The sick industrial companies special provisions act. When the sick industrial companies special provisions repeal act was passed in 2003, the idea was to do away with the bifr and let the companies act subsume powers of restructuring. Status of sick industrial central public sector enterprises registered with board for industrial and financial reconstruction in india 2003 to 2005. The companies act provides for three types of winding up. Sick industrial companies special provisions repeal act, 2003 to avoid any further litigation in insolvency proceedings, the code will have an overriding effect over all other laws. Originally, separate provisions were inserted in companies act, 1956 sections 424a to 424l through the companies second amendment act, 2002 to deal with the revival and rehabilitation of sick industrial companies.
Sica was to be repealed through sick industrial companies special provisions repeal act 2003 not made. Nclt and nclat were to replace bifr and aaifr through the second amendment act. The sick industrial companies special provisions act, 1985 sica was enacted. An overview sankalp jain introduction sick industrial unit is defined as a unit or a company having been in existence for not less than five years which is found at the end of any financial year to have incurred accumulated losses equal to or exceeding its entire net worth. Sick industrial companies special provisions repeal act. The sick industrial companies special provisions act, 1985 sica, which presently deals with the revival and rehabilitation of companies, was repealed by passage of the sick industrial companies special provisions repeal bill, 2001 by the parliament. The sick industrial companies act, 1985, indian bare acts at, a website for indian laws and bareacts, legal advice and law documents in india. The most important piece of legislation dealing with industrial sickness was the sick industrial companies special provisions act,1985 sica. The sick industrial companies special provisions repeal act, 2003 replaced sica and sought to dissolve the bifr and the appellate authority for industrial and financial reconstruction.
This chapter may and will replace the provisions of sick industrial companies special provisions act, 1985. In 2003, the sick industrial companies special provisions repeal act was enacted which gave the central government the power to repeal sica, and dissolve the bifr. Although it aims to provide comprehensive provisions for the revival and rehabilitation. The sick industrial companies act sica was a key piece of legislation dealing with the issue of rampant industrial sickness in india. To repeal the sick insdustrial companies special provisions act, 1985. The board for industrial and financial reconstruction bifr was formed under the sica to determine the sickness of such industrial companies and to. Introduction sick industrial companies special provisions act, 1985, as indicated by its title and preamble, was a special legislation enacted in public interest with the twin objects of securing the timely detection of sick and potentially sick companies speedy determination and enforcement of remedial measures i. Industrial companies special provisions repeal act, 2003 repeal act. Sick industrial companies act sica definition investopedia. The sick industrial companies special provisions repeal act, 2003 repealed sica. Sica was repealed and replaced by the sick industrial companies special provisions repeal act of 2003, which diluted some sica provisions and plugged certain loopholes. But ever since, there have been several rounds of changes and counter changes, which finally led to the enactment of the companies act of 20. Board for industrial and financial reconstruction wikipedia. Corporate i nsolvency resolution process under the.
The repeal act provides for the repeal of the sick industrial companies special provisions act, 1985 sica and related matters. Where on a demand by the secured creditors of a company representing fifty percent or more. The sick industrial companies special provisions repeal act, 2003 replaced sica and sought to dissolve the bifr and the appellate authority for industrial and financial reconstruction aaifr, replacing them by the nclt and nclat. Repeal of sick industrial companies special provisions. In accordance with the policy decision of the government of india, the sick industrial companies special provisions act, 1985 was passed by the parliament which received the assent of the president of india on january 8, 1986. Sick industrial companies special provisions act, 1985. The repeal act provides for repeal of the sick industrial companies special provisions act, 1985 sica and related matters. The act provided for setting up of a quasijudicial body designated as the board for industrial and financial reconstruction bifr to deal effectively with the problem of sick industrial companies. Section 4 in the sick industrial companies special. The sick industrial companies special provisions repeal act, 2003 sicspra shall come in force from december 01, 2016 vide notification. Eighth schedule amendment to the sick industrial companies special provisions repeal act, 2003. The sick industrial companies special provisions act, 1985 sica was enacted to make special provisions for the timely detection of sick and potentially sick companies owning industrial undertakings. Sick industrial companies special provisions repeal act, 2003. The provisions of sick industrial companies special provisions act, 1985 after having assented by the president of india on 8th january, 1986, the same was provided to objective to check sickness and expedite the process of revival of efficient and viable sick industrial companies and closure of those unviable.
