Amid flooding of cases in the NCLT and NCLAT, the Supreme Court today initiated a debate on ways to prevent delays in insolvency resolution of debt-ridden firms due to continued adjudication, saying all delays "must stop".
A bench of Justices R F Nariman and Indu Malhotra took note of the fact that the Insolvency and Bankruptcy Code provided for time-bound disposal of the resolution process meant to revive a company, but delays and several rounds of intervention by authorities like National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) defeated the purpose of the statute.
"Make the Act (the Insolvency and Bankruptcy Code) work, otherwise everything will go for a six," the bench said, adding that all the kinds of delays "must stop".
Earlier, the cases used to remain pending for years before the Board for Industrial and Financial Reconstruction and the Appellate Authority for Industrial and Financial Reconstruction under the Sick Industrial Companies Act, it said.
"The only beneficiaries used to be the promoters of the defaulting companies," the bench said.
Referring to the recent bankruptcy code, it said the authorities like NCLT and NCLAT should be deciding the cases once and for all and there should be no "back and forth" adjudications.
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The bench considered the time-line provided in the code and said the endeavour should be to arrive at the finality of the case.
Usually, the NCLAT remands back to the NCLT and the NCLT remands back to Committee of Creditors (CoC) and "this goes on and on", senior advocate Harish Salve, appearing for ArcelorMittal, said.
Notwithstanding other laws, everything has to be decided under the code within the time frame, he said.
The resolution proceedings cannot be interdicted by the NCLT and NCLAT "back and forth", the bench said and asked the lawyers including Salve and Gopal Subramanian to give suggestions.
The bench was hearing the plea of steel and mining major ArcelorMittal challenging the order of the NCLAT asking it to deposit Rs 7,000 crore for being eligible to bid for Essar Steel.