New Delhi, Sep 19 : The Rajya Sabha on Saturday passed a Bill to temporarily suspend initiation of the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code.
The Insolvency and Bankruptcy Code(Second Amendment) Bill, 2020, moved for consideration by the Upper House, was passed by a voice vote.
The passage of the Bill came after the house negated the Statutory resolution moved by K K Ragesh disapproving the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (No. 9 of 2020) promulgated by the President of India on June 5, 2020.
The Bill amends the Insolvency and Bankruptcy Code, 2016.
The Code provides a time-bound process for resolving insolvency in companies and among individuals. Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
Responding to the debate on the Bill, Finance Minister Nirmala Sitharaman said the purpose of suspending Section 10 A of the IBC was to prevent businesses from getting pushed into insolvency due to the Covid situation.
‘The situation before us in March was clearly of putting lives before livelihood. When PM announced the Janta curfew, he said it was a preventive remedy and did not know for how long it would last. Naturally, lockdown impacted business and financial market, did we just sit and watch? No.
‘It is better to suspend sections 7, 9 and 10 of IBC so that we can prevent businesses from getting pushed into insolvency and with that intention an ordinance was brought out. With this intention, Section 10A of the ordinance was brought in. Our intention of initiating corporate insolvency for matters that occurred during lockdown, was to give immunity during this period. This is only for those which arrive during COVID period. Amendment of section 66 provides that no obligation shall be filed by a resolution professional,’ she said.
On members commenting on the government coming up with lot of ordinances, she said that the purpose of this government coming up with Ordinances was to ensure that the emerging situations are addressed from time to time.
“We repeatedly hear that this government comes out with an ordinance. That is to ensure that the emerging situations are addressed and we come back to the House and get the Bills passed. It is a responsive government’s duty is to show that we are with the people of India,’ she said.