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Independent Power Producers Association Of India v. Union Of India And Others
Factual and Procedural Background
The petitioners filed a writ petition challenging an impugned circular dated 12.2.2018 issued by respondent no. 2, the Reserve Bank of India, addressed to Scheduled Commercial Banks and All-India Financial Institutions concerning members of the petitioners' association. The petitioners sought relief against adverse action based on this circular. The matter was heard, and notice was issued to respondent no. 2, with a returnable date fixed. The maintainability of the writ petition was kept open for further argument. Both parties agreed on an interim order proposed by the Court. The Court directed the Secretary, Ministry of Finance, Union of India, to convene a meeting of respondents 2 to 5 and representatives of the petitioners' association to consider their grievances in light of observations made by the Thirty-Seventh Report of the Standing Committee on Energy regarding stressed/non-performing assets in the electricity sector.
Legal Issues Presented
- Whether the writ petition challenging the RBI circular dated 12.2.2018 is maintainable.
- Whether any interim relief can be granted to the petitioners to avoid adverse action against them based on the impugned circular pending the meeting and further consideration.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court noted the serious financial stress faced by power projects as highlighted in the Thirty-Seventh Report of the Standing Committee on Energy, emphasizing that mechanical application of RBI guidelines could exacerbate these difficulties. Recognizing the complexity and the need for a considered resolution, the Court refrained from deciding the maintainability issue immediately and allowed the respondents to file short reply affidavits. The Court sought a collaborative approach by directing the Ministry of Finance to facilitate a meeting among the relevant parties to explore possible solutions. The Court granted interim protection to the petitioners by observing that no adverse action should be taken against members of the petitioners' association under the impugned circular, provided they are not willful defaulters, until the meeting is held and further directions are issued.
Holding and Implications
Interim relief granted and maintainability kept open.
The Court ordered that no adverse action be taken against the petitioners' association members based on the impugned RBI circular until the meeting convened by the Secretary, Ministry of Finance, takes place. The maintainability of the writ petition remains open for argument on the next date. This decision provides temporary protection to the petitioners but does not set a binding precedent or resolve the substantive issues raised.
1. Heard Mr. Sajan Poovayya, Senior Advocate with Mr. Ashish Mishra, learned counsel for the petitioners and Mr. Sanjay Kumar Om, learned counsel for respondents 1 and 3 to 6.
2. Issue notice to respondent no. 2, returnable on 10.7.2018. In addition to Court notice, the petitioners to serve notice to respondent no. 2 by registered post with AD/Speed Post/Courier and to file proof of service.
3. As requested by counsel for the respondent nos. 1 and 3 to 7, the question of maintainability of the writ petition, is kept open to be argued on the next date. It is open to the respondents to file short reply - affidavit at this stage, if they so desire and are advised.
4. After hearing both the sides, counsel for the parties have agreed for the order that we propose to pass today. Hence the following order:
5. We request the Secretary, Ministry of Finance, Union of India, to hold a meeting in the month of June, 2018 of respondents 2 to 5 through their Secretaries and a representative of the petitioners' association to consider their grievance and see whether any solution to the problem is possible, in the light of observations made by the Thirty-Seventh Report of Standing Committee on Energy presented to Lok Sabha on 7.3.2018 with regard to stressed/non-performing assets in electricity sector. Though, we could not go through the report, our attention was specifically drawn to some observations in Part-II of the report, which reads thus:
“The Committee are of the considered view that providing finances, though vital, to the project is only one of the several factors essential for the commissioning of the project. As of now, commissioned plants worth of thousands of Mws are under severe financial stress and are currently under SMA-1/2 stage or on the brink of becoming NPA. This is due to fuel shortage, sub-optimal loading, untied capacities, absence of FSA and lack of PPA, etc. These projects were commissioned on the basis of national need/demand of electricity, availability of all other essentials required in this regard. However, due to unforeseen circumstances, these plants are suffering from cash flows, credit rating, interest servicing etc. Hence, simply applying the RBI guidelines mechanically by the banks, financial institutions, joint lender forums will push these plants further into trouble without any hope of recovery.”
6. It is needless to mention that the petitioners representatives shall supply a copy of this order and of the writ petition with annexures to all the respondents within one week from today. We only observe that action may be avoided on the basis of the impugned circular dated 12.2.2018 issued by respondent no. 2-Reserve Bank of India addressed to all Scheduled Commercial Banks and All-India Financial Institutions, against members of the petitioners association, subject to condition that the member(s) is/are not willfull defaulter(s) till the meeting is conducted by the Secretary, Ministry of Finance, Union of India. We also observe that the Secretary, Ministry of Finance shall communicate the date and time of the meeting to all concerned, including the President of the petitioners' association, well in advance.
7. S.O. to 10.7.2018.
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