New Delhi [India], September 19 (ANI): The Rajya Sabha on Saturday passed the Insolvency and Bankruptcy Code, 2016 (Second Amendment) Bill on Saturday.
According to the amendment, fresh insolvency proceedings will not be initiated for at least six months starting from March 25, when the nationwide lockdown was imposed amid the coronavirus pandemic.
Now the IBC (second amendment) Bill will go to the Lok Sabha for consideration and passing.
Replying to the questions in the Upper House, Finance Minister Nirmala Sitharaman said, "Our intention of initiating corporate insolvency for matters that occurred during the lockdown, was to give immunity during this period. This is only for those which arrive during the COVID period, amendment of section 66 that no obligation shall be filed by a resolution professional."
Sitharaman, continuing the reply, says, the code balances the rights of debtors and creditors.
"Is it a blanket ban which is being imposed? I would like to say we are confining it to only those defaults which may arise in the COVID period. It will not affect the applications filed before," she added.
The Union Finance Minister clarified that the ordinance and the bill do not provide any protection to fraudsters.
"If the company is pushed into insolvency, when it is recovering from losses, the objective of the ordinance will be lost. The IBC is not a recovery law. Saving the lives of companies is important, more than the recovery of loans which may be utilised through other options," she said.
She also asserted that Micro, Small, and Medium Enterprises (MSMEs) wouldn't be affected by it as the IBC cannot be initiated for cases below Rs 1 crore.
"'Not exceeding one year' these words have become the bone of contention, if this is removed, it would naturally and directly mean excessive delegation to the executive. If I remove those words now, it would mean that I could extend it by executive order any time," Sitharaman said.
The Monsoon Session of the Parliament commenced on Monday and is slated to end on October 1. (ANI)