Financial Daily from THE HINDU group of publications
Thursday, Sep 19, 2002
Regulatory Bodies & Rulings
BIFR going strong even as its days are numbered
NEW DELHI, Sept. 18
THOUGH the countdown to wind up the "rehabilitator" of sick companies - the Board for Industrial and Financial Reconstruction (BIFR) - has begun, the Board is continuing to do what it is best at - "rehabilitating companies."
This is even as the last leg of work is being done to repeal the Sick Industrial Companies (Special Provisions) Act, 1985, (SICA) governing BIFR and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
A cursory glance on BIFR's performance shows that as on July 31, 2002, it has disposed of 2,576 cases. Almost 939 cases were dismissed as non-maintainable, while rehabilitation schemes were sanctioned for 557 companies (BIFR has sanctioned schemes for 537 companies and AAIFR/SC has sanctioned schemes for 20). Almost 315 companies were declared no longer sick.
As on July 31, 2002, it has received 5,514 references of which 5,245 were private companies and 269 were Central and State public sector undertakings. Of the 5,514 references received, registration has been declined to 1,370 companies and 4,072 references have been registered.
Further, as on July 31, 2002 about 1,496 cases were pending with the Board at various levels of rehabilitation. Draft schemes have been circulated for 78 companies and winding up notice have been issued to 124 companies.
During the month of June 2002 alone, the Board has dismissed 30 references as non-maintainable. It has recommended winding up of 10 companies in June 2002 to the High Courts. It has issued winding up notice to 17 companies in during the month.
Meanwhile, the Government is understood to have accepted most of the recommendations made by department-related Parliamentary Standing Committee on Home Affairs examining the Companies (Amendment) Bill, 2001, which proposes to put in place the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The proposed NCLT and NCLAT will take over functions being hitherto performed by the Company Law Board (CLB), BIFR and AAIFR as well as by the High Courts and District Courts in the winding up of companies.
Sources told Business Line the view that instead of repealing the SICA, and replacing BIFR with NCLT, the Board should be provided with more teeth, had not been accepted. The Government has said that the aim and objective of the present Bill is different from that of SICA.
Besides, corporate restructuring, including insolvency and winding up, and dispute resolution, for the Indian corporates is currently handled in three different quasi-judicial/judicial forums.
There is a need to provide a single-window service to the Indian corporates, the Government has said.
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