9911796707
TMI Blog2018 (10) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The petitioner also impugns Clause 13 of the RBI Circular dated 12.02.2018 inasmuch as it excludes the borrower in respect of which RBI has issued specific instructions to the banks for making a reference under the IBC. The petitioner, essentially, seeks that it be excluded from the scope of the said Circular. The petitioner had availed various term loans and working capital facilities from various lenders. The petitioner claims that the majority of its exposure is towards the consortium of lenders consisting of fifteen nationalized and scheduled commercial banks. Admittedly, the petitioner has defaulted in repayment of its dues and its account is being classified as a Non-Performing Asset (NPA) by certain banks. RBI has issued a direction to respondent no.2 (hereafter 'SBI'), which has led the bankers to initiate proceedings in respect of the petitioner before the National Company Law Tribunal (NCLT) under the provisions of the IBC. The petitioner claims that the said action of RBI is discriminatory and violative of Article 14 of the Constitution of India inasmuch as it results in disabling the petitioner from pursuing the SBI and other lenders for an appropriate resolution p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regate exposure (AE) of the lenders was in excess of Rs.1000 million. The JLF was required to consider various CAP for resolving the stress and to preserve the economic value of the underlying assets. The CAP would generally include either (a) Rectification (b) Restructuring or (c) Recovery. 4.3 Concededly, the petitioner's action was categorized as SMA-2 in October, 2015. In terms of the Circulars issued by the RBI, the JLF held its first meeting on 23.11.2015. Admittedly, the JLF approved CAP involving debt restructuring. A Debt Restructuring Agreement was also entered into by the petitioner and the lenders on 28.06.2016. The petitioner states that the said CAP was also approved by Independent Evaluation Committee (IEC). Admittedly, the said CAP failed and the petitioner alleges that the same was on account of inaction and lack of decision making by the members of the consortium of lenders. 4.4 The RBI issued another Circular dated 13.06.2016 titled "Scheme for Sustainable Structuring of Stressed Assets" (referred to as 'S4A'). The said Circular provided for resolution of large borrower accounts which satisfied the eligibility conditions, therein. At a meeting of the JLF held o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to it in clause (12) of section 3 of the Insolvency and Bankruptcy Code, 2016. 35AB. (1) Without prejudice to the provisions of section 35A, the Reserve Bank of may, from time to time, issue directions to any banking company or banking companies for resolution of stressed assets. (2) The Reserve Bank may specify one or more authorities or committees with such members as the Reserve Bank may appoint or approve for appointment to advise any banking company or banking companies on resolution of stressed assets." 4.7 On 05.05.2017, the Central Government issued a notification in exercise of its powers conferred under Section 35AA of the Banking Regulation Act, 1949 authorizing the RBI to issue directions to any banking company, which may be considered necessary to initiate insolvency resolution process under the provisions of the IBC. 5. The RBI has filed the counter affidavit indicating the steps taken to resolve the stressed assets in NPAs in the Indian Banking System. The RBI said counter affidavit indicates that the RBI took an earlier resolution in terms of Section 35AA and 35AB of the Banking Regulation Act, 1949 to initiate steps in order to address the burgeoning stressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olicy decision regarding referral of certain accounts to the IBC for resolution. The said press release also informed the various stakeholders of the process set in motion by the Answering Respondent in that regard. A copy of the June Press Release is annexed to the Petition and marked as Annexure P/9. g. As regards the other accounts that did not qualify under the above criteria, the IAC recommended that banks may be given six months to finalise a resolution plan. In cases where a viable resolution plan is not agreed upon within six months, banks should be required to file for insolvency proceedings under the IBC. h. The IAC subsequently met again and decided that out of the 55 remaining NPA accounts, accounts which are materially NPA (i.e., where 60% of the total outstanding has become NPA by June 30, 2017) may be given time till December 13, 2017 for resolution. If the banks fail to finalise and implement a viable resolution plan by the said date, banks will be required to file insolvency applications under IBC before December 31, 2017. The IAC noted that applying this criterion will cover 29 NPA accounts, with total outstanding of INR 135,846 crore and total fund-based NPAs o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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