Posted in Corporate and Finance

Unsettled Conundrum: Biased Treatment by an Unbiased Code

Over the period, the jurisprudence on the Insolvency and Bankruptcy resolution in India has evolved quite a lot, but there still exist certain grey areas, which could be the factor for the biased way of treatment to the parties involved in the rescue process of the company hit by Insolvency or Bankruptcy. One such factor which is pervasively present in most of the issues raised in association to this code is the favourable framework of the code for a type of Creditor, and not so favourable framework that it extends to another type of creditor and the debtor.

The Companies Act 1956[1], can be said to be the parent legislation of the Insolvency & Bankruptcy code[2] (hereinafter, IBC), under which the companies, by volition, concurred to be wound up, unlike the case in the IBC, where, the Financial Creditor[3]/ Operational Creditor[4] files for the resolution process at NCLT. The free volition scenario is there indeed, but only on paper, in a large number of cases. Due to this, the essential function of the code, which is to resurrect the dying company, nullifies, as the financial state of the company gets worse after the invocation of the company insolvency resolution process.

The first instance where the unfair treatment could be witnessed is if we see the wordings of section 7[5], section 8[6] and section 9[7] of the IBC. Section 7[8] states that, in case of default, the application by the Financial Creditor could be made to the NCLT where the details of the same will be provided and if the adjudicating authority[9] is convinced of the fact that the default exists, then the direction can be given for the initiation of the insolvency resolution process. Now, this is in stark contrast to the case which is made by virtue of section 8[10] and section 9[11], cumulatively of the IBC. In case of the operational creditor[12], a demand notice[13] is required to be provided to the Corporate Debtor[14], who is then required to revert within the span of ten days, apprising the presence of any dispute[15] regarding the claim[16]. In absence of the dispute[17] being present, the adjudicating authority[18] is bound to initiate the resolution process. But, in case of the presence of the dispute[19], or any fallacy in the application, the adjudicating authority[20] can ask the applicant to rectify the same within the span of seven days. This shows the lack of communication in the case where the Financial Creditor[21] files an application for the initiation of CIRP and puts the Corporate Debtor’s right to save itself prior to the initiation of the resolution process in peril. The same state has also been spawned by a plethora of judicial pronouncements, for instance, in Sree Metaliks Limited & Anr v. Union of India,[22] the Calcutta High Court stated in its dictum that-

proceedings before NCLT are adversarial in nature and such proceedings have drastic consequences, hence, person(s) cannot be condemned unheard. even though the application of principles of natural justice are not expressly provided, they can and should be read into in, therefore, the NCLT would be bound to afford the right to reasonable opportunity of hearing in an application under section 7 of the code.[23]

In yet another case of Starlog Enterprises Ltd. v. ICICI Bank Ltd.[24], the NCLAT held that,

it is imperative for the adjudicating authority to adopt a cautious approach in admitting insolvency applications and also ensuring adherence to the principles of natural justice.[25]

Apart from all the aforementioned arguments, it is also pertinent to observe, considering the current scenario of the discourse that, the legislation is silent on the part where the adjudicating authority[26] is required to decide and grant the hearing to the Corporate Debtor[27]. In addendum, the code has a non-obstante clause under section 238[28] which gives the code an overriding power over any other legislation. This negates the strict applicability of the provision of Civil Procedure Code[29] and the principle of natural justice which is encapsulated in Section 424[30] of the Companies Act- 2013[31].

Secondly, there is not any intelligible basis on which the distinction between the Financial Creditor[32] and the Operational Creditor[33] is made in the code. An instance of the same is that the Financial Creditor[34] has the right to preside over the meetings of the Committee of Creditors[35] (hereinafter, COC) and exercises the vote in commensuration to the amount disbursed as loan to the debtor. In juxtaposition, the Operational Creditor[36] has no such right. The fundamental possibility of the situation is completely overlooked that, the Operational Creditor[37] might have a claim[38] which could be of a huge monetary value.

