The IBC code is one of the most radical and progressive legislation of our times. The necessity of this code for the Insolvency Process arose because it was experienced by the government that there was an absence of single law dealing with various types of insolvencies such as the insolvency resolution process of corporate debtors, insolvency of individuals, etc. There were different legislation such as individual insolvencies managed to go to civil courts under the provincial insolvency act or the presidency insolvency act whereas in the case of winding up of companies one had to come to the high court or district court. BFR was authorized to educate the issues thereunder. Now these issues led to several complications and instead of giving the early solutions for insolvency cases the process got inordinately delayed the money, a huge amount of loans given by lenders got struck, and an increasing need was felt to have efficient legislation for dealing with the insolvency cases and the result was the enactment of IBC code. After the Insolvency and Bankruptcy Code was enacted between the period 2017 to 2020, four amendment acts were enacted whereby certain important provisions got incorporated into the IBC code and certain additional provisions were also incorporated.
Also, several judicial pronouncements clarified several issues under the act for interpretation by the insolvency lawyers in India. This also led to the evolution of IBC. In effect, the insolvency and bankruptcy code evolved largely due to this for amendment acts and the judicial pronouncements of the Supreme Court from time to time and NCLAT.
Important aspects of this amendment resulted in the incorporation of certain important sections and amendment of certain sections and the legal issues or the concepts which got cleared by the judicial pronouncements from time to time. First among these provisions which got incorporated into the insolvency and bankruptcy code by the amendment act is section 29(a) which was incorporated by the first amendment act of 2017. This act became effective on the 23rd of November 2017. This act is one of the most important sections which has given a lot of significance to the code. So after the code came into effect the experience showed that many undeserving persons were responsible for the downfall of the corporate debtor. The persons who are instrumental in borrowing huge amounts of loans from institutional creditors and then dumping them through the corporate debtors themselves by the backdoor method tried to take back the reins of such corporate debtors by proposing to be resolution applicants. To arrest this trend need was felt to bring in legislation and to bring in an amendment that should prevent this wrongdoer from taking back the reins of the corporate debtors.
Therefore section 29(a) and section 25(2)(h) got incorporated in the court. Section 25(h) got before its amendment as it stood that is 25(2) did not have any specific qualifications for becoming a resolution applicant who could submit the resolution plan. Anybody could have submitted the resolution plan and the resolution professional (RP) did not have much choice to say that a is ineligible or b is ineligible because of a certain factor or certain reasons enumerated in the code itself. So it became free for everyone whereas wrongdoers started to put their foot in and they were trying to seek an entry through the back door in the resolution process. Now 25(2)(h) came out with the eligibility criteria which went on to state that a resolution applicant would ensure that the resolution plan confirms the requirement prescribed by the committee of creditors depending upon the exigencies nature of business etc., of the corporate debtor.
In contrast to this section 29(a) came out with the shot of ineligibilities which would disentitle a person from becoming a resolution applicant. This section curiously opens the words of any person acting jointly in concert with other persons. This means an individual shall not be eligible to submit the determination plan if such individual or any other person functioning together or in concert with such individual then it takes off down to set out the numerous ineligibilities from clauses(a) to (j) of section 29(a). Effectively it says either a person himself who proposes to be a resolution applicant and comes to the resolution plan or any person jointly with that person or in concert with that person if he or she suffers from any disabilities then also the person who wanted to become a resolution applicant would dissent.
Conclusion
Now the inabilities set in there are if a person is discharged insolvent or a person is a willful defaulter as provided in accordance with the norms set in by the reserve bank of India or at the time of submission of resolution plan has an account which has become NPA or is a promoter director etc., of the corporate data which has become NPA and remained NPA for the period of more than one year.
