Amrutha P S & John Jomy
8th Semester Students, B.Com, LL.B (Hons.),
School of Legal Studies, CUSAT
India’s nascent battle against bankruptcy is sprouting new ideas and career options. After India enacted tougher laws to deal with viscous loans and the central bank stepped to accelerate the pace of recoveries, finance executives have stumbled upon a career growth on insolvency. The Insolvency and Bankruptcy Code 2016 is latest of such policies. The Code was established to improve the confidence of the lender and also to facilitate expansion of the credit market in India. The Bankruptcy Code has restored the bankruptcy and insolvency laws in India and most importantly done away with the scattered legislations that existed earlier and consolidated all laws under one umbrella. The law was introduced to help India clear up $117 billion stressed assets. The Code promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto. Insolvency professionals, Information Utilities, Adjudicating Authorities (NCLT & DRT) and Insolvency and Bankruptcy Board of India are the main four pillars of the Code. Financial ministry officials refer IBC as ‘A huge and game changing reform’. This code constitutes a significant retreat from the present system that is characterized by multiple laws and forums. The existing laws such as SARFAESI, 2002 is designed to exclusively benefit secured creditors such as banks and financial institutions. It lays down simple procedure for the banks and other financial institutions to recover the debt from the borrowers. The lender can recover a non-performing asset without the intervention of the court according to this act. The IBC tries to resolve this issue by providing rights to all types of creditors, and not just secured financial creditors, to evoke insolvency proceedings against the debtor. Under the Companies Act, 2013 any company, which has made any default that is nonpayment of debt whole or part of the installment, cannot make application for voluntary liquidation. Also under the Companies Act, 2013 petition for winding up by NCLT cannot be made by a creditor whereas in IBC the creditor has the right to initiate resolution of insolvency proceedings on failure of which liquidation can be approached. This paper seeks to examine various amendments the act brought under Indian Partnership Act,1932, Central Excise Act,1944, Income Tax Act,1961, Customs Act,1962, Recovery of Debts Due to Bank and FI Act,1993, The Finance Act,1994, SARFAESI Act,2002, SICK Industrial Companies (Special Provisions) Repeal Act,2003, Payment and Settlement Systems Act,2007, LLP Act,2008, and Companies Act,2013. The authors are of the view that some amendments to these acts is needed to be consistent with IBC. In addition, certain provisions in the IBC needs to be enhanced to improve the efficacy of the IBC.
Keywords: IBC, Bankruptcy Code, SARFAESI Act, Companies Act 2013