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Employees walk past an Essar Group logo outside their headquarters in Mumbai May 20, 2013.Reuters file

Essar Steel, one of the 12 chronic defaulters who owe a colossal amount in loans to Indian and international banks, got temporary relief when the Gujarat High Court stayed an insolvency petition filed against the company by Standard Chartered Bank.

The company, which owes Rs 37,284 crore to various lenders, pre-empted a move by the Ahmedabad Bench of the National Company Law Tribunal (NCLT) to initiate proceedings under the Insolvency and Bankruptcy Code (IBC), reported bar and bench on Wednesday.

The matter will now be heard on July 7.

Also read: List of 12 defaulterrs who owe a mind-boggling amount to banks 

The Court upheld the grounds on which Essar Steel had sought to halt proceedings. The company argued that the RBI letter to banks was dated June 13, 2017 while fixing the effective date for initiating proceedings as March 31, 2016.

Pursuant to the RBI's decision to identify 12 defaulters whose accumulated debt accounts for almost 25 percent of the bad loans in the banking system, the lenders initiated the next steps.

In Essar Steel's case, the joint lenders' forum headed by State Bank of India, decided to initiated insolvency proceedings by referring the case to the NCLT, along with two other defaulters, Bhushan Steel (amount due Rs 44,478 crore) and Electrosteel Steels (amount owed Rs 10,280 crore).

The RBI had said in its June 13 communication that the NCLT would take up the cases of the 12 identified on priority, given the seriousness of the issue and the amount involved. 

Essar Steel has a production capacity of 10 million tonnes per annum but is not listed on the stock exchanges.