[sbinews] SICA Repeal

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Mon, 22 Dec 2003 21:00:49 +0500

Lok Sabha clears Sick Cos Repeal Bill

NEW DELHI : The Lok Sabha on Thursday passed the Sick Industrial Companies 
(Special Provisions) Repeal Bill, ’03, paving the way for the government to 
implement the amendments to the Companies Act, 1956, pertaining to insolvency 
of companies, that had been cleared by the Parliament during the ’02 winter 

The repeal of the Act will result in the scrapping of the Board for Industrial 
and Financial Reconstruction and the Appellate Authority for Industrial and 
Financial Reconstruction (AAIFR), and in the creation of National Company Law 
Tribunal and National Company Law Appellate Tribunal as envisaged in the 
Companies (Second Amendment) Bill ’02. 

The department of company affairs (DCA) has already set up a search panel to 
identify the members to be nominated to the tribunal. The NCLT is to be set up 
with a maximum of 62 members and a president, who is qualified to be a judge. 
The NCLT will subsume the jurisdiction of the Company Law Board and the BIFR. 
The jurisdiction of High Courts to approve mergers and acquisitions of 
companies would also be transferred to the new tribunal. The NCLT shall 
comprise of judicial and technical members. 

Replying to a debate on the SICA Repeal Bill, finance minister Jaswant Singh 
said that the move would help in the expeditious rehabilitation of sick 
companies, which was not possible under the BIFR regime. 

Cases pending with the BIFR were those where 100% net worth of the companies 
had eroded, Mr Singh said, adding that under the Companies Act, companies with 
erosion of 50% of its net worth would automatically be referred to the 

The company concerned and its board of directors would then have to furnish 
information and the scheme for rehabilitation. 

The minister informed the House that the Companies Act has special provisions 
to protect workers interests. 

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