enmeshed in legal action insolvency and bankruptcy code · 2018-10-01 · adani ports asian paints...
TRANSCRIPT
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 1/7
Sukumar Mukhopadhyay Last Updated at September 30, 2018 21:08 IST
MORE COLUMNS BYSUKUMARMUKHOPADHYAYHow prone is GST toevasion?
Need for arti�cial de�nitionsin �scal economics
Single or multiple rates inGST
Getting de�nitions right for�scal economics
The Walmart e�ect oneconomy
JUST IN Search
News
You are here: Home » Opinion » Columns
Insolvency and Bankruptcy Codeenmeshed in legal actionThe law laid down by the SC in a plethora of cases is that policy issues of the govt are not justiceable. Theprecedent laid down by the SC also cannot be violated by the apex court itself
A dawn of a new era. That is how the Insolvency and BankruptcyCode recently enacted and worked up was described in newsmedia and even by economists and analysts. Now after a group ofpower asset companies went to the Supreme Court and hasobtained time for no action till November 11, 2018, it is clear thatthe apex court has treated the issue of the Reserve Bank of India’s(RBI’s) policy initiative on realising dues from non-performingassets (NPA) as justiceable. Some analysts have pointed out thee�ect of this policy being enmeshed into litigation. The factsargued before the Supreme Court are based on hardship, etc, andno argument has been made out about the infringement offundamental rights. Here I am writing only on the legality of thescope of intervening in policy matters of the government and ofthe RBI.
It has always been accepted in various judgements of the SupremeCourt that economic policy is not justiceable. It is already a settledissue that the Court cannot intervene unless any fundamental righthas been violated. A very clear decision is the well-known case ofIndian Express Newspapers v.U.O.I reported in AIR 1986SC 515that a noti�cation is legislative in nature and so intervention is notpermissible. Here the Supreme Court interfered to strike down theexcessive tax on newsprint because it came to the conclusion thatthe imposition of high tax on it was violative of the fundamentalright of freedom of speech under Art 19(1) g. On a mere ground ofunreasonableness, an imposition of tax even by an amendment ofa noti�cation cannot be challenged, it said. Economic policy is not
No Loss. Only Gains.StockNote by SAMCO
Ad
BS APPS BS PRODUCTS BS E-PAPER BS LEARNING Hi, INSOLVENCY AND BANKRUPTCYBOARD OF INDIA
Lessons from IL&FS saga
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 2/7
READ MORE ON IBC INSOLVENCY AND BANKRUPTCY CODE SUPREME COURT RBI
NON-PERMORMING ASSETS GOVERNMENT ECONOMIC POLICY TAX FISCAL LEVY
HIGH COURTS OPINION COLUMNS
justiceable unless it violates fundamental rights. There were manyjudgments after that. The Kasinka Trading vs. UOI – 1994(74) ELT782(SC) and Shrijee and Sales Corporation vs. UOI – 1997(89) ELT452 (SC) held that taxation policy cannot be pronounced upon bythe courts unless there is a violation of the Constitution.
The settled position is this. In the case of an ordinary �scal levy,mere excessiveness of tax is not justiceable. If the petitioner is ableto prove that the excessiveness of tax has created discriminationvis-a-vis his competitors or has otherwise completely ruined hisbusiness such that it has gone against his fundamental right to
trade or business, then it becomes justiceable. So far no such case has succeeded on this ground beforethe high courts and the Supreme Court. Only in the case of newsprint, the challenge to a levy, which wasfound to be burdensome, has been entertained by the Supreme Court as justiceable on the plea that itviolates Article 19(1) (g) and is a threat to democracy.
Now the question is whether the Supreme Court itself can go against the precedent laid down by it byseveral judgments. Here also the decision of the Supreme Court is that it cannot do that unless thenumber of judges in the new judgment is more than the number in the previous judgments. TheSupreme Court has held in the case of UjagaR Prints v U.O.I-1987 (27) ELT 567 (S.C) that judicial disciplinerequires that a Bench of two judges should not disregard the decision of a Bench of three judges, but ifthe Bench of two judges is inclined to disagree with the decision of three judges, the case should bereferred to a larger Bench. The court further said that for the purpose of imparting certainty andendowing due authority, decisions of this Court should be rendered by Division Benches of at least threejudges.
