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Lok Sabha Debates

Motion For Consideration Of The Insolvency And Bankruptcy Code (Amendment) ... on 1 August, 2019

Seventeenth Loksabha an> Ttile: Motion for consideration of the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 as passed by Rajya Sabha (Bill Passed).

 

माननीय अध्यक्ष: मद संख्या 2, दिवाला और शोधन अक्षमता संहिता (संशोधन) विधेयक ।

 

THE MINISTER OF FINANCE AND MINISTER OF CORPORATE AFFAIRS (SHRIMATI NIRMALA SITHARAMAN): I beg to move :

“That the Bill further to amend the Insolvency and Bankruptcy Code, 2016, as passed by Rajya Sabha, be taken into consideration.” माननीय अध्यक्ष: मंत्री जी, क्या आप इस पर कुछ प्रस्तावना रखना चाहती हैं?

SHRIMATI NIRMALA SITHARAMAN : Thank you, Speaker, Sir.

Sir, the Insolvency and Bankruptcy Code (Amendment) Bill of 2019 seeks to amend seven sections of the Insolvency and Bankruptcy Code of 2016. Actually, the sections that we are trying to amend are section 5, section 7, section 12, section 25(A), section 30, section 31 and section 33.

The main purpose of the Bill is to further the object of the Code, which is to ensure insolvency resolution of corporate debtors in a timebound manner and for maximisation of the value of assets of such debtors. Most often, when a company reaches the stage where debtors payments are pending due to the delay in timely resolution, the value of the assets of such debtors get depleted. It continuously regresses in its value and as a result, debtors find that there is no end to their problem. The resolution itself does not give an answer because of the delay. So, delay is one of the very important causes.

The amendments that we are bringing in today aim to ensure timely admission of cases, and also timely completion of the Corporate Insolvency Resolution Process.

I would probably refer to it  as CIRP. So, we want to bring in greater timeliness about the whole thing; permissibility of corporate restructuring process itself; the scheme, the resolution plan which the Committee of Creditors might come up with; and to make sure that order of priority of the creditors as laid down by Section 53 is maintained; the security interest of the secured creditors are respected. When it comes to the resolve to voting deadlock like a situation in certain cases, the authorised representatives can come under Section 21(6)(a) and cast the vote in accordance with the decision approved by the highest voting shareholders, that is, more than 50 per cent shareholders.

One of the aims of this amendment is to deal with that kind of a situation. In the case of voting, we are trying to very clearly present financial creditors on the basis of those who are present and voting. Then, we are also bringing an amendment to make sure that the applicability of the resolution plan. After all, the Committee of Creditors when they come up with the resolution plan - because theirs  is the final word on a commercial decision -  it should be binding on most authorities. Here, we are very clearly – because of the amendment – saying that it shall be binding on the Central Government, State Government, and even the local authorities. So, all the statutory authorities will be bound by the decision which the CoC brings in as a resolution plan.

We are also trying to clarify that the Committee of Creditors may take resolution plan-based decisions to liquidate the corporate debtor at any time after the constitution itself. So, if the Committee of Creditors is being constituted, they should be able to come up with the resolution plan that very minute onwards. Even if it is before the preparation of the information memorandum, it should be their job to do it. In a way, I want to underline the words of the Supreme Court. Not the exact quotes but I would like to refer to a particular case through which the Supreme Court really underlined the fact that this Code has really come to be a very effective tool in redressing the creditors grievances and the constitutionality of this Code has been very well established through that particular case of 2009, which is commonly referred to as Swiss Ribbons matter.

 

SHRI KALYAN BANERJEE (SREERAMPUR):  The judgement was given on 25th January, 2019.

 

SHRIMATI NIRMALA SITHARAMAN: It was 2019. Did I say 2009?  Sir, 2019 is what I wanted to say, and if I said 2009,  I am sorry.  I stand corrected if I said 2009.

In this Swiss Ribbons case of 2019, the Supreme Court observed that India shall no longer be a defaulters’ paradise because of the introduction of this Insolvency & Bankruptcy Code. So, we shall not be giving a comfortable haven like situation for those who are defaulters. It actually upheld the constitutional validity of the Insolvency & Bankruptcy Code thereby really giving strength to the Code on which it is being well recognised now that although it is only two and a half years since this Code has come in, there have been necessity for periodically responding to the developments outside.

Parliament in its wisdom, and rightly so, has found it necessary to come up with periodic amendments. This is one of the amendments – this is probably the third time we are coming up with a set of amendments – only to make sure that this Code is going to be vibrant. It does not give itself or lend itself to any kind of interpretative ambiguities. Therefore, the amendments are being brought in.

In doing so, in passing its verdict invoking the Swiss Ribbons matter, the Supreme Court also said that we need to move away from traditional approach in finding solutions for corporate, commercial, and economic matters.

That is why this court on its own is one of the very effective tools. Periodically, we are coming out with quite a few out-of-the-box solutions while remaining consistent with the Constitution. So, the hon. Supreme Court felt at the same time that the economic laws need to have flexibility and we should do some experimentation also. The hon. Supreme Court had said that the experimentation is somewhat acceptable when you are looking at a situation of reforming the economic laws. So, the main purpose is something which I have very clearly stated.

I would just want to go into the salient features of all the amendments that we are planning this time round. There are, as I said, seven Sections which are being touched upon for amendment and I would just highlight the larger context. There are largely explanatory changes trying to bring in clarity to the existing positions. Clarity is being brought in allowing comprehensive corporate restructuring schemes such as mergers, demergers, amalgamations etc. as a part of the resolution plan. That is the first one. If the hon. Members have got the Amendment Bill as passed by the Rajya Sabha, they will see that that is the first one which I am referring to. Section 5 will now have mergers, amalgamations and demergers included in the description of what can come as a resolution plan.

Sir, the next one is that a greater emphasis is being laid on the need for a time-bound disposal at the application stage itself. We are looking at the application stage being a very critical component. The usual process takes 14 days by which time it should be admitted but if there is a delay, if it is not admitted even by the 14th day, we are requesting through this greater emphasis that we are putting now that explanation be given why it is not getting admitted. At this stage, I am not going further into greater details of various amendments.

 

SHRI N. K. PREMACHANDRAN (KOLLAM): I want a clarification regarding the default because of which the application is rejected.

 

SHRIMATI NIRMALA SITHARAMAN: No, it is only for admission. We are saying, “do give us an explanation why it could not be admitted” but that does not end the story. They can take a bit longer time but they will explain why within 14 days they could not find it reasonable enough to get it admitted for the resolution. So, it is only a stage to mark so that all of us in the whole process are time conscious. That is not to deny the process but to say, “give us an explanation”. So, that is one of the things which we are bringing in.

The third emphasis is on the CIRP – the resolution process’s beginning. We want the whole process to be completed within 330 days including the litigation stage and also the judicial process stage. I am very quickly moving from one to another amendment so that I will hear the hon. Members and, in my reply, probably, I can give them far more detailed response and answers to the issues that are being raised by the hon. Members.

Since this amendment is coming in now and some of the amendments are in response to a situation which is developing outside, I want to talk about the treatment of financial creditors in one of the cases, I am not naming the case now but it is obvious, I will probably, if necessary, mention it in my reply. In one of the cases, the treatment of financial creditors was at par with operational creditors which should not have been the case. But all of them being treated at par came up as a big issue. People were worried. So, we are responding with an amendment to that issue also.

Then, there is a waterfall mechanism which is beautifully described in Section 53 as to who gets how much at what stage. Even that led to a lot of confusion in the treatment of different types of creditors. So, we are reinforcing the supremacy of Section 53, again establishing that the Committee of Creditors will be dealing with the commercial matters and theirs is  the final word as regards resolution plan.

 So, many of these make the set of amendments that we are trying to bring in here. I shall probably go further into details a bit later. I think for introductory remarks this should be enough. I will keenly listen to all the inputs coming from the hon. Members and respond to them at the end. Thank you very much.

माननीय अध्यक्ष: प्रस्ताव प्रस्तुत हुआ :

“कि दिवाला और शोधन अक्षमता संहिता, 2016 का और संशोधन करने वाले विधेयक, राज्य सभा द्वारा यथापारित, पर विचार किया जाए ।”       12.15 hrs INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) BILL, 2019 – Contd.  

SHRI GAURAV GOGOI (KALIABOR): Hon. Speaker, Sir, the Insolvency and Bankruptcy Code is definitely one of the more constructive steps taken by the previous Government. We all want that our banks get rid of the issues with respect to non-performing assets, have access to credit that they can further lend to the other sectors.

12.16 hrs                        (Shrimati Meenakashi Lekhi in the Chair) It is definitely a big task for the Insolvency and Bankruptcy Code when it started in 2015 initially and then culminated in 2016, that close to Rs.10 lakh crore were stuck in debt in the market, primarily in the sectors of steel, cement, infrastructure, housing and jewellery.

It is a new legislation and, as the hon. Minister says, we will learn from experience. The situation is quite dynamic because there are multiple stakeholders, multiple tribunals and they are all interpreting the law sometimes in sync with what the Government intended to do and sometimes out of sync. Therefore, the Government from time to time has brought amendments. This is the third round of amendments. Close to 54 clauses have been amended. We are here as a constructive opposition and we want this Code to succeed. We want to, therefore, support the Government whenever amendments which are necessary are brought before the Parliament. But one also needs to take a step back and look at the larger economic and macro-economic scenario of our country.

For 2019-20, many experts initially stated that our growth figure would be 7.2 per cent. Recently, the Asian Development Bank has moderated it and brought it to seven per cent. And, certain economics experts would not be even surprised if later on growth further slips to 6.8-6.9 per cent.

We have to realise that the last quarter was not good for the Indian economy, and what is not good for the Indian economy affects all of us. The Economic Survey had called for a virtuous cycle of savings and investment. But the reality is that savings is muted, demand is muted. And even though there was a lot of effort by the Government to give a spin to the latest Budget as the Big Budget, the reaction of the Sensex, the reaction of the market shows that they are not impressed.

Manufacturing has been one of the slowest growing areas. Its growth has dropped to 3.1 per cent from 6.4 per cent in the previous quarter. Manufacturing carries 77 per cent in overall growth contribution, but its growth rate unfortunately is very small.  All of this gives an indication as to where the Indian economy is.

Nonetheless, coming back to the IBC, it has been close to three years now. If you review these three years, the performance has been a mixed bag. I do not want to blame anyone as to why the performance has been so mixed.

But certainly, there are vested interests at play. As the hon. Minister said, litigation is taking time. Originally, the Code envisaged that there would be 270 days for resolution plus 90 days extension, but we are nowhere close to those deadlines if you really look at the big cases that are stuck in the insolvency process. But if you look overall, what is the track record? Close to 2,157 cases are in the corporate insolvency resolution process. Out of 2,157 cases, only 117 applications have the resolution plans approved. Close to 474 applications have gone into the liquidation process. Nobody wants to see liquidation. We want to avoid liquidation because it adds to high unemployment. The lenders have not got their money back. In case, tomorrow, if a real estate company goes into liquidation, what happens to home buyers who have invested their life savings, one dreads to imagine.

There are certain cases that have not been mentioned by the Finance Minister. The judgement of the NCLT, when it treats operational and financial creditors at par, is out of sync. Essar Steel has been stuck for a long time. Therefore, as the hon. Minister said in her opening remarks, she is bringing amendments, which brings clarity to the Committee of Creditors, talking about mergers and amalgamations as part of the resolution plan. She has revised the deadline to 330 days. There is a vote for home buyers in the CoC, which is a welcome step because we want the home buyers to have a voice in the CoC.

The hon. Minister has also mentioned about section 13 and section 53, which talk about the liquidation value. All of these amendments are welcome nonetheless the issues remain. There are certain clarifications that I want from the hon. Finance Minister. No doubt, the NCLT and the NCLAT are completely overloaded. Various media reports say that only 14 NCLTs are functional and two are yet to start and we do not have enough members. Initially, there were 27 members, whereas the target was 60. But I read the hon. Finance Minister’s reply in the Rajya Sabha, where she said that 26 new members have been added, which is a welcome step. But as we look in hindsight, may be this is a step which is somewhat late and maybe we should have prepared for this in advance.

My question to the hon. Minister is even though you have these 26 new judicial members, you are taking on their training, you are looking at various courts in Delhi and across the country, and you are renovating the interiors, as you have mentioned in your reply in the Rajya Sabha, do you honestly believe that after this, we will stick to the 330 days deadline? Or, do you envisage that again, we might have to show flexibility as the Supreme Court says and you might make an amendment later on that extends the deadline from 330 days to may be 390 days, I do not know. Are you confident that the Government has taken enough steps with respect to improving the infrastructure and the human resource of the NCLT that the 330 days deadline is met? That is very essential.

Another issue with the entire insolvency process is the issue of vested interests. It is quite unfortunate, Madam, to see the kind of haircuts that are taking place today. There is a company called Electrosteel, where the realisation of the resolution was only 40 per cent of the amounts that were due to the secured creditors, that means, a 60 per cent haircut. There was another company called Bhushan Steel, where the realisation was only 63 per cent. There was another company called Monnet Ispat, where the realisation was only 26 per cent. In the case of Essar Steel, the plan has not come yet. It is still stuck in court. And then, there is Alok Industries, where the resolution is 17 per cent, that means, an 83 per cent haircut. I am not going into the origins of why these companies are in the insolvency process but surely the amount of haircut that is being allowed must give the Government a cause for concern. After the haircut has been awarded, a big company comes and buys up the smaller company and the same bank which was initially due for money, gives the bigger companies a loan to buy those smaller companies, like, Alok Industries.

Does this pattern not create doubt in the Government’s mind that the system has been gamed or the system has been fixed? There have been cases where the resolution applicant has not even infused money. There have been cases where somebody won the bid and failed to pay. So, what will the Government do in such matters?

I also want to ask the Government about the case of Jet Airways. Right now, in a court in the Netherlands, two creditors won a judgement in the Dutch High Court, saying that Jet Airways owes them money. As of now, our Insolvency and Bankruptcy Code does not have provisions for cross-border insolvency. What are we going to do for that? Are we going to look at the United Nations Commission on International Trade Law?

The most tragic is the issue of home buyers. The home buyers in 2018 Ordinance got the status of financial creditors. Now, they have got a vote, but real estate overall needs a sectoral approach. I want to ask the hon. Finance Minister what her plan is to revive the real estate sector. Who is going to buy those companies which are in insolvency? Who is going to be the white night that comes to buy a company that is going into insolvency after haircut and give the home buyers their due? The interest of the home buyers and the interest of the lending banks of these real estate companies are at opposite ends. The home buyer wants his flat. He has invested his life savings in a flat and it has been 10 or 15 years. You talk about Jaypee Infratech or you talk about Amrapali, the home buyers want their flats. But the banks which have given loans to these real estate companies do not care about the flats; they do not care about the assets; they either want to take over the assets of the company or they want their money back. So, the interests of the homebuyers and the banks are completely divergent. How do section 53 and section 30 solve this? I would like the hon. Finance Minister to answer how the Government would solve this. God forbid, a real estate company goes into liquidation and the homebuyers are left high and dry.

The hon. Finance Minister used the previous Supreme Court judgements which might have talked about economic flexibility, but nonetheless there is a case which is going on in court. The Government has brought in amendments to section 53 and section 30 making them retrospective in certain aspects? Will this stand the test of time? Will this stand up to a court challenge? Merely by using the words like ‘economic flexibility’, I do not think the Government has enough merit to use the paraphrasing of those Supreme Court judgements. It is bringing in amendments to section 53 and section 30 and this is something that will be looked forward to.

The MSME sector needs a complete overhaul from this Government because most of our employment is generated in the MSME sector. There is also an amendment which this government brings which makes the resolution plan binding on the Central Government, the State Government, and the local Government. There are mixed views on that. Some say that this is necessary and this is a good practice that the Central Government, the State Government and the local Government should be bound to the resolution plan. But, what will happen if in certain cases the Government wants to recover money from a private sector company? It has various means because the Government is powerful. Let us not deny that; let us call a spade a spade. The Government of India is powerful. Why should it be bound to a resolution plan that a private body or the Committee of Creditors decides? Just for example, the R-com owed some money to the Department of Telecom and the owner of R-com wanted to sell it to Jio. The Government of India intervened and prevented that sale.

So, RCOM was forced to pay back its dues to the Department of Telecom before it was bought by Jio.  It shows that the Government has tremendous power.  Therefore, the Government should introspect whether it wants to be bound by this Clause. What the resolution plan says is God’s gospel. 

I do not want to take too much of your time, hon. Chairperson.  As I said, it is a dynamic legislation.  More amendments are likely to come.  If it is good for the economy, if it is going to reduce the stress in our financial sector, if it is going to reduce the stress in our public sector banks, as a constructive Opposition we will always support the Government.  While we congratulate the Government for the way it is taking forward the Insolvency and Bankruptcy Code, let us not forget the larger macroeconomic slump that India currently is facing, the unemployment challenges that we face, and the plight of the home buyers in the real estate sector.  Thank you very much.  

