NEW DELHI: The Supreme Court on Wednesday vowed to plug loopholes in the working of Insolvency and Bankruptcy Code (IBC) court cases, which came to the fore right through the continued intense combat between ArcelorMittal and Numetal to disqualify each other from bidding to restore debtridden Ruias-led Essar Steel.
A bench of Justices R F Nariman and Indu Malhotra, which had previous said it would rule in opposition to National Company Law Tribunal interfering over and over right through the method for finalisation of resolution plan for a debtridden company through Insolvency Resolution Professional (IRP) and Committee of Creditors (CoC), said the working of IRP and CoC too wanted streamlining.
“All that the IRP does it to inspect the bids, finalise it and position it for attention sooner than the CoC. IRP comes to a decision not anything. He acts as a publish administrative center after making preliminary scrutiny of resolution plans submitted through bidders. He may examine whether or not all dues have been paid through bidders. But, he can't maintain difficult questions of legislation below IBC and take criminal opinion. It is absurd. He isn't provided to maintain questions of legislation,” Justice Nariman said.
“As far as the CoC is concerned, there could be large banks in it which have fullfledged criminal departments. But still the CoC is to finalise the resolution plan submitted through the IRP. If at that time of time somebody has any objection, the problem can also be taken to quasi-judicial body NCLT, then to NCLAT and in any case to the Supreme Court,” he said, and insisted that the SC should lay down the legislation delineating the right kind process that is to be followed below the IBC.
He said submission of resolution plans through any of the bidders does not confer any statutory right on any of them. “It isn't like arbitration process. None of the corporations, which have submitted resolution plan, will have any vested right. The IBC objective is to try recuperating the large quantity of loans the debt-ridden company owes to banks. If the company can also be salvaged thru resolution plan it's smartly and just right. Otherwise it has to move for liquidation,” Justice Nariman said.
Appearing for Numetal, senior advocate Mukul Rohatgi requested the court to not lay down this kind of legislation as it will be “too harsh”. The bench said: “It has to be harsh. The lenders can't be left striking for ever. An opportunity being given for revival of a ill company does not mean the method be allowed to move on for ever.”
A bench of Justices R F Nariman and Indu Malhotra, which had previous said it would rule in opposition to National Company Law Tribunal interfering over and over right through the method for finalisation of resolution plan for a debtridden company through Insolvency Resolution Professional (IRP) and Committee of Creditors (CoC), said the working of IRP and CoC too wanted streamlining.
“All that the IRP does it to inspect the bids, finalise it and position it for attention sooner than the CoC. IRP comes to a decision not anything. He acts as a publish administrative center after making preliminary scrutiny of resolution plans submitted through bidders. He may examine whether or not all dues have been paid through bidders. But, he can't maintain difficult questions of legislation below IBC and take criminal opinion. It is absurd. He isn't provided to maintain questions of legislation,” Justice Nariman said.
“As far as the CoC is concerned, there could be large banks in it which have fullfledged criminal departments. But still the CoC is to finalise the resolution plan submitted through the IRP. If at that time of time somebody has any objection, the problem can also be taken to quasi-judicial body NCLT, then to NCLAT and in any case to the Supreme Court,” he said, and insisted that the SC should lay down the legislation delineating the right kind process that is to be followed below the IBC.
He said submission of resolution plans through any of the bidders does not confer any statutory right on any of them. “It isn't like arbitration process. None of the corporations, which have submitted resolution plan, will have any vested right. The IBC objective is to try recuperating the large quantity of loans the debt-ridden company owes to banks. If the company can also be salvaged thru resolution plan it's smartly and just right. Otherwise it has to move for liquidation,” Justice Nariman said.
Appearing for Numetal, senior advocate Mukul Rohatgi requested the court to not lay down this kind of legislation as it will be “too harsh”. The bench said: “It has to be harsh. The lenders can't be left striking for ever. An opportunity being given for revival of a ill company does not mean the method be allowed to move on for ever.”
SC vows to plug gaps in insolvency law
![SC vows to plug gaps in insolvency law]()
Reviewed by Kailash
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September 20, 2018
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