The Supreme Court has refused the Reserve Bank of India’s plea to stay proceedings in the Allahabad High Court against the central bank’s February 12 circular that prescribed tough norms for stressed assets. 

It will hear on August 28 the banking regulator’s plea seeking transfer of all petitions filed in several high courts to the Supreme Court. Significantly, August 27 is the deadline for completing resolution process for stressed assets as per the RBI circular. 

Additional solicitor general Tushar Mehta appeared for the government and opposed the transfer of case from Allahabad to the Supreme Court while RBI was represented by Jayant Bhushan. 

Justices RF Nariman and Indu Malhotra refused to grant stay on proceedings in the Allahabad High Court despite appeal from Bhushan, sources said. 

While there are over a dozen cases filed by companies and associations in various high courts, the one in the Allahabad High Court has made substantial progress. The plea filed by Association of Power Producers, Independent Power Producers’ Association of India and Jaypee Associates has not still been admitted by the Allahabad High Court, but the case is at a crucial stage as the government has recommended extension of the deadline by another 180 days. 

The high court is scheduled to hear the matter on Thursday. On August 2, the government submitted its report in the high court, which included the recommendations for deadline and informed the court about setting up of a high-level empowered committee led by cabinet secretary P K Sinha to revive the projects. The high court asked RBI to file its responses in the next hearing. 

The Allahabad HC had on May 31 temporarily stayed the RBI circular on companies other than wilful defaulters and asked the finance secretary to hold a meeting on resolutions. Power companies have sought modification in the RBI circular, saying it will trigger insolvency proceedings against 30,000 MW of assets, causing huge value erosion. The companies say many projects are stressed for reasons not in their control. These include delays in land acquisition, green clearances, failure of Coal India to supply fuel and reluctance of state discoms to sign power purchase agreements. #casansaar (Source - PTI, Economic Times)