BIFR to be dissolved shortly
By Our Corporate Bureau | 12 Dec 2003
New Delhi: The process of dissolving the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) took a major step forward yesterday, with the Lok Sabha giving its nod for the Sick Industrial Companies (Special Provisions) (SICA) Repeal Bill. The Bill envisaged dissolution of BIFR and AAIFR.
SICA was enacted in 1985 to tackle the problem of industrial sickness. However, in view of the problems noticed in the BIFR mechanism, the government had been considering various alternatives, including repealing SICA and enacting a separate legislation, to address the problems of industrial sickness more effectively.
The Bill outlined some of the deficiencies noticed in the operation of SICA as excessive protection to sick industries under Section 22 of SICA, providing for automatic stay of all proceedings; necessity of consensus amongst secured creditors before finalising the scheme; lack of monitoring of sanctioned revival scheme; and delays in winding up.
In order to overcome the deficiencies in SICA, the government came out with amendments to the Companies Act, 1956, establishing the National Company Law Tribunal.
