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Richa Mishra

NEW DELHI, March 9

THE apprehensions regarding the fate of the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) seem to have been cleared by the Standing Committee on Finance. The committee, that was examining the Sick Industrial Companies (Special Provisions) Repeal Bill, 2001, has recommended that the BIFR structure be done away with.

With this, the proposed National Company Law Tribunal (NCLT) would become the new focal point for dealing with industrial sickness. A Bill to set up the NCLT has already been passed by the Lok Sabha. NCLT proposes to replace BIFR through the provisions of the recently passed Companies (Second Amendment) Act, which provides for the new Insolvency Law. The Standing Committee Report, however, came with a note of dissent from Mr Rupchand Pal and Mr Prabodh Panda.

In its report, the committee said that while there was a broad consensus among the members that BIFR under SICA has to a large extent failed to achieve its purpose because of inherent deficiencies, some of the members were of the view that the proposed alternative mechanism, the NCLT, will not appropriately address the issue of `revival' and `rehabilitation' for the sick industries.

Further, the standing committee has also expressed concern that the issue of pending cases with BIFR and AAIFR, which shall abate on the repeal of SICA, has not been addressed. It felt that the transitional provisions were conspicuous by their absence in the proposed NCLT set-up. This, according to the committee, will cause great hardships to the sick companies whose cases are pending with BIFR and AAIFR. Besides, a lot of time will be wasted in registering the said abated cases afresh with NCLT, the committee felt. Hence, it has recommended that the Government should bring a suitable amendment in the present Bill itself to deal with such cases.

Meanwhile, voicing their dissent, two committee members, Mr Pal and Mr Panda, said that although there have been cases of misuse of certain provisions of SICA by unscrupulous promoters and management of companies in manufacturing sector, the basic objective of the Act could not be satisfactorily fulfilled.

This, according to them, was due to inadequate response of the Union Government in the matter of setting up required number of benches and providing the necessary infrastructure.

According to them, SICA should be adequately amended to serve the purpose for which BIFR was set up.

The members also expressed their resentment to the method of assigning the task of consideration of Company Law (Second Amendment) to one standing committee and giving the responsibility of considering SICA repeal to another.

"Both the Bills should have been given to one committee as they are closely related and the Company (Second Amendment) is considered the alternative to SICA which is proposed to be repealed," they said.

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