Introduction:
The Insolvency and Bankruptcy Code, 2016 gives a module to the insolvency resolution of debtors in a period bound way to provide them with maximum benefits.
This Code draws a fine line between the commercial and legal viewpoint of the procedures of insolvency and bankruptcy. It conceives a market instrument to safeguard those firms which are suffering financially and to encourage winding up of those firms as per the procedures laid down under this Code.
Under this Code, the adjudicating authorities are empowered to entertain the issues brought before them and pass decisions on the same. The Tribunals handling such matters have solved many cases till dates and also passed some landmark judgments.
The Adjudicating authorities under this Code are as under:
- National Company Law Tribunals: At present, there are thirteen benches across the country. It is established in Ahmedabad, Chandigarh, New Delhi (2 benches), Allahabad, Bengaluru, Kolkata, Kochi, Chennai, Guwahati, Jaipur, Hyderabad and Mumbai.
- National Company Law Appellate Tribunal.
- High Courts.
- Supreme Court of India.
The IBC Law has come into the picture with the target to incredibly improve the business growth in India. This law has simplified and shortened the winding-up procedures of the Companies, which were prior very lengthy and complicated. One of the primary reasons for this Code is to enable the debtor wherein the debtor in question can recover his or her dues through the Corporate Insolvency Resolution Process (CIRP) or liquidation of the defaulting debtor entity.
The NCLT is the supreme tribunal to be approached for obtaining favourable orders. Appeals for redressal of grievances arising out of an order passed by the NCLT are filed before National Companies Law Appellate Tribunal (NCLAT) and the Supreme Court. The main idea of IBC, along these lines, comprises of an admixture of executive and judicial powers at the initial level and complete separation at Appellate levels.
The IBC procedure is similar to the interrogative framework, where the court is effectively involved in examining the documentary evidence and cross-examining the witnesses before deciding a case. In the IBC, the NCLT plays a critical role helped by the Insolvency Professionals (IPs) and insolvency professional agencies (IPAs). To start with the proceedings, one has to file a petition in NCLT which is referred to as insolvency petition. At the point when an insolvency petition is placed before the tribunal, the job of National Company Law Tribunal is to distinguish whether the debtor has committed a default in reimbursement/ repayment of an undisputed debt pending towards the petitioner.
After following the procedures, if it comes to the conclusion that the debtor has defaulted the payment due towards the petitioner; and has not questioned the case of default by the petitioner in the past, it must accept and allow the petition for further hearings else it must dismiss the appeal. When an application/ petition is filed to initiate the corporate insolvency resolution process, the NCLT must provide a right of hearing to the corporate debtor in consonance with the principles of natural justice.
The insolvency resolution process (IRP) comes under the Insolvency and Bankruptcy Code, 2016, where the National Company Law Tribunal starts a corporate insolvency resolution process (CIRP). Under this process, the NCLT considers the defaults on making payments to creditors. An application or petition before NCLT can be filed by a financial creditor, operational creditor or corporate itself for proceeding with the insolvency resolution process IRP when default in the payment has happened. As per the new amendment in the Code, in case of a housing project, if a developer fails to deliver the possession of the house on time or neglects to refund the money, a home buyer can likewise approach National Company Law Tribunal for initiating IRP against the said developer.
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