While pronouncing the judgement on the Essar Steel India Ltd (ESIL)’s petition against Reserve Bank of India’s directive on insolvency proceedings, the Gujarat High Court on Monday raised serious concerns on the functioning of the apex bank and cautioned it to be “careful while issuing press releases”.

The petitioner Essar Steel had challenged the decision of the RBI mentioned in its press release dated June 13, 2017, which directed banks to initiate insolvency proceedings against top 12 NPA accounts under the National Company Law Tribunal (NCLT).

The Court had raised a query that based upon which office order or directions or decision such press release has been issued or published. In response, the RBI admitted that there is no other document in which the decision to issue the press release has been recorded and no other document on the basis of which such decision is taken.

However, there are subsequent specific directions issued to the bank. “This also goes to show the manner in which RBI is functioning, in as much as there is a press release even without a decision at certain level that press release is to be published and what should be included in such press release. This is also an equally serious issue,” the court observed.

In its submission, Counsel for RBI had stated that “pursuant to the recommendations of the Internal Advisory Committee (IAC) (which held its meeting on June 12, 2017), RBI took the decision which is contained in the Press Release dated June 13, 2017. There is no other document in which the decision to issue the press release has been recorded”.

Earlier during the hearings, the RBI had admitted an error in its June 13 press release, which mentioned that ...“such cases will be accorded priority by the National Company Law Tribunal”.

The court had asked the RBI to explain this, which was later deleted through a corrigendum followed by an affidavit by the apex bank.

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