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PTI Last Updated at 10 Aug 2018, 20:08 IST India

Parliament passes insolvency and bankruptcy bill

New Delhi, Aug 10 (PTI) A bill to amend the Insolvency

and Bankruptcy Code (IBC) 2016, allowing home buyers to be

treated as financial creditors and seeking to set up a special

dispensation for small sector enterprises, was passed by

Parliament today.

The bill, which was passed in Lok Sabha on July 31, was

approved in the Rajya Sabha today by voice vote.

The legislation seeks to replace the June 6 ordinance

that sought to put these amendments into force to aid quick

resolution of several bankrupt firms.

Replying to the debate on the Insolvency and Bankruptcy

Code (Second amendment) 2018 in the Upper House, Finance

Minister Piyush Goyal said its objective was to provide

resolution to small bankrupt firms and, at the same time, take

stringent action against big bankrupt businesses.

He said the bill aims to ensure that all cases are led to

resolution instead of liquidation.

"We want faster resolution of cases. ....We don't want

liquidation. Insolvency will not help the country. Assets

worth crores should put to use," he said.

The Minister said the Insolvency Law Committee, which

was set up in November 2017, had submitted the report on May

26 this year and every recommendations of the panel has been

accepted and incorporated in the amendments.

On the approval of a resolution plan, the Minister said

the report said it should be approved by a panel of creditors

by a vote of not less than 66 per cent of the voting share of

financial creditors. For routine decisions, it should be 51

per cent vote requirement.

Goyal said the government is trying to increase the

strength of NCLAT to address the pendency of cases. "The

number of courts, judicial members and technical members are

being increased," he said.

Besides, a group has been set up to see speedy resolution

of about 40,000 cases in NCLAT that are simple in nature and

can be resolved by imposing non-discretionary penalty, he

added.

On a member's query regarding less recovery of assets

through the resolution process, Goyal said "there is a good

recovery. ...If you look at the cases so far, 32 cases are

resolved through resolution and up to 55 per cent have been

recovered."

Earlier, it used to take an average of three years to

resolve a matter, it has now come down to one year. Earlier

the cost of resolution used be higher at 9 per cent, now it

has come down to one per cent, he said.

He also stated that the NCLAT was an independent body and

the government does not interfere in its functioning.

The minister said it is not that in all cases, the

promoters are wiful defaulters. Wherever promoters are wilful

defaulters, the action should be taken strictly.

"Now there is fear among big borrowers that they have to

repay their loans. Earlier, there was a responsibility to

repay loans was on small borrowers. Big players used think it

is not our problem, banks have to recover the loan. This

equation has changed today," he noted.

Opposing the bill, D Raja (CPI) said that frequent

changes to the law is being done to help defaulters and the

government wants to bail out the defaulters.

In the Bhushan Steel case, he alleged that the banks lost

Rs 21,000 crore but a corporate house gained this amount. He

sought to know why the government has a "soft corner towards

the corporates."

"The government should bail out the poor and not the

corporates. The voting requirement is reduced to 66 per cent

from 75 per cent to help one corporate," he alleged.

Neeraj Shekhar (SP), S R Balasubramaniyan (AIADMK),

Kahkashan Perween (JD-U), P Battacharya (Cong) were among

others who supported the bill, but expressed concern over the

government taking the ordinance route to amend various laws.

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(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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