 

डॉ. संजय जायसवाल (पश्चिम चम्पारण) : सभापति महोदया, आपका बहुत-बहुत धन्यवाद कि आपने मुझे इनसॉल्‍वेंसी एण्ड बैंक्रप्सी कोड (अमेंडमेंट) बिल, 2019 पर बोलने का मौका दिया  ।

       महोदया, मैं आपने कांग्रेस के साथी का भी आभारी हूं कि उन्होंने इस बिल का पूरा सपोर्ट किया है  । उन्होंने कंपनियों के बारे में भी कहा, मैं कंपनियों का नाम नहीं लूंगा कि किसी कंपनी की लिक्विडेशन में सिर्फ 63 परसेंट ही रिकवरी हो रही है, किसी कंपनी को 26 परसेंट हो रही है और किसी कंपनी को 17 परसेंट हो रही है  ।

सभापति महोदया, मुझको अपने इस संसदीय जीवन में दोनों तरह के दलों की सरकार देखने का मौका मिला है  । मैं इन सब कारणों के बारे में बताता हूं कि ये क्यों हुए, अगर इन्हें देखा जाए तो हमें इन कारणों को समझना पड़ेगा  । मैंने वह भी एक सरकार देखी है, जिसका वर्ष 2014 तक का पूरा कार्यकाल घोटालों का था, वित्तीय अनियमितताओं का था, पॉलिसी पैरालिसिज़ का था  । हम लोगों ने यह भी देखा कि किस तरह से प्रधान मंत्री और कैबिनेट के फैसले को कोई युवराज एक प्रेस कांफ्रेंस में जाकर फाड़ देता है  ।

हम लोगों ने यह भी देखा कि किस तरह बहुत सारे उद्योगपति अचानक चार्वाक ऋषि के चेले हो गए थे  । हमारे यहां चार्वाक नाम के वेदों में एक ऋषि रहे हैं, उन्होंने कहा था कि उधार को घी समझकर पियो और भूल जाओ  । वह पॉलिसी पैरालिसिज़ का समय था, उसी का कारण है कि यहां यह पूछा जा रहा है कि कंपनियों से 13 परसेंट या 17 परसेंट ही रिकवरी क्यों हुई? उस समय के बहुत सारे उद्योगपतियों ने समझा था कि वे पॉलिसीज़ अपने हिसाब से बना सकते हैं । जो उधार देने का सिस्टम था, जिस तरह एक समय में बैंकों ने 18 लाख करोड़ रुपये के उधार दिए थे, वे उधार पांच सालों में एक झटके में 18 लाख करोड़ रुपये से बढ़कर 52 लाख करोड़ रुपये हो गए  । …(व्यवधान)

श्री सुदीप बन्दोपाध्याय (कोलकाता उत्तर) : गौरव जी ने अच्छी भाषा में बोला था  । आप भी अच्छे से बोलिए  । …(व्यवधान)

श्री गौरव गोगोई : मैं भी इस तरह की भाषा का प्रयोग कर सकता था, लेकिन शायद वह सदन में अच्छा नहीं लगता  ।

डॉ. संजय जायसवाल (पश्चिम चम्पारण) : इसके लिए मैं आपको धन्यवाद देता हूं  । आपका धन्यवाद है, लेकिन आप जिस स्थान पर हैं, उस भाषा का प्रयोग करने में थोड़ी सी दिक्कत है, क्योंकि जब माननीय नरेन्द्र मोदी जी का कार्यकाल आया तो हम लोगों ने बिलकुल ही क्लियर-कट एक पॉलिसी बनाई कि किस तरह से हम लोग पारदर्शिता रखेंगे, किस तरह से हम लोग सही नीयत और सही नीति के साथ विकास करेंगे और किस प्रकार से हम लोग सभी घोटालेबाजों के लिए कड़ी सजा के प्रावधान करने का प्रयास करेंगे  ।

सभापति महोदया, आज ये जो बहुत सारे सवाल पूछे जा रहे हैं, उन सवालों का जवाब यह है कि पहले हमारा वित्तीय ढांचा पूरी तरह से चरमराया हुआ था  । हम उसी को ठीक करने के लिए, इन घोटालेबाजों को ठीक करने के लिए पीएमएलए का कानून लेकर आए, रेरा कानून लाए, बेनामी संपत्ति कानून लेकर आए, फ्यूगिटिव इकोनॉमिक ऑफेंडर्स एक्ट लाए, विदेशी काला धन (अज्ञात परिसंपत्ति) कानून लेकर आए  । अर्थात, हम लोगों ने विभिन्न कानूनों के माध्यम से जो इस तरह की अनियमितताएं चल रही थीं, उन सभी अनियमितताओं को ठीक करने का प्रयास किया  ।

महोदया, इसी के तहत वित्तीय संस्थानों की दशा और दिशा ठीक करने के लिए हम लोग कंपनीज़ अमेंडमेंट एक्ट लाए, आर्बिट्रेशन एण्ड कॉन्सिलेशन एक्ट लाए  । हम लोग अब इस सबसे बड़े कानून, इनसॉल्‍वेंसी एण्ड बैंक्रप्सी कोड को लेकर आए हैं  । इस कानून की सफलता क्या है, यह हमें इसी से पता लगता है कि पहले डूबे हुए उद्योगों में बैंकों की रिकवरी 23 परसेंट थी, जो अब बढ़कर 43 परसेंट हो गई है  । पहले की सरकार द्वारा जो लाखों-करोड़ों रुपये बिना सोचे-समझे बांट दिए गए थे, वे केवल आईबीसी कानून आने के बाद, केवल इस डर से कि आपको आईबीसी में जाना पड़ेगा, हमारी लगभग 2,84,000 करोड़ रुपये की रिकवरी हो गई  ।

इनसॉल्वेंसी और लिक्विडेशन से बैंको को 1 लाख 50 हजार करोड़ रुपये वापस मिल गए । पहले इन इनसॉल्वेंसी के मामले में पूरे विश्व में हमारी 134 रैंक थी, उसमें हमने 26 पायदान एक बार में छलांग मार ली  । इतना ही नहीं ईज ऑफ डूइंग बिजनेस में हम विश्व में 133 वें रैंक से 77 वें रैंक तक चले आए हैं  ।

सभापति महोदया, इतना बढ़िया काम हो रहा है कि वर्ष 2018में वित्तीय सुधार करने के लिए हमें ग्लोबल रीस्ट्रक्चरिंग रिव्यू अवार्ड मिला है  । मैं इसके लिए माननीय अरुण जेटली जी को बहुत-बहुत बधाई दूंगा कि उनके समय में यह पुरस्कार दिया गया । आई.बी.सी. में कितना भी हम लोग कानून में संशोधन कर लें, पर जो इस तरह के गलत तत्व होते हैं कि “तू डाल-डाल, मैं पात-पात”, इसी सिद्धांत को ठीक करने के लिए हर साल बहुत बढ़िया काम चल रहा है  । नॉर्मली हम कानून में देखते थे कि कोई कानून आ गया और हम 5-7 साल तक निश्चिंत हो जाते थे । फिर कभी होता था कि ये-ये गलतियां हम ठीक करेंगे, इसकी चर्चा में ही 4-5 साल बर्बाद हो जाते थे  । मैं माननीय वित्त मंत्री श्रीमती निर्मला सीतारमण जी का आभारी हूं । हमारे वित्त मंत्रियों द्वारा हर साल अमेंडमेंट लाए गए  । जहां गलती पकड़ी गई,उसको ठीक करने के लिए हम ईमानदारी से प्रयास कर रहे हैं  । जो कोर्ट के आदेश दिए गए हैं, उनका भी हम संज्ञान ले रहे हैं  । जो तीनों सुधार हुए हैं, नवम्बर 2017 में, जून 2018 में और अभी का जो सुधार है,यह हमारे लिए आगे के लिए बहुत बड़ा कदम है । इनसॉल्वेंसी के लिए पहले हमें सवा चार साल लगते थे,अब केवल 324 दिन लग रहे हैं  । जो केस आई.बी.सी.के तहत चल रहे हैं, उनमें 32 परसेंट ऐसे केसेज हैं, जो 270 दिन से ज्यादा के हैं  । माननीय प्रधान मंत्री जी खुश भी हो सकते थे कि हमने तेजी से 68 परसेंट केसेज निपटा दिए, लेकिन हमारी सरकार का यह सिद्धांत है कि हम लोग सौ प्रतिशत परफैक्ट ढंग से काम करने का प्रयास करते हैं  । माननीय प्रधान मंत्री जी का सिद्धांत है,जो स्वामी विवेकानन्द जी ने कहा था कि “उत्तिष्ठत जाग्रत प्राप्य वरान्निबोधत” । जब तक हम अपने लक्ष्य को पूरी तरह से प्राप्त नहीं कर लें, हम लोग विश्राम नहीं करते हैं  ।

सभापति महोदया, आपने भी देखा था कि जब हम सब चुनाव जीतकर आए थे तो खुशी मना रहे थे  । तब हमारे राष्ट्रीय अध्यक्ष जी ने कह दिया कि हमारा स्वर्णिम काल आना बाकी है  । जब तक हम केरल और बंगाल नहीं जीतेंगे, हम शांत नहीं रहेंगे । यह हमारा काम करने का एक तरीका है  । इसी के तहत हम लोगों ने इतने सारे सुधार करने का प्रयास किया है  । 270 दिन की बाइंडिग जरूर थी,लेकिन बहुत सारे मामले कोर्ट केस में लटक जाते थे  । इसलिए मैं माननीय वित्त मंत्री जी का आभारी हूं कि उन्होंने जो यह 330 दिन का सभी विवादों को खत्म करने का समय दिया है,यह एक बहुत ही उचित कदम है । जो लोग लिटिगेशन के माध्यम से फंसाना चाहते हैं, उन सभी को इससे बहुत बड़ी असुविधा होगी और देश को लाभ होगा । इसी के तहत एन.सी.एल.ए.टी.और डी.आर.टी.को कहा है कि 15 दिनों के भीतर आपको या तो केस एक्सैप्ट करना होगा या रिजैक्ट करना होगा  । यह भी एक बहुत बड़ा कदम है,क्योंकि इसमें भी बहुत सारे मामले लटके रहते थे । सबसे बड़ी बात है कि अगर देर होगी तो आपको कारण लिखकर देना पड़ेगा  । मैं माननीय वित्त मंत्री जी को इसके लिए भी बहुत-बहुत आभार प्रकट करना चाहूंगा  । उन्होंने कमेटी ऑफ क्रेडिटर्स को ज्यादा अधिकार दिये हैं कि अगर चलाना है तो आप कुछ बेचकर भी चला सकते हैं  । रीस्ट्रक्चरिंग करना हो,मर्जर-डीमर्जर, एमल्गामेशन या जो भी करना हो,उसका अधिकार जो इन्होंने कमेटी ऑफ क्रेडिटर्स को दिया है,उससे पूरा एक सिंगल विण्डो सिस्टम हो जाएगा । हमें तत्काल फैसले लेने और सभी निर्णय करने में सुविधा होगी । मैडम ने वॉटरफॉल मैकेनिज्म बता दिया है,मैं उसमें ज्यादा नहीं जाना चाहूंगा । हमारे एक मित्र ने जेट एयरवेज का उदाहरण दिया है,मैं भी वही उदाहरण देना चाहूंगा । हम लोगों ने दो एयरलाइंस को जाते हुए देखा है । आज से 9 साल पहले किंगफिशर एयरलाइंस को जाते हुए देखा है । जब तक इनसॉल्वेंसी का प्रोसेस चलता रहा तब तक उसके सारे हवाई जहाज कबाड़ा हो गए । उन्हें कोई खरीदने वाला नहीं मिल रहा है  ।

दूसरी तरफ आज जेट एयरवेज भी है, जिसका उदाहरण मेरे कांग्रेस के मित्र ने किया था  । कमेटी ऑफ क्रेडिटर्स होने से तुरन्त उसका हम लोगों ने फैसला भी कर लिया और फैसला करके उसे जब दूसरी कंपनी को हम लोगों ने दे दिया है तो आज वह हवाई जहाज भी उड़ रहे हैं  । हमारे यहां कितनी ज्यादा दिक्कत होती, अगर पूरे तौर पर वे हवाई जहाज बैठ गए होते  । आज हवाई जहाज का किराया दोगुना हो गया होता  ।

श्री गौरव गोगोई : किस प्राइस पर स्पाइस जेट को बेचा गया है?

 

डॉ. संजय जायसवाल: ये रेट्स सरकार द्वारा तय किए गए हैं  । पूरी ट्रांसपेरेंट प्रॉसेस है और उसे आपने सुना नहीं है  । हमारे माननीय उड्डयन मंत्री जी ने उसके बारे में बताया था कि बिल्कुल ट्रांसपेरेंट प्रॉसेज से हम लोगों ने दिया है  । हवाई जहाज अगर चल रहे हैं तो एक तो हमारा किराया बच रहा है और दूसरी तरफ जब भी उनके बिकने की बात आएगी तो बिकने में उनकी सही कॉस्ट निर्धारित होगी  । इनकी बात मानकर अगर वे सारे हवाई जहाज कबाड़ में रहते तो वे लोहे के रेट में बिकते, लेकिन जब भी इन्सॉल्वेंसी प्रॉसेज होगा, तो बिल्कुल अच्छी तरह से होगा और मैं यह विश्वास दिलाता हूं कि हमारे माननीय प्रधान मंत्री जी ने कहा है कि ‘This Government has no business being in business.’  यह पुराना कोटेशन है  ।

श्री गौरव गोगोई : सारा इम्पोर्ट आपके एक ही दोस्त को जा रहा है ।

डॉ. संजय जायसवाल: सभापति महोदया, हमारा काम है सही पॉलिसीज बनाना, सही एन्वायर्नमेंट उद्योगपतियों को देना, ताकि वे अच्छी तरह से काम कर सकें । हमारा काम हम बहुत अच्छी तरह से कर रहे हैं और माननीय वित्त मंत्री जी ने इनसॉल्वेंसी और बैंक्रप्सी कोड का जो अमेंडमेंट लाए हैं, मैं पूर्ण रूप से इसका समर्थन करता हूं  । आपका बहुत-बहुत धन्यवाद  ।

                                                                            

SHRIMATI KANIMOZHI (THOOTHUKKUDI): Madam, actually the first speaker, hon. Member, Shri Gaurav Gogoi, supported the Bill.  We thought the discussion will be above politics but then some people cannot let that go and temptation is there too much.  We are here not just for politics.  We are here for enacting legislations.

Anyway, to talk about the Bill now, there are a lot of welcome things in this Bill.  As the Minister has said, the amendments have been brought in to get more clarity in the Bill.  We have seen that this Code has been in operation for the past three years now. My primary objection is the amendment to Section 31.  The amendment makes it clear that the Central or State Government or local authority to whom statutory dues are owed are also bound by the resolution plan as stakeholders. If such a resolution plan has provided for reduced taxes or even no money at all, the State and Central Governments are bound by the resolution plan as approved by the adjudicating authority under Section 31 of the Act. 

I would say that this can have a very dangerous impact on the public exchequer.  The resolution plan is approved by the Committee of Creditors comprising of financial institutions.  The State and the Central Governments are not represented on this.  Actually, this will be giving powers to a private body – COC of a company – to determine or undermine the interest of the State.  I think the Minister has to take this into consideration.

       Now such an amendment is also on a shaky ground.  The power to recover dues to the State are provided to various authorities under various special statutes.  For example, the Income Tax Department draws its independent powers from the Income Tax Act, 1961; GST is levied and recovered by the authorities under the provisions of the Central Goods and Service Act, 2017.  The Acts are also there to recover property tax and other taxes by the Government bodies.  When these authorities have exercised powers under those Acts, a committee of private financial lenders is effectively over-ruling these Government bodies.  Therefore, we are creating a super body which will actually supersede the provisions of other statutes.  Can you imagine a situation where these private financing bodies will say that the State and the exchequer are more important?

Will they ever put them before their own private interests? I suggest that the hon. Minister must consider equating agencies of the State as an independent category of creditors as it was earlier done under the Companies Act of 1956 which gave them a place in the Committee of Creditors. This will ensure that the interests of the States are taken into consideration.

       Madam Chairperson, with regard to amendments to Section 30 I would like to submit that I understand that the Ministry is bringing these amendments to overcome interpretation of the National Company Law Appellate Tribunal’s judgement of the ESSAR Steels. However, if the Government takes a wholesome view of the judgement, we can see that the judgement helps small and medium scale vendors by not allowing financial creditors to take the whole pie. After this amendment, operational creditors can be given nothing. That is something we have to be very careful about. Owing to the bad practices followed by the corporate companies, these smaller concerns will be affected to a large extent. In Explanation 1, it has been mentioned `fair and equitable’. That can be subjected to any interpretation. That aspect also has to be taken into consideration and when these smaller entities are affected it will have a repealing effect on the economy. In many cases, these operational vendors and creditors have only a due of Rs. 1 lakh or Rs. 2 lakh and when they are not paid and settled, their entire business comes to a stand-still. We already have unemployment problems and the country is going through a crisis which has never been there before. So, I think, we should not add on to it.

       Amendment to Section 25A talks about the voting rights of those who form a class of creditor. I think, the hon. Minister while making her initial remarks on the Bill she even mentioned this. But for example, if there are 100 people who have invested for buying flats and 51 of them, who have invested, have one opinion that they want their money back but the rest of them want flats, then the representatives had two votes. They could then represent both the views. But after this amendment the representative will have only one vote. So, the opinion and what the rest of the 49 want is not taken into consideration. This is very unfair to a majority of the people because they are being defeated by just two votes. A lot of people belonging to the middle class want a flat for their investment and they do not want their money back because they have been waiting for so many years. It would become a big loss to them because they invest their life-time savings in this. 

       Madam, section 12 was a concern for many people and it talks about the timeframe. There were a lot of questions about whether the time taken in the court proceedings would be included in that or not. The hon. Minister has now explained that. It is a welcome thing. The stipulated time includes that also so that it does not become a never-ending process.

