The Bombay high court on Thursday dismissed a petition filed by a Srei entity challenging the Reserve Bank of India’s decision to supersede the board of two group companies — Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL).

The RBI on Monday moved to supersede the board of the two companies, announced an administrator and appointed a committee to assist the administrator with an eventual intent to initiate resolution under the Insolvency and Bankruptcy Rules .

Following the regulator’s move, Adisri Commercial, a holding company of Srei with a 60.36 per cent stake in Srei Infrastructure Finance Limited, moved the Bombay high Court seeking a stay on the RBI move initiating insolvency action.

A two-member division bench after hearing both sides dismissed the petition and observed that the court is not inclined to entertain the writ petition.

According to bankers, among the chief concerns that have been brought to the notice of the regulator, include income recognition, asset classification, provisioning, related party transactions, governance and compliance.

The parent company SIFL and SEFL were advised by the regulator to reassess and re-evaluate the relationship with certain entities.

“We deny all the allegations of diversion of funds against Srei companies, and with RBI’s action and now the Bombay high court’s decision we will explore various other legal options and solutions with the guidance and directions of the RBI,” Hemant Kanoria, founder Srei group, said.

As per regulatory disclosure the total exposure (net of impairment) of SEFL towards such borrowers was Rs 7,961 crore as of June 30, 2021.