By Aparna Ravi
When the Insolvency and Bankruptcy Code came into effect late last year, sceptics pointed out that the time-bound process contemplated by the code could easily be derailed if one of the affected parties were to file legal challenges in the high courts, which could drag on for months. Essar Steels recent petition in the Gujarat High Court against the RBI and two banks provided the first high-profile test case for how a court might deal with such a scenario. And it appears that the judgement has passed the initial test.
On May 22, an Ordinance amending the Banking Regulation Act was approved, which gave the RBI powers to direct banking companies to initiate insolvency proceedings under the Code. The RBI subsequently issued…
Read the full article at: http://blogs.economictimes.indiatimes.com/et-commentary/the-essar-verdict-was-a-validation-of-the-new-bankruptcy-code/