       Apart from making submissions on the various provisions of the Bill, I would also like to make one suggestion about minimum threshold for invoking the resolution process. It should be increased because it is just one lakh and I think, if that is increased, then it will reduce the workload of the Tribunals and also ensure that smaller companies are not dragged into the NCLT under the threat of insolvency. It is because these small companies are the ones who are affected by this and end up facing court proceedings and they are not able to run their companies and again it puts them back into the vicious cycle where they cannot get out of their debts.

       The hon. Minister also has to bring a mechanism to regulate the fees charged by the regulation professionals.  In some cases, when the debt is only around Rs. 1 lakh, the fees charged by them is nearly Rs. 25,000 to Rs. 50,000 or more.  Bigger companies have a panel of lawyers to help them out but smaller companies do not get anything out of it.  So, there should be some regulation on the fee structure.

       With these words, I think the hon. Minister will look into the suggestions made by this House to make this Bill even a better and clearer one.  Thank you.

 

SHRI KALYAN BANERJEE (SREERAMPUR):  Madam, the Insolvency and Bankruptcy Code was enacted in May, 2016. There is a critical link with a chain of steps initiated since 1991 for a transition towards the market economy.  Insolvency Code relates to the credit system of the country and therefore, must be given an expansive interpretation of all the clauses.  I agree with this that it is a new Code in a financial policy.  It needs some research from time to time and changes have to be made depending upon the situation. Some deficiencies were there which are now sought to be removed.  Due to those deficiencies or gap and the interpretation of the Supreme Court judgement, Essar Steel got big benefits.  Now after the passage of the amendments which have been brought, the benefit would naturally not go to them and that is warranted.  That is needed. They got the benefit since deficiencies were there.

       Madam, this amendment is to have a behavioural change, particularly among the promoters.  Continued ownership is no longer guaranteed since judicial interpretation seems to create confusion.  I have already referred to the Essar case. The resolution process of Essar Steel, where secured creditors have claims of Rs.45,559 crore, has dragged on way past the 270 days deadline as stakeholders mount legal challenges. Now, naturally, if these amendments come into effect, the judgement would be diluted.

I believe, after the introduction of the Insolvency and Bankruptcy Code and functioning of the NCLAT, some amounts have been recovered.  The process was going slowly but now it is going up speedily. Under the Code, Committee of Creditors is entrusted with a primary responsibility of financial restructuring, and financial creditors are busy in money lending, and banks and financial institutions are best equipped to assess viability and feasibility of the business of the corporate debtors.

       Madam, I agree with the hon. Member, Shrimati Kanimozhi. The object of the Bill was to recover the money from the corporate sector. Now, by inserting Clause 7, you are extending this to the Central Government, State Governments, and also the local authorities. As we know, every Government, including the Central Government, State Governments, and even so many local authorities, are taking loans. That is not their personal issue. It does not come within the realm of the corporate sector at all. The Bill was enacted for the purpose of recovering the money from the corporate sector but now, you are extending it to the Government also. In that case, whoever will be in the Government will be in a great difficulty, especially the local authorities.

       Madam, in your opening remarks, you referred to the Swiss Ribbons case, the judgment of which was delivered on 25th January, 2019. Regarding that, the then Attorney General of India made a statement before the hon. Supreme Court that the ruling of the judgment in Madras Bar Association, that may be in 2016, will be followed and Circuit Benches will be established. Therefore, the hon. Supreme Court of India directed that steps should be taken for setting up of Circuit Benches of NCLAT within a period of six months. Six months have already been lapsed but the Circuit Benches of NCLAT have not been created. Therefore, through you, I would request the hon. Finance Minister that setting up Circuit Benches of the NCLAT should be done as quickly as possible.

       Earlier, when Madam Finance Minister was the Minister for Corporate Affairs, before the Code has come into force, I must appreciate it, one day, I called on her mobile phone from Kolkata, I requested her to consider extending the appointment of one member of the Company Law Tribunal against whom so many allegations were there, I asked here to look into this matter, she really heard me and inquired into the matter but did not extend it but the effective steps were taken. Therefore, I request you to consider setting up of Circuit Benches of NCLAT, and also consider deletion of Clause 7. That is very important. Otherwise, the Bill is, no doubt, a good one. In future, even other eventualities will come. So, we have to come up with other amendments also.

   

13.00 hrs SHRI MAGUNTA SREENIVASULU REDDY (ONGOLE): Madam Chairperson, on behalf of my YSR Congress party, I rise here to support this Insolvency and Bankruptcy Code (Amendment) Bill, 2019.

       I would congratulate the hon. Finance Minister for bringing forth this important legislation to this House.  In this Amendment Bill, there are seven Clauses to be amended, which have been brought to the knowledge of this House.

       I would just like to make certain suggestions also to the hon. Finance Minister. After the CoCs was formed, you are taking into account the financial creditors, operational creditors and statutory dues.  Financial creditors are generally secured creditors.  Unsecured creditors would also be there.

       We are also having voting rights.  About the financial creditors, let me give an example.  If a company takes a loan from the banks, and another company also takes a loan from the banks by giving corporate guarantee, you are including them in the same Committee of Creditors. So, they will also be having voting rights in that company itself.  So, the fate of operational creditors also need to be taken care of.  The operational creditors are suppliers in MSME units, which is huge in number. You are giving more priority to the financial creditors in this amendment. My submission is that you should also keep in mind the operational creditors. In regard to financial creditors, guarantee is also given. We should not deprive the MSMEs or the operation creditors.

       There are many other things. For example, CIRP. It is a Corporate Insolvency Resolution Process, which is a welcome step. Regarding time limit for resolution process, it is being extended from 270 days to 330 days. But before 330 days, all litigations need to be resolved. In the olden days,  it used to be BIFR.  It was the effort of our hon. Prime Minister, to reduce the mounting NPAs of the PSU Banks in the country, that this Insolvency and Bankruptcy Code was brought in 2016. Actually, it is a welcome thing. The bankers were unable to solve their issues, and their NPAs were mounting.  They were not going in for restructuring and they were also not going in for one-time settlement.   

So, this Amendment has become a big relief for the bankers.  This Indian Bankruptcy Code has come into effect NCLT. Tribunals have also been appointed, now.

       Here I would like to ask the hon. Finance Minister, before sending any company for NCLT, like earlier some restructuring programmes were there, why should you not appoint an agency like RBI, to look into these matters and supervise the business? Otherwise, as has been stated by our hon. Finance Minister, this is to secure the value of the assets. If the process gets delayed, the value of the assets will get depleted only. Then, the running business would  be a closed-down business totally.  If it goes to NCT,  automatically, the value of the assets would get totally depleted.  So, the hon. Finance Minister can think about it.

       Our hon. Finance Minister’s priority is ‘Ease of Doing Business’ i.e., EODB.  In our country, slowly it is slipping into ‘DoDB’ that means, Difficulty of Doing Business.  So, it has to be corrected by our hon. Finance Minister.

       Then, there are a lot of challenges and issues  being faced by the industrialists.  Earlier  industries were sick, but the industrialists were wealthy; but nowadays, it is not so. Nowadays, if some industries are sick, their industrialists are also more or less sick and are facing problems due to the business failure.

I do not want to take anybody’s name.  You know all these things by going through today’s newspaper.  Look at what has happened to Karnataka’s prominent businessman. There is a fear psychosis in the minds of the business community.  That fear psychosis has to be removed by our hon. Finance Minister.  This fear psychosis is there in the minds of the bankers, officers and people from the business community.  She has to bring everybody into the fold and then only the economy will improve automatically. 

The infrastructure companies are going to be in problem, now, in our country. Everybody is just doing some indoor testing and later they all go to NCLT.  The problems will be there.  According to me, there are two types of businesses in our country.  One is totally professionalised and another is totally politicised.  The ‘totally professionalised business’ means software companies.  They need not have to be on the mercy of anybody.  They can be set up even in a jungle.  They can start anything.  For example, the Citi Bank is operating from Malaysia for the access or trial of our credit cards and debit cards. The situation in our country has become like that. This is very important.  Our hon. Finance Minister has to look into that.

13.06 hrs                    (Shri Kodikunnil Suresh in the Chair) When it comes in the newspapers that this particular industry is showing negative effects, bankers stop giving them further loans; rather they are pressuring them to repay their loans. I have been seeing it also. Ten per cent of the people will do business for taking loans but 90 per cent of the businessmen will take the loans for their businesses.  Now, are you treating everybody on an equal footing.  I can tell you frankly that you are putting asses and horses in the same stack. Everything has to be corrected; you have got a lot of powers, if the country has to grow financially.

When you are looking at a $5 trillion economy, this fear psychosis has to be removed from the minds of the business community. The businessmen have to be totally supported by the Government. Then, we can see a really growing economy in this country.

Thank you.

   

श्री कृपाल बालाजी तुमाने (रामटेक): सभापति महोदय, आपने मुझे दिवाला और शोधन अक्षमता संहिता (संशोधन) विधेयक, 2019 पर बोलने का मौका दिया, इसके लिए मैं आपको धन्यवाद देता हूं । मैं इस बिल के समर्थन में बोलने के लिए खड़ा हुआ हूं । मैं माननीय वित्त मंत्री श्रीमती निर्मला सीतारमण जी को धन्यवाद दूंगा कि वे एक काफी अच्छा अमेंडमेंट बिल यहां पर लाई हैं । इंटरप्रिटेशन ऑफ फाइनेंशियल क्रेडिटर एंड आपरेशनल क्रेडिटर के ऊपर सुप्रीम कोर्ट का भी निर्णय बहुत जल्दी आने वाला है । इसके पहले हम इस बिल को सदन में लाए हैं । जो संशोधन है,इसके कारण जो हमारा पैसा है,पहले बैंकों का पैसा वापस आने में काफी कठिनाई होती थी,यह कानून एक्चुअली लिटिगेशन फ्री सोसाइटी की ओर एक कदम है । एनसीएलटी के बाद हमने देखा कि देश में आज लगभग डेढ़ लाख करोड़ रुपये का जो बैंक्स का पैसा था,वह बैंक्स को वापस मिला है । एनसीएलटी कानून आने के पहले लोगों को बीआईएफआर, एआईएफआर, कंपनी एक्ट, लेबर कोर्ट, ऐसे बहुत सारे कोर्ट्स की गतिविधियों से गुजरना पड़ता था ।

लेकिन आज एनसीएलटी के कारण सभी लोगों को अच्छी सुविधा प्राप्त हुई है, इज ऑफ डुइंग बिजनेस और सुरक्षा का अमेंडमेंट बिल है । इस बिल में 330 दिन की समय सीमा निश्चित करने का प्रावधान किया गया है । इसे 270 दिन से बढ़ाकर इसे आगे ले गए हैं । इसे आद्योगिक और आर्थिक रूप से सामर्थ्यवान बनाना चाहते हैं तो इसके लिए एनसीएलटी के लिए भी समय सीमा की जरूरत रहना बहुत जरूरी था । मेरे संज्ञान में जो कुछ बातें आई हैं, मैं माननीय मंत्री जी का ध्यान उस तरफ आकृष्ट कराना चाहूंगा ।

एनसीएलटी के मेंबरों की संख्या काफी कम होने के कारण रिजर्व फॉर आर्डर कर देते हैं और बाद में छह-सात महीने तक रिजल्ट नहीं आता । इस मामले में भी अगर परफर्मेंस रिव्यू किया तो ज्यादा अच्छा होगा, इसके ऊपर भी हमें ध्यान देने की जरूरत है । यहां काफी सारे उदाहरण हैं, एसआर, भूषण पॉवर, एसआर में आज 700 दिन हो गए हैं, लेकिन केस पेन्डिंग पड़ा हुआ है जबकि 270  दिन की उस समय लिमिट थी । इसके ऊपर भी हमने 300 दिन में सारे मैटर्स को सुलझाने का प्रयास किया है ।

मैं इस मामले में जेट का उदाहरण देना चाहूंगा कि जेट में आईआरपी अपॉइंट करने के बाद जिस ढंग से फास्ट प्रोसेस हो रहा है, इस फास्ट प्रोसेस से सरकार ने जेट के मामले में कदम उठाया है कि जल्द से जल्द कंपनी शुरू हो और बाईस हजार लोगों के इम्पलायमेंट का प्रोबल्म है, वह बचना चाहिए । उसमें भी जल्द से जल्द  जिस तरह से आज की गतिविधि है, उससे जल्दी न्याय मिलेगा, ऐसा हमें लगता है ।

एक बार सुप्रीम कोर्ट ने कहा था कि ऐसा कानून आया है जिससे डिफॉल्टर के दिन खत्म हो गए हैं । हम लोग इस मामले में बहुत सोचते रहते थे । उसी दौरान होम बायर का विषय आया जब इन्सॉल्वेंसी की प्रक्रिया चलती है । ऑप्शनल क्रेडिटर्स में भी होम बायर की संख्या ज्यादा है । इस संशोधन से रेग्युलेशन फोर्सज को मजबूती मिलने वाली है । कमेटी क्रेडिटर्स का सीओसी का विषय काफी अच्छा है, जिसमें 66 परसेंट क्रेडिटर्स का झुकाव रहना चाहिए ।

मैं एक सुझाव देना चाहूंगा 66 परसेंट के बजाय पचास टका किया तो इसमें ज्यादा बेनिफिट हो सकता है क्योंकि 66 परसेंट कई जगह पर नहीं होता है । उसका फायदा होना चाहिए, हम इस बारे में सोंचे । मैंने इस विषय में कहा कि रिजर्व फॉर आर्डर कर देते हैं । उसके बारे में मार्केट में बहुत गलत अनुभव भी आता है । कोई उसमें भी कुछ करप्शन की बात करते हैं, लेकिन उस विषय में जल्द से जल्द निर्णय आए, इस बारे में प्रक्रिया शुरू करनी चाहिए । इसका सक्सेफुल होना एक बहुत बड़ी बात थी, बिडर आकर बीडिंग कर देते हैं, लेकिन बिडिंग करने के बाद उसको अलॉट हो जाता है, लेकिन काफी बार ऐसा होता है कि जो बीडर पीछे हट जाता है । इस मामले में भी हमें सोचना चाहिए । उसके ऊपर संशोधन या कानून बनना चाहिए । अगर वह पीछे जाता है तो उसके ऊपर भी सख्त कार्रवाई करने की जरूरत है ।

अंतरिम बजट 2019 में इंडिया स्टैम्प एक्ट 1899 में संशोधन प्रस्तावित किया गया था । इसका सीधा अस बिड प्रोसेस पर पड़ता है, उस मामले में भी हमें सोचने की जरूरत है । मैं आपका ध्यान एक महत्वपूर्ण विषय माइनिंग की ओर आकृष्ट कराना चाहता हूं । माइनिंग सेक्टर में स्टेट गवर्नमेंट भी पाटर्नर होता है । स्टेट गवर्नमेंट रिजर्व प्लान में सहयोग नहीं करते हैं ।  

इसमें राज्य सरकार पार्टी होने के बावजूद सरकारी प्रावधानों के बहुत विषय आते हैं, हमें इस मामले में भी सोचने की जरूरत है । आईबीसी, सेबी और अन्य संस्थानों के ऊपर काम करेगा, क्योंकि बहुत से मामलों में डिस्पयूट आने की संभावना है । इस बारे में भी हमें सोचना चाहिए ।

माननीय सभापति जी, मैं आपके माध्यम से माननीय मंत्री जी के ध्यान में एक बात लाना चाहता हूं कि पुराने मालिक जो भी एनसीएलटी में आते हैं, व्यवस्था, अव्यवस्था आदि थोपकर चले जो हैं, लेकिन पुराने मालिकों की तरफ जो बकाया रहता है, मान लीजिए 100 रुपये बैंक का या क्रेडिटर्स का कर्ज था, 50 रुपये हेयरकट के पीछे पड़े रहते हैं, किसी का कहना है कि 60 परसेंट हेयरकट मिले, किसी को 70 परसेंट मिले, जैसे अभी जेट ने 90 परसेंट हेयरकट मांगा, अब किसी  को  60  परसेंट  हेयरकट दिया जाएगा तो क्रेडिटर्स के पैसे का काफी पैमाने पर नुकसान होगा । इसकी भरपाई कहां से होगी, इसके बारे में भी सोचने की जरूरत है ।

आदरणीय  नेता  उद्धव ठाकरे जी हमेशा बेरोजगारों को रोजगार देने का प्रयास करते रहते हैं । एमएसएमई ऐसा क्षेत्र है, जहां काफी बेरोजगारों को रोजगार मिलता है । इसमें छोटी इंडस्ट्रिीज़ आती हैं । आपको निरंतर बीमार रहने वाली एमएसएमई युनिट्स के बारे में भी सोचना चाहिए ।

अब,मैं अपनी बात समाप्त करते हुए इस मैं बिल का समर्थन करता हूं ।…(व्यवधान)

   

श्री मुलायम सिंह यादव (मैनपुरी): माननीय सभापति जी, यह व्यवस्था का सवाल है । लोक सभा सारी विधान सभाओं का आदर्श है । इस देश में लोक सभा के अनुसार विधान सभाओं में काम होता था । क्या यह गरिमा है? यहां  लोक सभा के कितने मैम्बर्स हैं? शादियां हो रही हैं, हमें जनता के बीच जाना पड़ता है । यहां लगातार अनावश्यक लोक सभा चलाई जा रही है ।

मेघवाल जी, हम आपसे कहना चाहते हैं कि आपने हमेशा नियम और कानून की बात कही है और आज आप नियम और कानून भूल गए? आप किस तरह का लोक सभा का मज़ाक करवा रहे हैं?

