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As of April 22, 2020, Sikkim does not have any confirmed cases of COVID-19.  As of April 21, 2020, 87 samples have been sent for testing from Sikkim.  Of these, 80 have tested negative for COVID-19, and the results of seven samples are awaited.  The state has announced several policy decisions to prevent the spread of the virus and provide relief for those affected by it.  In this blog post, we summarise some of the key measures taken by the Sikkim state government in this regard as of April 22, 2020.  

Response before national lockdown

On March 16, the state government responded to the growing number of suspected cases in India by notifying certain directions to be applicable till April 15, 2020.  These included: (i) banning the entry of all domestic and foreign tourists in to the state, (ii) closing all educational institutes and anganwadis, (iii) prohibiting the use of recreational facilities such as, casinos, gym, and cinemas, (iii) closing three out of five check posts (border opening) for all visitors in to the state and opening the other two only for medical and police teams, and (iv) banning private industries from getting migrant workers from outside the state and avoiding large concentration of workers at one place.

On March 19, assembly of more than five people was prohibited in the state until April 15, 2020.  The government ordered the suspension of all non-essential work on March 19.  The supply of all essential commodities such as food grains, vegetables, sanitisers and masks was allowed.  Further, the formation of a sub-divisional task force to detect suspected cases was ordered.  

On March 22, the government regulated intra-state movement of private vehicles, two-wheelers and taxis on an odd-even basis (allowing plying of vehicles on alternate days as per the number plate) until April 15, 2020.  The government also reduced the budget session of the state to two days on March 23. 

On March 25, the central government announced on a 21-day country-wide lockdown till April 14.  During the lockdown the state government took various steps for physical containment, health, financial and welfare measures.  These are detailed below.

Measures taken during lockdown

Movement Restrictions

Certain movement restrictions were put across the state.   These include:

  • Movement of vehicles: Inter-state movement of vehicles was restricted to vehicles transporting essential goods.  These vehicles need to have a permanent pass for such movement.  On April 5, intra-state movement of vehicles was restricted to government officials, transportation of essential commodities, banks and PSUs, and media and cable networks.   Their passes are valid only from 8am to 5pm.
     
  • Validity of passes:  The state government noted that a large number of vehicle passes were issued due to various reasons.  On April 14, the government ordered that all passes issued by District Magistrates, and other Departmental Authorities (except those issued by the police, health department and forest and environment department) will be invalid from April 14.  New passes will be issued only by Magistrates and Block Development Officers.  
     
  • Securing borders:  In view of the COVID-19 pandemic and to check unauthorised cross-border infiltration from China, Nepal, and Bhutan, the state government secured all porous borders along the Rangpo river and other vulnerable areas.

Essential Goods and Services

On April 5, the state government issued an order requiring establishments such as shops, hotels, private offices, and commercial establishments to remain closed until April 15.  Establishments which were permitted to remain functional include law enforcement agencies, health services, electricity and water services, petrol pumps, and media.  Shops for PDS, groceries, vegetables, milk and, medicines were only allowed remain open from 9 am to 4 pm.

  • Valid prescription and label required:  On March 25, the state prohibited the sale of hand sanitisers without drug manufacturing licence label.  It also prohibited sale of N95 masks to general public without valid prescription. 
     
  • Transit camps:  On April 17, the state government notified that transit camps (temporary accommodation) will be set up for drivers and helpers of vehicles carrying essential goods.

Health Measures

On March 31, the Sikkim government identified and set up dedicated isolation wards and treatment centres in the STNM hospital, Sochakgang as a precautionary measure.  The government also issued directions for citizens to avoid getting infected by coronavirus.  These included social distancing, and maintaining proper hygiene.  

On April 18, the state government made it mandatory for all the public, students, teachers, and government employees, to install the Aarogya Setu application.  The government of India launched a mobile app called ‘Aarogya Setu’ to enable people to assess the risk of catching COVID-19 on April 2, 2020.   The app uses Bluetooth and Global Positioning System (GPS) based device location for contact tracing in order to prevent the spread of COVID-19. 

