# In the matter of Independent Power Producers Association of India Vs. Union of India & 5 Ors. Writ-C Nos. 18170, 23181 & 23183-2018

> HC judgment dated 2018-08-27. Citation: TCN-2018-HC-00008. The case involves multiple writ petitions challenging a circular issued by the Reserve Bank of…

- **Court:** HC
- **Order date:** 27 Aug 2018
- **Citation:** TCN-2018-HC-00008
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/independent-power-producers-association-of-india-vs-union-of-india-5-ors-writ-c-aaefa0db

## Summary

### Background

The case involves multiple writ petitions challenging a circular issued by the Reserve Bank of India (RBI) regarding the resolution of stressed assets, particularly in the power sector. The petitioners, including Independent Power Producers Association of India and Prayagraj Power Generation Company Limited, argue that the circular is arbitrary, violates Article 14 of the Constitution, and fails to account for the unique challenges faced by the power sector. The circular mandates lenders to initiate insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) within a strict timeline if resolution plans are not implemented, which the petitioners claim disregards the operational and regulatory issues specific to the power sector.

## Facts

The Independent Power Producers Association of India, Association of Power Producers, and Prayagraj Power Generation Company Limited filed writ petitions challenging the RBI's circular on stressed assets. The circular mandates lenders to initiate insolvency proceedings under IBC within 180 days if resolution plans are not implemented. The petitioners argue that the circular is arbitrary, violates Article 14 of the Constitution, and fails to account for the unique challenges faced by the power sector, such as fuel shortages, lack of PPAs, and regulatory issues. The Standing Committee on Energy's reports highlight the stress in the power sector. The petitioners contend that the RBI's circular treats all sectors equally, disregarding the specific challenges of the power

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## Issues and analysis

### Issue 1: Whether the RBI's circular on stressed assets is arbitrary and violates Article 14 of the …

**Ratio:** Article 14 of the Constitution mandates equality before the law and equal protection of

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**Reasoning:** The court acknowledges the argument that the power sector is heavily regulated and faces

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**Interpretation:** The court interprets Article 14 as not prohibiting the RBI from taking measures

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**Application:** The court finds that the RBI's circular is based on the rational differentia of

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## Parties

- **Judges:** Dilip B. B…; YASHWANT…
- **Appellants:** Independent Power…
- **Respondents:** Prayagraj Power…; Union of…

## Timeline

- **2017-05-04 — Banking Regulation…**: The Union Government promulgated the Banking Regulation (Amendment) Ordinance, 2017,…
- **2017-05-05 — Authorization…**: The Union Government authorized the RBI to issue directions as contemplated under Section…

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