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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?
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:
What is the procedure to resolve insolvency in the Code? The Code proposes the following steps to resolve insolvency:
What are some issues in the Code that require consideration?
A version of this blog appeared in the Business Standard on May 7, 2016.
The Protection of Women against Sexual Harassment Bill was passed by Rajya Sabha yesterday. Prior to this, no legislation specifically addressed the issue of sexual harassment at the workplace. In 1997, the Supreme Court issued directions in Vishakha vs. State of Rajasthan to deal with the issue. The Supreme Court had also recommended that steps be taken to enact a law on the subject. The Bill was introduced in Parliament in 2010 and was passed by the Lok Sabha on September 3, 2012. In order to protect women from harassment, the Bill establishes a mechanism for redressal of complaints related to harassment. Recently, the Verma Committee in its Report on Amendments to Criminal Laws had made recommendations on the Sexual Harassment Bill. In this blog we discuss some of the key issues raised by the Verma Committee with regard to the issue of sexual harassment at the workplace. Internal Committee: The Bill requires the establishment of a committee within organisations to inquire into complaints of sexual harassment. The Committee shall comprise four members: three would be employees of the organisation; and the fourth, a member of an NGO committed to the cause of women. The Verma Committee was of the opinion that in-house dealing of the complaints would dissuade women from filing complaints. It recommended that a separate Employment Tribunal outside the organisation be established to receive and address complaints of sexual harassment. Requirement for conciliation: Once a complaint is made, the Bill requires the complainant to attempt conciliation and settle the matter. Only in the event a settlement cannot be reached, the internal committee of the organisation would inquire into the matter. The Verma Committee was of the opinion that this is in violation of the Supreme Court’s judgment. It noted that in sexual harassment cases, an attempt to conciliate compromises the dignity of the woman. Action during pendency of the case: As per the Bill, a woman may approach the internal committee to seek a transfer for herself or the respondent or a leave to the complainant. The Verma Committee had recommended that till the disposal of the case, the complainant and the respondent should not be compelled to work together. False complaints: The Bill allows the employer to penalise false or malicious complaints as per their service rules. The Committee was of the opinion that this provision was open to abuse. A PRS analysis of the Bill may be accessed here.