And, whereas, clause b of section 4 of the sick industrial companies special provisions repeal act, 2003 has been substituted by the eighth schedule to the code, which provides that any appeal preferred to the appellate authority or any reference made or inquiry pending to or before the board or any proceeding of whatever nature pending. Indian sick industrial companies act, 1985 sica is a unique legislation introduced in india with the purpose of identifying industrial companies in financial distress and introducing timely preventive, ameliorative, and remedial measures to alleviate its condition. Delhi high court under the newly enacted section 4b there are only two classes of. And, whereas, the unamended second proviso to clause b of section 4 of the sick industrial companies special provisions repeal act, 2003 provides that any scheme sanctioned under subsection 4 or any scheme under implementation under subsection 12. The sick industrial companies special provisions repeal act, 2003 sicspra shall come in force from december 01, 2016 vide notification issued in official gazette on november 25, 2016 1 amendment of sicspra before coming into force. But some companies perceived sica as an official exit route, thereby resulting into losses to creditors and increased npas in the banking sector sica, 1985, was repealed by sick industrial companies special provisions repeal act, 2003. An act to repeal the sick industrial companies special provisions act, 1985. Therefore, the sica is repealed with effect from 1 december 2016.
Statewise number of sick industries in india growth. The sick industrial companies special provisions repeal act, 2003. Ninth schedule amendment to the payment and settlement systems act, 2007 10. Sick industrial companies special provisions act, 1985 sica applicable to scheduled industries1 only and the securitisation and reconstruction of financial assets and enforcement of security interest act, 2002.
Companies act were never enforced, and thus, the sica repeal law too. The companies amendment bill, 2001 was introduced because the government considered that the bifr had not met its objective of preventing industrial sickness. Sick industrial companies special provisions repeal. Definition of industrial sickness sick industrial companies act, 1985 a unit is defined as sick industrial company where. The sick industrial companies act sica, applicable to industrial. It aimed to repeal the presidency towns insolvency act, 1909 and sick industrial companies special provisions repeal act, 2003, among others. The sick industrial companies special provisions repeal. We may note this chapter has much wider impact then earlier act of 1985. Revival and rehabilitation of sick companies under new act.
Sick industrial companies act sica government of india. Rules regulations notifications orders circulars statutory ordinance statutes. However, legal hurdles prevented the nclt from being constituted. Home actsofparliamentfromtheyear the sick industrial companies special provisions act, 1985. Impact of sick industrial companies act on enforcement of. Therefore, the sica is repealed with effect from 1 december, 2016. Transition from sica to ibc historical analysis ipleaders. Board for industrial and financial reconstruction, for winding up of a company to a high court and where no appeal is pending, the proceedings for winding up initiated under the act, pursuant to section 20 of the sick industrial companies special provisions act, 1985 shall continue to be. Chapter xix of the 20 act lays down the provisions for the revival and rehabilitation of sick companies. Reference to bifr of sickness will halt proceedings before.
The reserve bank of india has issued guidelines to banks to strengthen the monitoring system and to arrest industrial sickness at the incipient stage. Government finally repeals sica years after repeal act. The chapter describes the circumstances which determine the declaration of a company as a sick company, and also includes the rehabilitation process of the same. Full text containing the act, sick industrial companies special provisions repeal act, 2003, with all the sections, schedules, short title, enactment date, and footnotes. Selected statewise number of companies declared sick in india 2007 to 2010 selected statewise number of sick sugar mills in india as on 31. Presentation on industrial sickness in india prithvi rani 2nd. Doc evolution of sick industrial provisions in india madhubanti. Repeal of sick industrial companies special provisions act, 1985. For the removal of doubts, it is hereby declared that an industrial company existing immediately before the commencement of the sick industrial companies special provisions amendment act, 1993, registered for not less than five years and having at the end of any financial year accumulated losses equal to or exceeding its. On the dissolution of the appellate authority and the board. Section 252 of the insolvency and bankruptcy code, 2016 ibc, which came in to force w. Sica was repealed and replaced in 2003 by the sick industrial companies special provisions repeal act of 2003, which watered down some.
Act 651 7 the six hundred and fiftyfirst act of the parliament of the republic of ghana entitled labour act, 2003 an act to amend and consolidate the laws relating to labour, employers, trade unions and industrial relations. Eleventh schedule amendment to the companies act, 7272017 20. Act, 2003 1 of 2004 in the manner specified in the eighth schedule to the said code. Mahatma gandhi national rural employment guarantee act, 2005 123 the seventh decade. Industrial sickness is defined all over the world dubious discuss as an industrial company being a company registered for not less than five years which has, at the end of any financial year, accumulated losses equal to, or exceeding, its entire net worth and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year. The sick industrial companies special provisions act, 1985. Preface companies second amendment act, 2002 second amendment act partvi a section 424a to 424l were introduced in the companies act, 1956 but not made effective. As the year of sica repeal act suggests, the repeal of sica has been on the cards for a very long time. It applies to industrial undertakings both in the public and private sectors. Section 4 in the sick industrial companies special provisions repeal act, 2003. Be it enacted by parliament in the fiftyfourth year of the republic of india as follows.