TMC MP asks govt to expunge Clause 7 from Insolvency and Bankruptcy Code

New Delhi: Trinamool Congress Lok Sabha member Kalyan Banerjee asked the government to expunge Clause 7 from the Insolvency and Bankruptcy Code Amendment Bill and demanded to set up the NCLAT circuit benches.

While discussing the Amendments to the Bill on Thursday, Banerjee said, "The Bill was brought to recover money from the corporate sector. Now, because of Clause 7, it is getting extended to the Central Government, State Governments as well as the local authorities. Every government, be it Central, State or local, is taking loans, but those are not for their gains. So extending the Act to the government sector will cause great difficulty to them, especially the local authorities. This does not come within the realm of the corporate at all."

Earlier this year, the Supreme Court directed the Centre to set up circuit benches for the National Company Law Appellate Tribunal (NCLAT) in the next six months. However, these have not been formed yet. Currently, NCLAT functions only out of the national capital.

The TMC MP also emphasised that the amendment is meant to create a behavioural change, particularly among promoters.

"Continued ownership is no longer guaranteed. The secured creditors having claims of Rs 45,559 crore has dragged way past the 270-day deadline as stakeholders through legal challenges. Now naturally this amendment comes into effect, the judgment will be diluted," Banerjee said.

He further lauded the Bill and said that "money has been recovered and now the recovery process is speeding up under the court committee of creditors, invested with the primary responsibility of financial restructuring, and since the financial creditors are in the business of money-lending, banks and FIs are best equipped to assess viability and feasibility of the business of the corporate debtor."