संसदीय कार्य मंत्रालय में राज्य मंत्री तथा भारी उद्योग और लोक उद्यम मंत्रालय में राज्य मंत्री (श्री अर्जुन राम मेघवाल): माननीय सभापति जी,पहली बात है कि हाउस में पूरा कोरम है । हाउस में काम है इसलिए हाउस चला रहे हैं ।

श्री मुलायम सिंह यादव:  सारी विधान सभाओं के लोग देख रहे हैं कि क्या मामला है?क्यों चला रहे हैं? इसके पीछे कोई साजिश है,हमें पता है  । आपने हमेशा नियम और कानून की बात कही है,मैंने अच्छा समझा । अब आप यह करवा रहे हैं  । आप कारण बता दें, कोई कानून रह गया हो,कोई ऐसी बात रह गई हो तो चलाइए, हम समर्थन करेंगे  । यह अनावश्यक है,अवैधानिक है,जनता का पैसा खर्च करवा रहे हैं  । हम जनता के प्रतिनिधि हैं  । हम जनता के बीच जा नहीं पा रहे हैं  । शादी-ब्याह में क्या नहीं जाना पड़ता है?

माननीय सभापति : बिल्कुल सही है  ।

श्री मुलायम सिंह यादव:  मेरा सख्त आरोप है कि यह सरकार की साजिश है,इसके पीछे छिपा हुआ कोई राज़ है  । लोक सभा क्यों चलाई जा रही है?हमें कारण बता दें, मैं स्वीकार कर लूंगा  । क्या यह मज़ाक नहीं हो रहा है?इतनी कुर्सियां खाली पड़ी हैं  ।

HON. CHAIRPERSON: Hon. Parliamentary Affairs Minister, please note down the suggestions made by Shri Mulayam Singh Yadav.

डॉ. आलोक कुमार सुमन (गोपालगंज): माननीय सभापति आपका बहुत-बहुत धन्यवाद कि आपने मुझे The Insolvency and Bankruptcy Code (Amendment) Bill, 2019 पर अपनी बात रखने का मौका दिया  ।

श्री अर्जुन राम मेघवाल : सभापति जी,हम भी जानते हैं कि माननीय मुलायम सिंह जी एक सम्मानित एवं वरिष्ठ नेता है  । लेकिन, ये जो कह रहे हैं, हम इस बात से सहमत नहीं हैं कि सदन अनावश्यक रूप से चलाया जा रहा है  । बिजनेस है इसलिए चलाया जा रहा है । विपक्ष की डिमांड रहती है कि हाउस को कम से कम 100 दिन चलना चाहिए । हम तो विपक्ष की डिमांड को पूरा कर रहे हैं  । ये सारे कानून जनता के हित में बनाए जा रहे हैं  ।  …(व्यवधान)

HON. CHAIRPERSON: Dr. Alok Kumar Suman, please continue.

… (Interruptions)

HON. CHAIRPERSON: Now, everything is over. Please sit down.

… (Interruptions)

HON. CHAIRPERSON: Now, only the speech of  Dr. Alok Kumar Suman will go on record.

… (Interruptions)... *   डॉ. आलोक कुमार सुमनः यह अमेंडमेंट बिल भारतीय अर्थव्यवस्था एवं बैंकिंग क्षेत्र में सुधार के लिए अति  आवश्यक है  ।

       जैसा कि हम जानते हैं भारत आज दुनिया की सबसे तीव्र गति से चलने वाली अर्थव्यवस्था है और लगातार इसकी गति बनी रहे, इसमें बैंकों की बड़ी भूमिका है । बैंकिंग प्रणाली में फंसे हुए कर्जों के स्तर बढ़ने से विकास पर असर पड़ता है । इसे दूर करने के लिए केंद्र सरकार ने न केवल इस संबंध में तेजी से कानून बनाया है बल्कि केंद्र सरकार प्राथमिकता के आधार पर कठिनाइयों को दूर कर रही है । आशा है कि अनुमान से बेहतर नतीजे सामने आएंगे  ।

       महोदय, The Insolvency and Bankruptcy Code (Amendment) Bill, 2019 में पूर्वोक्त कठिनाइयों को ध्यान में रखते हुए निगम दिवाला ढांचे में गंभीर कमियों को दूर करने के लिए यह आवश्यक हो गया है कि certain provisions of the Insolvency and Bankruptcy Code को अमेंड किया जाए  । The Insolvency and Bankruptcy Code (Amendment) Bill, 2019, inter alia seeks to amend sub-section 3 of section 12, जिससे यह आज्ञापरक बनाया जा सके कि किसी कार्पोरेट डेब्टर की दिवाला समाधान प्रक्रिया, दिवाला प्रारंभ होने की तारीख से 365 दिन से आगे और विस्तारित नहीं की जाएगी  । इस अवधि में कार्पोरेट दिवाला समाधान प्रक्रिया को पूरा होने में असम्यक विलम्ब को दूर करने के लिए लीगल कार्यवाहियों में लगने वाले समय भी सम्मिलित होंगे  ।

       महोदय, वर्ष 2018-19 में बैंकिंग क्षेत्र, विषेशकर सार्वजनिक क्षेत्र के बैंकों के मार्च, 2018 से दिसम्बर, 2018 के बीच अनुसूचित वाणिज्यक बैंकों का एकल एनपीए 11.5 परसेंट से घटकर 10.1 परसेंट हो गया है  । दिवाला और दिवालियापन की समस्या से निपटने के लिए प्रणालीबद्ध तरीके से व्यवस्था की जा रही है, जिससे फंसे हुए कर्जों की वसूली हुई है  । मैं यह बात रखना चाहता  हूं  कि 31 मार्च, 2019  तक  कार्पोरेट  दिवाला समाधान प्रक्रिया के अंतर्गत 94 मामलों का समाधान हुआ है  ।  इसके  परिणामस्वरूप 1,73,359 करोड़ रुपये के दावों का निपटारा किया गया  ।  28 फरवरी, 2019 तक 2.84 लाख रुपये की कुल राशि के 6079 मामले दिवाला और दिवालियापन संहिता आईबीसी के प्रावधानों के अंतर्गत सुनवाई से पहले वापस लिए गए हैं । भारत का दिवाला समाधान 2014 की रैंकिंग 134 से सुधरकर 108 हो गई है  । यह गर्व की बात है कि पिछले वर्ष  भारत को सर्वाधिक सुधार वाले क्षेत्राधिकार के लिए वैश्विक पुनर्संरचना समीक्षा पुरस्कार मिला  ।

       अत: मैं The Insolvency and Bankruptcy Code (Amendment) Bill, 2019 का समर्थन करते हुए अपनी बात समाप्त करता हूं  । धन्यवाद  ।

   

SHRI B. B. PATIL (ZAHIRABAD): Sir, the proposed amendment in the Insolvency and Bankruptcy Code aims at ensuring greater clarity in the debt resolution process. The Insolvency and Bankruptcy Code (Amendment) Bill will remove the grey areas and also ensure that there will be no chance for further interpretations which are against the original intent of the Act. Four, out of the eight set of amendments being brought in, are explanatory in nature. But there is a fear that probably the original intent with which this Parliament brought the Insolvency and Bankruptcy Code is probably getting diluted. We should not allow its dilution just for want of clarity.

       Until the Insolvency and Bankruptcy Code, 2016 was brought in, the country’s insolvency framework was all scattered and fragmented leading to sub-optimal realisation or outcome of the legislative intent of the Bill itself.

       Earlier the average time taken for any resolution of insolvency was almost 4.3 years and that kind of time added to the cost. Nearly 9 per cent was resolution cost whereas the recovery rate was only about 26 per cent. Within 2.5 years of this Code, it has been realized that there are certain areas in which for want of clarity the interpretation given by various Courts or even by the National Company Law Tribunal (NCLT) led to a very vital question – whether the legislative intent of the IBC was itself becoming weakened just for want of clarity.

       In a way, the Insolvency and Bankruptcy Code is being monitored through a Central Government Monitoring Committee. The balance of interest of stakeholders has been becoming an issue and, therefore, the amendments have been the need of the hour. But when some of the amendments are salutary and the direction is right, the worry is that while solving this problem unemployment will be created in the country. As the economy has been going through a difficult time with various sectors like automobile, steel, real estate and FMCG are facing problems and insolvency cases involving big firms, an oligopoly should not be created where 4 or 5 major players will only be able to buy such companies at throwaway prices. This resolution will be in favour of the big players.

The proposed amendments to the Code are aimed at filling critical gaps in the corporate insolvency resolution framework while, at the same time, maximizing value from resolution. The changes in the law are also aimed at timely admission of applications and timely completion of the corporate insolvency resolution process.

       The Bill also provides that if an application has not been admitted or rejected within 14 days by the adjudicating authority, it shall provide the reasons in writing for the same. It provides a deadline for completion of Corporate Insolvency Resolution Process (CIRP) within an overall limit of 330 days, including litigation and other judicial processes.

       The proposed amended Code is also aimed at providing greater clarity on permissibility of corporate restructuring schemes, clarity on rights and duties of authorized representatives of voters, manner of distribution of amounts amongst financial and operational creditors and applicability of the resolution plan on all statutory authorities, which will enable the market to come up with dynamic resolution plans in the interest of value maximization.

       Thank you, Sir.

श्री मुलायम सिंह यादव: सभापति जी,मैंने जो सवाल उठाए हैं, उन पर कोई रूलिंग तो दीजिए…(व्यवधान)

श्री अधीर रंजन चौधरी (बहरामपुर): वरिष्ठ सदस्य अगर कुछ कह रहे हैं तो कोई रूलिंग तो देनी चाहिए…(व्यवधान)

डॉ. निशिकांत दुबे (गोड्डा): आप वरिष्ठ सदस्य है, आपकी बात को सरकार ने और सभापति जी ने गंभीरता से ले लिया है…(व्यवधान)

HON. CHAIRPERSON: Mulayam Singh ji, your point has already been noted. Please sit down.

 

SHRIMATI  SUPRIYA SADANAND SULE (BARAMATI): Sir, I stand to support the Bill. I appreciate that there are two small points which the hon. Minister mentioned while starting her reply. She said that a lot of amendments that are made are because of the interventions and suggestions of the hon. Supreme Court. It is welcome. But I would like to remind her that last week we debated the Companies Act. During the discussion on the Companies (Amendment) Bill, she said that UPA Government had brought in the Act and they have to constantly re-bring it to bring in for amendments.

       I think the laws are made with very good intentions whether we make them or you. It has barely been two years and this is the third time that we are talking about it. So, I think, we all need to rise to the occasion because, at some point, they made it with good intentions as we did. 

       I think, all Governments make laws with good intentions. Just because you are bringing an amendment, that does not mean that it is a bad Bill.

       In the morning, I was looking at the television and market has fallen by 300 points even today. Even when the Budget was presented, it fell down. Generally, the economy of this country is not very robust. I appreciate that you will be reaching 5-trillion dollar economy. It is wonderful. Why should we aim for 5-trillion dollar economy? Let us aim for a 10-trillion dollar economy, if it is for the betterment of our country. We have to see really what the ground reality is. The intent of this Bill is very good, but I would like to talk about what the final outcomes are. You say that this has to be fair and equitable.

       I would like to give a few examples, since I come from Mumbai, which is the financial capital of this country. Some people talked about the service industry. I would like to highlight a point and give the example of Jet Airways. How does Jet Airways fit into this? We went into liquidation for it. Now, thousands of jobs are gone. Now, even if you go for liquidation, the aircraft are all leased. If you liquidate a company, would have it been better? I do understand that the Government does not need to pump in money to restart a company. I could give you several examples, which are there, like this. Could there be another plan just besides this where we could help, in some ways, to revive companies?

       There is another example of steel industry. I see that for today’s fall in the market is that there are nine verticals, including steel and cement. The economy is slowing down because globally, these segments are not doing well. Of course, when it is going to hurt the world, it is going to hurt us also. We are not an insulated economy from the world, after opening up. I will give you an example of Essar Steel. Essar Steel could have been resolved earlier. You are increasing the days. I am sure that increasing the days from 220 to 330 is very well intended. I do understand that there are some cases which have taken 600 days and really nothing is there. So, why should you increase the days? Suppose, a steel company had been sold, say, two months ago. It is not about the person who started the company. We are not doing this for the owners; we are doing this for the people who have invested money, who are at the bottom of the pyramid.  We are looking at supplies also. Why do we find that even the supply is bad?

       You talked about unsecured and secured creditors. Who is secured? How is it unsecured? How do we bring something which makes sure that both are looked after? Do we have the mechanism for this? This is my question. Why are all these delays going on? This is something which I would definitely like to ask just for my knowledge and after your reply, I think, the whole country will get a message. This is not applicable to just car manufacturers. I come from the State where in Pune District, most of these car manufacturers are absolutely bleeding right now. The companies used to do double shifts seven days a week and now, they are doing it for five days only. Obviously, these are all signals that the industry is screaming for help. What is the stand of the Government on this?

       Please also look at the issue of salaries in BSNL, HAL etc. We just discussed the Code on Wages yesterday. It was a very well-intended Bill, but Meghwalji was very kind enough yesterday, when I talked about salaries of PSU employees while participating in the debate, to say that I may send him a list and he would try to intervene, but just an intervention is not important; there has to be a sustainable model. Only selling the PSUs and bringing the Code on Wages will not help. I am very happy that globally, we are doing ‘ease of business’, but in reality, the common man and the economy is not saying so. Can we all put our minds to it? This is not about you versus us. This is not a political issue. India needs to grow. You agree and we agree. We have to see what we can do by putting all our minds together to change this.

       I was thinking about this Bill, more or less, since the time you have come.  Clause 5 of the Bill is very complex. When you talked about mergers, the whole idea behind bringing this in the NPAs was that the NPAs were standing at Rs. 15,00,000 crore at that time. I think, it would be even more. I may stand corrected. You brought in the resolution. You actually get more money in a resolution plan which you do not get in a liquidation. So, why are we looking at liquidation as an option? I brought out that in service industry, liquidation does not get anything to anybody and nothing to the common man. Why have we got this Bill? What more can we do for this? For the last two years, can we at least get a white paper on what we have achieved? You have given a reply, I think, to an Unstarred Question where it says ‘financial creditors/operational creditors’. With the resolution, just about 45 per cent people have got money and with liquidation, it is even less. So, if the Government admits to this, can we have a white paper on this that we have got this with a good intention. We are making changes only at the behest of the Supreme Court. What more can we do to improve the situation?

       When you talk about waterfall mechanism, I think, you need to put on record how secured and unsecured creditors will have equal rights. You may please clarify about that.

       There are two businesses which I would like to highlight. These are things which you get in the newspapers. I do not mean to quote any company. But look at the cement companies. There was a cement company which lost thousands of crores of rupees. There were bidders. There was a conflict of interest. This Bill should have addressed it. Do we really need the intervention of the Supreme Court? In the whole thing, the entire bidding process was derailed. So, what was the Government doing then? Why did we need this?

       Shri Gaurav Gogoi  has already talked about realty business. I would like to go one step ahead in this. Suppose I buy a flat and you also buy a flat there, we both do not know that we have bought a flat in the same place even if we know each other so well. If that realtor leaves, we have nobody to turn to. Where do we find 50 per cent people? Even if they say go to the AGM, how will you find AGMs? Where will I go chasing 50 per cent people?  So, is there some mechanism which you have in mind which will help us in this?

       What worries me the most in this entire Bill, which I have not understood and, I think, only you will be able to explain, is that in this entire game, there is only one credit agency which handles everything. Suppose I am a company, there is one credit agency which says I am AAA, which is wonderful. When somebody goes to the bank, the same agency says that this AAA company is wonderful, please give them a loan. The same agency, when I go to NCLT, says, ‘Yes, there is a problem’. So, there is only one professional person who is called the RP, is handling all agencies. So, the one who gives you the loan is the same person. So, with one credit agency, how will we stop all this mess? So, how are we going to change this? What mechanism do we have to handle this?

       Insolvency,  etc. came into a country like the USA ages ago. So, they are ready for it because of all the amendments they made. But it is a baby for all of us. There is only one credit agency. I do not care who he is. He could be from India or from abroad. People outside the House tell me that when you are sitting in Parliament, you all think that all is really wonderful in this country. But when you are on the field, it is not. I know your answer would be, ‘People would have not shown this faith in us and we would not have been 303’. That is not the point.

       Right now the economy is in the doldrums. There are markers which are screaming for help. So, I would like to ask you as to what you are going to do about all these several issues that have come. How will the credit agencies multiply? How will you make sure that they reach the last person who is seeking help? Otherwise, it is a monopoly.आप लोन भी एक से ही लो, सर्टिफिकेट भी उसी से लो और दिवाला भी उसी से निकालो । So, it is all one agency.

Hence, if you could kindly clarify as to how we can improve this it would be better. I whole-heartedly support this Bill. But, I think, we all need to put our minds to it. We can get some professional advice. Maybe we can go to the Standing Committee again once or twice to get some more recommendations. But do this with the right intention so that it gets implemented on the filed for the reason for which you have brought. Thank you.

