Lok Sabha Question No. 3536 (UNSTARRED), answered on 2022-08-08
Subject: Repayment of Loans under IBC
Ministry: CORPORATE AFFAIRS
Asked by: Sanjay Haribhau Jadhav, Omprakash Bhupalsinh alias Pawan Rajenimbalkar

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 3536 ANSWERED ON MONDAY THE 8 TH  AUGUST, 2022 SRAVANA 17, 1944 (SAKA)

## REPAYMENT OF LOANS UNDER IBC QUESTION

3536. SHRI SANJAY JADHAV: SHRI OMPRAKASH BHUPALSINH ALIAS PAWAN RAJENIMBALKAR:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether  the  Ministry  has  taken  cognizance  of  NCLTs  taking  note  of  the disproportionate amount paid to companies by borrowers using the Insolvency and Bankruptcy Code (IBC) in repayment of large loans and if so, the details thereof;
- (b) whether the Government has initiated investigation against the borrowers taking over the control of companies through family members or benamis by misusing the IBC and if so, the details thereof along with the number of persons found guilty in it and the action taken against them;
- (c) whether any complaint has been received by the Government or agencies regarding violation of law by defaulters or consultancy firms by misusing IBC; and
- (d) if so, the details thereof and the immediate action taken by the Government in this regard?

## ANSWER

MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF STATISTICS AND PROGRAMME IMPLEMENTATION; MINISTER OF STATE (INDEPENDENT CHARGE) OF THE  MINISTRY  OF  PLANNING;  AND  MINISTER  OF  STATE  IN  THE  MINISTRY  OF CORPORATE AFFAIRS

## [RAO INDERJIT SINGH]

- (a) :  No  Sir.  The  Ministry does not have any role in corporate insolvency resolution process (CIRP) of a corporate debtor (CD) under the provisions of the Insolvency and Bankruptcy Code, 2016 (the Code). CD undergoing CIRP is resolved through a resolution  plan  formulated  by  resolution  applicants  based  on  market  driven process. The Committee of Creditors (CoC) within its commercial wisdom assesses

the  feasibility  and  viability  of  the  resolution  plan  submitted  by  the  proposed resolution  applicant  which is then approved by the Adjudicating Authority (AA). Further, the realization by creditors through CIRP under the Code is dependent on quality assets at the time of its resolution.

- (b) : No such investigation has been initiated as section 29A of the Code enlists certain categories of undesirable persons which include related parties ineligible to submit a resolution plan during the CIRP. Regulation 36A(8) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 imposes a duty on Resolution Professional  (RP)  to  conduct  due  diligence  to  satisfy  themselves  that  the prospective resolution applicant is not ineligible under section 29A of the Code. The resolution plan approved by the CoC, within its commercial wisdom is then approved by AA under section 31 of the Code thereby ensuring that any undesirable persons  under  section  29A  are  unable  to  take  over  the  CD.  Likewise,  during liquidation proceedings of CD, the proviso to Section 35(1)(f) bars a liquidator from selling immovable and movable property to any person who is ineligible to be a resolution applicant.
- (c) and (d): The Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 enable stakeholders to file a grievance or a complaint against service providers under the IBC. Besides this, Insolvency and Bankruptcy  Board  of  India  (IBBI,  the  Regulator)  also  receives  complaints  and grievances  from  Centralized  Public  Grievance  Redress  and  Monitoring  System (CPGRAM), Prime Minister's Office, MCA and other authorities. Till 31st July, 2022, the IBBI had received 6231 such complaints and grievances, of which 6172 have been disposed after examination.

Further, as per information available, Directorate of Enforcement has received one complaint against an RP of one CIRP in which appropriate action under applicable law has been taken. Further, CBI has received one complaint regarding abuse of process  in  one  CIRP  matter  which  was  forwarded  to  the  Regulator  and  on examination, the Regulator has not found any actionable material.

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