New Delhi: Since its enactment, the Insolvency and Bankruptcy Code has brought a paradigm shift in the insolvency regime in the country and is a crucial milestone in economic reforms, according to Prime Minister Narendra Modi.
In a letter written to Dr Adish C. Aggarwala, who is the president of the International Council of Jurists, London, and also the president of the Supreme Court Bar Association, on August 21, 2023, the Prime Minister, though, acknowledged the need to make the insolvency regime “even better”.
It may be noted that India’s persistent Non-Performing Assets (NPA) challenge has worsened in recent years, contributing to the country’s economic slowdown. Although other factors, like rigorous tax enforcement, still impact the economy, resolving NPAs is pivotal for revitalising credit growth and investment.
Previous mechanisms for NPA resolution, primarily established by the Reserve Bank of India and limited to banks, were suboptimal. With the aim of resolving the NPA crisis and enabling a smooth flow of credit within the economy in mind, the Insolvency and Bankruptcy Code (IBP) was enacted by the government in 2016.
The IBC was introduced as a crucial solution. However, its stringent approach faced opposition due to its debtor-unfriendly nature and exclusion of certain business owners from reacquiring control during insolvency, Dr Aggarwala, told Global Bihari today. He explained: “With regard to the IBC, even though considered the best, three main issues persist. The first issue is that the resolution process currently functions as an auction of the firm rather than a reorganization of the firm’s business. The second issue is that a certain category of debtors have been legally prohibited from even attempting to take back control of their firms if the firms go into the IBC. The third issue is that there are delays within the judicial process.”
Stressing the need for “an urgent need for an august gathering of professionals to convene and engage in deliberations, seeking viable solutions to address these pressing concerns”, Dr Aggarwala said he has now taken an initiative to organise an international seminar on the rejuvenation of economy under insolvency laws, under the banner of the Insolvency & Corporate Professionals Council of India (an affiliate body of the International Council of Jurists, London), at VK Krishna Menon Auditorium, Opposite Supreme Court of India in the national capital from 10 am till 5:00 p.m. on August 27, 2023.
Taking note of the initiative, Prime Minister Modi, in his letter to Dr Aggarwala, wrote, “It is particularly heartening to note that this seminar is being attended by many legal luminaries, domain experts and other stakeholders”.
The Prime Minister said he was sure that the deliberations at the Seminar “will prove fruitful and provide a roadmap to make the insolvency regime even better”.
“Today, the health of our banking system is seeing new highs while the recovery of NPAs has been extremely encouraging. The sustained efforts by all stakeholders to get the process of resolving insolvency going smoothly has been an important contributor. It is the outcome of these dedicated and committed endeavours that the nation has massively improved its Ease of Doing Business,” he wrote to Dr Aggarwala.
Modi further pointed out that just a few years ago, India, which used to be counted among the ‘Fragile Five’ economies, is now being considered a bright spot in the global economy. “India has pursued a human-centric approach to development, for true progress is always people-centric,” he stated.
According to the Prime Minister, one of the important reasons for the turnaround of the Indian economy has been the advent of several reforms and their thorough implementation in a coordinated manner by several institutions. “When we speak of Ease of Doing Business, ease of winding up a business is also an important facet of the cycle. Since its enactment, the Insolvency and Bankruptcy Code has brought a paradigm shift in the insolvency regime in the country and is a crucial milestone in the economic reforms,” the Prime Minister wrote in the letter.
He added that Amrit Kaal reflects the resolve of more than 140 crore people to build a developed, self-reliant nation. When the hopes and aspirationsof every citizen get connected with the nation’s goals, self-reliant India becomes a national spirit.
Those who have already consented to attend the inaugural session of the International Seminar include Dr Justice KG Balakrishnan, retired Chief Justice of India; Justice Ashok Bhushan, Chairperson, National Company Law Appellate Tribunal and former Judge, Supreme Court of India; Justice Vineet Saran, Chairman, Ravi-Beas Water Tribunal, Ombudsman, Board of Control for Cricket in India and former Judge, Supreme Court of India; Justice Dilip Gupta, President Custom, Excise and Service Tax Appellate Tribunal (CESTAT) and Former Judge Allahabad High Court; GS Pannu, President, Income Tax Appellate Tribunal (ITAT); Bhubaneswar Kalita, MP, Panel Vice-Chairman, Rajya Sabha.
– global bihari bureau
