Supreme Court judge Justice Sanjay Kishan Kaul on Saturday credited India’s rise in the ‘Ease of Doing Business’ index to the introduction of the Insolvency and Bankruptcy Code (IBC), calling it a dynamic law that adapts to the “realities of the Indian society”.
“India’s rank has gone from 142 in 2014 to finally 63 in 2022 — due credit for which should be given to the IBC. In my opinion, IBC has also had a big role to play in India’s new ‘startup’ culture, by creating a conducive environment for budding entrepreneurs,” Justice Kaul said in his address as chief guest at the inaugural conference of the Insolvency Law Academy.
Justice Kaul said the IBC had shifted the balance of power from the promoters of a company to the creditors. The judge referred to changes proposed by the government in the IBC to benefit homebuyers and prevent them from being caught up in prolonged litigation with real estate developers. One of the proposals is that when an insolvency application is filed against a real estate developer having multiple projects, proceedings may be initiated only against a specific project that has defaulted. Hence, even if the company is legally under insolvency, the economic solution would be limited to the affected project.
“We must appreciate that these battles are not only about the colossal amounts of money involved in these matters, but about the dreams and hard-earned savings of these homebuyers,” Justice Kaul said.
The judge also highlighted the role of mediation, as a “confidential and voluntary process” in the insolvency process.
Besides reducing the burden on National Company Law Tribunal, National Company Law Appellate Tribunal and the courts, alternate dispute resolution mechanisms like mediation, especially in insolvency proceedings, would provide creditors like homebuyers speedy and cost-effective solutions.
“These are people who have invested their life savings to be able to cherish the dream of having their own house. In these cases, it becomes all the more urgent to ensure that the relief extended for homebuyers is not only effective but is also quick and least cumbersome,” Justice Kaul noted.