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.
Also Read: Real Threat To IBC Is Death By Delay: Outer Limit For Resolution Must Be Cut To 180 Days
An Appeal...
Dear Reader,
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.