Page 19 - Banking Finance February 2021

LEGAL UPDATE

Legal Cases

Supreme Court upholds clean break with the past and start on RTI applicant must
a clean slate," the bench added.
law protecting new owners disclose interest in seeking
The sale of bankrupt companies,
of bankrupt companies including JSW Steel Ltd.'s takeover bid information
The Supreme Court has upheld laws for Bhushan Power & Steel Ltd. -- one The Delhi High court has held that an
that protect new owners of insolvent of the 12 big debtors pushed into RTI applicant seeking information
companies from charges filed against bankruptcy by the central bank in 2017 should disclose his/her interest in it to
the previous management. -- have been stuck after India's anti- prevent a "roving and fishing enquiry".
money laundering agency seized assets
"A bankrupt company and its assets and opposed the deals while Justice Pratibha M Singh upheld the
cannot face criminal proceedings once order of the Central Information
investigating alleged offences by
it is sold to new owners," the SC said, previous owners. Commission to deny material sought by
dismissing petitions challenging the an applicant under the Right to
rules. The former management of the The law granting immunity was first Information Act about appointments
firms will face prosecution, according passed by a bankruptcy tribunal last to a particular position at President's
to the norms. year. The Supreme Court's judgment Estate in Rashtrapati Bhavan.
was part of a case by homebuyers and "This court is of the opinion that
The verdict holds importance for some creditors who challenged the
potential investors looking to buy into law. whenever information is sought under
one of the world's biggest piles of bad the RTI Act, disclosure of an interest
loans. India's central bank forecasts "With multiple criminal prosecutions in the information sought would be
often plaguing debtor companies, the necessary to establish the bonafides of
soured assets will almost double to
13.5% of total advances in the year ring fencing done by the 2020 the applicant. Non-disclosure of the
through September as the pandemic amendment would hopefully serve as same could result in injustice to several
impetus for resolution for the Reserve other affected persons whose
slams businesses.
Bank of India's dirty dozen and information is sought," the court
A three-judge bench headed by Justice beyond," said Sushmita Gandhi, a noted, while also slapping a cost of Rs
Rohinton F. Nariman said: "There is partner at law firm IndusLaw. 25,000 on the applicant.
imperative need to attract resolution
The court also upheld curbs disallowing Har Kishan had sought information
applicants who would not shy away
individual homebuyers from initiating that included the complete address and
from offering reasonable and fair bankruptcy against builders. The new father's name of all those who had
value."
law requires at least 100 buyers or been appointed to the post of
"Extinguishing criminal liability will 10% in a project to initiate a multitasking staff, and alleged
help the new management to make a bankruptcy case. irregularities.

BANKING FINANCE | FEBRUARY | 2021 | 19