 

SHRI PINAKI MISRA (PURI): Mr. Chairman, Sir, thank you. We are debating this Insolvency and Bankruptcy Code (Amendment) Bill, 2019 in the backdrop of the very unfortunate suicide of somebody who has been called the Coffee King of India. I have just seen the article by Bloomberg which says, “The death of India’s Coffee King should actually be a lesson in our country in how not to allow industry to die in this country.”        This is a Bill, of course, which I support. There is no question of not supporting it. But it is very unfortunate that a law like this should continue to grow and expand in our country. It does not bode well for our country that Insolvency and Bankruptcy Law should expand because that is not the way you reach a five trillion-dollar economy or the world’s third largest economy, which is the dream of the present Government.

       It is a law in the making. It is one of the most salutary laws. There is no question about it. It has had very limited success so far. Shrimati Supriya Sule spoke about the Essar Steel case, which has gone round and round. It has seen so many ups and downs and so many swings and round-abouts. More than 600 days have passed with so many rounds of litigation. Apart from lawyers, I do not know who else is benefiting in this entire exercise.

Despite that, we find the NCLTs are completely overburdened. At present, there are 14 Benches of the NCLTs in the country of which one is yet to be functional. The Kolkata Bench -- which, in fact, has the maximum number of these cases -- is overburdened as Judges in these Benches are sitting in rotation in both Guwahati as well as Cuttack. Therefore, it is imperative to boost the judicial strength of the NCLTs in order to achieve the goal of timebound resolution that has been set by this Government. Many of the provisions that have been brought about are salutary and there is no doubt about it. But, I think, you will find that many more amendments will need to be brought in as time passes and as wisdom dawns upon us.

There is some clarification that needs to be given by the Government with regard to the conflict between IBC and other statutes. SEBI, for instance, seems to have moved the Supreme Court recently to appeal against an order of the NCLAT, which said that section 14 of the IBC has overriding powers over the SEBI Act and this prevents SEBI from selling off assets of a defaulting company as a moratorium is imposed under section 14 of the IBC. Similarly, it seems that IBC is also in conflict with the Real Estate Regulation Act (RERA), a very important piece of legislation too. The Supreme Court has declared that home buyers are financial creditors now. Therefore, there can potentially be a case where proceedings are initiated against a real estate developer under IBC and RERA, and, of course, the Consumer Protection Act as well. So, there would be multiple proceedings under multiple Acts. I do not know how the Government plans to bring about some sort of resolution as far as all these conflicts between various Acts are concerned.

The Government, definitely, has done a good job by protecting the MSME interests by drawing out an exception to section 29(A) allowing MSME promoters to take part in the bidding of assets, which is otherwise not allowed for the larger promoters. To continue on this track, I think that the inclusion of MSMEs in the Committee of Creditors should also be considered by the Government because the MSMEs should be treated as a separate class of creditors to protect their interest. I am saying this because they need protection from the Government, and they, as I have said before in this House, really form the vast bedrock of employment that is provided in this country. They are the ones who actually provide bulk of the investment as well as bulk of the employment, which are prime problems in this country.

Apart from that, I certainly want to draw the attention -- and I have done that on a personal level with, for instance, Mr. Anurag Thakur, the hon. Minister of State -- about the manner in which the agencies are mindlessly going after some of these companies in terms of red-flagging accounts; in terms of calling accounts fraud accounts; and in terms of ordering forensic audits. Now, this is being done because bankers are being drawn into the net by CBI and ED for simply being Nominee Directors on companies.

I do not want to mention names here, but the Economic Times said that in one of the companies 580 people have been charge-sheeted. You will need a full football stadium in order to carry out a trial and possibly the next 40-50 years again without nobody benefiting except lawyers. Their nominee bankers have been charge-sheeted. Now, ‘A’ bank asks ‘A’ individual to be a Nominee Director on the Board of a company, and if that company fails and you are going to bring that Nominee Director under the pale of criminality. There are not one or two, but dozens and this includes -- may I say this with great respect -- one of our ex-Chief Election Commissioners, one of the highest Constitutional authorities today, Mr. Tandon, who is charge-sheeted simply because he was a Nominee Director in the Board of a company.

Is this going to be the manner in which the Government agencies are going to be allowed to operate? I say this with great respect, and I have said this before also that I think one of the great mistakes of UPA-II was the manner in which they let these agencies and individuals in these agencies go rogue. Anybody and everybody were allowed to be charge-sheeted, and anybody and everybody was roped in whether they were guilty or not guilty. By the way, in almost 99.9 per cent of those case there have been acquittals. There has not been a single conviction in any of those cases, and simply public time and money has been wasted.

Therefore, I would urge the Government not to spread panic among bankers because at the end of the day bankers and bureaucrats are the bedrock of how this country is going to go forward in economic motion.          Such behaviour spreads panic that  if you put your pen to signature or  if you even agree on the bank’s decision to make you a nominee director, then, you are going to be charge-sheeted, face the next 25 years in the court of law, and then, eventually be acquitted as has happened in 2G scam, as has happened in Coal scam, and as has happened in dozens of cases. The UPA-II saw a very sorry end to their regime. That was simply because there was no political direction given in these matters, and the political hand said, you are free to do what you like. So, perhaps, the obsession with honesty is a good obsession but that must be tempered with pragmatism.

I support this piece of legislation, and welcome any future legislation of this kind that the Government brings in to tweak these laws to help industry. Thank you very much.

 

SHRI JASBIR SINGH GILL (KHADOOR SAHIB):  Thank you, Mr. Chairperson, Sir. I don’t doubt the intention of the Government but request the hon. Finance Minister Madam to take care of a few points.

Although the Insolvency and Bankruptcy Code was formulated to help bring willful defaulters fall in line enabling the financial institutions and creditors recover their dues, it has actually turned into a two-sided sword.

Although this Bill did result in recovery of bad loans from a few big debtors, it has also turned into a tool for small and medium enterprises which may be facing genuine stress for a temporary phase during the normal conduct of their business.

This law gives the right to any secured creditor or an operational creditor to move the NCLT provided a debtor owes them anything more than Rs. 1 lakh, which is a miniscule amount in today’s time and an obligation of this sort of amount is normal for any running business. This has resulted in this law being used more like a recovery tool by operational and secured creditors which is also bringing small and medium enterprises to their knees due to the severe provisions of this law.

Secondly, there should be a provision in this law to fix responsibility on the bankers, who,  on the first hand, approve a project based on a project report to sanction loans to businesses after charging hefty processing fees etc. Then, subsequently,  move the NCLT declaring the same very business as unviable. This would prove as a deterrent for the lenders to be more vigilant, both while sanctioning the project loan, and then approaching the NCLT at the very first instance.

Furthermore, necessary amendments should be brought into this law to make it amply clear that the intention of this law is to help businesses, especially of small and medium enterprise to restructure their borrowings, to offer them a new lease of life through sustained resolution plans, and not just to choke them abruptly as soon as they hit a lean patch in normal course of business. This will go a long way not only in helping the  overall economic growth of the country but also will safeguard millions of jobs and the resultant Iivelihood of scores of genuine entrepreneurs.

There is an unannounced financial crunch in India. Such crisis appears to the public slowly. I think, the current situation is only the first phase of crisis. Increasing NPAs means scarcity of capital which in turn means no fresh investment.  The glorification of bankruptcy law and continuous scams and closure of companies will lead to cutting of more jobs leading to joblessness and frustration of youth.

Huge inventory and the houses in the real estate sector, be it in NCR, metros, big cities, tier 2 or tier 3 cities, are not being sold which means, the sale of steel, cement, bathroom fittings, plyboard, tiles and marbles is declining. With this, NPAs will grow and go deep into individual level by making the crisis go deeper.

Vehicles’ sales are at its lowest with around 35,000 crore worth of vehicles left unsold. India’s leading car manufacturer, Maruti, has cut down manufacturing by 50 per cent. This is the first time in our country, which commutes on two wheelers, the demand of two wheelers is showing negative growth which means reduction in demand for spares, tyres and other accessories. The above three things are bound to end crores of jobs and decrease tax revenues. In this scenario, the Government will impose new taxes to even the losses. The Government hands over profits to the private sector and keeps deficit in Government’s account burdening people more.

Public sectors undertakings and properties are sold to the Government’s favourite corporate houses. Financial crisis in India will be clearly visible around March 2020. Average Indians are unaware of it. For a few years, even the FMCG sector has been in the grip of recession.

Therefore, my request to the hon. Finance Minister is that the Government should not tighten the noose around unwilful defaulters. For MSME sector, the Government should come out with a policy that helps entrepreneurs to come out of these hard times by catching their hands and saving them from drowning with these types of stringent laws.

 

SHRI JAYANT SINHA (HAZARIBAGH): Hon. Chairperson, Sir, thank you for giving me this opportunity to speak on this very important Bill, and I would like to thank the hon. Finance Minister, my Party and other colleagues who have spoken in this House and supported this Bill.

Hon. Chairperson, Sir, our Government has been duly appreciated and duly thanked for various landmark reforms that we have brought in the last five years. Among those, of course, are GST, the Monetary Policy Committee, the macro-economic stability that we have achieved, various social welfare programmes that we have very successfully introduced and the extraordinary infrastructure built in railways, in ports, in airports. These are among the landmark reforms.

I was a little disappointed that my friend in the Opposition has called the insolvency code just a constructive step. Around the world, hon. Chairperson, what we have done with the Insolvency and Bankruptcy Code, it has been viewed as an extraordinary and a profound economic reform. So, it is not a constructive step. This is a game-changing reform that has been effected.

Subsequently, after passing the original Bill in 2016, through a series of rules, series of judgments of various courts and the amendments that have been brought in the past and this set of amendments, we are working towards establishing a settled law when it comes to the resolution process and when it comes to the bankruptcy process. This is very important for our country because we have to establish a firm foundation and a strong framework for the resolution process so that we can take our economy to not just 5 trillion dollars but 10 trillion dollars as well.

The streamlining of the resolution process and the establishment of this clear and stable framework are very much aligned with the philosophy of the hon. Prime Minister – Minimum Government, Maximum Governance. This type of governance is only achieved when the rules are clear.

I would like to draw your attention, hon. Chairperson, Sir, to what just happened at the World Cup. In the World Cup, we ended up with the tie in fifty overs. We went to the Super Over which was also a tie. But the rules were very clear. Everybody understood exactly how the final winner was going to be decided on the boundary rate because the rules were clear. There was no controversy, no dispute and the matter could be settled quickly, and we knew who the winner was.

In the same way, we have to make the rules clear. It is the job of the Government to make the rules clear for the various players in the industry, in the economy, so that everybody can conduct themselves accordingly. In this way, as the hon. Supreme Court said, India will cease to be a defaulters’ paradise, and instead debtors’ rights and creditors’ rights will be protected.

The Insolvency and Bankruptcy Code has already been very successful. As the speaker before me from the Treasury Benches said, we have already had a situation where 6,079 cases have been resolved even prior to getting into the resolution process because it is so clear what is going to happen there. And through that, over Rs.2.84 lakh crores of loans and assets have been resolved. So, it is already working very well. We have already seen 101 cases that have been withdrawn, 120 cases that have been resolved, and 475 cases that have been taken into liquidation. So, the Code is working very well.

I want to commend the hon. Finance Minister and I want to commend all the officials in the Finance Ministry and the Corporate Affairs Ministry for bringing forward these very important amendments because they will make this Act work even better. It will enable us to meet our philosophy of ‘minimum government, maximum governance’.

Mr. Chairperson, Sir, various Members have spoken on different aspects of this Bill. It has been my great fortune to have been involved in  the business  world for many years. So, rather than addressing the legal or the political aspects of this Bill, I want to address the economic and business aspects of this Bill. How is this making it possible to do business better, to make our banks more robust, and to enable creditor rights to be protected? First and foremost in this process of ensuring that our assets are utilised as efficiently as possible, that economic considerations are paramount, is the fact that through these amendments we are ensuring that disputes are settled in a timely way. And so, I must commend the hon. Finance Minister for bringing in a guillotine and saying that after 330 days the matter has to be settled, after 14 days it has to be admitted. This will introduce tremendous certainty in what is happening.

A second very important aspect of this Bill is introducing many other possibilities that were not allowed earlier such as mergers, amalgamations and de-mergers. By enabling this we give the resolution professional a great deal of flexibility in the resolution plan, enabling other better capitalised, more efficient enterprises to come and take over some of these companies that are in the resolution process. That too will make this Bill work much more efficiently and take our economy to 10 trillion dollars.

There is a third aspect that is very important which I will emphasise. It is that we know that through a recent NCLAT ruling there was some confusion about how the waterfall will work, what will be the rights of secured creditors, what will be the rights of operational creditors. That introduces tremendous risk and uncertainty in this process. And because of the risks and uncertainty, it drives up the credit cost, drives up the cost of capital. By making it absolutely clear through these amendments, as the hon. Finance Minister has done, we have made sure that the rights of secured creditors are safeguarded and the rights of the operational creditors are made crystal clear as well. This is reducing uncertainty, this is going to reduce the cost of capital, enable our economy to move even faster.

To that end, hon. Chairperson, Sir, Moody’s, a well-known global rating agency, has already come out and said, “The proposed amendments aim to improve the Code’s effectiveness. Three of the proposals have credit-positive implications for Indian banks”. So, rating agencies are already praising these amendments. They are saying that there will be credit-positive amendments. And that which is credit positive is growth positive, which means it is jobs positive, which means it propels the economy forward.

I say with complete conviction that this is obviously taking us to the five trillion dollars. But these are precisely the kinds of changes and amendments we need to make if we have to lay a firm foundation to take us not just to five trillion dollars, but to 10 trillion dollars as well. Thank you very much.

 

14.00 hrs SHRI N. K. PREMACHANDRAN (KOLLAM): Thank you very much, Mr. Chairman, Sir, for affording me this opportunity to speak on the Insolvency and Bankruptcy Code (Amendment) Bill, 2019.

I am very happy to note that in the eight amendments, which are amending seven sections of the Insolvency and Bankruptcy Code, 2016, most of the apprehensions are the ones which we have raised at the time of consideration and passing of the original Act of 2016. During 2016, we have raised the same apprehensions at the time of introduction as well as at the time of consideration of the Bill. At that time, the then Finance Minister, Shri Arun Jaitley was piloting the Bill.

The original Bill of 2016 is the consolidation of laws relating to the reorganisation and insolvency resolution of corporate persons, partnership firms and individuals within the stipulated time. I think, this is the third round of amendments coming for the consideration of the House. So, it shows that so many gaps and lacunas are there in the original Bill that have to be filled and rectified. The main purpose or the intent of the original Bill was to have an effective legal framework for timely resolution of insolvency and bankruptcy which would benefit the ease of doing business.

I would like to seek a clarification or an answer from the hon. Minister. In the hon. Minister’s opening remarks, the impact of the Bill has not been elucidated for the academic wisdom of this House. I would like to know from the hon. Minister that after 2016 and 2018, subsequent amendments were made to original Act – the situation has been changed, I fully agree – but how many cases were solved; what was the impact; and how much time was saved in resolving the problems and having the resolution process, in total?

Mr. Chairman, Sir, I am coming to the amendments one by one. Even this Amendment Bill is necessitated due to the judgement by the National Company Law Appellate Tribunal in the Essar Steel case. In order to overcome the judgement of the Appellate Tribunal, the amendment is being brought in. The two-member bench in the National Company Law Appellate Tribunal has put the operational creditors on par with the secured financial creditors at the time of the settlement of the claims. So, this judgement has far-reaching consequences. It is making section 53 of the original Act irrelevant. This is the same provision which we have made at the time of consideration of the Bill. I have gone through the records of 2016. I myself had stated this apprehension that these financial creditors are put on par with so-called operational creditors. At that time, the then hon. Finance Minister had assured me in the House that the secured creditors will be getting top priority. That was the assurance given by the then hon. Finance Minister. But in the judgement of the National Company Law Appellate Tribunal, it has specifically stated that they have put both the financial creditors as well as the unsecured creditors, that is, operational creditors – they are supplying goods and service to the company – in place, in the name of equity and justice. In the name of equity and justice, the National Company Law Appellate Tribunal has made the judgement and that is why the section 63 of the Insolvency and Bankruptcy Code has become irrelevant in order to override this difficulty.

In the Essar Steel case, the resolution plan was to pay financial creditors 92.5 per cent of their dues. But according to the judgement, it is 60.7 per cent, equal to that of, both the operational creditors as well as the secured creditors, especially, the financial creditors. Section 53 lists the hierarchy by which claims are to be sanctioned or settled, out of the proceeds of the liquidated assets, that is, cost of the liquidation process; insolvency professionals; dues to the secured creditors and workmen; the employees and unsecured creditors; the Government dues; and so on. I do accept though, there is a distinction between the operational creditors, the financial creditors and the secured creditors, still the ambiguity was there. That is why, at that time, I have stated that unsecured and secured creditors have been placed in the same footing, which will be a serious disadvantage to the banks, especially, the public sector banks. The public sector banks holding financial securities are facing big liquidity crisis in the country.

I am coming to the second amendment which is regarding section 12(3) and I fully support this because the insolvency resolution process of a corporate debtor shall not exceed 330 days. As per the original Act, it was 180 days, extendable by a period of up to 90 days, that is a total of 270 days. Now, it is going to be 330 days. I have a given a notice of an amendment to reduce the days from 60 to 30 days that is pending.

The amendment to section 5 is providing an explanation to the resolution plan. When the Bill was taken for consideration, all these apprehensions were made in the House and they have been brought in the form of an amendment. It means that our discussion in the House has been fruitful and that is getting due respect and due consideration in the House.