Welfare Measures

  • Economic relief package:  On March 27, an economic relief package was announced by the state government.   This included free ration in specific quantities (other than the PDS entitlement) to needy families in rural and urban areas, daily wagers, migrant labourers, casual workers, and stranded people.  Further, the government announced an additional incentive wage of Rs 300/day for tea workers at Temi-tea estate. 
     
  • Food distribution:  On April 16, the government announced that Asha workers will be given Rs 5,000 as honorarium for work done during COVID-19.  Further, it ordered the food and civil supply department to compile a list of all the left out beneficiaries for distribution of food relief packages.
     
  • Relief to stranded patients:  On April 16, the government announced that a financial relief of Rs 30,000 will be provided to each patient undergoing treatment and stranded outside Sikkim from the Chief Minister's relief fund.
     
  • Relief for casual workers:  On March 30, the Sikkim government issued directions to all contractors/ employers to pay migrant and casual labourers on the due date without any deductions due to the lockdown.  The state government also provided grants worth Rs 2,000 to the 7,836 registered building and other construction workers in the state.
     
  • Relief for stranded students:  On March 29, the state announced that it will provide Rs 5,000 to each state student stranded outside Sikkim during the nationwide lockdown.

Certain relaxations after 20th April 

On April 14, the nation-wide lockdown was further extended till May 3, 2020.  On April 15, the Ministry of Home Affairs issued guidelines outlining select activities which will be permitted from April 20 onwards.  These activities include health services, agriculture related activities, certain financial sector activities, operation of Anganwadis, MNREGA works, and cargo movement.  Further, subject to certain conditions, commercial and private establishments, industrial establishments, government offices, and construction activities will also be permitted.  The Sikkim government took the following steps in the same line.

  • On April 19, the state government gave directions to all government and PSU offices to work with up to one-third of their actual staff strength from April 20 onwards. 
     
  • On April 19, the state government gave directions and standard operating procedures to be followed at manufacturing establishments, work spaces and public places post April 20.  These include: (i) no overlapping shifts, (ii) staggered lunch breaks, (iii) training on good hygiene practices, (iv) compulsory wearing of face cover, and (v) sanitising workplaces between shifts. 

For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.

The Insolvency and Bankruptcy Code, 2016 is listed for passage in Rajya Sabha today.  Last week, Lok Sabha passed the Code with changes recommended by the Joint Parliamentary Committee that examined the Code.[1],[2]  We present answers to some of the frequently asked questions in relation to the Insolvency and Bankruptcy Code, 2016. Why do we need a new law?Time resolve insolvency1 As of 2015, insolvency resolution in India took 4.3 years on an average.  This is higher when compared to other countries such as United Kingdom (1 year) and United States of America (1.5 years).  Figure 1 provides a comparison of the time to resolve insolvency for various countries.  These delays are caused due to time taken to resolve cases in courts, and confusion due to a lack of clarity about the current bankruptcy framework. What does the current Code aim to do? The 2016 Code applies to companies and individuals.  It provides for a time-bound process to resolve insolvency.  When a default in repayment occurs, creditors gain control over debtor’s assets and must take decisions to resolve insolvency within a 180-day period.  To ensure an uninterrupted resolution process, the Code also provides immunity to debtors from resolution claims of creditors during this period. The Code also consolidates provisions of the current legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency. Who facilitates the insolvency resolution under the Code? The Code creates various institutions to facilitate resolution of insolvency.  These are as follows:

