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Bills on SICA repeal, co tribunal tabled

Our Bureau

NEW DELHI, Aug. 30

THE Government today introduced separate Bills in the Lok Sabha seeking to set up the National Company Law Tribunal (NCLT) and to simultaneously repeal the Sick Industrial Companies (Special Provisions) Act (SICA), 1985, which would in effect abolish the Board for Industrial and Financial Reconstruction (BIFR).

The two proposed legislations would also result in the winding up of the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and the Company Law Board (CLB). The powers and jurisdiction currently being exercised by various bodies -- C LB, BIFR, AAIFR as well as the High Courts in respect to company matter -- will now be consolidated under the tribunal.

While the Bill proposing the setting up of NCLT, the Companies (Amendment) Bill, 2001, was moved by the Union Minister for Law, Justice and Company Affairs, Mr Arun Jaitley, the Bill to repeal SICA was introduced by the Finance Minister, Mr Yashwant Sinh a.

The Companies Bill also provides the setting up of a National Company Law Appellate Tribunal (NCLAT) to which appeals from the NCLT would be referred. Any further appeal would be directed to the Supreme Court within 60 days of the order of the appellate tribunal.

The NCLT structure would deal with the revival, rehabilitation and winding up of all sick companies including insurance companies, but would exclude banking companies under the Banking Regulation Act (BRA). Small-scale industries and public sector undert akings would be taken up on specific reference.

The new tribunal is expected to lead to a faster, time-bound mechanism for dealing with the problem of industrial sickness. Unlike the earlier mechanism under the BIFR, the new structure would not provide any relief to companies on ongoing litigation, wh ile the tribunal would also be armed with powers of contempt to ensure compliance of its directives.

The new law also expands the definition of Operating Agencies (OA) that would assist the tribunal in finalising the revival schemes. Thus, besides banks and financial institutions, the NCLT can appoint any group of experts, State-level institutions or `` any other person'' as OAs.

Among the major improvement over the earlier legislative provisions under SICA is that the new system would not require a consensus to be evolved among all parties for any scheme to be sanctioned.

The tribunal would also have powers to call for periodic update on the progress of the implementation of the scheme as part of the legislation.

The NCLT, which would operate through a maximum of 10 special benches, is expected to compress the winding up process to about two years. During the period, companies would not be allowed to resort to any stripping of their assets.

It also envisages creation of a Rehabilitation and Revival Fund which would, among other things, be used for payment of workmen's dues and protection of assets.

The fund will be created through the levy of a cess on turnover or gross receipts of companies at a rate not less than 0.005 per cent and not more than 0.1 per cent. The cess shall be payable within three months from the close of every financial year. Th e proceeds of the cess shall be first credited to the Consolidated Fund of India.