Furthermore, the code does not create an obligation on the adjudicating authority[39] to look into the veracity and genuineness of the claim made by the Financial Creditor[40], unlike in the case of the Operational Creditor[41], where the ascertainment of the amount, veracity and genuineness of the claim[42] is paramount and mandatory. This, again, is without any basis and rationale. This unfair treatment is meted out to two parties here,

  1. Corporate Debtor[43]– As he has got no say to avert the resolution process, even though the claims made might not be that of an actual amount. The only consideration made in this by virtue of section 7[44] is, that there is a default made by the debtor and it subsists. This has been well put forth by the Supreme Court in the case of Innoventive Industries Ltd. ICICI Bank[45], where the court said-

It is of no matter that the debt is disputed so long as the debt is “due” i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise.[46]

  1. Operational Creditor[47]– As the division between the procedures in case of the two types of creditors is not in the same line. The Operational Creditor[48] has to go through a lot of checks before getting the claim [49]sorted, and also does not get cast the vote in the meeting of the COC.

Even the presence of the Information Utility[50], in case of the Financial Creditor[51], also does no good, for two reasons, essentially:

  • The presence of default is the only criterion which is needed to be looked into, irrespective of the dispute on the claimed amount, before initiating the resolution process.
  • Procuring the authentic information might be difficult as sharing information from the digital database exposes oneself to the risk of data privacy and data theft, making it impossible for the parties to the suit to ascertain the genuineness of the claims made.

One of the reasons provided, usually for such a distinction, bases itself on the findings of the report of the Bankruptcy Committee[52] chaired by Dr. T. K. Viswanathan, which submitted that the claim of financial creditors is usually left uncontested. There is indeed a paradigm shift in the insolvency law in India and the unification and adherence to this law is remarkable, but, leaving such loopholes on the basis of mere assumptions and probabilities makes it detrimental for the ones who do not find themselves landing in the aforementioned set. The law, in such changing times, needs to be accommodative of all the possible permutations and combinations of probabilities which might emerge. Though the hope for the same is zilch as there cannot be an all-embracing law possible, but an attempt to reach near the same could be made.

[1] Companies Act, 1956

[2] Insolvency and Bankruptcy Code, 2016

[3] Code, Id. at Sec. 5 (7)

[4] Code, Id. at Sec. 5 (20)

[5] Code, Id. at Sec. 7

[6] Code, Id. at Sec. 8

[7] Code, Id. Sec. 9

[8] Id. 5

[9] Code, Id. at Sec. 5 (1)

[10] Supra 6

[11] Supra 7

[12] Supra 4

[13] Code, Supra at Sec. 8(2) Explanation.

[14] Code, Supra at Sec. 3(8)

[15] Code, Supra at 5(6)

[16] Code, Supra at 3 (6)

[17] Id. 15

[18] Id. 9

[19] Id. 15

[20] Id. 9

[21] Supra 3

[22] Sree Metaliks ltd. v. Union of India, [2017]140CLA30(Cal), (Calcutta High Court).

[23] Debangsu Basak, J. Sree Metaliks ltd. v. Union of India, [2017]140CLA30(Cal).

[24] Starlog Enterprises ltd. v. ICICI Bank ltd., [2017]142SCL1, (National Company Law Appellate Tribunal)

[25] Sudhanshu Jyoti Mukhopadhaya, J. Starlog Enterprises ltd. v. ICICI Bank ltd., [2017]142SCL1

[26] Supra 9

[27] Supra 14

[28] Code, Supra at Sec. 238

[29] Civil Procedure Code, 1908

[30] Sec. 424, Companies Act, 2013

[31] Companies Act, 2013

[32] Supra 3

[33] Supra 4

[34] Supra 3

[35] Code, Supra at Sec. 21 (2)

[36] Supra 4

[37] Supra 4

[38] Supra 16

[39] Supra 9

[40] Supra 3

[41] Supra 4

[42] Supra 16

[43] Supra 14

[44] Supra 5

[45] Innoventive Industries ltd. v. ICICI Bank ltd., (2018)1SCC407, (Supreme Court of India).

[46] R. F. Nariman, J., Innoventive Industries ltd. v. ICICI Bank ltd., (2018)1SCC407

[47] Supra 4

[48] Supra 4

[49] Supra 16

[50] Code, Supra Sec. 3(21)

[51] Supra 3

[52] Insolvency and Bankruptcy Board of India, The Report of Bankruptcy Law Reforms Committee, (2015), available at http://ibbi.gov.in/BLRCReportVol1_04112015.pdf (Last visited on May 11, 2018)


ABOUT THE AUTHOR

Shivam Sharan

IMG_20180605_102806_156

Shivam Sharan is a second-year law student at NALSAR University of Law, Hyderabad. Although he has no particular area of interests as such in the legal field, but he likes to keep experimenting with new things and is open to edification by way of exploration. Apart from his work, he likes painting and listening to music.

