Insolvency

The latest round of tweaks to the bankruptcy codes come amid reports that the promoters or main shareholders of some of the 12 biggest loan defaulters named by the central bank were trying to bid for and reacquire their assets that were being put through a possible discounted sale or eventual liquidation.

By removing a potential ambiguity around bidder’s eligibility, the government hopes to blunt any political campaign in upcoming state elections that it was going soft on defaulters.

In June, these 12 companies were ordered by the Reserve Bank of India to be forced into bankruptcy courts as part of efforts to cut a record Rs10-trillion in toxic assets in the banking system that chokes fresh lending.

In all, more than 300 cases have been approved by the National Company Law Tribunal (NCLT) for resolution under the bankruptcy code.

But government officials said the latest changes should not be seen as a blanket ban on promoters of companies who have been on banks’ non-performing account (NPA) list.

But insolvency experts disagreed.

“There are legal challenges to the amendments. It bans bona fide defaulters. There could also be foreign investors, so how do we decide their qualification for acquiring stressed assets,” asked insolvency expert Sumant Batra.

The move was welcomed by promoters looking to pick up stressed assets at a discount.

“Happy to see the government’s intent in moving swiftly towards streamlining and bringing credibility [and] transparency in the IBC process,” tweeted Sajjan Jindal, chairman and managing director of the JSW Group.

“This will facilitate healthy competition in maximizing value to lenders which is in public interest.”

Among the 12 defaulters named by the central bank in June were Essar Steel Ltd, Bhushan Steel and Electrosteel. Jindal’s company has expressed interest in picking up stressed steel assets.

Companies facing insolvency called the latest changes unfair, saying it encourages monopoly.

“Banks and industry will be the ultimate losers as competition is decimated [by] the ordinance,” said an executive at a steel company undergoing insolvency resolution. He did not wish to be identified as the matter is before the NCLT.

A second steel company executive concurred. “The ordinance will lead to only few players in the steel sector leading to bigger monopolies,” he said. access to formal finance from banks, said Praveen Khandelwal, secretary general of industry body Confederation of All India Traders (CAIT).

“The rest of the sector is dependent on other sources such as private money lenders for finance. MSME sector is often called the back bone of the economy and what the sector needs now is a national policy to stimulate growth,” said Khandelwal.

Another official in the finance ministry said the process of rationalisation and simplification of GST would continue. This person, who also spoke on condition of anonymity, added that the rationalisation, though, would depend on the tax revenue coming in. Since the GST rates were originally fixed in May, the Council has been rationalising rates at every meeting. In the last meeting held in Guwahati on 10 November, it shifted 178 items including detergents, shampoo and chocolates from the 28% slab to 18%.

A third government official who asked not to be identified said that tax revenue across the three GST components (Central GST, Integrated GST, and State GST) were in line with estimates.

The initial revenue shock following the roll out of GST has eased in October with states steadily improving collections aided by relaxations in deadline, waiver of late payment fee and steps to encourage compliance. my statement and all of sudden I received this notice."

Another of those charged, JN Chauksey claimed “the names of medical college owners were included to divert the whole investigation and to save some high profile people."

Bhadoriya claimed he had not received any notice from the CBI and Ajay Goenka declined comment.

Listing mode details of the modus operandi involved in fraudulent medical admissions CBI said that once fake candidates (also called “engines” by the agency), usually bright medical college students, got through the examinations they would opt for admission to a private medical college. These private colleges have to reserve 42.5% of their seats for students who clear the examination. However, at some stage, these engines would pull out, and the private medical college would fill the seat with a candidate of its choice, sometimes, even someone who had not appeared in the examination.

In its previous set of charges, the 110th, dealing with admissions to medical colleges in 2013, CBI had detailed two other methods through which these frauds were perpetrated. The engines, would be paired with students who would be allowed to copy from them. In some cases, the answer sheets of candidates would be replaced with previously solved answer sheets.

In all, these private colleges had to fill 286 seats under state quota but they managed to admit ineligible candidates for 229 of these, CBI said.

“Minimum going rate for these seats was around ~50 lakh and it could upto more than ~1 crore in cases where parents were desperate to get their children admitted in medical colleges,” said a CBI official who spoke on the condition of anonymity.