Against the backdrop of Mallya episode, government on May 5 said it intends to enter into cross-border treaties to confiscate overseas assets of wilful defaulters and recover dues of banks as the Lok Sabha passed a bill that seeks to update existing laws in this regard.
Amid concerns expressed by members over rising instances of wilful defaults as highlighted by the case of liquor baron Vijay Mallya, Minister of State for Finance Jayant Sinha said bankruptcy framework and the normal procedure against them would continue in a parallel manner.
He was replying to a debate on the Insolvency and Bankruptcy Code Bill that seeks to update and consolidate existing laws, which was approved by the House later.
The legislation is a "transformational building block" for the economy and there would be one law dealing with bankruptcy while doing away with at least 12 different legislations, some of which are centuries old. This will also make the whole process more "transparent", Sinha said.
The new framework would help in improving India's position in the World Bank's ease of doing business ranking, he said.
To a query on whether the new legislation would help in taking the overseas assets of wilful defaulters, Sinha said in this regard first cross-border treaties need to be put in place.
"We have to make cross-border treaties. We have to have an understanding with other nations that we are taking action on this defaulter.
"When we have a good law like this in which the other nations will be clear that by due process of law we are taking action, then they will also believe us and they will cooperate with us in attaching the assets and properties in their countries," he said.
According to Sinha, India has already discussed the matter with other countries. "They have said that when we have such a law in the country, then such attachments and confiscation will be easily done... this law will help," the Minister said.
Earlier, the members questioned what the government proposes to do in the event of cases like "Mallya syndrome".
Sinha said "employees and workmen" would have first right during liquidation of assets under the law.
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