Posted in Now happening

An unbiased discussion on Jallikattu

A Nation’s culture resides in the heart and soul of its people!

Culture shapes our values, belief, norms and, to a great extent, our attitudes and the way we perceive the world around us. And our motherland, the India is known for its unique blend of diverse culture. We take pride in our cultural practices, tradition, custom and we also feel an obligation for its preservence. Jallikattu is one among the prevalent Tamilian culture’s part. Jallikattu, Tamil Nadu’s version of ‘running of the bulls’ that has been banned by the Supreme Court, is back in the limelight once more.

All you need to know about the Jallikattu

Jallikattu could be referred to as bull taming event typically practiced in Tamil Nadu as a part of Pongal celebrations on Mattu Pongal day, third day of the four-day Pongal festival. The term ‘jallikattu’ is derived from the tamil words ‘jalli’ and ‘kattu’.  Jalli refers to gold or silver coins. Kattu means ‘tied’. Therefore, combined together it refers to coins being tied to the bulls’ horns, which is considered the prize for whoever tames the bull. The bull that wins is used to service numerous cows preserving the native breed. It is renowned as an ancient ‘sport’, believed to have been practised some 2500 years ago.

An Essential Role of Jallikattu

Jallikattu events provide the opportunity for bulls to be exhibited. Male calves are kept only in regions with a tradition of sports like jallikattu. In other regions, male calves are sold and taken to slaughter in only a few days. With the reduced availability of males, farmers have to go for artificial insemination. That is indeed a problem. But the region where Jallikattu is in Practice, the male calves are nurtured as part of their family. “For thousands of years, the agrarian society of Tamils has considered cattle as family members. The sole purpose of rearing a bull is for Jallikattu. The sport is a scientific method to pass on the best of genes to the next generation. It’s a method to identify the robust of bulls and create a superior genepool.” There are also some people who depend on the hefty prize money on bull taming. In reality they pursue it as a profession. And that cannot be ignored.

Chronological events concerning animal rights with a reference to Jallikattu

The bull fights, and bull races have been illegal since 1960 under the statute “Prevention of Cruelty to Animals Act. Further the bull performance was banned by the environment ministry itself in 2011, and the causing of unnecessary suffering that is inherent in Jallikattu.

In 2014, the court had banned Jallikattu on grounds of animal cruelty. The order, however, didn’t go down well with Tamil Nadu political parties.

Last year, SC had dismissed the plea of the state government seeking review of its 2014 judgement that banned bulls for Jallikattu in Tamil Nadu. The apex court had also earlier declared Tamil Nadu Regulation of Jallikattu Act, 2009 as constitutionally void, being violative or Article 254(1) of the Constitution.

On January 8, last year the Centre had issued a notification lifting ban on Jallikattu in Tamil Nadu with certain restrictions, which was challenged in the apex court by Animal Welfare Board of India, People for Ethical Treatment of Animals (PETA) India, a Bangalore-based NGO and other.

On July 26, last year the apex court had said that just because the bull-taming sport of Jallikattu was a centuries-old tradition, it could not be justified.

A Bird’s view on constitution of India in consonance with ongoing debate

Article 48 and Article254(2) have been given reference on such debatable issues. Article 48 of the Constitution requires to the state to “endeavour to organise agriculture and animal husbandry on modern and scientific lines and shall, in particular, take steps for preserving and improving the breeds, and prohibiting the slaughter, of cows and calves and other milch and draught cattle”. The later one Article 254(2) talks at length about how in the matter mentioned in concurrent list if decision of state and central government are different then central government decision shall prevail. Both provisions cannot be overlooked. The state needs to build a way out that will be going through both places.

Democracy gives right to differ but definitely in reasonable manner

Those who have batted for the “sport”, have usually done so saying it is part of the state’s culture much in the manner gory bull-fights and Pamplona’s running of the bulls are in Spain or rodeo is in parts of the US. We don’t need to take such defence like somebody powerful than you involves questionable short of activities doesn’t mean we should emulate. A bad will always be bad. Indian culture is inherently kind in nature. So these people should not say at least now the Jallikattu in recent version is brutal.

