Supreme Court Halts Swiss Challenge Debt Assignment.


25 June 2025 Civil Appeals >> Civil & Consumer Law  

In International Financial Service Limited v/s Srei Equipment Finance Limited & Another, the Supreme Court has temporarily halted the finalization of an invitation for expressions of interest issued by Respondent No. 1, concerning the assignment of debt under the Swiss Challenge Method. The invitation, dated April 16, 2025, sought interest from Non-Banking Financial Corporations and others to acquire the debt of M/s. United Asian Traders Limited.

The petitioner initially challenged this invitation in a trial court, which on April 24, 2025, issued an injunction against it. This injunction was subsequently set aside by the High Court on June 9, 2025, although the High Court maintained a 15-day stay due to "arguable points."

 
 

The petitioner then filed a special leave petition with the Supreme Court. On June 20, 2025, the Supreme Court ordered both parties to file affidavits regarding the status of Respondent No. 1, with the petitioner also required to affirm no connection to the previous promoter.

During arguments, the petitioner contended that Respondent No. 1 is a government company and a wholly-owned subsidiary of SREI Infrastructure Finance Limited, which was taken over by the government-backed National Asset Reconstruction Company Limited. This, the petitioner argued, bound Respondent No. 1 to Reserve Bank of India circulars. Respondent No. 1, however, argued that the petitioner lacked locus standi as neither a borrower nor a bidder.

After hearing both sides, the Supreme Court determined that the matter requires further consideration. The Court has issued notice to the respondents, returnable by August 5, 2025, and has ordered that the invitation for expression of interest dated April 16, 2025, shall not be finalized in the interim.