"Lenders cannot be left hanging for forever", the Supreme Court today observed and made it clear that the Insolvency and Bankruptcy Code (IBC) was brought to ensure that the dues of the companies, declared non-performing assets (NPAs), are recovered by the banks.
A bench of Justices R F Nariman and Indu Malhotra also asked the counsel for ArcelorMittal and NuMetal, involved in legal fight over bidding for Essar Steel, to provide a statement of the union minister in Parliament while piloting the amendment in the IBC providing the grounds for disqualification.
"The idea is to recover all dues of the banks," the bench said, adding that "the lenders cannot be left hanging for forever".
The bench said under the Code, a chance can be given to the bidders to revive a debt-ridden company keeping the interests of workers in mind.
The bench also made it clear that if the resolution plans fails to take off, then the NPA firm needed to be wound up to ensure that the banks get their dues.
Earlier, the cases used to remain pending for years before the Board for Industrial and Financial Reconstruction and the Appellate Authority for Industrial and Financial Reconstruction under the Sick Industrial Companies Act, it said.
Referring to procedures under the IBC, the bench said that Resolution Professional has to just see the procedural compliance has been made by the companies bidding for the debt-ridden firm.
The bench, amid flooding of cases in the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), has initiated a debate on ways to prevent delays in insolvency resolution of debt-ridden firms due to continued adjudication, saying all delays "must stop".
Earlier, it had said that the Code provided for time-bound disposal of the resolution process meant to revive a company, but delays and several rounds of intervention by authorities like NCLT and NCLAT defeated the purpose of the statute.
The bench was hearing the plea of steel and mining major ArcelorMittal challenging the order of the NCLAT asking it to deposit Rs 7,000 crore for being eligible to bid for Essar Steel.
(This story has not been edited by LiveLaw and is from PTI feed)