एन. एच. आई. डी. सी. एल. क्षेत्रीय कार्यालय - गंगटोक द्वारा सिलीगुड़ी टैक्सी स्टैंड पर अतिक्रमण मुक्त राष्ट्रीय राजमार्ग के लिए एक जागरूकता कार्यक्रम आयोजित किया गया।

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  एन. एच. आई. डी. सी. एल. क्षेत्रीय कार्यालय - गंगटोक द्वारा सिलीगुड़ी टैक्सी स्टैंड पर अतिक्रमण मुक्त राष्ट्रीय राजमार्ग के लिए एक जागरूकता कार्यक्रम आयोजित किया गया। राष्ट्रीय राजमार्गों को अतिक्रमण मुक्त और सुरक्षित बनाने की दिशा में एक महत्वपूर्ण कदम उठाते हुए राष्ट्रीय राजमार्ग एवं अवसंरचना विकास निगम लिमिटेड (एन. एच. आई. डी. सी. एल.) क्षेत्रीय कार्यालय - गंगटोक ने दिनांक 14.10.2024 को सुबह 11:00 बजे सिलीगुड़ी टैक्सी स्टैंड, गंगटोक पर एक जागरूकता कार्यक्रम का आयोजन किया। इस कार्यक्रम का उद्देश्य स्थानीय लोगों और वाहन चालकों को राष्ट्रीय राजमार्गों पर अतिक्रमण से होने वाले खतरों और इसके कानूनी परिणामों के बारे में जागरूक कराना था। एन. एच. आई. डी. सी. एल., क्षेत्रीय कार्यालय - गंगटोक द्वारा यह पहल राष्ट्रीय स्तर पर सड़क सुरक्षा को बढ़ावा देने और राष्ट्रीय राजमार्गों पर होने वाले दुर्घटनाओं को कम करने के उद्देश्य से की गई। राजमार्गों के किनारे अतिक्रमण, जैसे अवैध निर्माण, अस्थायी दुकानें और अनधिकृत पार्किंग, यातायात के प्रवाह को बाधित करते हैं, और दुर्घटनाओं की संभावना को बढ़ाते ...

COVID-19: Lockdown triggers amendments to Insolvency and Bankruptcy Code- Revision of threshold of default under the IBC: a bitter pill to swallow?

This Blog is written by Ms. Nandini Tripathy, Student of Symbiosis Law School,  Hyderabad.

