The Insolvency and Bankruptcy Code (Amendment) Bill, 2019

SHRI AMAR PATNAIK (ODISHA): Sir, admittedly, this IBC is designed to bring about a paradigm change in the way business is done in India. There is no doubt that, as has been discussed, it would improve the credit culture; this would also, probably, unlock the capital; the capital which was getting locked in NPA, it is going to unlock it and spur the economic activity. So, like chicken and egg story, if you leave things like that, probably, some of the employees would continue to remain but they remain stretched all over because the company itself is in doldrums. But, you should revive the company. The main purpose or the intent of the Bill is continue having it as a going concern. The activity that would probably happen afterwards would give rise to more investments coming into these companies or coming into new companies and more employment taking place. These are very laudable, positive points in IBC. As far as NPAs are concerned, we used to have about one lakh crore NPAs every year from 2000 to 2016 and it has decreased definitely because of the IBC. It has brought in accountability for promoters and for the home buyers; the Amendment has brought in a separate provision which is really praiseworthy. The most significant thing is that here the responsibility for keeping the company alive is shifted from the equity shareholders to the creditors. Now, this particular Act basically tries to bring the divide between the financial creditors and the operational creditors as everybody has discussed and by giving primacy to the financial creditors over the operational creditors it would further improve the credit culture. The banks would start lending, the off take of loans will take place, new businesses would probably come about and more jobs would be generated, employment would improve. As far as home buyers are concerned, the issue is very complex. It cannot be settled in this particular Bill itself. RERA would continue to remain and has to remain as the primary Act for solving the problems of home buyers. So, this is one area where the RERA and the Government have to probably look into it and try to bring about a situation in which the real problem of the home buyers is solved because as you know, Sir, there are a number of cases of the home buyers still pending in the Supreme Court. This particular Act and the amendments which have come in, as has been discussed, bring flexibility in the insolvency plan, it brings mergers, amalgamation, demergers. It clarifies that particular position and the most important thing is that it takes care of the delay aspect. I would come to the challenges while talking about the delay aspect. It, of course, helps to take care of even the fair and equitable distribution of the proceeds that comes out of a resolution process, but the challenges are very important. The challenge is, following the due process of law. The due process of law is enshrined in our Constitution. The due process of law has to be followed in all cases. Natural justice has to be followed. So, how do you take care of this even if you prescribe a 330 days' or 270 days' limit? That's something that the Government has to grapple with. The tribunals have been set up in India basically to make the justice system faster. Even in the Central Administrative Tribunals the delay has been there before. Initially the period was shorter, but after that there have been delays. There is statistics to say that in the initial period there was a spurt in companies trying to go for the resolution process. Now it has decreased. In the last two years it has decreased. The amendments, whether they can address this particular issue, is something that one has to think about. There are also concerns relating to the small operational creditors having less than ten per cent of the total. What happens to them? But the most important question is, this law that we are talking about, Sir, is like the gardening work. It is cleaning up things, but we have to plant trees. For that you have to have capacities. The capacity of the resolution advisors have to improve. The capacity of the NCLT judges has to improve. The capacity of the NCLAT judges has to improve. I know of cases, I will not name the Bench where the judge himself told the advocate, who was a friend of mine, that I don't know about all these. So, this capacity building work has not taken place and that may actually come in the way of resolving these cases within the time-frame that the Amendment has brought in. Thank you, Sir.