In Conversation with Mr. Vijay Nair – IBC, Financial Reforms and Foreign Law Firms

Vijay Nair is currently Founder and Senior Partner at KNM & Partners, New Delhi. He has an experience of two decades in the field of corporate law. He has previously worked at Luthra & Luthra and Sibal & Eradi. He has been a regular contributor in annual global report by World Bank on Doing Business. In recent conversation with IJLPP, he talks about increasing tribunalisation, corporate ethics, IBC and much more. 

Q. You have large experience of practicing at NCLT. Recently, there was a bill which clubbed many tribunals together. What is your view regarding this clubbing of tribunals? Will this be able to have impact which is being speculated?

Ans. This Bill came in 2017 which aims to club COMPAT with NCLAT. There is already widespread negative opinion about too much of tribunalisation. There are two things to be considered:

1. Tribunalisation is diluting judicial work and administrative work is increasing.

2. For e.g.: – The NCLT, which was constituted to take up cases under the Companies Act is now burdened with cases under the Insolvency and Bankruptcy Code. I feel that more preference is given to IBC cases and cases under Companies Act are gathering dust. Big ticket matters are given preference and take up most of the productive time of the Tribunals as compared to other cases and even mentioning matters for expeditious disposal doesn’t help.

On clubbing, please note that Competition Act is a special act and requires experts from specialized field to adjudicate matters. The clubbing of COMPAT with NCLAT could prove to be a wrong move.

Q. Insolvency and Bankruptcy Code (IBC) has come into action. In last few months we have seen lot of amendment in the code. What do you think was this code is result of hurry or still there are some practical flaws in the law?

Ans. The idea behind enactment of IBC is good, when pitted against the practical difficulties one faced under the erstwhile Companies Act and SICA. Every enactment has evolved over a period of time, after it has been put into practical application.  IBC is a welcome move, but certain time limits prescribed under the Code are impractical to adhere to and should be relaxed, so that substantial justice could be done to the essence of the Code.

Q. Recently government brought various reforms which improved its rank in ease of doing business. Still we don’t have proper enforcement law when it comes to company matters. What do you think what are the steps that can be taken for improving the situation?

Ans. There has to be reduction in litigation by statutory bodies. An alternative exists in arbitration and it is good enough that India recognizes foreign awards because large number of cases are taken up in foreign jurisdictions for arbitration. But we need to understand the other side of this case as well. One is known by the company he keeps. We have an age old principle of Caveat Emptor. Due Diligence is on the people and not the system. People need to take precautions from their side as well for easy business.  In their zeal to do business in a growing economy like India, businesses will have to choose their partners wisely without being blinded by easy profits.  It is not fair to blame the system in India just because the partner you chose or the Industry you chose to invest in, did not mark up to your expectations.

Another problem is asset identification in the case of enforcement. There is a delay in this process. Things go back and forth. This process needs to be smoothened up. While a creditor may have some idea about the assets of a debtor, he cannot be expected to know about the process.  Some handholding at this level is advisable.

Q. In the past there was discussion that foreign firms should be allowed. What is your take into this issue?

Ans. Well it is a subjective question. I am neither for it nor against it. The main concern is the ultimate intent of the firm which wants to enter. There can be actually restriction on the fields in which foreign laws firms can enter. Though now the original discussion has diluted and approach has changed. Times have changed and even individual lawyers are acting like law firms.

From my own experience, foreign law firms are always have a sense of urgency but Indian firms are laid back. The entry of foreign law firms can effect positively the turnaround time of Indian law firms and may also help in introduction of new technology into various fields of legal practice, for eg. Legal transcription.

Q. There has been allegation that sexual harassment at workplace has increased and still the law has not been implemented it in spirit. What do you think corporate houses should do regarding this?

Ans. I think political will is the core problem. Practically, getting a good employment is already a problem for women. Instances of sexual harassment were always there but were addressed under the provisions of law which was ineffective. This culture has been inherited by the corporate circuit. Lala companies put on a façade of professionally operated companies but the work culture doesn’t change. There is need to change the mindset to view women as strong and independent. Further, there is need for stepping up the campaign to have effective Committees as prescribed after Visakha case, for dealing with complaints of sexual harassment in companies.

Q. In the past few days, many corporate stalwarts were accused of mismanagement of firms. The Vice-President of India also laid stress on ethical corporate practice. Why do you suggest we are getting these cases frequently?

Ans. “Corporate Ethics” is not defined anywhere, but mainly they are behavioral and functional ethics. To be honest, they were never there. Kith and Kin receive favor and those favors are returned. There is non-compliance with Gender protection laws. There are sad affairs where Board of Directors is only on paper.

We cannot compare systems of different countries and they are left to “subjective” interpretation. With great power comes greater responsibility and the more we understand this, better will be the system.

Q. Last, there has been debate that still there is no work life balance in corporate practice. What is your take on this and what can be done to maintain required balance?

Ans. There has been some progress on legal side. Today we have more tools. Earlier it used to take a week to prepare drafts but now not more than 70 minutes. But then quality output has gone abysmal. People are treated like machines and resultantly, the application of mind is missing. 

The reason, as I understand is, with high efficiency, work load has increased. I think right boxes are to be created for easing the pressure rather than throwing work without any limit. Time deliverability is a question in itself but then balance will help in more ethical and healthy corporate sector.

This interview was taken by Pranav Tanwar (Editor in Chief) and Saurabh Pandey (Managing Editor).