MEMBER OF PARLIAMENT, RAJYA SABHA
National Spokesperson and Head of IT Cell, BJD
The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 and The Insolvency and Bankruptcy Code (Amendment) Bill, 2020
DR. AMAR PATNAIK (ODISHA): Mr. Vice-Chairman, Sir, because ofshortage of time, I will come straight to the point relating to the threshold for certain creditors for initiating the resolution process, particularly with reference to the real estate sector and the home buyers. Adding to the concern, which has also been expressed by other hon. Members, I would like to ask whether the classification, which is being brought out, that is,minimum 100 people or 10 per cent, whichever is less, is a reasonable classification to achieve the objective that is to be achieved, and I would guess the objective is to avoid frivolous complaints. But, for avoiding frivolous complaints, the Supreme Court judgment clearly says that the penalty would be about Rs.1 crore. So, would it meet the ends of justice if you have this kind of a classification separately, particularly, when the operational creditors can also file a case if the threshold is one lakh, and the other financial creditors also have the threshold of one lakh? A ticket size of home buyer, which could be twenty-five lakhs, he would not be able to file unless he gathers these ten per cent people. So, whether this will meet the reasonable classification is something that bothers me. The second aspect is the supply of critical goods, particularly by the MSME sectors. An operational creditor from the MSME sector, which is supplying goods and services, itself may be under stress because it has not received the past dues, and whether it would be able to supply again even if there is the performance guarantee given is something that has to be considered because otherwise, such an MSME creditor will itself get into NCLT. The third aspect is the liabilities for prior offences. Many of the big companies have huge outstanding amounts of water and electricity bills in the States. Now, those are State Government and municipal receipts. If you waive those off when a new management comes, the State Government and municipality bodies will be left high and dry. Whether that would be acceptable is something that one has to consider. Then, I think, ‘the licenses and permits not to be terminated due to insolvency’ is a very good clause which basically ensures that the company is able to maintain as a going concern and maximize the value of the assets.The other aspect which is good about the Bill is that it fixes a particular date for the resolution professional's appointment and the resolution process to start. So, overall, I would say that the biggest concern here, as hon. Member was saying, is the real estate sector. The home buyers may feel that they have got a raw deal by the introduction of this particular clause in section 7 of the Code. The other aspect which I would like to highlight is the fact that while the supply of goods would be a big problem for the MSME sector, it might also interfere in the contractual arrangement which is already in force. It is not clear whether an additional contract has to be signed during the moratorium period between the resolution professional, corporate debtor and the companies. I think, rules should be able to probably satisfy some of these concerns. Since there are so many amendments coming about, I think, there might be another amendment which will be required in the future.