The Opposition and the government on Tuesday failed to reach a consensus on the future course of The Insolvency and Bankruptcy Code, 2015, which aims to improve the ease of doing business.
The government had initially planned to refer the bill to a joint committee of the two Houses to avoid any further review by the Rajya Sabha where the Opposition is in majority. In a Rajya Sabha panel, the Opposition would have more members than the ruling side.
“The Centre consulted different parties and all had agreed. The Congress had even informally proposed the names of its members, but after a few hours senior ministers informed us that the Congress wants a Rajya Sabha select panel to review the bill,” BJD leader Bhartruhari Mahtab said.
The bill, introduced in the Lok Sabha on Monday, aims to replace the archaic bankruptcy rules. The proposed law promises to be much kinder to sick companies that turn insolvent for genuine reasons.
Sources in the Congress told HT the bill cannot be passed hurriedly and must be reviewed in an intra-party panel. They also argued in favour of a select committee of the Rajya Sabha scrutinising the bill, instead of a joint committee doing the same. “It will also save time,” sources said.
Finance minister Arun Jaitley on Tuesday said the country is going through a “critical” phase and “economic legislation has to go on”.
Underlining that the bill was an important legislation, he said it should not “go from committee to committee” as the “country cannot wait” for reforms.
“We can play these Parliamentary tactics but the world is not going to wait, this country is not going to wait, the economic legislation has to go on,” Jaitley said. “What is the quick way out by which we can consult everybody, have the wisdom of all the sections and then legislate. Or, is it only an obstacle race where there is one party which wants to create obstacles and my only job is to jump over those obstacles? That is not how a legislation is framed in this country.”
The bankruptcy bill proposes a timeline of 180 days for dealing with applications for insolvency resolutions, which could be extended by another 90 days. It also suggests early identification of financial stress in companies, which could help in their revival.
The new set of regulations would allow easy exits for companies while protecting the rights and interests of lenders.
At present, there is no single law dealing with insolvency and bankruptcy. Liquidation of companies is handled by the high courts. Individual cases are dealt with under the Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920, among others.