NCLT, Courts And The RBI Work Together To Implement The Bankruptcy Code

INTRODUCTION

In the most recent development in the ongoing battle against Non-Performing Assets ("NPA's"), the Gujrat High Court ("GHC") upheld the constitutionality of the RBI Press Note dated June 13, 2017 ("Press Note"), ¹ compelling Essar to appear in insolvency proceedings before the NCLT.

BACKGROUND

" The Banking Regulation Act, 1949 ("BRA") was amended by way of an Ordinance of the Central Government ("Ordinance"). This Ordinance, inter alia, empowered the RBI to issue directions to any banking company to initiate the insolvency resolution process in respect of defaults under the IBC. For a detailed analysis of the Ordinance you can access our hotline here.

" On May 22, 2017, the RBI issued a Press Release stating, inter alia, that it would be constituting a Committee comprised majorly of its independent Board Members to advise it with respect to concerns regarding large stressed assets. Consequently, on June 13, 2017, the RBI issued the Press