Monday, June 21

RBI: SC segregates pleas against RBI NPA circular, to hear matter on November 28

The Supreme Court will hear the pleas filed by companies owning stressed assets on November 28, after segregating the matters into those challenging insolvency law and those challenging validity of RBI circular.

The matters pertaining to Insolvency and Bankruptcy Code will be heard first followed by those challenging the RBI circular, sources said.

Matters related to validity of IBC proceedings include those filed by South Indian Sugar Mills Association and Bhushan Steel & Power. The Supreme Court had on September 11 halted insolvency proceedings against defaulters in the power, sugar, shipping and textile sectors by staying the RBI circular. The bench, comprising Justices RF Nariman and Indu Malhotra, directed parties to maintain status quo while transferring about a dozen cases on the matter in various lower courts to itself.

Private power companies and bank employees union have challenged the controversial circular saying it is ultra vires the RBI Act as it infringes lenders’ discretion to move defaulting loan accounts. The RBI circular mandated lenders to initiate insolvency proceedings against all defaulters after August 27.

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