  • Insolvency Professionals: A specialised cadre of licensed professionals is proposed to be created. These professionals will administer the resolution process, manage the assets of the debtor, and provide information for creditors to assist them in decision making.
  • Insolvency Professional Agencies: The insolvency professionals will be registered with insolvency professional agencies. The agencies conduct examinations to certify the insolvency professionals and enforce a code of conduct for their performance.
  • Information Utilities: Creditors will report financial information of the debt owed to them by the debtor. Such information will include records of debt, liabilities and defaults.
  • Adjudicating authorities: The proceedings of the resolution process will be adjudicated by the National Companies Law Tribunal (NCLT), for companies; and the Debt Recovery Tribunal (DRT), for individuals. The duties of the authorities will include approval to initiate the resolution process, appoint the insolvency professional, and approve the final decision of creditors.
  • Insolvency and Bankruptcy Board: The Board will regulate insolvency professionals, insolvency professional agencies and information utilities set up under the Code.  The Board will consist of representatives of Reserve Bank of India, and the Ministries of Finance, Corporate Affairs and Law.

What is the procedure to resolve insolvency in the Code? The Code proposes the following steps to resolve insolvency:

  • Initiation: When a default occurs, the resolution process may be initiated by the debtor or creditor. The insolvency professional administers the process.  The professional provides financial information of the debtor from the information utilities to the creditor and manage the debtor’s assets.  This process lasts for 180 days and any legal action against the debtor is prohibited during this period.
  • Decision to resolve insolvency: A committee consisting of the financial creditors who lent money to the debtor will be formed by the insolvency professional. The creditors committee will take a decision regarding the future of the outstanding debt owed to them.  They may choose to revive the debt owed to them by changing the repayment schedule, or sell (liquidate) the assets of the debtor to repay the debts owed to them.  If a decision is not taken in 180 days, the debtor’s assets go into liquidation.
  • Liquidation: If the debtor goes into liquidation, an insolvency professional administers the liquidation process. Proceeds from the sale of the debtor’s assets are distributed in the following order of precedence: i) insolvency resolution costs, including the remuneration to the insolvency professional, ii) secured creditors, whose loans are backed by collateral, dues to workers, other employees, iii) unsecured creditors, iv) dues to government, v) priority shareholders and vi) equity shareholders.

What are some issues in the Code that require consideration?

  • The Bankruptcy Board (regulator) will regulate insolvency professional agencies (IPAs), which will further regulate insolvency professionals (IPs).  The rationale behind multiple IPAs overseeing the functioning of their member IPs, instead of a single regulator is unclear. The presence of multiple IPAs  operating simultaneously could enable competition in the sector. However, this may also lead to a conflict of interest between the regulatory and competitive goals of the IPAs.  This structure of regulation varies from the current practice where the regulator directly regulates its registered professionals.  For example, the Institute of Chartered Accountants of India (which regulates chartered accountants) is directly responsible for regulating its registered members.
  • The Code provides an order of priority to distribute assets during liquidation. It is unclear why: (i) secured creditors will receive their entire outstanding amount, rather than up to their collateral value, (ii) unsecured creditors have priority over trade creditors, and (iii) government dues will be repaid after unsecured creditors.
  • The smooth functioning of the Code depends on the functioning of new entities such as insolvency professionals, insolvency professional agencies and information utilities.  These entities will have to evolve over time for the proper functioning of the system.  In addition, the NCLT, which will adjudicate corporate insolvency has not been constituted as yet, and the DRTs are overloaded with pending cases.

 


 

  1. The Insolvency and Bankruptcy Code, 2016, http://www.prsindia.org/administrator/uploads/media/Bankruptcy/Bankruptcy%20Code%20as%20passed%20by%20LS.pdf.
  2. Report of the Joint Committee on the Insolvency and Bankruptcy Code, 2015, April 28, 2016, http://164.100.47.134/lsscommittee/Joint%20Committee%20on%20Insolvency%20and%20Bankruptcy%20Code,%202015/16_Joint_Committee_o n_Insolvency_and_Bankruptcy_Code_2015_1.pdf

A version of this blog appeared in the Business Standard on May 7, 2016.