The snail’s pace of setting up National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), even as several top posts in the Board for Industrial and Financial Reconstruction (BIFR) remain vacant, caused a huge embarrassment to the Modi Administration in Delhi High Court on Friday.
These two tribunals should have been set up hard on the heels of Sick Industrial Companies Repeal Act 2003. But on account of massive lobbying by owners of sick companies with the UPA government, the two tribunals never saw the light of the day.
Even though the Modi administration can’t be faulted for what the UPA did, its failure to fulfill its statutory obligation of keeping the BIFR suitably staffed has earned it the odium of the HC.
May it be recalled that a month or so back, the Union Cabinet decided to do away with the Board for Industrial and Financial Reconstruction that is to be replaced by NCLT and NCLAT. Still the move to establish the two tribunals has not taken off.
The Delhi High Court, in a 10-page judgment on Friday, scolded the central government for not filling up the vacancies of members of the Board for Industrial and Financial Reconstruction (BIFR) within 45 days. It also directed the government that not only the board vacancies be filled up, but also other vacancies of the organization in the next one month.
Off record, officials point out that BIFR has become a safe haven for promoters of sick companies, who use this route to escape payment of debts of banks and siphon off funds.
But no one has a cogent answer as to how it helps banks to recover their loans by keeping top posts of BIFR vacant.