While speaking at colloquium on Insolvency law and associated best practices, the judge also observed that the IBC has shifted the insolvency process, from debtor-centric to creditor-centric.
Justice NV Ramana of the Supreme Court recently spoke on “Judicial Sensitisation on Insolvency Law And Associated Best Practices”, at a colloquium held on Friday.
At the outset of his address, he quoted Lord Mishcon by saying that “Insolvency is not a very thrilling or amusing subject” and went on to add, “… uninteresting as it may be, it is nevertheless a very important subject area”, by quoting Edward Jenks, the noted English jurist.
Justice Ramana pressed on the fact that the subject of insolvency could not be undermined, “as it has implications on a host of other sectors such as employment, banking, company law, etc., and the economy at large.”
He spoke on how insolvency may be viewed not just as a matter of private rights, but rather more holistically, "weighing of the interests of various stakeholders and just redistribution."
Viewed from this holistic perspective, Justice Ramana opined that, "insolvency law should attempt to ensure the survival of organizations, and if the same is not possible, then their orderly liquidation.” He added that,
"One ought to remember that liquidation should be the last resort, and rarely has advantages over restructuring or revival. This is the core philosophy of the present insolvency regime in our country."
Justice NV Ramana
He recounted that the aim behind the enactment of the Insolvency and Bankruptcy Code in 2016, lay in the "imperative to update the laws and incorporate best practices from across the world", given the “staggering amount of NPAs” at the time.
Addressing delays prevalent in the erstwhile system, Justice Raman pointed out that the IBC attempts to streamline the process of insolvency with added focus on ensuring speedy resolution of insolvency and bankruptcy.
He went on to note that the IBC has brought in better credit culture among borrowers.
"... the IBC has shifted the process, from being debtor-centric, to being creditor-centric. The Code has brought in better credit culture in borrowers as they are apprehensive of the initiation of insolvency, and resultantly, losing control over their assets."
Justice NV Ramana
Justice Ramana further took the opportunity to emphasise on the role played by the Insolvency Professionals, who he noted were key to the present insolvency regime. Justice Ramana observed that Insolvency Professionals must possess not just “a high level of competence, but must also be highly ethical”.
The judge also spoke on the problem vacancies in the National Company Law Tribunal (NCLT), which he remarked may be attributed to service conditions which discouraged people from applying.
Justice Ramana observed that the issue was also taken note of by the Supreme Court in the recent Rojer Mathews case. He added that while the Government recently introduced new rules concerning the service conditions of NCLT members, the same needs to be analysed and their effect is left to be seen
He also took note that the Tribunals suffered from lack of physical infrastructure.
"The Tribunals also suffer from a serious lack of physical infrastructure in some of the benches. With the increasing workload of the members because of expansion of the jurisdiction of the Tribunal, it is necessary to also ensure that the infrastructure keeps pace with the same."
Justice NV Ramana
As he concluded his address Justice Ramana observed that conferences were necessary, in the present age of globalisation and cross border investment. He observed,
“[The conference] acts as a bridge to bring Indian insolvency jurisprudence closer to the rest of the world and facilitate the development of a ‘Universal perspective’”
Justice NV Ramana
[Read the full address here]
