More on RBI’s Intervention in Matters of Corporate Insolvency

The Gujarat High Court judgment
discussed in a
post
yesterday by a guest contributor, Saurav Roy, brings to the fore
several tricky issues and questions relating to the extent to which the Reserve
Bank of India (RBI) ought to be involved in matters relating to the resolution
of corporate insolvency. While matters of insolvency are essentially within the
purview of the National Company Law Tribunal (NCLT) under the Insolvency and
Bankruptcy Code, 2016 (the Code), RBI’s intervention is not surprising given
the eagerness to use the Code process to deal with the non-performing loans
(NPAs) that have been plaguing the banking sector. RBI’s powers in this regard
have been strengthened by way of the Banking (Regulation) Amendment Ordinance,
2017.
The manner in which the RBI went
about the process of exercising its powers has caused a great deal of
consternation, much of which has been the subject matter of the Gujarat High
Court judgment mentioned above. However, both in the run up to the Court’s
ruling as well as before that, there has been considerable debate and
discussion surrounding the jurisdictional considerations surrounding corporate
insolvency and possible turf wars plaguing the resolution process. The purpose
of this post is to merely point readers to some of the extensive commentary
that already exists on this issue. As noted by the commentators, while the
Gujarat High Court may have shone the green light in respect of the Essar Steel
case that is now before the NCLT, it may have ended up circumscribing the new
found powers that RBI has exercised in respect of corporate insolvency
involving the largest NPA cases.
References:
– Shyamal Majumdar
in Business
Standard
– Editorial in the
Economic
Times
– Andy Mukherjee
in Bloomberg
Gadfly
– Somasekhar
Sundaresan on his
blog
– Pratik Dutta on Ajay
Shah’s Blog
– Cyril Shroff in
conversation with Menaka Doshi on BloombergQuint

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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