Allahabad HC Refuses Interim Relief To Power Projects From RBI Circular On Revised Framework For Resolution Of Stressed Assets [Read Judgment]

The Allahabad High Court on Monday refused to grant interim relief to private power companies from the circular issued by the Reserve Bank of India which gives borrowers 180 days' time to clear their dues— a deadline that ended on Monday.The Bench comprising Chief Justice DB Bhosale and Justice Yashwant Varma ruled, "In the ultimate analysis, I have been unable to persuade myself to. The Allahabad High Court on Monday refused to grant interim relief to private power companies from the circular issued by the Reserve Bank of India which gives borrowers 180 days' time to clear their dues— a deadline that ended on Monday. The Bench comprising Chief Justice DB Bhosale and Justice Yashwant Varma ruled, "In the ultimate analysis, I have been unable to persuade myself to find the petitioners entitled to the grant of interim relief bearing in mind factors such as the state of the banking sector, rising status of NPA's, declining profitability of public sector banks, steady erosion of profits, majority of banks not even meeting the minimum capital requirements, the huge infusion of funds by the Union Government to shore up the banking system as a whole, the experience of RBI of existing schemes not being sufficiently strong to deal with resolution of stressed assets with expediency, all of which appear to have acted as the backdrop in which the impugned directive came to be issued." The Court then highlighted the need for unanimity between the Centre and the RBI on the issue of timeline for resolution, observing, "I am, prima facie, of the view that there should be unanimity amongst the different arms of the Government on such crucial issues like timeline for resolution and they should be flexible enough to address the problems in the proper perspective and resolve it in a positive manner… Along-with the economic health of the country, which is the direct concern of the RBI, progress and growth of the country including providing power/electricity to every village in the country, is the concern of the Government and, therefore, there should be unanimity amongst the different arms of the Government on such crucial issues."