CLB likely to replace BIFR

Sick industrial units may no longer have to wait for decades for the authorities to decide whether they should be revived or liquidated. To fast-track the determination of industrial sickness of enterprises, the government is planning to expand the scope of the Company Law Board (CLB) to assess whether a sick unit should be liquidated or revived. At present, this procedure is carried out by the Board for Industrial and Financial Reconstruction (BIFR), which would be wound up. The corporate affairs ministry is working on a proposal to vest CLB with this authority. 

While the original idea for the ministry was to close both BIFR and CLB to make way for a multi-purpose forum called the National Company Law Tribunal (NCLT), legal complexities have come in the way. This has forced the government to seek alternative routes to speed up the process of reviving sick units. Officials attribute the ministry’s proposal to pass on BIFR’s powers to CLB on the government’s urgency to settle large number of cases pertaining to industrial sickness.

Officials say even though both BIFR and CLB would eventually be wound up, CLB is considered to be better poised to fast dispose of such cases. For this reason, the government is also working on a scheme to improve CLB’s administrative setup. While the BIFR is regulated by provisions of the Sick Industrial Companies Act, (Sica) the CLB is governed by the provisions of the Companies Act.

The new company law bill, expected to be placed in Parliament this monsoon session, would propose strengthening the powers of CLB as the government fears that setting up of NCLT and its appellate tribunal would still take some time. In the present scenario, the government sends the names of suspected sick companies to BIFR to decide as to whether they could be financially revived or liquidated. The BIFR, known for its procedural delays, takes years for a decision. The framework is time-consuming as well as inefficient, sources said.