By Sanjay Raman Sinha
The Jet Airways case has been a testament to the complexities and delays inherent in the Insolvency and Bankruptcy Code (IBC) process. Despite the National Company Law Tribunal (NCLT) approving the resolution plan on June 22, 2021, the legal battle persisted, with the case reaching the Supreme Court twice. The Jalan KalRock Consortium, which had emerged as the Successful Resolution Applicant (SRA), failed to pay the first and second tranches as per the resolution plan, instead appealing to the National Company Law Appellate Tribunal (NCLAT) for respite in payment.
SHORTCOMINGS OF THE IBC
The IBC has several shortcomings that hinder its effectiveness:
- Ground-level inconsistencies: The Code is plagued by operational roadblocks that undermine its systemic structure.
- Timeline breaches: The resolution timeline is frequently breached, leading to progressive value erosion of the corporate debtor’s assets.
- Shortage of members: NCLTs and NCLAT face vacancies, impacting the insolvency reform initiative.
- Inadequate infrastructure: The Tribunals lack adequate infrastructure, hindering their functioning.
CORRECTIVE MEASURES
The Supreme Court outlined several corrective measures to address these shortcomings. These are:
- Statutory amendments: The government can introduce amendments to the IBC in order to streamline the process.
- Time-bound hearings: Members of Tribunals must ensure time-bound hearings and resolutions.
- Domain experts: Members should possess domain knowledge to handle complex commercial cases.
- Integrity and impartiality: Appointments to NCLT and NCLAT should be based on high ideals and impeccable integrity.
THE WAY FORWARD
The Jet Airways verdict serves as a wake-up call for IBC reform. The government and stakeholders must work together to:
- Amend the IBC: Introduce reforms to streamline the process and prevent delays.
- Strengthen infrastructure: Enhance the infrastructure of NCLTs and NCLAT.
- Ensure accountability: Appoint members with domain expertise and integrity.
With the upcoming winter session of Parliament, expectations are high that the centre will introduce pending legislative reforms to boost the economy, including amendments to the IBC and the Companies Act.