The
Indian Industries Association (IIA) is an apex representative body of Micro, Small and Medium Enterprises (MSME) that was established in 1985. It is a body responsible for enabling the environment for developing MSMEs in the current competitive industrial scenario.
A recent notification issued in the wake of the pandemic wherein the government set the minimum default requirement value for triggering insolvency at Rs.1 crore was set to be applicable from
24th March, 2020.
Section 4 of
Insolvency and Bankruptcy Code, 2016 stated that the prima facie value to file any application under the code would be Rs. 1 Lakh and after the notification, the proviso is ad-verbatim produced below reads,
"Provided that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.”
The step has been considered as a relief factor for MSMEs in this time of disruption caused by the pandemic. One thing to note is that, in the nascent stage, the amount of Rupees One Lakh previously allowed the creditors the liberty to misuse the process of the code being the smaller amount it was in the vantage of a commercial point. As reported on
3rd April, 2020, IIA chapter of Uttar Pradesh has raised concern over the amendment in the Insolvency and Bankruptcy Code of 2016. The association has written a letter to PM Narendra Modi, MSME Minister Nitin Gadkari, RBI Governor Shaktkantha Das and SS & DC MSME. The letter said,
"The Finance Ministry has announced the amendment of section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), by which one crore rupees is the minimum amount of default instead of rupees one lakh for filing cases in NCLT. The Finance Ministry has taken the plea that this has been done so that the MSMEs are protected. This amendment has been very promptly issued [F. No. 30/9/2020-Insolvency) on 24th March, 2020 on the same date of announcement." The amendment of minimum monetary limit of default from Rs. 1 lakh to Rs. 1 crore for protecting the establishments under MSMEs is abhorring, IIA further elaborated.
"This statement of FM and amendment has taken the MSMEs by surprise as we had never raised the issue. It seems the amendment has been basically done to please the large industries so that MSME cannot file cases in NCLT. MSME now shall have to wait till the debt becomes One Crore instead of One Lakh," said IIA. They have further demanded that the amendment be annulled immediately.
Supreme Court Transfers Pleas Challenging IBC Provisions on Personal Insolvency to Itself
Judiciary
Oct 30, 2020
Richa Shah
(
Editor: Ekta Joshi
)
5 Shares
On Thursday (29th October 2020), the Supreme Court transferred all petitions, pending in the various high court of the country, challenging provisions of personal insolvency under the Insolvency and Bankruptcy Code (IBC) to itself. No more writ petitions on this issue will be entertained by the High courts as per the directions of the Supreme Court.This order was passed by a bench of three judges: Justice L Nageswara, Justices Hemant Gupta, and Justice Ajay Rastogi. They added that all...
Supreme Court Reserves Order on IBBI's Plea Seeking Transfer of HC Cases Challenging Personal Guarantors' Insolvency
Judiciary
Oct 30, 2020
Jishu
(
Editor: Ekta Joshi
)
5 Shares
The Supreme court on Thursday (October 29,2020) transferred all petitions, pending in various high courts of the country, challenging provisions of personal insolvency under the Insolvency and Bankruptcy Code (IBC) to itself. High courts have been directed not to entertain any more writ petitions on this issue.The order was passed by an apex court bench headed by Justice L Nageswara. The three-judge bench, also comprising Justices Hemant Gupta and Ajay Rastogi, added that all interim directions...
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