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NEW DELHI: The government, bankers and private power companies are seeking legal opinion to interpret the Supreme Court’s Tuesday order on the RBI’s controversial circular because experts have diverging views on its implications on the resolution process. They are seeking clarity on whether the ongoing resolution process by lenders would be stalled, which is seen as damaging for the already troubled projects.

Lenders to power sector are contemplating whether going ahead with the resolution proceedings will amount to contempt of court. The order on RBI’s plea to transfer all petitions to the apex court read, “Issue notice.

Status quo, as of today, shall be maintained in the meantime.

List all these petitions for final disposal on Wednesday, the 14th November, 2018.” Senior advocate Jayant Bhushan, who appeared for RBI, said there would be no insolvency proceedings against parties whose petitions RBI sought to transfer to the top court. “Resolution proceedings have got nothing to do with the RBI circular.

The mandate to lenders to do something though the circular is challenged.

Anything that the lenders can do without the RBI circular, can always be done, how can that be stayed” “The order has to be interpreted on what the challenge is.

Therefore, there will be status quo as far as the RBI circular is concerned for these projects which were the subject matter of the transfer petition.

Lenders were forced to do something, now they are not being forced.

If they still want to do it, without being forced, they can certainly go ahead,” Bhushan said. However, one of the state-run banks with exposure to power companies, said, “We consulted the legal department, which has advised us we cannot carry on with the resolution proceedings since it is a status quo.

But in case the existing promotors have agreed to the resolution plan, we can implement them.

In most resolution plans for management change, the existing promotors are on board.” Another executive from a financial institution said there are conflicting views on the implementation of resolutions since the apex court order is silent on the extension of the 180-day period for completing the resolution plan. Banks, members of the Association of Power Producers, Independent Power Producers Association of India, South Indian Sugar Mills Association along with groups representing shipyards and textile makers had welcomed the order on Tuesday saying it prevented their stressed assets from insolvency court. Vishrov Mukherjee, partner at J Sagar Associates, which advised and represented Association of Power Producers, GMR and RattanIndia before the Allahabad High Court and Supreme Court in challenging the RBI circular on stressed assets, said the status quo will extend to parties before the Supreme Court including members of various associations including Association of Power Producers and Independent Power Producers Association of India and a clarification from RBI is required. “Banks and financial institutions are unclear as to whether they can go ahead with ongoing resolution processes given that the cut-off date under the 12th Feb Circular was August 27.

Given that the IBC route mandated by RBI is foreclosed for the time being, it is important for the RBI provide clarity so as to enable lenders to continue with the resolution process within the framework of the February 12 circular.

Putting a halt to these proceedings until November will not only be counter-productive but may result in further value erosion,” it said.





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