The Central Government has moved an ordinance to amend the The Insolvency and Bankruptcy Code, 2016 with The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 and whereas the Hon’ble President, Shri Ram Nath Kovind is pleased to pass such ordinance with immediate effect having satisfied with circumstances to render it with immediate action even where the Parliament is not in session, in exercise of the power conferred by clause (1) of article 123 of The Constitution of India.
The said ordinance is notified on 05th June, 2020 and with such ordinance Section 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016 is suspended for a period of 6 months or for such further period, not exceeding one year from 25th March, 2020, which means no application shall be ever filed in for initiation of Corporate Insolvency resolution process of corporate debtor for the default occurring during the said period but it shall not be applicable for any defaults prior to 25th March, 2020. Such Ordinance is promulgated in the interest of business entities, who may have affected with disruption of normal business operations and faced economic distress, which was beyond their control due to Covid-19 Pandemic. This Ordinance is certainly a booster to business community and is a commendable proactive initiative by the Central Government but this ordinance may have to fulfil the condition as prescribed under Article 123 (2) (a), therefore things can be more clear after next Parliamentary session.
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