Supreme Court: In a Special Leave Petition filed against the judgment of the Calcutta High Court, the Division Bench of Ujjal Bhuyan and K. Vinod Chandran, JJ. observed that the issue as to whether SREI Equipment Finance Limited (‘SREI Equipment’) is bound by the circulars issued by the Reserve Bank of India, considering its status as a company backed by the Government of India, required further consideration.
Pending such consideration, the Court granted an interim stay on the proposed debt assignment process initiated by SREI Equipment under the Swiss Challenge Method, in respect of the debt concerning United Asian Traders Limited. The interim stay was directed to remain in force until the next date of the hearing, scheduled for 05-08-2025.
Background
SREI Equipment had issued an invitation for expression of interest for the assignment of debt under the Swiss Challenge Method on 16-04-2025. By the said invitation, SREI Equipment had invited expressions of interest from Non-Banking Financial Corporations and others to acquire the debt of United Asian Traders Limited. The deadline for submission of the expression of interest was fixed as 22-04-2025 by 5:30 p.m.
International Financial Service Limited (‘IFSL’) had challenged the said invitation for expression of interest by instituting a suit and had also sought an injunction. The Trial Court, vide order dated 24-04-2025, restrained the respondents from giving any effect or further effect to the notice dated 16-04-2025.
This order was assailed by SREI Equipment before the High Court. The High Court, vide judgment and order dated 09-06-2025, had set aside the order dated 24-04-2025 on various grounds. However, on a prayer made by IFSL, the High Court continued the stay for a period of 15 days, observing that certain arguable points were involved.
Thereafter, IFSL preferred the instant special leave petition.
The Court in its order dated 20-06-2025, had directed that, before proceeding further in the matter, both SREI Equipment and IFSL were required to file affidavits regarding the status of SREI Equipment. It was further directed that IFSL, in its affidavit, should specifically state that it is not an alter ego and is in no way connected with the previous promoter.
Pursuant to the directions issued by this Court, both SREI Equipment and IFSL filed their respective affidavits.
IFSL referred to the affidavit filed by SREI Equipment to contend that SREI Equipment is a wholly owned subsidiary of SREI Infrastructure Finance Limited and is, by all accounts, a government company, in addition to being a Non-Banking Financial Corporation. It was further submitted that SREI Equipment has been wholly taken over by the National Asset Reconstruction Company Limited following a corporate insolvency resolution process, and the said company is backed by the Government of India. Therefore, SREI Equipment is bound by the circulars issued by the Reserve Bank of India in this regard.
SREI Equipment, however, opposed the above submissions and placed reliance on the impugned judgment to contend that the present petition is devoid of merit. It was further submitted that the IFSL is neither a borrower nor a bidder and, therefore, lacks the locus standi to institute the suit.
Court’s Order
The Court viewed that the matter required further consideration. Accordingly, notice was issued to the respondents, returnable on 05-08-2025. However, since SREI Equipment was already represented, issuance of formal notice to it was dispensed with. Liberty was granted to the respondents to file a detailed counter affidavit to the Special Leave Petition, if so advised.
In the meanwhile, the respondents were directed not to finalise the invitation for expression of interest for assignment of debt under the Swiss Challenge Method dated 16-04-2025.
[International Financial Service Limited v. SREI Equipment Finance Limited, 2025 SCC OnLine SC 1392, decided on 25-06-2025]
Advocates who appeared in this case:
For Petitioner(s): Mr. Vikram Nankani, Sr. Adv. Ms. Rooh-e-hina Dua, AOR Mr. Tanay Agarwal, Adv.
For Respondent(s): Mr. Rajan Bachawat, Sr. Adv. Mr. Saurav Agarwal, Adv. Mr. Paritosh Sinha, Adv. Mr. Shounak Mukhopaddhay, Adv. Mr. Saubhik Chowdhury, Adv. Ms. Priyata Chakraborty, Adv. Ms. Tapasika Bose, Adv. Mr. Tavish Bhushan Prasad, AOR Mr. Mehak Joshi, Adv.
