Public Sector Bank initiates insolvency proceedings against State Trading Corporation

The NCLT Principal Bench has issued notice issued to Government-owned, State Trading Corporation (STC), in a filing made by Syndicate Bank in its capacity as a financial creditor..STC is an international trading house owned by Government of India. It trades in a variety of products ranging from agricultural commodities to manufactured product. It has availed various credit facilities from 6 banks – Syndicate Bank, IOB, Exim, BOB, UBI and Indian Bank..STC’s account was declared as an NPA on 31.3.2018 due to non-service of interest due since December 2017. As on 31.12.2018, outstanding balance, owed by STC to Syndicate bank, is approximately 700 crores. After being declared as an NPA, Syndicate Bank also wrote to the Ministry of Commerce and Industry alleging that STC is routing the transactions to other banks, which is in contravention of RBI guidelines..While several insolvency applications have been filed against Public Sector Undertakings in the recent past, none were admitted barring West Bengal Essential Supplies Commodities Corporation. This particular application is unique since it’s a public sector bank filing against a public sector undertaking, essentially making it a government dispute inter-se..A 1,955 crore suit against STC is already pending at DRT, filed by Syndicate Bank along with 5 others. The DRT-II, Delhi issued notice to STC on February 8, 2019, with interim directions and restrained STC from dealing with or disposing of secured assets over which security interest is created..Advocate Hitesh Sachar, Partner at Canpisce & Co is appearing for Syndicate Bank.