Skip to main content

Panel Suggests Higher Threshold for NCLT Cases

Backs decentralisation of power to RoCs & an in-house adjudication mechanism
The 14-member expert committee set up by the government to suggest decriminalisation of less-significant violations of the companies law has favoured an increase in the threshold for cases referred to the National Company Law Tribunals (NCLTs). It has also backed decentralisation of power to the registrar of companies (RoCs), regional directors and an in-house adjudication mechanism to free up the overburdened NCLT benches. That could help speed up the resolution of banks’ bad loans as the tribunals are central to the Insolvency and Bankruptcy Code (IBC) process. The changes can be implemented through modification of rules and won’t require amendments to law.
The tribunals currently hear violations involving fines of more than Rs.5 lakh. The decision on what the new limit should be has been left to the government. “The enhancement of this limit, along with simultaneous operation of in-house adjudication mechanism, will lead to de-clogging of routine matters pending with NCLT,” a senior government official said. The ministry of corporate affairs is also planning to refer routine matters such as conversions to privately held from publicly held companies either to the in-house mechanism or to RoCs and regional directors. “Referring routine matters such as conversion from public company to private company to NCLT needlessly burdens NCLT. Shifting jurisdiction of such matters to other judicial mechanisms available would further unburden the NCLT,” the official said, adding that the recommendations would be implemented soon by changing the rules.
The Companies Act has three broad categories of violations–minor, major and others. Minor violations are procedural in nature, covered under 18 sections, and settled through the in-house mechanism. Major violations largely involve fraud and invite both fines and imprisonment. Most violations fall in the ‘others’ category--more serious than minor violations but not involving fraud. The major and other violations are tried by special courts. Most of these relate to non-filing of financial statements and annual results. Around 15 of these violations, including filing-related ones, could also be shifted to the in-house mechanism. “This is a welcome relief for the already over-burdened NCLT benches,” said Anshul Jain, partner, Luthra & Luthra Law Offices. “Not only will it help in reducing a lot of workload from the NCLT benches but it will also help in making the whole process more efficient.”
Currently, about 9,000 cases are pending before NCLT benches in the country for insolvency and other routine matters. More than 5,000 cases are in Mumbai and about 2,100 are in New Delhi. The ministry is also working on the one-time resolution of cases related to deregistration, liquidation, restoration and relief to ease pressure on the NCLT benches and other special courts to free them up to handle more insolvency cases.
The Economic Times, 09th August 2018

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…