Partners Column May, 2017

Dear Friends, “The Insolvency and Bankruptcy Code, the National Company Law Tribunal, a new arbitration framework and a new IPR regime are all in place. New commercial courts have also been set up. These are just a few examples of the direction in which we are going. My Government is strongly committed to continue the reform of the Indian economy.” - Hon’ble Prime Minister, Shri Narendra Modi at the inauguration of the Vibrant Gujarat Global Summit, 2017 on 10th January, 2017” The government seems to be walking the talk. In the recent past, we have witnessed various initiatives and reforms undertaken by the NDA government to keep up to its commitments. The biggest challenge being faced to achieve the results of any initiative, was the lack of commitment at the top and the co-ordination among various departments concerned. This requirement seems to have been fairly understood by the Government and adequate steps are being taken to remove this bottleneck. We are witnessing committed efforts by the union government to reduce the gap in interdepartmental co-ordination. Few of the following initiatives will vouch for this:

• Ordinance was issued to amend the Banking Regulations Act to authorise the Central Government to given direction to Reserve Bank of India to initiate Insolvency process under newly enacted Insolvency and Bankruptcy Code, 2016. This ordinance will act as an enabler and mandate the banks suffering from stressed assets to resort to IBC.
• Immediately Central Government authorised Reserve Bank of India by way of notification to issue necessary directions as it may think fit to the banks suffering from Stressed Assets to initiate Insolvency Resolution process under IBC
• To combat the Black Money, as a part of Operation Black Money- 2, Registrar of Companies issued notices close to over 2 lakhs companies who have not filed their financial statements. It was believed that many of these companies are used as a vehicle to create money laundering activities;
• To reduce the use of paper -currency and encourage e-currency, availability of cash at ATMs has been reduced considerably and cash transactions beyond certain amounts are penalised.
• Towards legislative reforms RERA & IBC have been notified within the record time
• Few appellate Tribunals are consolidated for optimum utilisation

Overall, we are witnessing a commitment both in terms of action and implementation. I feel these will surely create an impact on the economy. Strike off Registration of Companies The Central Government prepares to strike off registration of over two lakhs companies across India. Registrar of Companies of concerned states have issued show cause notices to those companies who are either not doing business for a long time or have not filed the financial statements. This is a step towards tackling black money menace. Government suspects that most of these shell companies are used for money laundering activities.  The Companies who have received notices are required to reply satisfactorily to these notices, else RoC may proceed to strike off the names of the Companies from the Register of Companies and dissolve such companies. However, certain concerns are unanswered under this move viz, the status of the properties held by the Companies.  

• Economy & Stock Market:

  India is on its way to become a $6 Trillion economy. At present, everything looks stable and good on the macro front and if the earning in the following quarter improves, bourses will move to a higher level. Various forums are vouching that coming is the bull run and would be a Mother of all Bull Runs!! With the various moves at systematic level, hope it will fuel the growth and stock market will perform better.

• NCLT & NCLAT

Justice delayed is justice denied. The commercial courts viz NCLT and NCLAT are functioning with full pace. Surprising, even the NCLTs are functioning most of the times even during vacation period. Though these courts are new and the practises there at are slowly settling, the cases are being disposed off with a great pace.

• Insolvency & Bankruptcy

Insolvency and Bankruptcy Law is primarily aimed at consolidating the Insolvency Laws in India and to provide a timely revival / exit to the businesses so that optimum utilisation of limited resources are achieved. This is one of the biggest reforms brought by the Government of India next to GST. Though there are huge NPAs sitting in the bank books, many banks are keeping a wait and watch approach. In order to combat this and push to a resolution, Government has last week issued an Ordinance to amend the Banking Regulations Act to authorise the Reserve Bank of India to give directions to the Banks to initiate Corporate Insolvency Resolution Process under IBC, 2016. This is a most needed legislation and shows the commitment of government in achieving the objects enshrined in the preamble of the Code.

• Bahubali 2 – The Conclusion

South Indian movie Bahubali 2 – the Conclusion is creating record collections competing the Bollywood and Hollywood. We must appreciate the Director and his team to  bring in such a quality piece of move. @ R & A We are pleased to share that R & A has initiated Insolvency Practise in its vertical. I am happy to inform I have registered as a permanent Insolvency Professional along with one of our partner G. Raghu Babu. We are also happy to share that our firm’s growth story was figured on YourStory.com. With best regards CS R. Ramakrishna Gupta Partner www.rna-cs.com