National Company Law Tribunal (NCLAT) Chairperson Justice Sudhansu Jyoti Mukhopadhaya has expressed the need for rules "to regulate the conduct of the Committee of Creditors (CoC) and its members". He further stressed on the need for more powers to be provided to the Insolvency and Bankruptcy Board of India (IBBI), which regulates the insolvency proceedings. This is due the fact that the number of insolvency cases has risen following action against banks' Non-Performing Assets (NPAs). These comments were made by the NCLAT Chairperson while delivering the first annual day lecture to commemorate the establishment of IBBI on October 1, 2016.
Justice Mukhopadhaya also complimented the IBBI for setting high standards of competence, further achieving significant milestones by upholding the principles and objectives of the Insolvency and Bankruptcy Code (IBC). He stated that freedom is necessary in order to start a business, to continue the said business and to stop if necessary. "This enables new firms to emerge continuously. They do business when they are efficient and vacate the space when they are no longer efficient. This ensures the most efficient use of resources and consequently optimum economic well being," he said.
Furthermore, Justice Mukhopadhaya also said that the old regimes such as Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) or Sick Industrial Companies Act (SICA) had given the powers in the hands of debtors, whereas IBC strengthens rights of creditors. "IBC has entrusted the ultimate control of the defaulting firm to a CoC to either resolve or liquidate the debtor's business," he stated.
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