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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 Piracy Bill was introduced in Lok Sabha on April 24, 2012. According to the Statement of Objects and Reasons, there has been a significant increase in attacks by pirates, particularly in the Gulf of Aden and off the coast of Somalia. This has affected security of maritime traffic and personnel plying between Asia, Europe and Africa. Moreover, enhanced naval presence in the Gulf of Aden is now causing pirates to shift operations close to India’s Exclusive Economic Zone. As a result, a number of Somali pirates are presently in the custody of Indian police authorities. However, since piracy as a crime is not included in the Indian Penal Code (IPC), this has led to problems in prosecution. The Piracy Bill intends to fill this gap and provide clarity in the law. The Bill, if passed by Parliament, would extend to the entire Exclusive Economic Zone of India (EEZ). Under international law, EEZ is a seazone over which a country has special rights for exploration and use of marine resources. It stretches outward from the coast, up to 200 nautical miles into the sea. The Bill defines 'piracy' as any illegal act of violence or detention for private ends by the crew or passengers of a private ship or aircraft on high seas or at a place outside the jurisdiction of any State. This definition is akin to the definition of piracy laid down under the 'United Nations Convention on the Law of the Sea'. The Bill seeks to punish piracy with imprisonment for life. In cases where piracy leads to death, it may be punished with death. It also provides that if arms, ammunition are recovered from the possession of the accused, or if there is evidence of threat of violence, the burden of proof for proving innocence would shift to the accused. The Bill empowers the government to set up designated courts for speedy trial of offences and authorizes the court to prosecute the accused regardless of his/ her nationality. It also provides for extradition. You can access the Bill text here.
