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The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 is listed for discussion in Rajya Sabha today.[i] The Bill aims to expeditiously resolve cases of debt recovery by making amendments to four laws, including the (i) Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and (ii) the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Recovery of Debts Due to Banks and Financial Institutions Act, 1993 The 1993 Act created Debt Recovery Tribunals (DRTS) to adjudicated debt recovery cases. This was done to move cases out of civil courts, with the idea of reducing time taken for debt recovery, and for providing technical expertise. This was aimed at assisting banks and financial institutions in recovering outstanding debt from defaulters. Over the years, it has been observed that the DRTs do not comply with the stipulated time frame of resolving disputes within six months. This has resulted in delays in disposal, and a high pendency of cases before the DRTs. Between March 2013 and December 2015, the number of pending cases before the DRTs increased from 43,000 to 70,000. With an average disposal rate of 10,000 cases per year, it is estimated that these DRTs will take about six to seven years to clear the existing backlog of cases.[ii] Experts have also observed that the DRT officers, responsible for debt recovery, lack experience in dealing with such cases. Further, these officers are not adequately trained to adjudicate debt-related matters.[iii] The 2016 Bill proposes to increase the retirement age of Presiding Officers of DRTs, and allows for their reappointment. This will allow the existing DRT officers to serve for longer periods of time. However, such a move may have limited impact in expanding the pool of officers in the DRTs. The 2016 Bill also has a provision which allows Presiding Officers of tribunals, established under other laws, to head DRTs. Currently, there are various specialised tribunals functioning in the country, like the Securities Appellate Tribunal, the National Company Law Tribunal, and theNational Green Tribunal. It remains to be seen if the skills brought in by officers of these tribunals will mirror the specialisation required for adjudicating debt-related matters. Further, the 1993 Act provides that banks and financial institutions must file cases in those DRTs that have jurisdiction over the defendant’s area of residence or business. In addition, the Bill allows cases to be filed in DRTs having jurisdiction over the bank branch where the debt is due. The Bill also provides that certain procedures, such as presentation of claims by parties and issue of summons by DRTs, can now be undertaken in electronic form (such as filing them on the DRT website). Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 The 2002 Act allows secured creditors (lenders whose loans are backed by a security) to take possession over a collateral security if the debtor defaults in repayment. This allows creditors to sell the collateral security and recover the outstanding debt without the intervention of a court or a tribunal. This takeover of collateral security is done with the assistance of the District Magistrate (DM), having jurisdiction over the security. Experts have noted that the absence of a time-limit for the DM to dispose such applications has resulted in delays.[iv] The 2016 Bill proposes to introduce a 30-day time limit within which the DM must pass an order for the takeover of a security. Under certain circumstances, this time-limit may be extended to 60 days. The 2002 Act also regulates the establishment and functioning of Asset Reconstruction Companies (ARCs). ARCs purchase Non-Performing Assets (NPAs) from banks at a discount. This allows banks to recover partial payment for an outstanding loan account, thereby helping them maintain cash flow and liquidity. The functioning of ARCs has been explained in Figure 1. 
It has been observed that the setting up of ARCs, along with the use out-of-court systems to take possession of the collateral security, has created an environment conducive to lending.[iii] However, a few concerns related to the functioning of ARCs have been expressed over the years. These concerns include a limited number of buyers and capital entering the ARC business, and high transaction costs involved in the transfer of assets in favour of these companies due to the levy of stamp duty.[iii] In this regard, the Bill proposes to exempt the payment of stamp duty on transfer of financial assets in favour of ARCs. This benefit will not be applicable if the asset has been transferred for purposes other than securitisation or reconstruction (such as for the ARCs own use or investment). Consequently, the Bill amends the Indian Stamp Act, 1899. The Bill also provides greater powers to the Reserve Bank of India to regulate ARCs. This includes the power to carry out audits and inspections either on its own, or through specialised agencies. With the passage of the Bankruptcy Code in May 2016, a complete overhaul of the debt recovery proceedings was envisaged. The Code allows creditors to collectively take action against a defaulting debtor, and complete this process within a period of 180 days. During the process, the creditors may choose to revive a company by changing the repayment schedule of outstanding loans, or decide to sell it off for recovering their dues. While the Bankruptcy Code provides for collective action of creditors, the proposed amendments to the SARFAESI and DRT Acts seek to streamline the processes of creditors individually taking action against the defaulting debtor. The impact of these changes on debt recovery scenario in the country, and the issue of rising NPAs will only become clear in due course of time. [i] Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, http://www.prsindia.org/administrator/uploads/media/Enforcement%20of%20Security/Enforcement%20of%20Security%20Bill,%202016.pdf. [ii] Unstarred Question No. 1570, Lok Sabha, Ministry of Finance, Answered on March 4, 2016. [iii] ‘A Hundred Small Steps’, Report of the Committee on Financial Sector Reforms, Planning Commission, September 2008, http://planningcommission.nic.in/reports/genrep/rep_fr/cfsr_all.pdf. [iv] Financial Sector Legislative Reforms Commission, March 2013, http://finmin.nic.in/fslrc/fslrc_report_vol1.pdf.
