Coming back to life: Government finally makes appointments at BIFR, AAIFR

Indian companies deemed to be “sick” may finally have something to cheer about: the Board of Industrial and Financial Reconstruction, and the appellate authority AAIFR, are set to resume functioning soon..It is a development that has been months in the making..Since October last year, when SC Sinha’s tenure as a BIFR Member came to an end, the Board has not heard a single matter. Following Sinha’s retirement, the Board was helmed by Acting Chairman JP Dua. But without sufficient quorum, no hearings could be held. On January 22 this year, Dua retired..Three months later, things are finally looking up and this may have to do with a PIL filed in the Delhi High Court..In 2014, Delhi-based Purti Marwaha Gupta had filed a PIL in the Delhi High Court on the functioning of the BIFR, highlighting the pressing need to fill up vacancies..The government, represented by ASG Sanjay Jain, contended that the BIFR would be replaced by the National Company Law Tribunal, and the appellate tribunal. Hence, there was little incentive to fill up the vacant posts..Chief Justice Rohini and RS Endlaw J. disagreed. In November last year, the High Court directed the government to assess the vacancies and go ahead with the necessary appointments..But it was another matter before the Delhi High Court that finally pushed the government into making the appointments. On April 6, 2016 Justices Pradeep Nandrajog and Mukta Gupta noted that the vacancies at AAIFR and BIFR had not been filled up. The court was hearing a matter relating to the Baroda Rayon Corporation (W.P.(C) 2940/2016), and asked the Finance Secretary to be personally present in court on the next date of hearing that is April 18, 2016..On April 18, ASG Sanjay Jain provided copies of two notifications issued on that very day..These notifications have given Shashank Saksena, Economic Adviser at the Department of Financial Services, additional charge as Member at the BIFR. He will now join Ashish Kalra, Presiding Officer at DRT III, who was given additional charge at BIFR in March this year..A similar story can be told about the appellate authority, AAIFR..Maharaj Sinha, a former judge of the Calcutta High Court, was appointed as Chairman in March 2013. Even back then, the notification stated that the appointment would last till the age of 65 years or “the abolition of the AAIFR”, whichever is earlier..In August last year, Sinha retired, leaving RC Mishra as the Acting Chairman and GK Chaturvedi, as the Member. In January this year, Chaturvedi retired meaning that the appellate authority only has an Acting Chairman at the helm..The April 18 notification has given Girish Shankar, Secretary at the Department of Heavy Industry, additional charge as member of the appellate authority..But is this enough?.Alok Dhir, founder of Dhir & Dhir Associates, says that the non-functioning of the Board has caused a number of problems, especially where the revival schemes are in the final stages. Even though some companies have opted to approach the High Court under Article 226 and 227 writ jurisdiction but this is not an ideal solution, says Dhir..The larger issue, says Dhir, centres around the Insolvency and Bankruptcy Bill of 2015, which may be passed soon. Should the Bill, a single comprehensive legislation, become an Act, the BIFR shall be made redundant. Under the new law, introduced by Finance Minster Arun Jaitley, all matters relating to company rescue shall shift to the National Company Law Tribunal and the appellate tribunal..Dhir also says that the new appointments may not go a long way in reducing pendency; four thousand matters are currently pending before the BIFR..“Both the new Members have been given additional charge. To what extent two Members can reduce pendency remains to be seen.”.As to when these Boards will start functioning, some information can be gleaned from a statement made by ASG Sanjay Jain regarding AAIFR appointments. On February 26 this year, Jain told the Delhi High Court that “all possible steps” were being taken to enable the AAIFR to start functioning in four weeks..The government is a few weeks behind schedule; Dhir says that the AAIFR should start functioning early next month.