I have no new insights into UGC's actions (which include writing to the IITs and asking them to get their degrees aligned with the UGC notification), other than what is reported in the newspapers, and what others have said. As for the latter, Dheeraj Sanghi's musings are about the best; start with his posts: UGC decides maximum standards, and MHRD agrees with UGC.
The IITs claim that since they were created through an act of Parliament, they are outside the purview of UGC; this view has been contested by the UGC which says that while the IITs have all the autonomy in how they structure their courses, they simply do not have the right to call their degrees whatever they want.
Reacting to the controversy, UGC chairman Professor Ved Prakash said there is "no question of any encroachment".
"Every university is also a statutory body, but there is a procedure to be followedâ€¦ no other body except the UGC can specify degrees. We are a conduit between the government and the institution, and no one can award a degree that is not approved," he said. [Source: India Today]
If UGC has its way, the 4-year BS degree, which was introduced by IIT-Kanpur in 2011 (the same year IISc started its own BS program) would be in trouble, since the abbreviation "BS", as a degree, does not appear in the Gazette notification of July 5, 2014. [The funny part, of course, is that this list has "only" 129 degrees!].
It now appears that the IITs are itching for a public fight which the UGC is very likely to lose. This realization is probably behind the HRD Ministry's suggestion that the IITs and UGC sit together across a table, and work things out; UGC's utterances have also mellowed lately.
Given the high-handed way the UGC has conducted itself in the last several months (starting with the gutting of the FYUP at the Delhi University), it is understandable that people root for the IITs in their fight.
[Disclosure: There is a personal interest for me: if the IITs win, we at IISc will also be able to restore the name "BS" to our own 4-year degree program].