As many as 6027 companies were under liquidation as of March 31, 2004. In India it takes an average of 10 years to complete the insolvency process. The relevant provision in the Companies Act, 1956 dealing with liquidation and winding up of companies was amended in 2002 to provide for a time-bound process for winding up of companies. But because of a legal challenge to this enactment, the relevant provisions of the said Amendment Act have not yet been notified. Hence, the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) which were intended to be set up under the Act to deal with matters relating to the liquidation and winding up of companies have not been constituted. Their jurisdiction has to be transferred from the High Courts. A speedy settlement of valid claim would be possible with the speedier winding up of companies as envisaged under the Companies (Second Amendment) Act, 2002.
This statement was made by the Minister of Company Affairs, Shri Prem Chand Gupta, in the Lok Sabha today.
SMK/ls
(Release ID :10666)