Quashing of the 12th February circular and declaring it ultra vires and unconstitutional is a welcome decision of the highest institution of the country i.e. the Supreme Court of India as it was bad in law and had impacted various resolution plans which were under process between lenders and debtors, adversely”, said Mr. Vijay G. Kalantri, President, All India Association of Industries (AIAI).
AIAI states that the democratic resolution process of negotiation between lenders and debtors had come to a halt by this circular and especially the Infrastructure, Shipping, Power and other manufacturing companies were compelled to undergo insolvency proceedings under the NCLT and Indian Bankruptcy Code (IBC).
AIAI further states that the said circular created monopolies in these sectors and large corporate were buying out their competitors at very low costs, thereby impacting the entrepreneurial spirits of the existing promoters and dissuading them from starting a new enterprise.
“AIAI feels that now the lenders and borrowers will be able to come up with resolution plans that will restructure the existing units, thereby not only generating employment but also encouraging other entrepreneurs to venture into new business activities”, said Mr. Kalantri.