IBC and Public Policy in India: Integrating Bharatiya Concepts of Rina and Dharma into Modern Insolvency Governance

The passage of the Insolvency and Bankruptcy Code, 2016 (IBC) brought a paradigm shift in the insolvency landscape of India with its adoption of a single, streamlined and time-bound resolution framework in place of the existing disorganized set of insolvency laws. Although the Code has boosted the confidence of creditors, facilitated the ease of doing business and financial discipline, talks about insolvency governance have kept within the scope of economic efficiency and market-oriented principles. But the Indian legal system has a rich philosophical tradition that could be useful in the ongoing discussion on insolvency in India. The concepts of ‘righteous duty', ‘justice', ‘ethical conduct' (dharma) and ‘debt' or ‘obligation' (rina) have always been important in Indian society in terms of social and economic relations. This paper explores the link between IBC's goals and the Bharatiya philosophies of Rina and Dharma. It maintains that insolvency should not only be seen as a financial phenomenon but also a process in the process of which moral responsibilities are also assumed by the debtor, creditors, employees, investors and society. The study also examines how such indigenous concepts can serve as a normative basis for insolvency governance, which is based on the principles of fairness, accountability, responsible lending and equitable resolution. The paper critically examines the extent of applicability of these principles in the IBC and the need to strengthen insolvency jurisprudence in India based on public policy considerations which are culturally relevant. The paper ends by concluding that the principles of Bharatiya legal thought are not necessarily to be replaced by modern economic principles in the context of insolvency governance but can be complemented with ethical values which are conducive to sustained and socially responsible economic behaviour. This can help to create a more equitable insolvency regime based on both financial efficiency and social good.