SC provides interim relief to power firms
SC DIRECTED THAT ALL RBI PLEAS RELATED TO FEBRUARY CIRCULAR BE TRANSFERRED TO IT AND IT WILL HEAR THE MATTER ON NOV 11
MUMBAI: The Supreme Court on Tuesday granted interim relief to stressed power companies, directing lenders to maintain a status quo on the Reserve Bank of India’s (RBI’S) circular for banks to resolve these cases with 180 days.
The apex court directed that all pleas filed by the central bank related to the February circular should be transferred to it and it will hear the matter on November 11.
Several petitioners, including GMR Energy Ltd; Rattanindia Power Ltd, a Punjab-based textile company; Association of Power Producers (APP); Independent Power Producers Association of India (IPPAI); Sugar Manufacturing Association from Tamil Nadu and a shipbuilding association from Gujarat, had intervened in the matter in different courts.
“Supreme court has granted status quo. Hence, no new petitions can be filed relying on the RBI circular and if any has been filed it cannot move further,” said senior advocate Mahesh Agarwal, who is representing GMR Energy and Rattanindia Power.
“It will apply to power produc- ers who were part of the associations including Association of Power Producers (APP), Independent Power Producers Association of India (IPPAI). Some of the associations including sugar manufacturing association from Tamil Nadu and a shipbuilding association from Gujarat had also challenged RBI’S circular and this relief will be extended to them as well.”
On August 27, the Allahabad high court denied relief to these power companies. Consequently, lenders identified around 20 out of 32 stressed assets to be referred to the National Company Law Tribunal (NCLT).
These assets include power projects such as Essar Power, Korba West Power Co. Ltd, Jindal India Thermal Ltd and Sravant Energy Pvt. Ltd.
The central bank through its February 12 circular asked banks to draft resolution plans for defaulters within 180 days in cases where the exposure is more than ₹ 2,000 crore.
The central bank also introduced the concept of a one-day default, under which banks have to identify incipient stress when repayments are overdue even by a day.
“13-14 GW (gigawatts) of assets, which are nearing resolution stage, will be able to get resolved in this time and it also provides adequate time to a highlevel empowered committee set up under the chairmanship of cabinet secretary to come up with suitable recommendations regarding the stressed assets,” said Ashok Khurana, director general, Association of Power Producers.