As far as the resolution plan is concerned, the suggestion we have made is that the restructuring should also include merger, demerger as well as amalgamation. The resolution process should not be for dissolution and destruction of a company, but it should be for the revival of the company. That was the point which the hon. Minister made at that time also.

Coming to amendment to section 25(a), it is absolutely beneficial to the home buyers because an authorised representative representing the financial creditors shall cast his vote on behalf of all the financial creditors he represents in accordance with the decision taken by more than 50 per cent of the voting share of the creditors that they represent.

In the IBC Amendment Act of 2018, significant relief was given to home buyers by recognising the status of financial creditors, but even subsequent to the very significant judgement of the Supreme Court, that has not been practical because of technical difficulties. The home buyers are a poor lot. It is very difficult to have 66 per cent of the value of total votes because these people are scattered and they are not able to come. Giving a right to 50 per cent of the votes of home buyers through an authorised representative will be sufficient to make the per centage of 66 per cent which is very beneficial to the home buyers. In this way, the resolution plan can be very beneficial for them. With these words, I support the Bill.

 

SHRI JAYADEV GALLA (GUNTUR): Hon. Chairperson, Sir, thank you for allowing me to speak on this Bill. Our journey to resolve commercial insolvency began with the Companies Act of 1956, went to the Sick Industrial Companies Act in the 1980s to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act in the early 2000s to the present Insolvency and Bankruptcy Code. The names of the legislations have changed, decades have gone by and the entire Government machinery has been put to stop this menace of NPAs. However, there is no perceptible change as far as addressing the issue of NPAs is concerned. As of 31st March 2008, the gross NPAs in the economy stood at Rs. 10.35 lakh crore and about 85 per cent of these are from loans and advances given by public sector banks.

14.09 hrs                    (Shri N. K. Premachandran in the Chair) If one looks at the rate of increase also, in 2008, it was about 2.3 per cent a year and presently it is 9.3 per cent. So, even the rate of increase is going up. The point I am trying to drive at is that even though there have been attempts and there have been many legislations, we have still not been able to contain the issue of rising NPAs. Now, the hon. Finance Minister has come before us with one more set of amendments to the Insolvency and Bankruptcy Code, aiming to plug some of the loopholes and clarify some of the sections in the Code in the debt resolution process and I certainly welcome this.

I just wanted to introspect  a little bit, especially considering what recently happened to Mr. Siddhartha in Bengaluru, as one hon. Member mentioned. If we look at why businesses fail, it can be for many reasons. It can be because of economic downturns, international downturns, or even domestic downturns at times.  

They do not necessarily go hand-in-hand.  Particular industries can be going through business cycles.   As was seen currently, whether it is the aviation sector, the auto sector, or the telecom sector, all three were under severe stress.  It could be because of the faulty strategy by the company or because of the Government policy changes.  As we see today in the energy sector, with fuel price changes, PPAs are being negotiated. So, even that can lead to business failure.  These are all, if you want to call it, genuine business failures.   

But there is also business failure with malicious intent, where there are wilful defaulters.  So, you have genuine business failure on the one hand and you have wilful defaulters and malicious failures on the other hand.  We need to differentiate these two.  While we have to attack one, we have to still support genuine business failure. In any company if you want to have a robust investment environment, you have to be able to sustain failures as well as successes.

In this whole process, banks and lenders also have a very important role to play. I believe that the accountability with the banks needs to be much higher.  The bankers have to go through any kind of proposal, that is given to them by a business, with due diligence.  They have to do their own survey and look at the state of the economy. They have to review business plans, the leadership team, their track record, and their ability to deliver. They have also to monitor the performance of the business.  My question is, how many banks are being held accountable for all of this and how well are they actually doing their jobs.  If banks are giving loans without evaluating all of these factors, the NPAs will continue to go up and banks will continue to escape accountability.  So, I think that the accountability of banks and the role that they play in a business being successful or not, has to come under a lot more scrutiny than we have been able to do so far.

There can be no innovation without failure.  Business failure is currently being stigmatised.  Businessmen, if they fail, are being viewed as criminals.  We have to understand that in every profession there are good apples and bad apples.  Business is definitely no exception to that, but neither is any other profession.  Even in business we have to recognise who are the good apples and who are the bad apples, without treating everybody the same way.

For people, any entrepreneur, to take risk there is a concept of limited liability. It is a global concept but in India all entrepreneurs are being forced to sign personal guarantees for business loans that they take.  It is leading to a crisis where either the entrepreneurs are unwilling to take that risk or if they take the risk and fail, they are resorting to extreme steps like suicides and things like that.  How do we handle risk?  Who has to actually be assigned that risk?  How do you encourage entrepreneurs to invest more?  If we do not distinguish between genuine business failure and wilful default, we will lose our ability to innovate as a country and ultimately it will affect our growth towards a five trillion dollar or much higher level economy.

The private sector is very crucial in this growth.  If we do not encourage the private sector, it will be impossible to achieve this goal.  I would request the hon. Minister to look at this whole situation and see how to give entrepreneurs more capability to take risk and be able to differentiate between people who are having genuine business failure and wilful default and bring that into the Code.

I will speak on a couple of points and then finish.  The first point is, Clause 3, which proposes to amend section 5 of the Code. It says that if an application is not admitted or rejected within 14 days, then the adjudicating authority has to give reasons in writing.  Clause 4 gives deadline for completion of insolvency resolution process within 330 days. There are other procedural aspects like this which are welcomed by the industry.

HON. CHAIRPERSON: You may come to the point and conclude.

SHRI JAYADEV GALLA : If you look at Chapter XI of the US Bankruptcy Law, it allows an appeal by a debtor to turn things around.

       In the US, the courts can grant this appeal regardless of what the creditors think. This provision is missing in the legislation.

So, I suggest for consideration of the hon. Minister to provide one last opportunity to the debtor, because our ultimate objective is to turn the business around and keep it running and not to close the business. Kindly look at this.

Finally, if you look at Section 5 (21), it talks about what constitutes ‘operational debt’. Here ‘operational debt’ means claims in respect of goods and services and debts owed to Government.

HON. CHAIRPERSON : Please conclude.

SHRI JAYADEV GALLA: Sir, I am concluding. But here it is not mentioned about certain types of debts such as claims under indemnity agreements or intellectual property licences, which do not constitute goods or services. So, I suggest that the definition for ‘operational debt’ be modified to include indemnity agreements and intellectual property licences as well.

With these observations, I conclude my speech. I support this Bill. Thank you very much, Sir.

             

SHRI P. R. NATARAJAN (COIMBATORE): Hon. Chairperson, Sir, thank you. The proposed amendments provide for a time-bound resolution process. In the IBC itself, it has already been stipulated that after receiving a resolution application, the NCLT must determine the existence of default within fourteen days. An average time, which the NCLT takes, ranges from three to six months. In my opinion, merely fixing a time-frame in the law will not resolve the real problem. We will have to identify the real reasons. There are many reasons. Unless and until these issues are addressed, the exercise that we are doing is going to be in vain.

The bankruptcy law has got two components: One, the insolvency of corporate establishments; and second, the insolvency of corporate persons.

I would like to know from the hon. Finance Minister, why one part of the Code has been notified and why the other part, which is in fact the soul of the Code, has not been notified. At present, the bankers can initiate insolvency proceedings only against corporate establishments. Section 60 of the Code talks about insolvency resolution to proceed against individuals. That means, eighty-five per cent of the total loans was written off due to the resolution plan.

I would like to ask from the hon. Minister that in the event of successful resolution plan, what would be the liability of a corporate individual?

 

DR. AMAR SINGH (FATEHGARH SAHIB): Hon. Chairperson, Sir, thank you for giving me the opportunity.

Through you, I want to put some suggestions to the hon. Finance Minister. The first speaker from our Party has supported the Bill and we all support the steps taken by the Government of India. But still I want to bring certain issues to the notice of the hon. Minister.

Primarily this Act was brought in the year 2016 to handle the issue of NPAs in the Public Sector Banks. The NPA issues are still there and have gone worse, with the Jet Airways and with this Café Coffee Day person committing suicide. There are about 50,000 employees in Jet Airways and I do not know the figures about the employees in the other company. What happens to the employees?

What I am trying to say is that the Act was brought with a very good intention, which we support. In the last three years, what we have been able to achieve, we would like the hon. Minister to bring it on board in the Parliament, so that we can understand that this step yielded this much result.

The second thing which I would like to bring to the notice of the hon. Minister, through you, is that in the case of Jet Airways, the issue of lending sites has come up. There is some international case which is coming in newspapers and magazines. That is under Cape Town Convention. What do we do? Not only Jet Airways, there would be other so many big companies in our country, which would be having international operations. They may be dealing with various national and international agencies.

What will we do with them?  It is because this Code and this amendment do not throw any light on the issue that wherever international agencies are involved, what are we going to do.

The third issue which I want to bring to the notice of hon. Finance Minister is that you have given 90 per cent power to the financial creditors.  They can close down and they can finish the case.  I want to bring to the notice of the hon. Minister the experience of the USA and Europe in 1980s.  Please have a look at that experience.  This policy was followed with force there.  Ultimately, what happened to a city like Detroit?  It is a ghost town today.  We need to create jobs in the economy.  ऐसा न हो जाए कि बहुत अच्छे इन्टेंशन से लॉ लेकर आए थे, but after five years or ten years down the line we may find that we have lost so many jobs.  Today, those figures would not be available but within six months or one year or two years, all those figures would be available.

Another point which I want to impress upon the hon. Minister is that last year you amended Section 12(a).  Now many stakeholders are raising this issue that there is a large possibility of misuse of this new amendment.  It is because about 90 or 100 cases have been disposed of in the last two and two and a half years of the Insolvency Law.  Around 80 cases have been withdrawn.  Who are these people?  Why did the creditors agree so easily?  We need to look into this issue.  I am not saying that there is some scandal but we need to see this issue very seriously.

The last point which I want to make is that without going into the underlying reasons, why are things not moving?  I will request the hon. Minister that increasing the time from 270 days to 330 days would not make much difference unless we understand what the underlying issues are.  Why are the cases not being handled?  There are some structural issues.  There are some staff issues.  We have given permission to even a Rs.1 lakh creditor to put up the case.  दस हजार करोड़ रुपये का भी केस है, एक लाख रुपये का भी केस है ।  The same Tribunal is handling.  So, we need to differentiate between the severity of the cases. 

These are the issues which I wanted to bring to the notice of hon. Minister.

                                                                          

SHRI P. P. CHAUDHARY (PALI): Sir, I rise to support the Insolvency and Bankruptcy Code (Amendment) Bill, 2019. 

I can say that this is one of the biggest economic reforms of the century.  This is a reform visualised by our hon. Prime Minister, Shri Narendra Modi Ji.  We have seen that before coming into force of Insolvency and Bankruptcy Code, numerous remedies were available for the companies, for the individuals and for the firms for either redressal of their grievances or before AIFR, BIFR under the Companies Act or approach DRT, SARFAESI; for the labour - to approach before the labour courts; and for recovery – to file the recovery suit before the civil courts.  

In some cases, we have also seen that for redressal of grievances, the aggrieved has also approached the High Court under article 226 of the Constitution of India.  We have also seen that in these proceedings, the interim order  were granted and the Government money in crores of rupees was stuck.  Everybody was in trouble because there was no resolution and no scheme was also provided. This has also been contended by some of the hon. Members that the provision is also there under the SEBI Act and RERA.

So, looking into the scheme of the Insolvency and Bankruptcy Code, in case of conflict between IBC and SEBI and in case of conflict between IBC and RERA, the IBC will have an overriding effect.

       Now, we have seen that since the law was fragmented numerous remedies were available and everybody was approaching various courts according to their choice, it may even be the SICA of 1985. But we have seen that it failed to produce the desired results and it created a protective wall for realisation. On account of this, the perpetual control of the management, despite the fact the companies were mismanaged, the possession and control could not be recovered by the financial creditors and it was one of the biggest problems. The consequential effect of this was that before coming into force of the Insolvency and Bankruptcy Code, we were not in a position to recover the debt and the rate was only 26 per cent. It was very strange to see that around 9 per cent was the cost of resolution or liquidation. If we take into consideration the delay in resolution, one would find that huge time was spent in litigation. Average time taken was 4.3 years. Despite this, there was only a sub-optimal realisation of liquidation. So, it is evident that all these fragmented laws hindered the ease of doing business.

Sir, so far as the SARFAESI Act is concerned, during that time the focus was on recovery of debt and liquidation and there was no provision for resolution. I would also like to make it clear here that way back in 1960, the Law Commission of India specifically recommended bringing in an Insolvency and Bankruptcy Code and said that it was the need of the hour. Since then  nobody had taken the pain to do this and for the first time in 2014, under the guidance and vision of the hon. Prime Minister, Shri Narendra Modi ji, this Code was enacted. Insolvency Law is already in existence in the USA and other European countries for last so many years and the realisation under such Code in those countries is around 90 per cent. But in our country, as of today, the realisation is not to that extent, it is around 50 per cent. Since there are old NPAs, that is the reason why the realisation is less. What is the reason? The reason is since 1950 to 2006 around Rs. 18 lakh crore loan was advanced and during the period from 2006-2014, this amount increased to Rs. 54 lakh crore and because of this the financial creditors were in doldrums. We have created an eco-system which became the end of defaulter’s paradise. This is the reason  that the Supreme Court has taken the view, when this Code was assailed before the Court, and they observed that this is the end of the defaulter’s paradise. 

So, IBC is basically to consolidate and amend laws and for reorganisation and insolvency resolution in corporate, in firm and in individual cases. The maximum time provided for resolution for is 330 days and further extendable by 90 days. This is being done with a view to maximising the value of the assets. This code also  provides for the formation and constitution of the IBBI. If one compares the IBC and the earlier law, one would find that in IBC it has been made clear that it will provide for resolution, whereas the earlier law dealt only with liquidation. This Bill provides for rescue, whereas the object of the earlier law was just recovery. So, by this IBC Code the problem is minimised and under this Code the waterfall mechanism is also there. The losses have been fairly distributed amongst financial creditors and the operational creditors. A World Bank report says that the ease of doing business in India has tremendously improved on account of the coming into force of the IBC because the realisation is more.

After the IBC has come into effect, we have seen a deterrent effect.  Realisation is manifold. On account of the enforcement of the IBC, even before filing an application, a complete eco system in the economy has been created. Earlier the creditor was required to chase the debtor but now it is debtor.…(Interruptions) In large number of cases we have seen that the amounts have been realised once the application is filed and admitted before the NCLAT. After the admission of the application, the amount gets realised. Many cases have been resolved under the IBC before the NCLAT. 

So far as the working of the NCLT is concerned, we have seen that it is working fairly well.  We have seen that post created has already been filled to a large extent.  Even before admission of the applications before the NCLT, the realisation has reached an amount of Rs. 3 lakh crore.    Many cases have been transferred from the earlier courts to NCLAT and some new cases have also been filed.  So, the disposal rate is fairly good compared to other adjudication processes.

The provisions of financial creditors, the resolution plan and the resolution professionals are also working well.  Only in case where the resolution plan is rejected, it can go to liquidation and not before that.

We have amended the code three times.  Earlier, the promoter was required to participate but he has been removed on account of second amendment.  We have also seen  cases that a particular company was having an asset of Rs. 10 crore, they had advanced a loan of Rs. 900 crore but they were in a position to recover only Rs. 53 crore. All these NPAs and bad loans were of during 2006-2013.

So far as MSMEs are concerned, relaxation has already been granted in the second amendment.  Regarding home buyers, earlier they were not financial creditors but now they are financial creditors.

So far as the Bill of 2019 is concerned, the amendment is only for the purpose of clarity and interpretation because various courts and NCLT have given various interpretations.  With a view to remove ambiguity, for the purpose of clarity and interpretation, and to prevent dilution of the provisions of IBC, this Bill is before the House.  This has been done after consultation with the various stakeholders.

       With these observations, I support the Bill.                             

 

PROF. SOUGATA RAY (DUM DUM): Sir, I support the IBC (Amendment) Bill in principle.  I would just point out some of the infirmities that have surfaced as far as the Bill is concerned.

I also want to remind you that we were in this House – you were also there – when we passed the IBC.  It was arrived at after consultation in a Select Committee of the House. The IBC was a very well thought out but still, it has been proved that in three years, we have moved three amendments.  So, it was not perfect.  The present amendments do fill up some critical gaps in the IBC. We are bringing this amendment in the backdrop of Shri Siddharth Hegde, Café Coffee Day owner’s suicide.  Tax terrorism has driven people to suicide.  This is not desirable in a country where we are looking for investment and entrepreneurship. I hope the Finance Minister will take care of tax terrorism that is prevalent in the country.

If I were the Finance Minister, I would not be able to sleep at night. It is true that IBC has reduced NPAs to the extent of Rs. 3.5 lakh crore to Rs. 4 lakh crore but even today, the total NPAs amount to Rs. 10.35 lakh crore. 

With the banking system in such doldrums, I do not know how the Finance Minister sleeps at night.

Sir, two problems have surfaced. One is with regard to home buyers. In the case of Jaypee Infratech, the developer failed to deliver thousands of homes in Noida. In the event of liquidation, home buyers may get little back since they are not ‘secured creditors’. These are parties - such as banks - that get precedence when spoils are distributed. The IBC has failed in the case of home buyers.

The other point is regarding the resolution of Essar Steel matter. It has dragged on for more than 270 days due to which the present Bill extends the period to 330 days.