There is no doubt that jallikattu, translated as bull-hugging, is a cultural phenomenon singular to Tamil Nadu as is camel racing to Rajasthan or Gujarat or ritual animal sacrifice in Assam, none of the latter being banned practices. What kind of hugging happens by way pulling the tame of bull, exposing him to various torturous circumstances that disorient them?

We successfully banned child marriage, abolished Sati pratha, initiated widow remarriage, and numerous as such with the passing of time then why not the Jallikattu can be dealt in such manner? The blanket ban also won’t work as it worked in Sati Pratha and Child Marriage. The former two don’t have any kind of positive aspects and contribution in societal development and sustenance, but the Jallikattu is a need for the native person. It discovers the strongest breed of bull that would help in production of better breed and also the people who depends on the prize money of the sport. The one is environmental issue and another is social concern.

Social heritage and social adjustments are characteristics of culture. So we need to protect the heritage but we should also walk together towards a global culture where surely some kind of adjustment is required.

CONCLUSION

Choosing sides in the debate on Jallikattu is a Sisyphean task. Rather it should be dealt with the due dialogue. Dialogue is the basis of Indian culture. So the proper legislation should be made on Jallikattu so that there won’t be any kind of cruelty in practice and Animal Rights ought to be taken into consideration. Man has the capacity to learn from experience and devise ways of adjusting to the physical environment in order to ensure his survival. So they need to rethink their demand by a animal’s point of. But one thing that cannot be ignored is the kind of peaceful and proper protest at Marina Beach will be a paradigm in future. We are rationalist nation. Let’s go of the old, leave the nonsense kind of politics and make a room for the new proper legislation…



ABOUT THE AUTHOR

picture1

KOMAL

Komal has done her schooling from Jawahar Navodaya Vidyalaya , Birauli, Samastipur, Bihar. Currently, she is pursuing BA.LLB at Chanakya National Law University, Patna. Intrinsically passionate about News paper, Books and Basketball, her interest extends to understand the intricacies of the current legal issues. She yearns to be a renowned lawyer.

Posted in Bills

Geospatial Bill & How it does affect us?

This article is written by Srishti Gupta. Srishti is a fourth-year law student from Vivekananda Institute of Professional Studies, GGSIPU.

 

 

The Ministry of Home Affairs on May 4, 2016, released a draft of ‘The Geospatial Information Regulation Bill, 2016’. The drafting of this Bill was repercussion of the attack in Pathankot airbase. Google conducts a contest called ‘Mapathon’ contributing to the mapping features of a city. In 2013, Vishal Saini was its winner and the city chosen by him was Pathankot. This resulted in a petition by Lokesh Kumar Sharma in the Delhi High Court where he sought directions of the Court to restrain Google from making available maps and images of sensitive and defence establishment. Then, the Additional Solicitor General assured the Bench that ‘steps are in progress to regulate the publication of aerial/satellite geospatial data.’ Hence, the draft was introduced.

The prime objective of the Bill is to regulate the acquisition, dissemination, publication and distribution of geospatial information of India which is likely to affect the security, sovereignty and integrity of India. It is applicable to all Indian citizens, even those outside the country, as well as “persons on ships and aircrafts, registered in India, wherever they may be.

In simple terms, it means that every bit of geospatial information has to be cleared for approval from the Security Vetting Authority appointed under this Bill. This information shall include every graphical or digital data, which can be as simple as a Facebook check-in or geo-tagging on Twitter or even a map for personal reference.

Any person who wants to use the geo-spatial information shall have to apply for a license with requisite fees within a year of enactment for the Bill. This also includes those who are already in possession of such information. However, that is not all. The Authority, having the power of refusal to grant such license, can take only as long as 3 months to grant the license. The most crucial ground for refusal is that the piece of information threatens “national security, sovereignty, safety and integrity.

Apart from having the right to revoke the license after giving an opportunity of being heard, there are penalties for using unlicensed geo-spatial information which includes a fine from Rs. 10 Lakh to Rs. 100 Crore and imprisonment for a period of 7 years.

It is admitted that there is need for reformation in this area as the National Map Policy is outdated but this idea is unlikely to take things towards a constructive impact. This Bill shall have an effect on every person and every business including Google, App based Cab companies like Uber, Ola. Basically, whosoever uses location as a major feature is likely to be affected with the coming of this Bill.

