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Experts divided on Supreme Court's status quo of February 12 circular

Updated : September 12, 2018 06:40:28 IST

The Supreme Court (SC) on Tuesday offered a two-month window for resolution of large stressed assets in the power, shipping and sugar industries.

Hearing a petition filed by these sectors, the apex court transferred all the cases filed before various courts to itself and ordered a status quo on the Reserve Bank of India's (RBI) February 12 circular.

The circular imposed a 180-day deadline on resolving these cases, failing which they were supposed to end up at the National Company Law Tribunal (NCLT).

To discuss the impact of this on debt resolution push, CNBC-TV18 spoke with Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services and HP Ranina, corporate lawyer.

On six-month deadline set by RBI to finalise resolution plans, Parekh said apex court may come across a different approach altogether.

According to Parekh, the decision by the SC today does give a bit of a jolt to banking system and the regulator.

If one aspect is challenged, then each and every promoter and case will have enough grounds, which can be taken to court, Parekh said.

Talking on cases initiated at NCLT, Parekh said people may get an opportunity to get the case reopened or reexamined and that will delay the judgement.

Ranina said one need not take apex court order in a negative way as it will ultimately come up with the right results once the SC gives its view on the subject.

He said the SC must have had some reason for putting it on hold and possibly they want to hear the matters in great detail and come do decision, which would be helpful generally to all parties.

However, Ranina agreed that SC's involvement in insolvency proceedings would delay the whole process, but there will be no uncertainty.

“Two months delay should be taken in the normal course as part of judicial process in India,” Ranina added.
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