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IBC A ‘Performing Asset’: SC Upholds Constitutional Validity Of The Insolvency Legislation In Its ‘Entirety’
A view of Supreme Court building. (Sonu Mehta/Hindustan Times via Getty Images)
The Supreme Court (SC) has upheld the constitutional validity of the Insolvency and Bankruptcy Code (IBC) in its ‘entirety’ and dismissed petitions challenging the code, reports Money Control.
The apex court also ruled out pleas for parity of operational creditors with financial creditors. The SC judgement was in line with the earlier Allahabad High Court order that refused to provide private companies relief against a 12 February (2018) Reserve Bank of India (RBI) circular.
The circular tightened norms for classifying bad loans (non-performing assets or NPAs) and also mandated insolvency proceedings against defaulting power projects.
A Success Story?
The National Democratic Alliance government’s flagship legislation, IBC saw teething troubles including inconsistencies and technical issues. However, due to the government's proactive approach in rolling out amendments, the code provided the Indian banking system with a comprehensive solution to recover their dues from wilful defaulters.
Secretary to the Union Corporate Affairs Ministry, Injeti Srinivas, recently stated that the IBC has helped to, directly and indirectly, address over Rs 3 lakh crore worth of distressed assets.
But the delay in getting the cases fully resolved in the National Company Law Tribunal is still causing significant losses. A report in The Hindu Business Line pegs the damages at Rs 25,000 crore in interest for over Rs 2 lakh crore loans from top 10 defaulters.
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