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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 National Advisory Committee has recently come out with a Communal Violence Bill. The Bill is intended to prevent acts of violence, or incitement to violence directed at people by virtue of their membership to any “group”. An existing Bill titled the “Communal Violence (Prevention, Control and Rehabilitation of Victims) Bill, 2005” pending in the Rajya Sabha (analysis here). The main features of the NAC Bill are explained below: The Bill makes illegal acts which result in injury to persons or property, if such acts are directed against persons on the basis of their affiliation to any group, and if such an act destroys the secular fabric of the nation. Such acts include sexual assault, hate propaganda, torture and organized communal violence. It makes public servants punishable for failing to discharge their stated duties in an unbiased manner. In addition, public servants have duties such as the duty to provide protection to victims of communal violence and also have to take steps to prevent the outbreak of communal violence. The Bill establishes a National Authority for Communal Harmony, Justice, and Reparation to prevent acts of communal violence, incitement to communal violence, containing the spread of communal violence, and monitoring investigations into acts of communal violence. The Authority can also inquire into and investigate acts of communal violence by itself. The Bill also provides for the setting up of State Authorities for Communal Harmony, Justice, and Reparation. The central or state government has been given the authority to intercept any messages or transmissions if it feels that it might lead to communal violence. This power is subject to existing procedures which have to be complied with for intercepting messages and transmissions. Importantly, if public officers are liable to be prosecuted for offences under the Bill, and prior sanction is required for such prosecution, the state government has to grant or refuse sanction within 30 days. If not, then sanction will be deemed to have been granted. The Bill also allows the states to set up one or more Human Rights Defender of Justice and Reparations’ in every district. The Human Rights defender will ensure that those affected by communal and targeted violence are able to access their rights under existing laws. Apart from these, the Bill also establishes state and district-level authorities for assessing compensation for victims of communal violence. States also have numerous obligations towards victims, such as the establishment of relief camps, ensuring proper facilities, medical provisions and clothing for those within such camps, etc. The states government also has the obligation to create conditions which allow the return of victims of communal violence to the place of their ordinary residence.
