The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (SICSPRA) shall come in force from December 01, 2016 vide notification issued in official gazette on November 25, 2016.
1) Amendment of SICSPRA before coming into force:
Section 252 of the Insolvency and Bankruptcy Code, 2016 (IBC), which came in to force w.e.f. November 01, 2016, provide that the SICSPRA shall be amended in the manner specified in the Eighth Schedule.
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.”.
2) Impacts of the developments:
Thus, only Section 4(b) of SICSPRA got replaced with new Section 4(b) as provided in Eighth Schedule of IBC, hereinabove. Further replacement of Section 4(b) the following changes took place w.e.f. 01.11.2016 in SICSPRA:
i) 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.
ii) 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.
iii) SICA shall stand repealed and the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) stand dissolved. (Section 3 of SICSPRA).
iv) Companies shall have option to file reference with NCLT within 180 days w.e.f. 01.12.2016 i.e. by 29.05.2017 in terms of provisions of IBC 2016. Accordingly, necessary rules are likely to be notified in next couple of days.
v) With the repeal of SICA, the immunities which were available to Companies under Section 22 of SICA, 1985 shall no longer be available.
vi) Companies shall have option to file reference with NCLT within 180 days w.e.f 01.12.2016 i.e. by 29.05.2016 in terms of provisions of IBC 2016. Accordingly, necessary rules are likely to be notified in next couple of days.
The article incorrectly mentions that a scheme sanctioned under Section 18 shall be rendered invalid pursuant to the amendments mentioned in the eight schedule of the Insolvency and Bankruptcy Code, 2016. Section 5 of the SICA Repeal Act is the section that deals with savings and provides as under;
5. Saving.—(1) The repeal by this Act of the repealed enactment shall not—
(a) affect any other enactment in which the repealed enactment has been applied, incorporated or
referred to;
(b) affect the previous operation of the repealed enactment or anything duly done or suffered
thereunder;
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(c) affect any right, privilege, obligation or liability acquired, accrued, or incurred under the
repealed enactment;
(d) affect any order made by the Board for sanction of the schemes;
(e) affect the validity, invalidity, effect or consequences of anything already done or suffered, or
any right, title, obligation or liability already acquired, accrued or incurred or any remedy or
proceeding in respect thereof or any release or discharge of or from any debt, penalty, obligation,
liability, claim or demand, or any indemnity already granted, or the proof of any past act or thing;
(f) affect any penalty, forfeiture or punishment incurred in respect of any offence committed
against the repealed enactment, affect any investigation, legal proceedings or remedy in respect of
any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any
such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such
privilege, forfeiture or punishment may be imposed as if this Act had not been passed;
(g) affect any principle or rule of law, or established jurisdiction, form or course of pleading,
practice or procedure, or existing usage, custom, privilege, restriction, exemption, office or
appointment, notwithstanding that the same respectively may have been in any manner affirmed or
recognised or derived by, in, or from, the repealed enactment;
(h) revive or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction,
exemption, usage, practice, procedure or other matter or thing not now existing or in force.
(2) Save as otherwise provided in section 4 and in sub-section (1) of this section, the mention of
particular matters in the said section and sub-section shall not be held to prejudice or affect the general
application of section 6 of the General Clauses Act, 1897 (10 of 1897), with regard to the effect of repeal
From the above, it is clear that any orders passed, schemes sanctioned and any rights and priviliges acquired under SICA shall continue to survive, notwithstanding the repeal.
Please correct me if I am wrong. Thank you