MSME PROPRITERIARY AND PARTNERSHIPS ARE STILL NEGLECTED IN NCLT REGIME: Dr.Paanse
National Company Law Tribunal (NCLT) established under the Insolvency and Bankruptcy Code 2016 (IBC), which was initiated by the Narendra Modi Government with the main object of “Doing business with ease” has hardly served MSME sector, as the proprietary concerns and partnership firms are still outside the purview of the NCLT.
In fact, the NCLT was set up by the Union government under IBC to help the NPA accounts to resolve their problems and restructure the business while maintaining the employment. However, presently it is useful only to the corporates. MSME sector which is mainly in the form of proprietary and partnership forms are being neglected, alleged Dr. Visswas Paanse, Ex-banker and NPA activist.
Talking to reporters Dr. Visswas said the small and medium entrepreneurs other than corporates who are NPA’s were not getting any opportunity to revive their business under The Board for Industrial and Financial Reconstruction (BIFR) and now under IBC as well.
Even at present the corporates which are applying to NCLT, either under section 7, 9, or 10 are not getting dates for 3-4 months. According to law they should get an opportunity to be heard within 15 days. The corporates are thus deprived of taking advantage of this new law and banks are getting undue upperhand for destroying the existing businesses. In fact, the IBC is meant for revival of business but such delay is helping banks unduly, use this time for coercive recoveries.
The Process of resolution under IBC has to be completed within 6 months, from the date of admission which may be extended to another 3 months but presently even this 9 months are not enough and are always deferred for more than 9 months. Now it is interpreted as the time limits under IBC are directory and not mandatory. This is not with the spirit of IBC, says Dr. Visswas
As of now, NCLT is flooded with insolvency cases of big corporate houses including Essar Steels, Bhushan Steel and Bhushan Power and Uttam Galva etc and the existing infrastructures of NCLT are being overburdened. The NCLT also gives the priority to big and known corporates as big debt are involved in it and the small and medium entrepreneurs are being neglected without any reasons.
The recent judgment of Supreme Court whereby personal properties mortgaged by the promoters to obtain the corporate loans have been kept outside the provisions of IBC is against the spirit of IBC. When the corporate loans are based on these collateral securities why should they be kept outside the purview of IBC, Government should take note of it and make the suitable amendment in the Code, demands Dr. Visswas. This is also detrimental for arriving at practical resolution of borrowers, as the physical possession of the personal mortgaged properties are taken by the bank and used exclusively for their own recovery purpose.
About the appointment of the Resolution Professional (RP), Dr. Visswas argues that the banks and financial institutions appoints only their selected Panel members as RP and remove the IRPs appointed under section 7 or 9 by other creditors or by the borrowers under section 10. It shows the banks have no trust on the RPs or IRPs which are appointed by others. “Isn’t it against the basic framework of IBC and doubting the integrity of RP or IRP as professionals? “- questions Dr. Visswas.
The provisions should be made unless there is a prima facie evidence that an IRP is behaving partially he should not be removed. Any empanelment of RPs or IRPs by the banks or institutions either officially or unofficially should be banned as they are supposed to be impartial – suggests Dr. Visswas.
——-Abhishek Dubey(PRO)
