarup Industries
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