Centre Looking at Decriminalizing some IBC Offenses

The government has proposed the decriminalisation of several violations under the Insolvency and Bankruptcy Code (IBC) to further improve the ease of doing business and speed up corporate failure resolution, the Economic Times of India reported. The move is in line with the government's initiative to clean up the statute book to decriminalise minor offences and switch to monetary penalties. A similar process has been carried out in the laws for companies and limited liability partnerships. In a discussion paper floated last week, the ministry of corporate affairs proposed to empower National Company Law Tribunals (NCLTs) and Debt Recovery Tribunals (DRTs) with powers to penalise anyone who violates the IBC. These violations are currently handled by special courts through criminal proceedings. The proposed amendments will apply to violations falling under Section 235A of the IBC, which says criminal proceedings can be initiated against anyone over contraventions for which the code doesn't specify the penalty. Violations such as promoters not cooperating with liquidators or resolution professionals (RPs) filing frivolous cases don't have any penalty prescribed in the code. Legal experts hail move. These would fall under Section 235A, involving criminal prosecution. "In furtherance of the central government's policy to decriminalise offences in business law statutes wherever feasible, it is felt that Section 235A should be converted into a civil penalty," said the discussion paper. Legal experts welcomed such a move. Read more.