Categories: Business

Plea against insolvency code ordinance HC seeks center reply

Photo: SOCIAL MEDIA

Plea against insolvency code ordinance

new Delhi. The Delhi High Court on Tuesday sought reply from the Central Government on a petition filed against the ordinance amending the Insolvency and Bankruptcy Code. Through this ordinance, action under IBC has been suspended for six months in the default cases arising on or after 25 March 2020. The government took this step in view of the corona virus epidemic. A bench of Chief Justice DN Patel and Justice Prateek Jalan asked the Law Ministry and the Insolvency and Bankruptcy Board of India to file a petition by 31 August. The petition has sought removal of the amendments made in the IBC law through an ordinance.

Advocate Amit Mahajan, appearing for the Central Government, opposing the petition, appearing on behalf of the Ministry, said that it is not hearable. Mahajan said that the petitioner, Rajiv Suri, had failed to explain what he had to do with the filing of this PIL. The IBC Amendment Ordinance states that action will not be taken against the borrower under the Insolvency and Bankruptcy Act for failing to pay the bank loan in regular installments from March 25 onwards. This exemption from action has been given for six months, which can be extended for one year.

The government implemented a nationwide lockdown from March 25 to control the spread of the corona virus epidemic. The IBC Act provides that any bank can seek action under the Insolvency Act against a company that does not repay its debt. There is a provision for insolvency action under the IBC, if there is a delay of one day from the scheduled time in repayment of the loan installment. However, the minimum amount has been fixed at Rs 1 crore, which was earlier kept at Rs 1 lakh. The government has amended the law to provide relief to borrowers in the current era of corona virus.

This post was published on July 28, 2020 3:47 pm

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