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IBC is a game-changer but has failed to ensure time-bound resolution of cases: Injeti Srinivas

PW Bureau

He added that the implementation of the IBC was a “mixed story” even though it has impacted the behaviour of borrowers and lenders New Delhi: While hailing the Insolvency and Bankruptcy Code (IBC) as a game changer, corporate affairs secretary Injeti Srinivas said that non-adherence to timelines and inordinate delay in the admission of cases are major concerns. He added that the implementation of the IBC was a “mixed story” even though it has impacted the behaviour of borrowers and lenders. The code, which became fully operational in December 2016, made provisions for a market-determined and time-bound resolution of insolvency.

According to the bureaucrat, there are litigations that should not be entertained at all if one goes by the yardsticks laid down by the Supreme Court.

Srinivas pointed out that cases worth about Rs 1.2 lakh had been settled pre-admission and about Rs 40,000 crore non-performing assets (NPAs) had been converted to performing assets by way of payment by borrowers, leading to a decline in new NPAs. However, he added, that one of the areas where IBC has fallen short of expectations is adherence to timelines. “This is an area that is causing deep concern; and even after the apex court has given such a speaking order about the sanctity of timelines, we find that even today a number of big 12 cases also appear to be locked up in unending litigation,” Srinivas said. According to the bureaucrat, there are litigations that should not be entertained at all if one goes by the yardsticks laid down by the Supreme Court. “There is also a concern about inordinate delay in admission of cases where debt is well established and you do not have to determine the quantum of debt. You have to determine whether there is a default. When 14 days’ time is given in the law, it should be done in 14 days. Whereas, it is seen that it is taking three months or more,” he said. To ensure that decisions on admission of cases under the IBC were done within 14 days, he suggested that there could be a “provision of deemed admission”. “Here the fundamental theme is time-bound disposal. This is a very special law, it is extraordinary.”