The Transgender Persons (Protection of Rights) Bill, 2016 has been listed for passage during the ongoing Winter Session of Parliament. This Bill was introduced in the Monsoon Session last year and referred to the Standing Committee on Social Justice and Empowerment, which tabled its report earlier this year. The Bill seeks to recognise transgender persons, and confer anti-discriminatory rights and entitlements related to education, employment, health, and welfare measures. This post explains key provisions of the Bill and certain issues for consideration.
Self-identification and obtaining a Certificate of Identity
The Bill provides for ‘self-perceived gender identity’ i.e. persons can determine their gender on their own. This is in line with a Supreme Court judgement (2014) which held that the self determination of one’s gender is part of the fundamental right to dignity, freedom and personal autonomy guaranteed under the Constitution.[1]
Along with the provision on ‘self-perceived gender identity’, the Bill also provides for a screening process to obtain a Certificate of Identity. This Certificate will certify the person as ‘transgender’. An application for obtaining such a Certificate will be referred to a District Screening Committee which will comprise five members including a medical officer, psychologist or psychiatrist, and a representative of the transgender community.
The Bill therefore allows individuals to self-identify their gender, but at the same time they must also undergo the screening process to get certified, and as a result be identified as a ‘transgender’. In this context, it is unclear how these two provisions of self-perceived gender identity and an external screening process will reconcile with each other. The Standing Committee has also upheld both these processes of self-identification and the external screening process to get certified. In addition, the Committee recommended that the Bill should provide for a mechanism for appeal against the decisions of the District Screening Committee.
Since, the Bill provides certain entitlements to transgender persons for their inclusion and participation in society, it can be argued that there must be an objective criteria to verify the eligibility of these applicants for them to receive benefits targeted for transgender persons.
Status of transgender persons under existing laws
Currently, several criminal and civil laws recognise two categories of gender i.e. man and woman. These include laws such as Indian Penal Code (IPC), 1860, National Rural Employment Guarantee Act, 2005 (NREGA) and Hindu Succession Act, 1956. Now, the Bill seeks to recognise a third gender i.e. ‘transgender’. However, the Bill does not clarify how transgender persons will be treated under certain existing laws.
For example, under NREGA, priority is given to women workers (at least one-third of the beneficiaries are to be women) if they have registered and requested for work under the Act. Similarly, under the Hindu Adoptions and Maintenance Act, 1956, there are different eligibility criteria for males and females to adopt a girl child. In this context, the applicability of such laws to a ‘transgender’ person is not stated in the Bill. The Standing Committee has recommended recognising transgender persons’ right to marriage, partnership, divorce and adoption, as governed by their personal laws or other relevant legislation.
In addition, the penalties for similar offences may also vary because of the application of different laws based on gender identity. For example, under the IPC, sexual offences related to women attract a maximum penalty of life imprisonment, which is higher than that specified for sexual abuse against a transgender person under the Bill (up to two years).[2]
Who is a transgender person?
As per international standards, ‘transgender’ is an umbrella term that includes persons whose sense of gender does not match with the gender assigned to them at birth.[3], [4] For example, a person born as a man may identify with the opposite gender, i.e., as a woman.[5] In addition to this sense of mismatch, the definition provided under the Bill also lists further criteria to be defined as a transgender person. These additional criteria include being (i) ‘neither wholly male nor female’, or (ii) ‘a combination of male or female’, or (iii) ‘neither male nor female’.
The Supreme Court, the Expert Committee of the Ministry of Social Justice and Welfare, and the recent Standing Committee report all define ‘transgender persons’ based on the mismatch only.1,[5],[6] Therefore, the definition provided under the Bill does not clarify if simply proving a mismatch is enough (as is the norm internationally) or whether the additional listed criteria ought to be fulfilled as well.
Offences and penalties
The Bill specifies certain offences which include: (i) compelling transgender persons to beg or do forced or bonded labour, and (ii) physical, sexual, verbal, emotional or economic abuse. These offences will attract imprisonment between six months and two years, in addition to a fine.
The Standing Committee recommended graded punishment for different offences, and suggested that those involving physical and sexual assault should attract higher punishment. It further stated that the Bill must also specifically recognise and provide appropriate penalties for violence faced by transgender persons from officials in educational institutions, healthcare institutions, police stations, etc.
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[1]. National Legal Services Authority vs. Union of India [(2014) 5 SCC 438]; Article 21, Constitution of India.
[2]. Sections 354, 354A, 354B, 375, Indian Penal Code, 1860.
[3]. Guidelines related to Transgender persons, American Psychological Association, https://www.apa.org/practice/guidelines/transgender.pdf.
[4]. Standards of Care, 7th Version, The World Professional Association for Transgender Health, https://s3.amazonaws.com/amo_hub_content/Association140/files/Standards%20of%20Care%20V7%20-%202011%20WPATH%20(2)(1).pdf.
[5]. Report of the Expert Committee on the Issues relating to Transgender Persons, Ministry of Social Justice and Empowerment, January 27, 2014, http://socialjustice.nic.in/writereaddata/UploadFile/Binder2.pdf.
[6]. Report no.43, The Transgender Persons (Protection of Rights) Bill, 2016, Standing Committee on Social Justice and Empowerment, July 21, 2017, http://164.100.47.193/lsscommittee/Social%20Justice%20&%20Empowerment/16_Social_Justice_
