Insolvency and Bankruptcy Code, 2016 (IBC)

Section 252 of the Insolvency and Bankruptcy Code, 2016 (IBC), which came in to force w.e.f. 01.11.2016, provide that The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 shall be amended in the manner specified in the Eighth Schedule.

Eighth Schedule of IBC provides for substitution of Section 4(b) of The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (SICSPRA)

Section 4(b) of SICSPRA provides as under:

(b) any appeal preferred to the Appellate Authority or any reference made to the Board or any inquiry pending before the Board or any other authority or any proceeding of whatever nature pending before the Appellate Authority or the Board immediately before the commencement of this Act shall stand abated:

Provided that a company:—
(i) in respect of which such appeal or reference or inquiry stand abated under this clause may make a reference under PART VIA of the Companies Act, 1956 (1 of 1956) within one hundred and eighty days from the commencement of this Act in accordance with the provisions of the Companies Act, 1956;
(ii) which had become a sick industrial company as defined in clause (46AA) of section 2 of the Companies Act, 1956 (1 of 1956), before the commencement of the Companies (Second Amendment) Act, 2002 (11 of 2003) may make a reference under PART VIA of the Companies Act, 1956 within one hundred and eighty days from the commencement of the Companies (Second Amendment) Act, 2002 or within sixty days of final adoption of accounts after such commencement, whichever is earlier, and reference so made shall be dealt with in accordance with the provisions of the Companies Act, 1956 (1 of 1956):

Provided further that no fee shall be payable for making such reference under PART VIA of the Companies Act, 1956 (1 of 1956) by a company whose appeal or reference or inquiry stand abated under this clause:

Provided also that any scheme sanctioned under sub-section (4) or any scheme under implementation under sub-section (12) of section 18 of the repealed enactment shall be deemed to be a scheme sanctioned or under implementation under section 424D of the Companies Act, 1956 (1 of 1956) and shall be dealt with in accordance with the provisions contained in PART VIA of that Act;

Eighth Schedule of IBC provide for new Section 4(b) of SICSPRA as under:

On such date as may be notified by the Central Government in this behalf, any appeal preferred to the Appellate Authority or any reference made or inquiry pending to or before the Board or any proceeding of whatever nature pending before the Appellate Authority or the Board under the Sick Industrial Companies (Special Provisions) Act,1985 (1 of 1986) shall stand abated:

Provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 within one hundred and eighty days from the commencement of the Insolvency and Bankruptcy Code, 2016 in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016:

Provided further that no fees shall be payable for making such reference under Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or inquiry stands abated under this clause.”.

Thus only Section 4(b) of SICSPRA got replaced with new Section 4(b) as provided in Eighth Schedule of IBC. Further vide aforesaid replacement of Section 4(b) the following changes took place w.e.f. 01.11.2016 in SICSPRA:

Related Topic:
What is difference in Repeal and amendment

1. Central Government given power to specify date from which any appeal, reference, inquiry or proceedings under The Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) shall stand abated.
2. Reference to Part VIA of the Companies Act, 1956 regarding filing of appeal within 180 days of commencement of SICSPRA now modified providing for filing of reference on abatement with NCLT within 180 days of commencement of IBC.
3. Now even scheme sanctioned under Section 18(12) of SICA and under implementation shall not remain valid.

Section 3 of SICSPRA, which became Act w.e.f. 01.01.2004, provides that SICA is hereby repealed and the Appellate Authority and the Board stand dissolved. However Section 1(2) provides that It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Further as Section 4(b) of SICSPRA stands amended w.e.f. 01.11.2016, empowering the Central Government to specify date from which all appeals, references, inquiries and proceedings under SICA shall stand abated.

Related Topic:
Documents to be filed by Insolvency Professionals under IBC Law.

And now notification has been issued by Central Government on 28.11.2016 by which SICA shall repeal w.e.f 01.12.2016 and BIFR/AAIFR shall stand dissolved. However such companies shall have option to file reference with NCLT within 180 days w.e.f 01.12.2016 ie. By 29.05.2016 in terms of provisions of IBC 2016. Accordingly necessary rules are likely to be notified in next couple of days.