Resolution process

Govt must address emerging gaps in the IBC

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"Prima facie, we are of the view that the impugned judgment does not correctly consider the legal position as has been laid down by a catena of judgments," remarked last week a Supreme Court Bench comprising Chief Justice of India B R Gavai and Justice Satish Chandra Sharma. It recalled the May 2 apex court judgment that declared the resolution plan for Bhushan Power & Steel Ltd (BPSL) illegal and ordered its liquidation. In the Supreme Court, something like this doesn't happen often, but this extraordinary situation needed extraordinary action. The May 2 judgment had caused considerable discomfort, not only among the direct stakeholders but also in policy circles. If a resolution plan passed by the National Company Law Tribunal (NCLT) can be declared illegal after several years and a corporate debtor can be ordered to be liquidated, it would seriously undermine the basis of the Insolvency and Bankruptcy Code (IBC), with an extraordinary long-term cost to the economy.