The Supreme Court’s recent decision striking down the RBI’s February 2018 circular on bad loans highlights something significant about the state machinery — the extent to which it can be a source of risk for private businesses.
In that sense, the ruling provides an immediate relief to promoters in the power sector — mainly because the petitions challenging the RBI circular were primarily filed by power sector companies — from being dragged to insolvency courts under the Narendra Modi government’s 2016 legislation, the Insolvency and Bankruptcy Code (IBC).