Macro Economy

Implementing Bankruptcy Code may set off Ministry turf war

Surabhi Richa Mishra New Delhi | Updated on January 22, 2018

TK Viswanathan

Cabinet will have to find a way out, says bankruptcy panel chief Viswanathan

A turf war could erupt within Central Ministries over the ownership of the proposed Bankruptcy Code and the related tribunals that would resolve corporate and individual insolvency cases.

“This is an issue on which the Cabinet will take a decision. For many Acts, these problems have been solved... in any institution, there are bound to be turf wars, but ultimately the Cabinet decides the way out,” TK Viswanathan, Head of Bankruptcy Law Reform Committee, told BusinessLine.

“Besides, law is neutral. The Ministry which will govern it will be dealt under the allocation of business rules,” he said.

The plan for a modern Bankruptcy Code was announced by Finance Minister Arun Jaitley in the Union Budget 2015-16, but the proposed structure plans to use the National Companies Law Tribunal (NCLT) and the Appellate Tribunal for corporate bankruptcy and the Debt Recovery Tribunals (DRT) for individual insolvency cases.

Until now, corporate insolvency and the NCLT, were governed by the Companies Act and administered by the Ministry for Corporate Affairs, while the DRTs are with the Department of Financial Services in the Ministry of Finance. While the Finance Ministry is expected to take the proposed Code to the Union Cabinet for approval, the allocation of business rules of the Central Government could be amended at a later date.

Awaits approval

The Committee, in its report submitted to the Finance Ministry, has not made any recommendation on which Ministry or department would be responsible for administering the Code.

The Government is hoping to get the Bill passed by Parliament in the Winter Session and implement the bankruptcy provisions by the end of the fiscal.

Published on November 23, 2015

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