New Delhi: Union Minister Arun Jaitley, undergoing medical treatment in the US, on Friday welcomed the Supreme Court's decision upholding the constitutional vailidity of the Insolvency and Bankruptcy Code (IBC).
"The Supreme Court judgment upholding the validity of the IBC is a welcome decision. The bank defaulters cannot get away for long," the former Finance Minister, now Minister without portfolio, said in a tweet.
Earlier in the day, the Supreme Court upheld the IBC 2016 in its entirety and constitutional validity. The verdict upheld the Section 29A of the Code that bars promoters of a company facing insolvency proceedings from bidding to regain its control.
"The upholding of the provisions that bar the defaulting promoters from bidding is both ethical and proper - otherwise the defaulter will continue to manage the company with only the banks taking a haircut," Jaitley said.
The Supreme Court's verdict and Jaitley's remarks become significant in the backdrop of the tussle going on between ArcelorMittal and Essar Group to gain control over bankrupt Essar Steel, which is undergoing corporate insolvency proceedings since August 2017.
However, the apex court caused a setback to operational creditors that include suppliers, customers, employees and contractors.
The bench headed by Justice Rohinton F. Nariman refused the pleas to give operational creditors' parity with financial creditors while deciding a batch of petitions challenging the IBC.
The operational creditors wanted to be treated at par with secured creditors like banks and financial institution who have first claim over the money coming through the proceedings under the insolvency law.