The Supreme Court’s decision to quash the RBI circular on referring defaulting companies for insolvency proceedings does not in any manner dilute the Insolvency and Bankruptcy Code (IBC), a senior official said Thursday.
Corporate Affairs Secretary Injeti Srinivas also said a generic instruction, one size fits all, that if the resolution does not take place within 180 days then on the 181st day, the banks have no other option but to go to the NCLT has been declared ultra vires.
Under the Code, insolvency proceedings can be initiated only after getting approval from the National Company Law Tribunal (NCLT).
The Supreme Court’s judgement in no way dilutes the scope or efficacy of the Code. It does not in any manner dilute the Code, he said on the sidelines of an event here.
With the circular issued on February 12, 2018, the Reserve Bank of India (RBI) replaced various debt restructuring schemes with a harmonised and simplified generic framework for resolution of stressed assets.
The circular was quashed by the court on Wednesday.
Speaking at industry body CII’s Annual Session here, Srinivas said building trust is the core issue for governance.
Corporate scandals in the past few years have raised issues of corporate governance. Building trust is the issue for governance, and trust is a cross-cutting issue in the internal and external environment, he was quoted as saying in a release.