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Eradi panel for changes in insolvency law

Our Bureau

NEW DELHI, Sept. 2

THE Justice V. Balakrishna Eradi Committee, which was set up to suggest changes in the ``Insolvency Law'' submitted its report to the Prime Minister, Mr. Atal Bihari Vajpayee.

The committee is understood to have suggested the setting up of a separate National Tribunal to deal with sickness of companies which leads to insolvency. The committee has also focussed on an expeditious process of winding up and preservation of assets of the companies. Further, according to the report, a company shall be deemed to be insolvent if it defaults in payment of loans.

The committee is said to have also suggested having professional liquidators -- chartered accountants and lawyers -- apart from the official liquidators.

The panel of professional liquidators is to be drawn up by the Government on the recommendations of the Tribunal. Further, the panel will have a time-bound programme not exceeding more than two years.

It is understood that the committee had also focussed on the problems of the workforce of such companies. The liabilities of the workers would run pari passu like the liabilities of secured creditors.

The committee had considered all aspects of corporate insolvency and worked on elimination of delays. The committee had also looked into the existing Sick Industrial Companies Act (SICA).

PTI reports: Recommending repeal of SICA and amendments to the Companies Act, 1956 the committee said that Article 323B of the Constitution would have to be amended to vest the jurisdiction and powers of the High Courts with the National Tribunal, an off icial release said.

The committee said the Tribunal would have Benches at High Courts and winding up proceedings pending in the High Courts under the Companies Act should be transferred to the Tribunal for expeditious disposal of cases, the release said.