The Finance Minister even as addressing the media on numerous monetary decisions and schemes are undertaken by the Government for the advantage of the not unusual masses due to the sudden outbreak of novel COVID-19, which has brought the whole us of a to a grinding halt, announced that the edge restriction for triggering a Corporate Insolvency Resolution The process below the Insolvency Bankruptcy Code, 2016 (hereinafter called “the Code”) shall stand increased to INR 1 crore.
The Gazette Notification dated 24-03-2020 [MCA Notification S.O. 1205(E)] categorically states that by way of virtue of the strength conferred through Parliament at the Central Government, vide the proviso to Section 4 of the Insolvency and Bankruptcy Code, 2016, may additionally, through notification, increase the quantity of default to a maximum quantity of INR 1 crore. However, the said notification does now not have any explanation as to the cut-off date concerning the powerful date, or, within the alternative if the notification comes into pressure immediately then what happens to the pending matters where notices were issued however the National Company Law Tribunal (“the Adjudicating Authority”) is yet to admit the equal. There is a loss of clarity with admire to the aforesaid situation, so one can be developing confusion and could bring about the ouster of instances which could not have been taken up due to this pandemic.
It is a time-honored the position that this notification is a government act and not a modification. Hence, this can be thoroughly termed as a chosen piece of regulation. It is trite in regulation that a chosen piece of regulation cannot be made to be retrospective via the govt unless and until the statute offers the executive such power. It is a popular norm for the reason that age of Rai Sahib Ram Jawaya Kapur v. the State of Punjab that, the executive can do such acts beneath a statute as a way as authorized and as a long way because of the energy of the legislature extends. Whenever the Government had decided on troubles referring to raising the pecuniary limit or enacting a separate law, which might purpose loss of jurisdiction, the govt, and the legislature in its awareness on in advance activities had looked after such transition by using issuing a clarification or through enacting a provision. For instance, when the Administrative Tribunals Act, 1985 become enacted, cases had been transferred to the Central Administrative Tribunals (CAT) vide Section 29 of the Act of 1985.
However, despite the pendency of the said writ petition and the Ordinance being difficulty-count of the venture, the Government went beforehand and passed the aforesaid Ordinance as an Amendment Act on 13.03.2020. The passage of the ordinance as an Amendment Act on 13.03.2020 by way of preserving the identical provision which becomes stayed through the Supreme Court, nullifies the writ petition pending adjudication and the order of the Supreme Court. However, that may be a separate matter to be examined by way of the Court. The Notification dated 24.03.2020 does not have such a proviso additionally as that of the Amendment Act of 2020, which makes matters worse, as in both the litigants and the Courts might be clueless with appreciate to its applicability and the impact it'd have on the pending petitions which can be yet to be admitted. Hence, in this thing also, the notification fails to satisfy the test of objectivity. Thereafter, coming to the question of class-primarily based rules, the Notification dated 24.03.2020, completely ignores many elements, specifically, as a way because the workmen are concerned, they need to now rely on the alternate unions to initiate or trigger insolvency, however again small change unions with a restrained a wide variety of participants will no longer be capable of in shape the brink. The Government through this manner has pushed them to the already pre-present opportunity treatment under the Industrial Disputes Act, 1947.
Further, the Government has issued a press announcement specifying that they're taking into account suspension of the operation of Sections 7 to 10 of the Code, 2016 which offer for the mechanism for petitions through the Financial Creditors (Section 7) and by using the operational lenders (beneath Sections 8 and nine of IBC, 2016). The aforesaid notification of increase of threshold quantity has already made the operation of Sections 7 to 9 of IBC, 2016, redundant because it will match handiest a handful of large businessman/corporate houses, which fall inside the ambit of operational creditors and large monetary establishments who fall in the ambit of financial lenders. It can even in shape homebuyers who have invested in massive tasks of well worth more than a crore, even as the small-scale domestic consumers whose apartments are well worth INR 40-50 lakhs stand to lose out.
While Section 4 of IBC, 2016 gives the Government a prerogative to difficulty policy instructions, but those policy instructions have to no longer be manifestly arbitrary and cannot result in sub-classification which ultimately runs contrary to the item and cause of the legislature and of the statute itself. However, the notification for the reasons cited above if at all is positioned to check, in our opinion may have slim chances of having authorized, because it fails to face on legs and pass the muster of show up arbitrariness. Going by using the common sense of the executive that is to safeguard the small scale and medium scale industries from getting doomed underneath the existing state of affairs, militates in opposition to itself thinking about the invocation of pressure Majeure clause which includes the existing scenario and the moratorium announced with the aid of Reserve Bank of India for a length of three months. Therefore, the defaulter of less than INR 1 crore shall stand to gain from all the three notifications whilst the small scale/medium scale companies stands to large pecuniary loss who cannot motel to any remedy for the realization of its debts/losses? The announcement issued by RBI and the force majeure clause could have stored the defaulters for 3-6 months, while via this notification, the perpetual defaulters are saved from the rigors of the Insolvency and Bankruptcy Code, 2016 for eternity.
Changes in the provision regarding the minimum amount of default and its effect
Recently, the Central Government through gazette notification dated March 24, 2020, special Rs 1 crore rupees because of the minimum quantity of default for initiation of complaints below the Insolvency and Bankruptcy Code, 2016 (‘the Code’). This represents 100-fold growth from the modern degree of 1 lakh rupees. The threshold of default underneath Section 4, IBC for initiation of insolvency lawsuits raised to Rs 1 crore. This circulate comes within the backdrop of the Covid-19 pandemic and is ostensibly geared in the direction of defensive Micro, Small & Medium Enterprises (‘MSMEs’) from being driven into insolvency at some stage in these trying times. The Finance Minister has also introduced that the government turned into considering the suspension of Sections 7, 9, and 10 of the Code if the current situation keeps beyond April 30, 2020. The aforesaid movements appear justified whilst taken into consideration within the context of the present emergent situation. With the Government had ordered a lockdown across the country and the economy close, there are without a doubt going to be ripple-effects across every settlement entered into between parties, especially for time-certain transactions. We are inevitably going to see numerous times of events being unable to fulfill their contractual responsibilities because of the extraordinary state-huge shutting down of financial activities.
COVID-19: Lockdown triggers amendments to Insolvency and Bankruptcy Code
The nationwide lockdown in the wake of the COVID-19 outbreak has impacted the business environment due to the suspension of markets, leading to zero earnings for business communities and revenue losses for the state. At the regulatory level, amendments incorporate laws that brought changes to S. 4 of the Insolvency and Bankruptcy Code, 2016 (IBC). The ministry of corporate affairs raised the threshold of default to Rs 1 crore from Rs 1 lakh as a response to the financial challenges arising from COVID-19. More importantly, the Corporate Insolvency Resolution Process (CIRP) could be suspended for six months for either a financial creditor, an operational creditor or corporate debtor to apply if the situation prolongs beyond April 30. However, this amendment could adversely impact the regulatory environment, and in turn, affect the business climate in the country. The move to increase the default threshold to Rs 1 crore by the corporate debtor could be to prevent companies, especially those within micro small and medium enterprises (MSME) category, from being dragged to the National Company Law Tribunal for settlement of debts. This could be a breather for companies that are already struggling with business losses. On the flip side, this amendment could harm the interests of creditors whose only hope for a fast realization of debt is the IBC route. Similarly, for the financial creditor, this will seriously affect the debt recovery process, leading to a credit crunch in the market. The operational creditor will find it difficult to apply under S.9 due to the rise in the trigger amount. Even if a financial creditor initiates a CIRP if the default is above Rs 1 crore, the company will continue its business though it is unviable for the operational creditor to supply goods or provide services to the debtor. To that extent, their contractual obligation will not be suspended (S.14(2)(A) Amendment Act 2020) until the debtor commits a default. Even if the debtor commits a default, the right of the creditor to sue the debtor will be curtailed. To extend this arrangement far beyond April would considerably bring down the value of assets of the corporate debtor and by the time the Rs 1 lakh ambit default is recovered, precious time would have been lost, hampering the interests of all stakeholders.
In the main comfort for corporate borrowers hit hard via the coronavirus pandemic, the government has decided to amend the insolvency regulation to droop up to 12 months provisions that trigger insolvency lawsuits against defaulters, in step with resources. Further, the assets stated amendments to the IBC (Insolvency and Bankruptcy Code) might pave the manner for banks to restructure loans. The sources said an ordinance would be promulgated to droop three sections of IBC for up to 365 days and a selection in this regard turned into taken with the aid of the Union cabinet on Wednesday. Section 7, 9, and 10 of the IBC would be suspended for 6 months and the suspension time may be extended up to one year. A permitting provision with recognition to extending the time might be a part of the ordinance, they brought. Suspension of these provisions may be extended as much as one year based totally on the financial scenario going forward.

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