The Supreme Court on Tuesday asked the Centre to detail the composition of the Insolvency Law Committee set up to identify and suggest ways to address issues faced in the implementation of the Insolvency and Bankruptcy Code (IBC). It also asked the government to tell which cases were under active consideration of the panel. It has also asked the government to explain whether the committee is permanent in nature, or formed according to the needs.
On November 21, 2017, the government had set up a 14-member panel to identify and suggest ways to address issues faced in the implementation of the law. The committee, chaired by Corporate Affairs Secretary Injeti Srinivas has Insolvency and Bankruptcy Board of India (IBBI) Chairperson M S Sahoo, RBI Executive Director Sudarshan Sen, former Lok Sabha Speaker T K Viswanathan, among others as members.
It had been tasked to issues which might "impact the efficiency of the corporate insolvency resolution and liquidation framework" and make recommendations.
The SC is hearing a bunch of petitions moved by several operational creditors. Earlier, it had observed that operational creditors of companies undergoing the insolvency resolution process should have a say in the committee of creditors (CoC), and get voting rights proportional to the debt they owe. The court had also sought the government's response on the issue. In its submissions on Tuesday, the government said the primary objective of most of the operational creditors was recovery of the money owed to them. This, the government said, was against the principle of the IBC.
Though the government has earlier in the court accepted the need to fine-tune certain provisions of the IBC, it has voiced its concern about the petitioners seeking to remove the Bill altogether.
In its arguments, led by Attorney General K K Venugopal, the government had said removing the Bill entirely will place defaulting companies out of the purview of the law, which was not desirable. Firms such as Swiss Ribbons, Shivam Water Treaters, and Ganesh Prasad Pandey, an individual petitioner, have challenged various provisions of the IBC such as Sections 7, 12 and 29. The petitioners have listed discriminatory treatment to a certain class of operational creditors, and alleged the IBC was unfair as it was only protecting the rights of the financial creditors.