CHENNAI: A PIL petition to quash an amendment made to the Insolvency and Bankruptcy Code (IBC), 2016, which disabled financiers from suing corporates before the National Company Law Tribunal (NCLT) for loan default, has been filed in the Madras High Court.
The Union Ministry of Law and Justice on June 5 issued an ordinance amending Section 10 of the IBC and inserted clause (A), which, among other things, provided that no application shall ever be filed for initiation of insolvency resolution against a corporate debtor for the default occurring during six months period.
Aggrieved, Gagan Bothra, a financier in Sowcarpet, moved the HC with the petition. He argued, the amendment was contrary to the Code. By doing so, the Centre was encouraging defaulters. Defending the Union government, Additional Solicitor General R Sankaranarayanan said, “The petitioner was espousing his personal motive.”
The bench before which the petition came up, opined that the ordinance was in the nature of making the very Act redundant. The purpose of the Code might get defeated, it added.
The matter was posted for further hearing after six weeks.