The other point I want to mention before the hon. Minister, whose Bill I have supported, is this. The resolutions are allowing huge haircuts. If you have noticed, the haircut in the case of buying of Electrosteel by Vedanta was 60 per cent. In the case of Bhushan Steel, the realisation is 63 per cent. In the case of Monnet Ispat, the realisation is 26 per cent. In other words, the IBC is not as potent. If you give such big haircuts, then what comes to the kitty of the banks?

Lastly, I want to mention that of the various amendments like in Section 30, the treatment of operational creditors and secured creditors under resolution plan should be fair and equitable, these amendments will completely dilute the National Company Law Appellate Tribunal ruling in the Essar Steel case which has still not been resolved.

Sir, the other amendments are innocent amendments in the sense that they are clarifications. In Section 5(26), ‘Resolution may include merger/demerger’. This is merely clarificatory.

HON. CHAIRPERSON : Please conclude.

PROF. SOUGATA RAY : Sir, I will conclude shortly.

The other amendment is this. Within 14 days of the receipt of application, the authority shall ascertain the existence of default. That is welcome.

As far as Section 12 is concerned, the ‘330 days’ is a very ambitious step. It is doubtful whether the Government will be able to resolve this.

With that, I will say that this amendment is a positive step to strengthen the IBC but the Minister has to take up the problem of Non-Performing Assets of banks which have jumped to Rs. 10.35 crore, and do away with tax terrorism before we claim credit that we are 77th in the rank of ease of doing business. A country like India, aspiring to be the third largest economy is 77th in the rank of ease of doing business, and we beat our chest about it.

 

HON. CHAIRPERSON: Thank you. Now, the hon. Finance Minister.

 

THE MINISTER OF FINANCE AND MINISTER OF CORPORATE AFFAIRS (SHRIMATI NIRMALA SITHARAMAN): Thank you very much, Sir. I begin thanking all the 18 Members who have participated in this Debate. We have had a series of Corporate Affairs-related legislations which we have been discussing in the last few days like Company Law, Insolvency, and so on. I have noticed and have benefitted from the participation of all the Members. Each Member has given valuable inputs all of which I wish to take on board. But before I get into specifics of responding to each one of the Members, I wish to broadly put the picture out which many of you, many Members, have really effectively captured and also have spoken about.

I think the spirit behind this Code and also, what I may call, the frequent amendments -- this being the third in the last three years of the Code’s existence -- might appear that we are coming up too frequently with amendments.  But the reasons are obvious.  Irrespective of some Members’ observations, the Insolvency and Bankruptcy Code actually has proved effective; and in the course of my answer, I will certainly give figures to prove it.  But then, the spirit with which     this Code has come in, and also the way in which it has functioned, together with the types of solutions it is offering, and the expectation with which businesses are approaching for solutions through the Insolvency Code, will have to be put on record.

Again, it is not the intent here that every such problematic issue related to companies is taken up only with liquidation as an agenda.  IBC does not keep liquidation alone as an agenda.  In fact, if I can show you the types of solutions which we have come up with, many of them have even been settled much before they have even got into admission stage.  In the light of IBC, the principle behind IBC and also the letter and spirit of the legislation with which it is getting implemented, is also what was captured very well by the observation made by Shri Pinaki Misra, who asked: “How not to allow companies to die.” It is the spirit behind what we are doing through IBC.

How not to allow companies to die? If there is any prospect of a company that can be revived, the solution is not to go for liquidation irrespective of the situation, but to ensure that solutions are given as a going concern.

14.41 hrs                    (Hon. Speaker in the Chair)   Therefore, the process is aiming at treating companies as going concerns, and that singularly explains why amendments are there to Section 5.  That is the first point that we are talking about. It is about  bringing in elements of merger, bringing in elements of acquisition and so on.  So, on merger, and demerger, amendments to Section 5 are to keep with this idea and to keep it as a solution for a going concern rather than blindly get into liquidation.

Sir, the issues which have been raised are several, and I will definitely come back giving you response for each of the Members.  An issue has been raised: ‘Why are there so many litigations now, leading to so many liquidations now?’ To set the background, I want to inform the hon. Members that with the IBC today and the resolutions, which have been handled, largely  has a stock come in from the BIFR base.  Seventy-three per cent of all the cases, which are in the line, waiting for a solution are those, which have been inherited from the BIFR.  Most of these cases, which have come from the BIFR’s table are either very sick or are totally defunct. So, if 73 per cent of them are waiting to get solutions, obviously you have a picture of too many waiting lists, too many liquidations, and that is not as a result of last few years; it is more, waiting for decades.

Sir, much before I get into details, I would very quickly give you a picture of what liquidation value has been seen here.  Liquidation value of 475 companies is Rs. 24,417 crore against a claim of Rs. 3,46,655 crore. Liquidation value is at seven per cent of the claims, the BIFR being the character there.

Then, the timeline is one issue on which people have raised a lot of questions.  I would respond to that.

It is very legitimate and I can definitely tell you about that.  By using IBC, homebuyers’ issues are being addressed.  Of course, one of which has had a solution coming from the Supreme Court itself.  So, if I were to go one-by-one, I will be addressing the issues raised by various Members.  Although several Members have raised the issues, some are being classified and grouped in my response. We were talking about the backlog which partly I explained by saying that 73 per cent have come from BIFR.  Yes, it is a matter as to how we are going to address all these pending cases together with those which are mounting now.  The capacity building is so required.  I just want to give you a picture that in view of the increasing number of cases, the Government has increased the number – some of the Members did mention it – of Benches of the NCLT from 10 to 15 in the last one year itself. The number of members has also been increased in a phased manner.  Recently, as was observed by one of the Members, 26 new members have been brought in. That is taking the total to 52. More than one court has also been made operational in the Benches where large number of cases are pending such as Mumbai, Delhi, Chennai and Kolkata.  The e-Court Project is also being implemented in NCLT so that there will be faster disposal. 

I do not want to take a lot of time but I want to tell all the Members that as far as Benches in Allahabad, Mumbai, Delhi, CGO Complex in Delhi, the MTNL Building in Delhi and new Branches in Amravati, Vijayawada and Indore are concerned, areas have already been taken up and interior work is going on. Hon. Member Gaurav Gogoi referred to it.  So, there is a lot of activity going on in terms of physical infrastructure for which a lot of investment has already been made. Many of them are near completion. 

Other than this, regular colloquiums are being held for capacity building of members so as to ensure speedier response and uniform judicial delivery system.  For the capacity building, relevant training is also being given to officers and employees from time to time. There is a lot of emphasis on giving the right training and exposure to the members so that the quality of resolution will also be high.

The National Law Universities’ participation in training is also very well recognised.  On the Resolution Professionals, many of the Members have raised questions.  I would like to just say that the IBBI registers and regulates professionals. They are CAs, Cost Accountants, CSs and Advocates with, at least, ten years of experience.  Therefore, we do not expect any dilution in the quality of the Resolution Professionals.  They also pass an examination which is conducted by IBBI.  They have pre and post registration training.  So, in a way, the capacity issues, both, physical capacity and also the training requirements of people, are attended too.

Sir, I just want to draw your attention to a point which I briefly mentioned earlier that IBC is now recognised for its constitutional validity and effectiveness.  Now, we are globally seen as a country which is serious about resolution and cooperate affairs matters.  We are also looking at company affairs in such a way that there is a positive approach.

Many Members have referred, particularly in the context of the tragic incident which has happened in Karnataka, Bengaluru of an entrepreneur putting unfortunately an end to the problem by committing suicide, resorting to a very, very tragic end, or I do not know.  I mean, I am just using the word loosely because technically we will have to wait for the inquiry to get over. 

In that context I want to say the role this particular Code will play in terms of resolution is something which all of us will have to put our energies together to make it possible so that business failure – I think Jayadev Galla ji referred to it –  in this country should not be tabooed.  It should not be looked down upon.  It should not be treated as a curse.  On the contrary, through proper legitimate resolutions, we should give an honourable exit from business if that is what the entrepreneur wants, or a resolution to the problem so that the concern can be a going concern with newer equity participants coming into the picture.  The letter and spirit of IBC and the frequent amendments which are coming in response to the developing situation outside are all in keeping with this spirit.  So, our wish, the Government’s desire is to be able to provide simpler and a fairly considered solution within the statutory framework that we have given ourselves. 

In that way, I want to just put before the hon. Members the number of cases which have been disposed of before admission itself, and this is post-IBC coming into being a law of this country.  That itself indicates to you both in number of cases and also the amount which has been retrieved and disbursed to big and small creditors.  The total number of companies’ cases which have been disposed of under Section 7 are 894. Under Section 9, 5102 cases have been disposed of; under Section 10, 83 cases have been disposed of.  A total of 6079 cases, large and small, have all been disposed of even at the point in time of admission or entry.  This data is up to 28th February, 2019. What is the amount which has been used for disbursal in all these cases? 

Sir, Rs.2,84,000 crore have been retrieved for disbursal.  Therefore, you can see what kind of a behavioural change is happening in terms of resolution where there are issues about whether the company can go on or whether the company has to go for liquidation.  Compare it with the days when they were waiting as sick companies under SARFAESI Act or even under the laws which existed before.  This actually has helped us to bring in a behavioural change.  People have hope and they expect to have the problems resolved. 

A concern which many Members expressed is this.  If you are going for liquidation, what happens to the people who are working there?  No, that is not the driving principle.  If there is life, if there is a possibility of reviving a unit, revival is given the chance, thereby once the whole matter settles down, it can be run as a going concern. It means the labourers, the employees, all of them are going to be taken care of.  They are not going to be thrown out.  The resolution spirit itself is to keep it as a going concern.

I want to give an instance.  Without naming the company, I want to use this as an example to say, by taking this route through the IBC, whether there is a loss in terms of what is being paid to people.  Not at all. If you look at this particular case which was resolved earlier, liquidation value was only Rs. 9 crore. Claims of financial creditors were up to Rs. 900 crore.  Realisation for creditors was Rs. 54 crore.  Realisation percentage of claim was six percentage; whereas realisation as a percentage of liquidation value was 600 percentage.  The company was in BIFR for a decade.  It is because of IBC, the company revived and creditors got 600 per cent of the liquidation value. 

That is the achievement of IBC.  I do not want to say that is the end of the story.  But by constantly sharpening, bringing in greater focus and bringing in purpose serving amendments, we have achieved and we should continue to achieve with the cooperation of all the Members, certain kind of culture in the dispute resolution mechanism.  Without the IBC, the creditors would have got only one per cent of the Rs. 9 crore of their claim. So, that underlines the need for us to be able to keep this alive and keep this relevant to the developments which are happening in the markets and in the economy and bring in this particular set of resolution timely. I am grateful to all the hon. Members in the House and all the Members have received it in the context in which it is being brought in.  So, if there are some areas which require greater clarification, we had to bring in greater interpretative explanatory notes. Otherwise, you would treat all kinds of creditors as being equal which is unacceptable.

So, I would want to underline the importance of this set of amendments that we are bringing in, in the context in which we have brought in.

Now, hon. Member, Gaurav Gogoi spoke about haircuts and later many other Members also spoke about haircuts.  Here, the Government does not play a role.  It is the Committee of Creditors who takes a resolution plan.  It is not the Government; be it even if one of the claimants to the credit which is being lent is a public sector bank or any other institution of the Government, you can only lay your claim from your side. It is the Committee of Creditors who take a final call and that is why, voting in it is also a very important thing. The financial creditors on an average are getting 43 per cent of their claims, 188 per cent of their liquidation value, which is after rescuing a company, and bringing in a behavioural change.  So, this is a very important point when you are talking about haircut.  Many examples have been quoted but the logic behind it is to make sure that we revive the company but when liquidation becomes inevitable, we do that. 

There were quite a few Members who spoke about the status of the Corporate Insolvency Resolution Process, that is the CIRP under the Insolvency and Bankruptcy Code. As on 30th June, 2019, I would like to say that 120 CIRPs have yielded resolution till date.  I will now present the status of the CIRPs as on 30th June, 2019. Those which have been admitted are 2162;  closed on appeal or review or settled matter is of 174 cases; closed by withdrawal under Section 12A are 101; closed by resolution are 120; closed by liquidation are 475; and on-going CIRPs are 1292. 

Now, one another set of statistics which would be very relevant as a part of my response because many Members have raised about the number of days that cases wait, I would just want to say on-going CIRPs, which I just read out, is 1292. Those which have waited more than 330 days are 335;  more than 270 days – 445; more than 180 days but less than 270 days – 221; more than 90 days and less than 180 days – 349; and less than 90 days are 277.  So, this is the kind of spread of cases which have been waiting for resolution.     

PROF. SOUGATA RAY: Do you not think that 330 days is too ambitious?

 

SHRIMATI NIRMALA SITHARAMAN: Well, with the additions being made to the capacity of the NCLT and also the resolution professionals, I do not think it is too ambitious.

Sir, some Members raised the question of the 12 large accounts.  I just want to give a picture of that because the 12 large accounts were initiated by banks, the resolution attempts for them have been initiated by banks.  Together they had an outstanding claim of Rs. 3.45 lakh crores as against liquidation value of Rs. 73,220 crore.

15.00 hrs Of these, the resolution plans in respect of six CDs have been approved. Due to failure of implementation of approved resolution plan in Amtek Auto, the process has re-started. I am not sure whether Prof. Saugata Ray or some other Member referred to that particular case. The process has re-started in the case of Amtek Auto Limited. Other accounts are at different stages of the process. The following is the outcome of six large accounts that ended with resolution plans. In the case of Electrosteels Limited, realisation by all claimants as a percentage of liquidation value is 183.45. There is a list of names of the successful resolution applicants. I am not reading each one of them, unless you want it.

PROF. SOUGATA RAY: You give the percentage. That is important.

SHRIMATI NIRMALA SITHARAMAN: Sure, I will give you.

माननीय अध्यक्ष: आप उनको प्रति भेज दीजिएगा । विद्वान माननीय सदस्य को आप कॉपी भेज दीजिएगा ।

प्रो. सौगत राय: यह बहुत जरूरी है ।

श्रीमती निर्मला सीतारमण: हां, कॉपी भेज देंगे । I have already explained as to what constituted the backlog. So, I am not going to the other large ones. Sir, 73.42 percentage has come from the BIFR’s table and they are not growing concerns. Therefore, it is a high level of liquidation.

PROF. SOUGATA RAY: You mention them one by one.

 

SHRIMATI NIRMALA SITHARAMAN: I have a direction from the Speaker that I can write to you.

माननीय अध्यक्ष: आप उनको जवाब मत दीजिए  । माननीय मंत्री जी, आप माननीय सदस्य को कोई जवाब मत दीजिए  ।

श्रीमती निर्मला सीतारमण : ठीक है,सर  । It makes my job easy.

माननीय अध्यक्ष: आप जब स्पष्टीकरण करेंगे, तब पूछ लीजिएगा  ।

SHRIMATI NIRMALA SITHARAMAN: Hon. Speaker, Sir, there were questions asked about what would happen when a resolution applicant does not fulfil his obligations, for instance, the provisions of the resolution plan. So, action can be initiated against such resolution applicants. The Board has also initiated action against such resolution applicants, in case they did not turn up afterwards. So, the regulation also provides for performance guarantee to be brought in by the resolution applicant even at the stage of finalising the plan. So, there are checks and balances in the system with which we ensure that an applicant, who has successfully responded to the resolution plan, continues and sustains his interest in that thing.

The housing resolution has really attracted a lot of attention and the Members have expressed their concerns about how that is going to be addressed. I want to clearly mention that the Committee of Creditors have been empowered. The CoC is endowed with the duty of working in the interest of all stakeholders. As per section 334, the CoC may approve a resolution plan by a vote of not less than 66 per cent. I am grateful to Member, Shri P.P. Chaudhary who also spoke in detail about it. There is 66 per cent of voting share, considering the feasibility and viability of the plan and such other requirements as specified by the Board.

Now, in this category, definitely, we have a lot of home buyers. Hon. Member, Supriya Sadanand Sule did ask a very relevant question saying how we are going to have them all come together. They are all so scattered. Yes, the resolution professional, together with the Committee, will have to issue notices, get the people come to respond and take their response. Only then, the Board will represent them. The question, which she also further asked and one of the Members later asked also, was that for those who voted in favour of the resolution plan whether we were going to give them their flat or the money as they choose. But what happens to those who have voted against? Even for them, there is a provision to be treated at par with others, if the resolution plan would stick to section 53 relating to the waterfall mechanism. Whatever is expected to be given to them as per that waterfall mechanism, will definitely, be given, irrespective of the fact whether they voted in favour or against. So, that is already there.

There is one thing for which I will definitely take this opportunity to talk about is Jet Airways. A lot of hon. Members asked what is going to happen as it has gone to an international court. I just want to underline the fact that the stakeholders - the debtors and the creditors - are free to work out the resolution. They do not need to work out a resolution which is only through the IBC. They are not obliged to use IBC. IBC is only optional.

As regards the case which has gone to Netherlands or some other country, I would like to say that they have a company there. So, they are approaching the court there. Here we are looking at the context through the IBC. In that, I just want to add one more line. The Insolvency Law Committee has recommended the United Nations Commission on International Trade Law (UNCITRAL) model for cross border insolvency. This is under consideration of the Government. The hon. Law Minister is here. I am expanding on its Sections 234 and 235 which provide for agreement with foreign countries. This is a bilateral arrangement. It has not been operationalized yet.

Jet Airways has some office in Netherlands. Based on that, Netherlands court has admitted it for bankruptcy. While admitting Jet Airways, NCLT has refused to recognize Netherlands proceedings. This order has been appealed to the NCLAT. So, that is the status on the matter of Jet Airways.

