New Delhi: The Supreme Court on Tuesday struck down Reserve Bank of India's (RBI) February 12 circular and declared it unconstitutional and ultra vires.
The judgment was rendered by a two-judge-bench of the Supreme Court, headed by Justice Rohinton Nariman.
RBI had on February 12, 2018 issued a circular saying that lenders have to provide for resolution plan within 180 days in case of large account of Rs 2,000 crore and above. It said that if a resolution was not found by August 27, Non Performing Asset (NPA) accounts should be sent to bankruptcy courts.
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This circular had a bearing mainly on the power companies and also affected companies in the textile, sugar and, shipping sector.
The power companies had initially approached the Allahabad High Court, which had rejected their plea, following which these companies approached the Supreme Court. On September 11, the Supreme Court transferred all the petitions moved by power, sugar and shipping companies in different courts across the country to itself and said that status quo as of that day would be maintained until further orders.
Ultra Vires means when a body or an individual is acting beyond its legal power or authority.