The Bill, however, is neither free from flaws nor consequences. The first one being that there is no amount prescribed as requisite fees for applying for a license which means it can vary from person to person. Secondly, maps are an essential resource for academicians. Institutions are likely to absorb the financial shock from students by hiking their fees. The Bill will have a major impact on start up businesses for which the geo-spatial information is essential and shall ultimately pass on their financial burden on to the customers. This Bill also covers individuals using geo-spatial information for private purposes and categorises it as illegal which is again a violation of their fundamental right of freedom of speech and expression as well as their right to privacy under Article 19(1) (a) and Article 21 respectively.

The Ministry of Home Affairs has not come out with a concrete statement on the Bill till date but had accepted comments on the draft until June 4, 2016.

Posted in Criminal Law, Critical Analysis

PINK OR BLUE ? –The gender bias within the Indian Penal Code

This article is written by Simran Bhinder. Simran is a fourth-year law student at O P JINDAL GLOBAL UNIVERSITY.

 

 

A very prominent feature of Criminal law in India is the fact that there is a very clear gender bias. I say gender bias and not “male bias” because there are certain provisions within the Indian penal code which are against both males and females.

Nearly all the laws that deal with crimes against women are aimed at codifying Old and Out-Dated patriarchal notions of how an “ideal” woman should behave. The various case laws further end up legitimising the socially prevalent masculine ideas of how a woman should behave and conduct herself. The words of the law in themselves convey a biased message. For example, Section 135 of the IPC talk about offences that outrage a woman’s modesty. Modesty.

The question here is that how is it that a woman’s “modesty”(a word used to define the behaviour of an individual) is outraged by the uncivilised and improper conduct of a man? Shouldn’t the moral character and the modesty of the man who commits such an anti-social act be questioned and not the other way round?

The fact that the victim was wronged gets overshadowed by the implied consequence that she has lost her social standing. Thus even though the act is aimed at providing a remedy to the woman, the unintentional consequence of the very language that is used in this section ends up further stigmatising the female victims.

Section 375 (sixthly), states that even a consensual sexual act with a woman below the age of 18 years will be deemed to be statutory rape. This section is, according to me, is the most unapologetic refusal of the criminal justice system to recognise a woman’s authority and her rights regarding her own body. It denies a woman the right to decide on an issue that is immensely intimate and very personal. It transforms a voluntary act of love into the beastly act of rape, which is one of the highest forms of physical violation and disrespect of the human body.

The adultery laws in India are another example of how unjustly and unequally the law views women in comparison to men. These laws fail to recognise not only the fact that a wife is an equal member of a marital union but also end up lending legal legitimization to the idea that in a marriage a woman is nothing but her husband’s property, and that he deserves to be compensated for the stealing of and encroachment upon his property by some other man. Thus since a woman is viewed as an inanimate object (the property of her husband) it is assumed that she wouldn’t undergo any psychological and emotional distress if her husband commits adultery. This assumption is clearly reflected in the law since only a married man has the right to file a complaint against his wife’s paramour and no one else. A married woman cannot start proceedings against her husband or her husband’s partner in cases of adultery. The judgement in cases like KALYANI vs STATE (2011), further illustrate it.

Even the Rape laws in India are just a reflection of how the criminal law has actually institutionalised and made stronger the unjust social norms instead of providing remedy for them. A lot has been said about the loopholes within these laws ( which exist even after the much publicised and celebrated 2013 amendments). The fact that even today in almost all the rape law judgements  reference is made to the past sexual history of the victim (as was the case in Mathura rape case) and whether or not her general behaviour was “respectable or not” shows how the forces of socially accepted morality for women function within the legal system also.

There is also a trend of forcefully victimising women in Indian criminal law. The way most of the judgements especially those dealing with rape cases, are worded usually make it seem as if the Rape is the only “event” that would define how victims life would take shape. The punishment is not seen as a correction for a wrong committed but as a compensation for “ruining” a woman’s life.

Another interesting fact is that in India women are never seen as being capable of actually being perpetuators of crimes. The fact that rape laws in India are gender neutral and that in cases of adultery only a man can be booked and not the female companion not only shows how criminal law re-enforces the traditionally accepted notions of feminity and masculinity but also poses a grave danger to the well-being of the society, where in today’s day and age same-sex molestations, including female rapes are a reality.

The main objective of criminal law is to provide equal protection to all the members of the society and this objective can only be realised if the criminal law in India starts viewing women as equal members of the society , who not only have equal rights to the remedies but who can also be equally punished.