There is a status quo ordered by the Supreme Court not to initiate any insolvency proceeding tillNovember 11, 2018. There is no report that the Supreme Court has taken the cases as the infringementof the fundamental rights. If that is factually true, then the action on the part of the Supreme Court instaying the operations of the power companies tantamount to the court's taking the issue as justiceable.The law laid down by the Supreme Court in a plethora of cases is that such policy issues of thegovernment are not justiceable. The precedent laid down by the Supreme Court also cannot be violatedby the Supreme Court itself.
The writer is member, Central Board of Excise & Customs (retired)
Email: [email protected]
First Published: Sun, September 30 2018. 21:08 IST
RECOMMENDED FOR YOU
Ad
100% Brokerage Cashbackfor 1st month. Flat Rs 20thereafter. Top rated mobiletrading appStockNote by SAMCOTrade on India's top rated mobiletrading app with 100% brokeragecashback.
PREVIOUS STORY NEXT STORY
Counting Swallows before
summer: Political wind could be
shifting
RBI's dual-track policy imperative IL&FS mes
strike
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 3/7
AdvertisementsSecure every print, every time with Canon MFDs
Add Colour to Your Business Documents at Low Cost
Business Can Be Simple with Canon MFDs
Subscribe to Business Standard Digital & get 12 months WSJ online worth Rs.
Business Standard book for IBPS: 3000 GK Questions: GST, Budget 2017, Demonetisation
You Might Also Like
Promoted Stories
Recommended by
Insolvency process: Sterlinggroup �rms o�er steep haircutsto lenders
Closely working with RelianceJio to curb fake news menace:Whatsapp
From 'commander-in-thief' toRahul's 'conspiracy': Rafale rowhits new low
Use correction in �nancials tobuy for the long term: CLSA'sChris Wood
Maruti Suzuki, YES Bank, JetAirways, Godrej Properties hit52-week low
Midcaps, smallcaps plunge tonew lows in biggest monthlydrop since 2008
Future would see you upagainst machines for jobs.Prepare with an indepth ML-AIcareersoftomorrow.amityonline.com
Shhh!! Here’s The Secret ToAchieving Your Financial Goals.Know More.HDFC Life
The 10 Most LegendaryInvestors Who Have Ever LivedTrendingstock Today
What Is The Gold MonetisationScheme?www.mygoldguide.in
What Are The 10 Biggest TechCompanies In The World?Trendingstock Today
Don't Pay Too Much For CarInsurance! Explore TheAvailable Optionsarecarinsuranceok.live
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 4/7
Opinion: Overview GO LATEST NEWS
Counting Swallows beforesummer: Political windcould be shifting
RBI's dual-track policyimperative
IL&FS mess: A three-pointsurgical strike
Chinese reform during atrade war
Advertisement
More >
MOST POPULAR
Govt to move NCLT toremove IL&FSmanagement followingserial defaults
IL&FS secures lifeline asshareholders approvefundraising via debt, equity
Paytm Mall may acquiremajority stake inBigBasket, talks on fasttrack
Crisis-hit IL&FS to raise Rs150 bn, hike borrowinglimit to Rs 350 bn
Advertisement
Secure every print, everytime with Canon MFDs
Add Colour to YourBusiness Documents atLow Cost
IN THIS SECTION ALL
READ SHARE COMMENTED
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 5/7
LATEST NEWS
The pros and cons of RBI ratecutAjit K Ghose
What is required is change of growthstrategy, from foreign �nance-led toexports & domestic growth
Presidential Polls: NitishKumar keeping the grandalliance on tenterhooks
Until a couple of months ago, Kumar wasin favour of a united opposition
EDITORIAL COMMENT
New telecom policy makes right noises;timely, e�cient rollout to be keyTelecom Minister Manoj Sinha has saidNDCP 2018 will be implemented within ayear of being tabled in Parliament, but ...