There was a talk about fee being charged. They said that the fee is very high. Is the Government going to charge this higher fee for these kinds of resolutions? No two Corporate Insolvency Resolution Processes (CIRPs) are comparable. Therefore, fee cannot be prescribed high or low. Even if we intend to give a lower fee, it might affect the resolution itself. I think hon. Kanimozhi said, if the whole thing is of Rs.1 lakh and we charge Rs.20,000, what happens? This becomes a big issue for small debtors. But if each case is so different, it is very difficult for the Government to establish and prescribe a different fee. The amount of default has no bearing on the amount of work involved also by the CIRP. So, in a way why do we not fix up the fee, is not only because of the size but also because of the work which remains same. So, both ways we cannot fix up the fee.

माननीय अध्यक्ष : माननीय मंत्री जी, अब आप इस पर स्पष्टीकरण दे दीजिए  । आप उसमें जवाब दे दीजिएगा  ।

…(व्यवधान)

माननीय अध्यक्ष : आप क्लैरिफिकेशन के समय बता दीजिएगा  ।

…(व्यवधान)

श्रीमती निर्मला सीतारमण : अध्यक्ष महोदय, ठीक है  ।

माननीय अध्यक्ष : प्रोफेसर सौगत राय जी, आप बोलिए  ।

…(व्यवधान)

PROF. SOUGATA RAY : Sir, I think she has not completed it yet. …(Interruptions)

SHRIMATI NIRMALA SITHARAMAN: Speaker, Sir, if I understand, you want me to write to all the clarification seekers separately and conclude now. I hope the sense of the House is that and because there is another Bill waiting, I shall conclude. I seek all the Members’ support in passing this Bill.  

PROF. SOUGATA RAY: Sir, I think today the hon. Minister has replied to many of the questions raised with a lot of clarity. I am thankful to her for the same.

माननीय अध्यक्ष : प्रोफेसर साहब, आपको कॉम्प्लीमेंट दे रहे हैं  ।

…(व्यवधान)

श्रीमती निर्मला सीतारमण : अध्यक्ष महोदय, मैं यह उनसे दोबारा सुनना चाहती हूं  ।…(व्यवधान)

माननीय अध्यक्ष : प्रोफेसर साहब, आप एक बार और बोल दीजिए  ।

…(व्यवधान)

 

PROF. SOUGATA RAY : And also, she has touched upon very many sensitive issues including Jet Airways and others which normally the Ministers skip. But Sir, she, in the process, has given the list of six out of the 12 important companies referred to by the RBI. With your permission, I request her to complete that. 

My other question is with regard to Jaypee Infrastructure. A large number of people deposited money for buying flats with Jaypee. They also built the Noida Expressway.

माननीय अध्यक्ष : दादा, आप वरिष्ठ सांसद हैं । इंडिविजुअल फर्म की चर्चा पार्लियामेंट में कैसे होगी?

…(व्यवधान)

माननीय अध्यक्ष :  संजय जायसवाल जी, एक मिनट  । मैं आपको पूरा मौका दूँगा  । मेरी बात भी सुन लीजिए  । प्लीज एक मिनट बैठ जाएं  ।

इंडिविजुअल एक-एक फर्म की, एक-एक कम्पनी की बात विधेयक पर चर्चा होते हुए कैसे होगी? क्या आप मानते हैं कि यह सदन में होना चाहिए?

…(व्यवधान)

माननीय अध्यक्ष :  सौगत राय जी,आप बोलिए  ।

PROF. SOUGATA RAY: Sir, let me complete.

The resolution plan submitted by resolution-applicant can be approved by CoC if 66 per cent votes are cast in its favour. However, in Jaypee’s case, home-buyers form 59.4 per cent and the voting share garnered by banks and financial institutions is 40.6 per cent. On paper, there are 23,600 home-buyers. Now, how will they get their flats? The Government must find out a way.

एक-एक कम्पनी की चर्चा होना खराब नहीं है  । जेट एयरवेज की बात यहाँ नहीं उठाएँगे तो कहाँ उठाएँगे? जे.पी. की बात यहाँ नहीं उठाएँगे तो कहाँ उठाएँगे? एस्सार स्टील के बारे में हेयरकट इधर नहीं उठाएँगे तो कहाँ उठाएँगे? यही तो सदन है  । यही तो प्लेटफार्म है,जहाँ पर हम उठा सकते हैं  ।

माननीय अध्यक्ष : आप नियम और प्रक्रिया की किताब निकाल कर बता दीजिए  । मैं इसलिए बता रहा हूँ  ।

श्री शिवकुमार उदासी  ।

 

SHRI S.C. UDASI (HAVERI): Hon. Speaker, Sir, through you, I would like to draw the attention of the hon. Minister. I was also a part of the JPC constituted to look into the IBC.   सर,जेपीसी कमेटी में मैं भी था, श्री पीपी चौधरी साहब, डॉ. संजय जायसवाल, निशिकांत दूबे जी,श्री भर्तृहरि महताब और सौगत दादा भी थे । उसमें पहली बार जब  the former Secretary-General, Shri Viswanathan, who had framed the IBC, came, the first question, that was asked by me in the meeting, was: ‘How are you going to have a comprehensive IBC without cross-border insolvency?’ As hon. Minister was stating in her reply, NCLT could not take into cognizance of what had happened to the Jet in the Netherlands. So, I would like to ask the Government as to when they are going to have a comprehensive cross-border insolvency in the IBC. You already have Fugitive Economic Offenders Bill and PMLA in force. To have expansion of the economy to the tune of 5-trillion dollars, when are you going to have this cross-border insolvency in the IBC? Hon. Minister may please clarify this.

 

SHRI JAYADEV GALLA : Sir, I just want to ask one question. With 83 per cent of the bad loans coming from the public sector banks, the responsibility of the bank should be to conduct a due diligence, evaluate the leadership theme, evaluate the business plan and strategy, monitor their performance so that they do not get into NPAs. What are you doing to improve the performance and accountability of banks? The banks still seem to be getting the first preference in terms of getting paid during liquidation. How are they feeling the pressure beyond getting recapitalised every time they increase the NPAs? How are we going to increase the accountability of the banks?

 

SHRI KALYAN BANERJEE: Sir, I will not take the name of any of the companies. That is not just my business to speak here in the Parliament. Who will be benefited and who will be loser, is not the point at all because we are discussing the Bill.

I understand a simple thing that if you have taken a loan, you have to repay it. It is not that you will enjoy or anybody will enjoy at the cost of the public. I will also not ask you about who has committed suicide and who has not committed suicide, who is running away and who is laughing, and what are the reasons. That is not the subject matter here. I have also so many corporate clients and I could have taken names of so many corporates, but I have not done so.

I have a simple question which I will ask you. On January 19, 2019, the Supreme Court, on the basis of the submission, rather an undertaking given by the learned Attorney General, has given a direction that there should be circuit benches of the NCLAT.

Now, six months have lapsed. That is a mandatory order. That order is mandatory. Therefore, when are you going to set up that?

 

SHRI GAURAV GOGOI: Hon. Speaker, Sir, thank you. Through you, I would like to ask a question on behalf of home buyers.

As per the pattern of section 53, as of now home buyers come very low at the pecking order when it comes to resolution. As I initially said, real estate is a separate matter. There is a lot of individual home buyers who are aggrieved. So, is the Government thinking about any amendment in the future whereby home buyers can be thought about as secured creditors and their rank can be elevated in the pecking order?

माननीय अध्यक्ष: माननीय मंत्री जी ।

 

श्रीमती निर्मला सीतारमण: सर, आपने पहले ही यह याद दिलाया कि टाइम की पाबन्दी है,इसलिए मैं सीधा, सटीक जवाब दे देती हूं  ।

One of our hon. Members have asked a question on cross border insolvency. I know the Insolvency Law Committee has given the Report. The Government is examining the Report. It is under the active consideration at the moment and stake-holders consultation will have to happen. On the completion we will be able to report back on what we want to do on that.

There are one or two questions which are more on the verge of explanations. There has been quite a lot of linking of NPA with resolutions. This Insolvency and Bankruptcy Code is a law for resolution, not for bank related recovery matters. Bank related NPA recovery matters will be sorted out by the banking regulations. The Reserve Bank of India, the Government, etc. will be putting their best foot forward for that. But when I am talking of IBC, it is more for resolving the crisis in the companies. Of course, in a larger context, there is a sense in bringing the NPA together with the resolution related matters. But there is a different track. That is not being addressed by the IBC> So, I just want to be clear on that.

Let us be clear that this Bill strengthens the hands of the home buyers. I am trying to address every question asked by the Members in this regard. The home buyers are scattered. The hon. Member, Shrimati Supriya Sule, graphically put it saying that they are everywhere and how you are going to get them together. That is the whole idea of using this with a sense of wanting to resolve and give the option for voting. Give the option for voting so that they can decide and their vote can be treated as 100 per cent although they may be just 51 per cent. The mechanism through which they will participate will give them that option.  All of them have locked their money. They are waiting. They neither have the house nor the response from the promoter. The promoter is not around.  We know in one particular case the Supreme Court has given its verdict.  I would like to assure the Members here that the Government is looking at how to resolve one of the cases which is not in the court. It is for us to address because of the concern of all the home buyers. I am taking the name here because hon. Members will benefit by knowing its name. It is the JP case. The Government is fully seized of the matter. All of us, like the Ministry of Urban Development, the Ministry of Finance, are working together to see how best we can do justice for those home buyers who are desperately waiting for a solution. There too we are applying the IBC to make sure that they will benefit from some kind of voting mechanism. Other than that, how the Government can respond is something which is being actively considered by the Government. So, home buyers are not at all being forgotten either by this or by the way in which the Government wants to address the distress in which they are.

Prof. Sauguata Roy, this Bill gives the mandatory 330 days. It is not something speculative. So, now it provides mandatory timeline of 330 days. I hope I have answered most of the questions.

   

PROF. SOUGATA RAY: What about haircuts?

 

SHRIMATI NIRMALA SITHARAMAN: I did answer that. I hope you did not miss it out. I will write to you separately if you want. Thank you very much.

 

माननीय अध्यक्ष : प्रश्न यह है :

“कि दिवाला और शोधन अक्षमता संहिता, 2016 का और संशोधन करने वाले विधेयक, राज्य सभा द्वारा यथापारित, पर विचार किया जाए  । ” प्रस्ताव स्वीकृत हुआ  ।

माननीय अध्यक्ष : अब सभा विधेयक पर खंडवार विचार करेगी  ।

 

Clause 2     Amendment of Section 5 माननीय अध्यक्ष : श्री एन.के. प्रेमचन्द्रन, क्या आप संशोधन संख्या 1 प्रस्तुत करना चाहते हैं?

SHRI N. K. PREMACHANDRAN (KOLLAM): Sir, I beg to move :

       Page 1, line 9, --

              for “may”               substitute“shall”. (1) Sir, merger, de-merger and amalgamation, simply ‘may’ shall be substituted by ‘shall’. If the hon. Minister can concede to this amendment, then it is well and good. I am moving it. माननीय अध्यक्ष : अब मैं श्री एन.के. प्रेमचन्द्रन द्वारा खंड 2 में प्रस्तुत संशोधन संख्या 1 को सभा के समक्ष मतदान के लिए रखता हूं  । संशोधन मतदान के लिए रखा गया और अस्वीकृत हुआ  ।

माननीय अध्यक्ष : प्रश्न यह है :

“कि खंड 2 विधेयक का अंग बने  ।” प्रस्ताव स्वीकृत हुआ  ।

खंड 2 विधेयक में जोड़ दिया गया  ।

खंड 3 विधेयक में जोड़ दिया गया  ।

Clause 4   Amendment of Section 12 माननीय अध्यक्ष : श्री जसबीर सिंह गिल, क्या आप संशोधन संख्या 2 और 7 प्रस्तुत करना चाहते हैं? SHRI JASBIR SINGH GILL (KHADOOR SAHIB): Sir, I beg to move : Page 2, line 9, --

for “thirty” substitute “sixty-five”. (2) Page 2, line 15, --

for “ninety days”  

substitute “one hundred and twenty days”.     (7)  

    

माननीय अध्यक्ष : अब मैं श्री जसबीर सिंह गिल द्वारा खंड 4 में प्रस्तुत संशोधन संख्या 2 और 7 को सभा के समक्ष मतदान के लिए रखता हूं  । संशोधन मतदान के लिए रखे गए और अस्वीकृत हुए  ।

माननीय अध्यक्ष : श्री रितेश पाण्‍डेय – उपस्थित नहीं  । श्री ए. राजा, क्या आप संशोधन संख्या 4 प्रस्तुत करना चाहते हैं? SHRI A. RAJA (NILGIRIS): Sir, I beg to move :

       Page 2, after line 12, --

Insert     “Explanation.--The ‘legal proceedings’ referred to above shall exclude the period of any stay granted by any appellate tribunal or court of competent jurisdiction, on the corporate insolvency resolution process.’’. (4)          Sir, it is a very small amendment to exclude the stay period. I am moving it. माननीय अध्यक्ष : अब मैं श्री ए. राजा द्वारा खंड 4 में प्रस्तुत संशोधन संख्या 4 को सभा के समक्ष मतदान के लिए रखता हूं । संशोधन मतदान के लिए रखा गया और अस्वीकृत हुआ ।

माननीय अध्यक्ष : श्री एन.के. प्रेमचन्द्रन, क्या आप संशोधन संख्या 5 प्रस्तुत करना चाहते हैं? SHRI N. K. PREMACHANDRAN : Sir, I am not moving it. I am satisfied with the answer as 90 days is required. माननीय अध्यक्ष : प्रो. सौगत राय, क्या आप संशोधन संख्या 6 प्रस्तुत करना चाहते हैं? PROF. SOUGATA RAY : Sir, I beg to move :

       Page 2, line 15, --

              for “ninety days”  

              substitute “sixty days”.       (6)  

    

माननीय अध्यक्ष : अब मैं प्रो. सौगत राय द्वारा खंड 4 में प्रस्तुत संशोधन संख्या 6 को सभा के समक्ष मतदान के लिए रखता हूं । संशोधन मतदान के लिए रखा गया और अस्वीकृत हुआ ।

  माननीय अध्यक्ष : प्रश्न यह है :

              “कि खंड 4 विधेयक का अंग बने ।” प्रस्ताव स्वीकृत हुआ ।

खंड 4 विधेयक में जोड़ दिया गया ।

  Clause 5   Amendment of Sections 25A माननीय अध्यक्ष : श्री एन.के. प्रेमचन्द्रन, क्या आप संशोधन संख्या 9 प्रस्तुत करना चाहते हैं? SHRI N. K. PREMACHANDRAN : Sir, I beg to move :

       Page 2, line 22, --

              for “all the financial creditors” substitute “the financial creditors duly authorised in writing and         signed by separate authorisation”.   (9)   Sir, the authorised representative has to vote on behalf of the financial creditors, and for which my amendment is that “the financial creditors duly authorised in writing and signed by separate authorisation”. Otherwise, fraud and cheating will take place. So, this amendment is very crucial, and I am moving it. माननीय अध्यक्ष : अब मैं श्री एन.के. प्रेमचन्द्रन द्वारा खंड 5 में प्रस्तुत संशोधन संख्या 9 को सभा के समक्ष मतदान के लिए रखता हूं  । संशोधन मतदान के लिए रखा गया और अस्वीकृत हुआ  ।

  माननीय अध्यक्ष : प्रश्न यह है :

              “कि खंड 5 विधेयक का अंग बने  ।” प्रस्ताव स्वीकृत हुआ  ।

खंड 5 विधेयक में जोड़ दिया गया  ।

खंड 6 विधेयक में जोड़ दिया गया  ।

  Clause 7   Amendment of Section 31 माननीय अध्यक्ष : श्री एन.के. प्रेमचन्द्रन, क्या आप संशोधन संख्या 10 प्रस्तुत करना चाहते हैं? SHRI N. K. PREMACHANDRAN : Sir, I beg to move :

       Page 3, line 15, --

              after “local authority”  

insert “or public undertakings or autonomous bodies under the    

direct control of the Central Government or any State Government”.       (10)  

माननीय अध्यक्ष : अब मैं श्री एन.के. प्रेमचन्द्रन द्वारा खंड 7 में प्रस्तुत संशोधन संख्या 10 को सभा के समक्ष मतदान के लिए रखता हूं  । संशोधन मतदान के लिए रखा गया और अस्वीकृत हुआ  ।

माननीय अध्यक्ष : प्रश्न यह है :

              “कि खंड 7 विधेयक का अंग बने  ।” प्रस्ताव स्वीकृत हुआ  ।

खंड 7 विधेयक में जोड़ दिया गया  ।

खंड 8 और 9 विधेयक में जोड़ दिए गए  ।

खंड 1, अधिनियमन सूत्र और विधेयक का  पूरा नाम विधेयक में जोड़ दिए गए  ।   माननीय अध्यक्ष : मंत्री जी, अब यह प्रस्ताव करें कि राज्य सभा द्वारा यथापारित विधेयक को पारित किया जाए  । SHRIMATI NIRMALA SITHARAMAN: Sir, I beg to move: “That the Bill, as passed by Rajya Sabha,  be passed.” माननीय अध्यक्ष : प्रश्न यह है :

“कि विधेयक, राज्य सभा द्वारा यथापारित, पारित किया जाए  ।” प्रस्ताव स्वीकृत हुआ  ।

 

  15.26 hrs