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G. Srinivasan

The committee felt that the then extant provisions would not have enabled NCLT to address issues of revival and rehabilitation of sick industries meaningfully.

New Delhi , July 22

THE Cabinet Committee on Economic Affairs is likely to take up official amendments in the Sick Industrial Companies (Special Provisions) Repeal Bill 2001 with a view to incorporating the recommendations of the Parliamentary Standing Committee on Finance at its meeting here on Wednesday.

Sources in the Government told Business Line that the amendments proposed related essentially to clarifying transitional provisions in the proposed National Company Law Tribunal (NCLT) set-up.

Following the proposed amendments, the schemes approved or sanctioned by the Board for Industrial and Financial Reconstruction or Appellate Authority for Industrial and Financial Reconstruction (AAIFR) prior to repeal of SICA would be saved and NCLT would monitor successful completion of those rehabilitation schemes under the Companies (Second Amendment) Act 2002.

The sources pointed out that on concurrent introduction of two bills namely, the Companies (Amendment) Bill 2001 in respect of insolvency and winding up of companies and Sick Industrial Companies (Special Provisions) Repeal Bill, 2001, the former Bill was referred to the Parliamentary Standing Committee on Home Affairs and latter to the Department-related House Panel on Finance for examination and report. After incorporations/modifications mooted by the Standing Committee on Home Affairs, Companies (Second Amendment) Bill 2002, among others, suggested setting up of NCLT and this was approved by both Houses of Parliament on December, 20, 2002. But certain provisions in this amendment Bill could be notified and implemented only after SICA has been repealed.

Hence after considering SICA Repeal Bill 2001, the House Panel on Finance came up with a report after hearing the views of various sections. This report highlighted the inadequacies in provisions of Companies Amendment Bill and proposed SICA Repeal Bill.

The committee felt that the then extant provisions would not have enabled NCLT to address issues of revival and rehabilitation of sick industries meaningfully. It was felt that the then proposed SICA Repeal Bill, 2001 suffered from deficiencies due to absence of transitional provisions to deal with cases pending with BIFR and AAIFR for sending them for abatement after enactment of the relevant Act.

The sources said that it was also indicated that the proposed Bills did not provide transparent picture on the future status of sanctioned schemes of BIFR where revival proposals were under implementation.

They said as per the amendments proposed, only cases pending before BIFR or AAIFR would abate and schemes already approved by BIFR/AAIFR would be saved and monitored by NCLT.

It is further proposed that a reference to NCLT is not mandatory in the case of sick industrial company owned by the Government whereas it is mandatory in the case of a private company. It is proposed to provide that any company, which has become a sick industrial unit as defined in clause (46AA) of Section 2 of the Companies Act, 1956 might make a reference to NCLT without paying the fee.

It is further proposed that references pending before NCLT should abate if 75 per cent of the secured creditors resolve to take action under the Securitisation Act.

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