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Move to set up law tribunal welcomed

Our Bureau

NEW DELHI, Aug. 18

THE apex chambers of commerce and industry have welcomed the Cabinet's decision to abolish the Board for Industrial and Financial Reconstruction (BIFR) and replace it by a National Company Law Tribunal (NCLT).

In a statement, the Federation of Indian Chambers of Commerce and Industry (FICCI) said this was a `turning point' in the economic reforms process, which had, of late, somewhat slowed down. The chamber has expressed confidence that the Government will no w go ahead `full steam' with the much needed `second generation' reforms.

The Confederation of Indian Industry (CII), on its part, welcomed the provisions in the Companies (Amendment) Bill 2001 relating to insolvency laws.

It said the setting up of NCLT and repealing SICA should help in speeding up the bankruptcy procedure. The chamber is of the view that this was critical for tackling the NPA problem in the banking system.

However, CII has called for the need to review the provision which seeks to establish an insolvency fund where companies, with a paid-up capital of over Rs 10 lakh would have to contribute a percentage of their turnover for the rehabilitation of sick com panies and protection of assets.

It said this move would essentially penalise the companies which run efficiently to contribute to the rehabilitation of sick companies.

The Associated Chambers of Commerce and Industry (Assocham), too, welcomed the decision to set up the NCLT, saying that the procedural delays involved in the BIFR route restricted initiation of financial restructuring or managerial improvement. According to the chamber President, Mr Raghu Mody, the BIFR has lost its relevance and cannot help in either addressing industrial sickness or checking incipient sickness. He hoped that the new body would have sufficient expertise and `teeth', which BIFR lacked, to nip emerging signs of sickness in the bud.