Golden Antlers’ Seminar on Insolvency and Bankruptcy Code held on 28th September, 2018 at Kolkata
Speakers: 1) Hon’ble Justice Jinan K. R., Judicial Member NCLT Kolkata 2) Mr. Jayanta Mitra, Senior Advocate
Panel Discussion: Mr. Sudipto Sarkar, Senior Advocate (Moderator)
Panelist: Hon’ble Justice Debangshu Basak, Judge, Calcutta High Court, Mr. Abhrajit Mitra, Senior Advocate, Mr. Jishnu Chowdhury, Advocate, Mr. Ajay Gaggar, Partner, R. L. Gaggar & Co.
Address by Mr. Debanjan Mandal, Partner, Fox & Mandal
LatestLaws.com was Proud Media Partner for the Seminar.
The seminar was inaugurated by Justice Jinan who in his Key Note Address highlighted the significant role played by NCLT since admission of its first case on 5th January, 2017.
Justice Jinan spoke of the various amendments/ordinances introduced since January 2017 and hailed the various roadblocks which have been removed by the Supreme Court from time-to-time to enable expeditious disposals of the cases. According to Justice Jinan the introduction of Section 29A has had a tremendous effect on the Resolution Process. This Code has been widely welcomed by the business world, said Justice Jinan.
Mr. Jayanta Mitra, Senior Counsel, in his Key Note Address pointed out the relevance of Article 19(1)G of the Constitution of India which provides the Right to all citizens to carry on any trade of business and was of the view that this Code protects the stakeholders under the Constitution. Mr. Mitra welcomed this Code which brings in various multiple forums e.g. SICA, DRT, Company’s Act under one umbrella for restructuring of sick units. Mr. Mitra was of the opinion that the existence of multiple forums under various legislative acts were complicating the process of restructuring the NPAs and was a cumbersome tool for the stakeholders to realize their claims. According to Mr. Mitra the IBC has helped in development in credit markets and ease of doing business.
Mr. Mitra touched on the intentions of the legislature in providing employment of workers so as to give the citizens a basic human life and a decent standard of living. Going with the intent of the Indian Constitution, Mr. Mitra felt that the legislature while drawing up the Code should have been conscious of this article so as to protect the interest of the workmen in a CIRP process. He felt that the COC may be expanded to include representatives of the Operational Creditors and the Workmen at large.
The panel discussion which followed was on the “Role of IBC in economic growth.” Justice Basak shared his views on the Vires of the Code which was challenged before him. He agreed with the views of Mr. Mitra and felt that Article 43A of the constitution was not considered in its true spirit and law. Mr. Abhrajit Mitra felt that this Code was heavily in support of the Financial Creditors and essentially for the Banks.
He however expressed his happiness that the Code dealt with the sick companies as a “Going Concern”. Mr. Mitra was critical that the Resolution Professionals do not have a free hand to work and fulfill its responsibilities. He felt that the RPs should be given more power to deal with all types of creditors as oppose to they being now purely in the hands of the Financial Creditors. Mr. Jishnu Chowdhury pondered as to whether the IBC was a success or a failure. According to him, the banks were a happy lot even after taking a haircut so far as their realizations are concerned.
However, Mr. Chowdhury felt that this law was lopsided with the dues of the Operational Creditors and the Government not being taken into account in the Resolution Plan. According to Mr. Chowdhury, along with the introduction of the Code the legislature should have ensured proper infrastructure to be in place. He felt that more courts are to be introduced across the country and consequently more judges appointed for the Tribunal.
Mr. Chowdhury cautioned that the Corporate Debtors should not be allowed to take advantage of the moratorium period allowed under the Code as ventured by some unscrupulous businessmen. According to him more stringent checks and balances need to be imposed so as to make the Code meaningful. Mr. Ajay Gaggar pondered as to whether the IBC is really aiming on economic development of the company. He was critical of the name attributed to the Code and felt that both the words “Insolvency” and Bankruptcy” were negative in nature.
He touched upon the accounting principles followed by the bank under CIRP and said that these outstanding debts were already provided in the books of the banks and any earning out of CIRP was treated as an ‘income’ in the books of the bank. Mr. Gaggar was critical of the introduction of Section 29A in its present form and suggested that the existing promoters should also be allowed to bid as a Resolution Applicant and to be considered if they are the highest bidder.
After the discussion by the panelists, Mr. Sudipto Sarkar as the moderator dealt with the various contentions and issues and observed that IBC is not a litigation promoting statute and is rather a litigation mitigating statute. He came down strongly on the role of the RP and felt that the RP should be able to deal with the CIRP process through its own competency and not by appointing solicitors/advocates to represent them before the Tribunal thereby increasing the CIRP cost. Mr. Sarkar felt that the object of the Code was to save the sick companies from going into liquidation. According to him the Code is to revive the sick companies by introducing new management in place of the incompetent erstwhile management. Mr. Sarkar dealt with the provisions of Section 53 of IBC and analyzed on the priority of payment as laid down in the Code.
Mr. Debanjan Mandal in his address brought out the statistical figures of a research carried out and highlighted the survey results which revealed that 83 percent felt that IBC has brought in a significant change in the industrial scenario. Mr. Mandal felt that the Code should take into account the competency of an RP in playing its roles and duties while managing a company so that the RP is capable of successfully running the company during the CIRP. He further suggested that the fees of the RP should be capped so as to control the cost of CIRP.
Key Issues That Immerged Out of The Deliberation In The Seminar
- IBBI should consider the expansion of COC so as to take care of the dues of the Unsecured Creditors and in particular the Workmen.
- The RP should be appointed taking into consideration the size of the company and the number of Secured Creditors/Unsecured Creditors/Workmen so that he is capable of dealing with the dues of the Creditors in the judicious manner and not being a puppet in the hands of the Secured Creditors so as to ensure justice for all.