Open Access Research Article
EVALUATING TIME BOUND INSOLVENCY RESOLUTION UNDER THE INSOLVENCY AND BANKRUPTCY CODE 2016
Abstract
ABSTRACT
The Indian legal environment for
distressed assets is fragmented due to ineffective legislation leading to bad
loans, and therefore has always been quite complicated. However, the
introduction of the Insolvency and Bankruptcy Code (IBC) in 2016 was a major
step towards a creditor control model that tackled value erosion due to system
delays longer than expected. As there have been delays in previous attempts to
introduce similar legislation, the introduction of a completely new creditor
control model will be dependent on strict, no-excuse deadlines for the
completion of corporate insolvency resolution processes. In order to keep the
corporate debtor solvent, the corporate insolvency resolution process should be
finished within 330 days.
The Indian court system is witnessing
a huge gap between the legal timelines set by the statutory provisions for
completing the cases and what is actually happening in the courts. The 2019
Amendment was put in place to allow longer periods for disposing of properties
by extending the deadline for the disposal of a property to 330 days in order
to stop the property from appreciating any further. However, the 330-day
deadline is still being missed as a matter of routine in the ordinary course of
business due to the extremely rigid nature of the statutory requirement.
Various courts have issued significant decisions that have altered this firm
requirement including the Supreme Court of India's judgment in Essar Steel Ltd.
v. Satish Kumar Gupta. The Supreme Court ruled that the 330-day deadline is
normally enforceable as a strict rule, however, the Court also ruled that this
requirement may be modified under exceptional circumstances to achieve justice.
This paper brings up the concept of a
litigation trap. Therefore, it runs counter to the very purpose of the Code.
Among the reasons for delay are an overburdened National Company Law Tribunal
(NCLT), the litigation on Section 29A eligibility as well as the influence of
the unforeseen international situations. Besides, the pandemic-induced halting
of filing new cases under Section 10A of the Code has caused inconsistent
credit flows and a growing backlog of unprocessed cases. This means that the
330-day period is basically a target to be reached rather than a firm legal
requirement.
Now, defaulting promoters are more
inclined to be afraid of losing control. Nevertheless, such a feeling does not
always accelerate the process. Both lawmakers and practitioners should cease
changing the law all the time and instead concentrate on developing a robust
institutional framework. Such a framework will help IBC, not just as a means of
pressurizing people, but as a tool for uncovering the truth. In fact, the road
to efficiency lies in an excellent system that will offer the chance for
effective implementation, not by enforcing regulations that require efficiency.
Published Paper
Author Details
Authors: EESTAA PATNAIK
Registration ID: 1013148 | Published Paper ID: IJLRA13148
Year: Sep-2026 | Volume: 3 | Issue: 6
Approved ISSN: 2582-6433 | Country: Delhi, India
Page No.: 725-736
Article Information
EVALUATING TIME BOUND INSOLVENCY RESOLUTION UNDER THE INSOLVENCY AND BANKRUPTCY CODE 2016
Authors: EESTAA PATNAIK
- Journal IJLRA
- ISSN 2582-6433
- Volume 3
- Issue 6
About Journal
International Journal for Legal Research and Analysis
- AbbreviationIJLRA
- ISSN2582-6433
- AccessOpen Access
- LicenseCC 4.0
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