IBC 2016: Insolvency Code Flaws Exposed by Jet Airways Case
Why in the news
The Supreme Court’s Jet Airways judgment drew attention to weaknesses in India’s insolvency framework under the IBC, 2016.
About the IBC, 2016
- One law covering insolvency of individuals, partnership firms and corporations; often termed the exit law.
- Helps creditors recover dues, cuts bad loans, encourages entrepreneurship and credit, and maximises asset value.
- Created the IBBI, a committee of creditors (CoC) and adjudicating authorities; brought time-bound processes.
- Pillars: information utilities, insolvency professionals, adjudicating authority, IBBI.
Problems
| Issue | Detail |
|---|---|
| Overload | NCLT and NCLAT handle IBC and Companies Act cases together |
| Design | NCLT structure is dated for modern insolvency |
| Expertise | Members lack specialised knowledge, as the Supreme Court noted |
| Procedure | Compulsory hearings cause delay; little use of alternative dispute resolution |
| Accountability | Some members do not follow Supreme Court orders, hurting the judicial hierarchy |
Way forward
- Hybrid bench model and better infrastructure.
- Mandatory mediation before an insolvency application is filed.
- Training for tribunal members; tighter monitoring and compliance with higher-court orders.
Exam angle
- Regulator: IBBI. Year: 2016. Nickname: exit law.
- Adjudicating authority: NCLT (appeals to NCLAT).