Name: Ambar Zahra
Country: India

Year: 2021
Volume: Volume-8, Issue-1 (January-June)
Page Number: 1-7

Introduction
While the mainstream economic thought throws light upon the inadequacy of resources to full fill the
unlimited wants, the mainstream legal thought has the central problem of inadequacy of freedom to
pursue economic interest meaning fully.1
A firm needs freedom at three stages of business, free entry into the market, free competition and free
exit. This freedom ensures optimum utilization of resources in the economy. The first stage ensures
allocation of resources to the most efficient use, the second stage ensures efficient use of resources
allocated, and the third stage ensures release of resources from inefficient uses.
In India the Companies Act, 2013, The Competition Act 2002 and the Insolvency and Bankruptcy
Code (IBC) 2016, are the three most important pillars of legislation that empower the central
government to regulate the formation, financing, functioning and winding up of companies.
While the Company Act 2013 belongs to the rules and regulations that lead to the first stage of
business activities i.e. free entry into the market, Competition ACT 2002 deals with the rules and
regulations that provide freedom to the enterprise to continue his business, the IBC 2016 insures
release of inefficient resources from market through its resolution and liquidation mechanism.
The Code provides such a market mechanism for (a) rescuing a failing, but viable firm; and (b)
liquidating an unviable one and releasing its resources, including entrepreneur(s), for competing uses,
and thereby provides the freedom to exit, the ultimate freedom. Presently the IBC provides for a
variety of plans for the resolution of individual stressed companies only. However, it does not
envisage a framework to either synchronise insolvency proceedings of different corporate debtors in a
group or resolve their insolvencies together. However, in the insolvency resolution of some corporate
debtors, including Videocon, Era infrastructure, Lanco, Educomp, Amtek, Adel, Jaypee and Aircel,
special issues arose from their interconnections with other group companies. In some of these cases,
the Adjudicating Authority (AA) under the Code i.e., National Company Law Tribunal (NCLT) as
well as the Supreme Court, in some cases, have passed orders to partially ameliorate some such
issues. This highlights the need to examine the desirability and feasibility of having a group
insolvency framework.