New Delhi, Feb. 16: India Inc has started lobbying against a cess that would be used to fund the closure or revival of sick companies. The cess, which industry considers unjustified, is part of the Companies (second amendment) Act, 2002.

The act has proposed a cess on all companies for the rehabilitation of sick ones. Profit-making companies are opposing the cess and consider it a fee they have to pay for not falling ‘sick’.

“It is a fine for being healthy and a reward for the sick,” said a Delhi-based industrialist.

Y. K. Modi, president of the Federation of Indian Chamber of Commerce and Industry (Ficci), said, “The imposition of a cess on companies to build a fund for rehabilitating or protecting the assets of sick firms is unwarranted. It will be an unnecessary burden on profit-making companies.”

However, government officials feel the levy is quite small. The cess will be between 0.005 per cent and 0.1 per cent of turnover or annual gross receipts, whichever is higher.

Modi is apprehensive of the utility of the fund. “One is not sure as to how far the fund would be effectively administered and properly utilised,” he said.

The amendment also makes way for the formation of the National Company Law Tribunal which will now deal with cases that were earlier referred to the Board for Industrial and Financial Reconstruction (BIFR) and the Company Law Board (CLB).

Chartered accountants also feel that the imposition is arbitrary.N . D. Gupta, former president of the Institute of Chartered Accountants of India (ICAI) and a practising chartered accountant, said, “It is wrong to ask healthy companies to foot this bill. There are a plethora of sick companies and some of them are sick because of unhealthy practices.”