Are we over-protecting India? Tari�hikes could do more harm than goodGovt believes higher import duties on 19non-essential items will help control thecurrent account de�cit, but ...
Open court justiceLive streaming of apex court proceedingsis a good �rst step
More >
MOST POPULAR COLUMNS
Shekhar Gupta: If Sukhoiswere Rafales, HAL would �y
And the Great Indian Bureaucrat will be theMarshal of the Air Force. Bofors mummi�edour defence acquisitions, Rafale couldentomb it now
Oil portents: Are weheaded for another priceshock and economic shake-up?
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 6/7
If forecasters are right and oil rises not just to$100 but perhaps $120 a barrel, trade gap,in�ation, the rupee's external value andeconomic growth may all come underpressure, writes T N Ninan
Counting Swallows beforesummer: Political windcould be shifting
Among other things, even the BJP's plan to�eld a larger number of �lm stars andcricketers in elections than in the pastsuggests it realises the Modi tsunami of 2014may be losing its force
STOCK MARKET LIVE
PORTFOLIO
COMMODITY MARKET
UPCOMING IPO
PERSONAL FINANCE
STOCK MARKET NEWS
DERIVATIVES
MUTUAL FUNDS
GOLD PRICE
SENSEX
QUICK LINKS
A B C D E F G H I J K L M N O
P Q R S T U V W X Y Z
1 2 3 4 5 6 7 8 9
A B C D E F G H I J K L M N O
P Q R S T U V W X Y Z
BROWSE STOCK COMPANIES
BROWSE MUTUAL FUNDS
Adani Ports Asian Paints Axis Bank B P C L Bajaj Auto Bajaj Finance Ltd Bajaj Finserv Bharti Airtel Bharti Infra.
Cipla Coal India Dr Reddy's Labs Eicher Motors GAIL (India) Grasim Inds H D F C HCL Technologies HDFC Bank
Hero Motocorp Hind. Unilever Hindalco Inds. Hindustan Petroleum Corporation Ltd ICICI Bank
Indiabulls Housing Finance Indian Oil Corporation Ltd. IndusInd Bank Infosys ITC JSW STEEL Kotak Mah. Bank
Larsen & Toubro M & M Maruri Suzuki NTPC O N G C Power Grid Corpn Reliance Inds. St Bk of India
Sun Pharma. Inds. Tata Motors Tata Motors-DVR Tata Steel TCS Tech Mahindra Titan Company
UltraTech Cement Ltd UPL Ltd Vedanta Wipro Yes Bank Zee Entertainment
TRENDING ON BS
FROM BS WEBSITE ABOUT US SUBSCRIBE ELECTIONS 2018
MORE ON MARKETS:
INDEX STOCKS
You0 pts VS MODE
What company onceowned Harley-Davidson?
Honda
Ford
AMF
Aermacchi
Create your own at
Weekend #BSTech #GST #BSSpecial #Markets
10/1/2018 Insolvency and Bankruptcy Code enmeshed in legal action | Business Standard Column
https://www.business-standard.com/article/opinion/insolvency-and-bankruptcy-code-enmeshed-in-legal-action-118093000570_1.html 7/7
Home
Companies
Markets
Opinion
Politics
Technology
Specials
Personal Finance
Latest News
Today's Paper
RBI Policy
General News
General Videos
General Photo Gallery
Events
Authors
Education
About Us
Code of Conduct
Terms & Conditions
Cookie Policy
Disclaimer
InvestorCommunication
List of our GSTregistration number
SUPPORT &CONTACT
Partner with Us
Careers
Advertise with Us
Contact Us
Feedback
Browser Support
Sitemap
E-Paper
BS Magazines
Portfolio Tracker
BS PRODUCTS
Smart Investor
BS Hindi
BS Motoring
BS Books
B2B Connect
iPhone
iPad
android
wap
BS Banking RoundTable 2017
BS Fund Cafe 2017
Budget Insight Out
Karnataka Election 2018
SPORTS
ASIA CUP 2018
CONNECT WITH BS
Google+
Youtube
RSS