The Juvenile Justice (Care and Protection of Children) Bill, 2015 is currently pending in Rajya Sabha and was listed for passage in the current Winter session of Parliament.  The Bill was passed by Lok Sabha after incorporating certain amendments, in May 2015.  Here is all you need to know about the Bill and key issues associated with it.  A PRS analysis of the statistics on incidence of crimes by children and conviction rates is available here.

Table 1: Juveniles between 16-18 years apprehended under IPC  
Crime

2003

2013

Burglary

1,160

2,117

Rape

293

1,388

Kidnapping/abduction

156

933

Robbery

165

880

Murder

328

845

Other offences

11,839

19,641

Total

13,941

25,804

Note: Other offences include cheating, rioting, etc.  Sources: Juveniles in conflict with law, Crime in India 2013, National Crime Records Bureau; PRS.  

Who is a juvenile as recognised by law? In the Indian context, a juvenile or child is any person who is below the age of 18 years.  However, the Indian Penal Code specifies that a child cannot be charged for any crime until he has attained seven years of age. Why is there a need for a new Bill when a juvenile justice law already exists? The government introduced the Juvenile Justice Bill in August 2014 in Lok Sabha and gave various reasons to justify the need for a new law.  It said that the existing Juvenile Justice Act, 2000 was facing implementation issues and procedural delays with regard to adoption, etc.  Additionally, the government cited National Crime Records Bureau (NCRB) data to say that there has been an increase in crimes committed by juveniles, especially by those in the 16-18 years age group. NCRB data shows that the percentage of juvenile crimes, when seen in proportion to total crimes, has increased from 1% in 2003 to 1.2% in 2013.  During the same period, 16-18 year olds accused of crimes as a percentage of all juveniles accused of crimes increased from 54% to 66%.  However, the type of crimes committed by 16-18 year olds can be seen in table 1. What is the new Bill doing? Currently, the Juvenile Justice (Care and Protection of Children) Act, 2000 provides the framework to deal with children who are in conflict with law and children in need of care and protection.  The Bill seeks to replace the existing 2000 Act and lays down the procedures to deal with both categories of children.  It highlights the two main bodies that will deal with these children, to be set up in each district: Juvenile Justice Boards (JJBs) and Child Welfare Committees (CWCs).  It provides details regarding adoption processes and penalties applicable under the law.  The Bill provides for children between 16-18 years to be tried as adults for heinous crimes.  The three types of offences defined by the Bill are: (i) a heinous offence is an offence that attracts a minimum penalty of seven years imprisonment under any existing law, (ii) a serious offence is one that gets imprisonment between three to seven years and, (iii) a petty offence is penalized with up to three years imprisonment. Currently, how is a juvenile in conflict with law treated? How is that set to change? Under the 2000 Act, any child in conflict with law, regardless of the type of offence committed, may spend a maximum of three years in institutional care (special home, etc.)  The child cannot be given any penalty higher than three years, nor be tried as an adult and be sent to an adult jail.  The proposed Bill treats all children under the age of 18 years in a similar way, except for one departure.  It states that any 16-18 year old who commits a heinous offence may be tried as an adult.  The JJB shall assess the child’s mental and physical capacity, ability to understand consequences of the offence, etc.  On the basis of this assessment, a Children’s Court will determine whether the child is fit to be tried as an adult. What did the Standing Committee examining the Bill observe? One of the reasons cited for the introduction of the Bill is a spike in juvenile crime, as depicted by NCRB data.  The Standing Committee on Human Resource Development examining the Bill stated that NCRB data was misleading as it was based on FIRs and not actual convictions.  It also observed that the Bill violates some constitutional provisions and said that the approach towards juvenile offenders should be reformative and rehabilitative. The Bill as introduced posed certain constitutional violations to Article 14, 20(1) and 21.  These have been addressed by deletion of the relevant clause, at the time of passing the Bill in Lok Sabha. What does the United Nations Convention on the Rights of the Child (UNCRC) say? What are the obligations on the signatory nations? The UNCRC was ratified by India in 1992 and the 2000 Act was consequently brought in to adhere to the standards set by the Convention.  The proposed Bill maintains this aim and seeks to improve implementation and procedural delays experienced by the 2000 Act.  The UNCRC states that signatory countries should treat every child under the age of 18 years in the same manner and not try them as adults.  While the 2000 Act complies with this requirement, the Bill does not.  However, many other countries who have also ratified the Convention try juveniles as adults, in case of certain crimes.  These countries include the UK, France, Germany, etc.  The United States is not a signatory to the UNCRC and also treats juveniles as adults in case of certain crimes. Under the Bill, what happens to a child who is found to be orphaned, abandoned or surrendered? The Bill addresses children in need of care and protection.  When a child is found to be orphaned, abandoned or surrendered he is brought before a Child Welfare Committee within 24 hours.  A social investigation report is conducted for the child, and the Committee decides to either send the child to a children’s home or any other facility it deems fit, or to declare the child to be free for adoption or foster care.  The Bill outlines the eligibility criteria for prospective parents.  It also details procedures for adoption, and introduces a provision for inter-country adoption, so that prospective parents living outside the country can adopt a child in India. Currently, the Guidelines Governing Adoption, 2015 under the 2000 Act, regulates adoptions.  Model Foster Care Guidelines have also recently been released by the Ministry of Women and Child Development. What are the penalties for committing offences against children? Various penalties for committing offences against children are laid out in the Bill.  These include penalties for giving a child an intoxicating substance, selling or buying the child, cruelty against a child, etc. Issue to consider: The penalty for giving a child an intoxicating or narcotic substance is an imprisonment of seven years and a fine of up to one lakh rupees.  Comparatively, buying or selling a child will attract a penalty including imprisonment of five years and a fine of one lakh rupees. It remains to be seen if the Bill will be taken up for consideration in this session, and if its passage will address the issues surrounding children in conflict with the law.

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.