Bills and Acts
Summary of latest bill and acts passed or pending in 2018 in Parliament of India with their salient features and issues for Current Affairs 2018 preparation for various examinations.
Category Wise PDF Compilations available at This Link
Lok Sabha has passed Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018. It replaces the ordinance promulgated by President in May 2018 and amends Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015.
The Act enables creation of commercial divisions in High Courts and commercial courts at district level to adjudicate commercial disputes such as disputes related to contracts for provision of goods and services and construction contracts. The amendment is aimed at improving ease of doing business in India.
Key Features of Bill
Reduction in pecuniary limits: Under the parent Act, commercial courts and commercial divisions in High courts can decide commercial disputes with value of at least Rs. 1 crore. The Bill reduces this limit to Rs. 3 lakh.
Establishment of certain commercial courts: The parent Act, empowers state governments to constitute commercial courts at district judge level, after consulting concerned High Court. It had barred such commercial courts to be constituted in cases where High Court has original jurisdiction to hear commercial cases. The Bill removes this bar and allows states to constitute commercial courts where High Courts have original jurisdiction.
Commercial Appellate Courts: The Bills allows state governments to notify commercial appellate courts at the district judge level in areas where High Courts do not have ordinary original civil jurisdiction. These Appellate Courts will hear appeals against order of commercial court below level of district judge.
Mediation: It introduces pre-institution mediation process in cases where no urgent, interim relief is contemplated. This aims to provide for opportunity to parties to resolve commercial disputes outside ambit of courts through authorities. This will also help in reinforcing investor’s confidence in the resolution of commercial disputes.
Counterclaims not to be transferred: The Bill removes provision of counterclaim in relation to transfer of suits in a commercial dispute of at least Rs. 1 crore in civil court.
Tags: Bills and Acts • Bills and Amendments • Commercial Courts • Commercial Courts Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill • Ease of doing business • Lok Sabbha • National
Lok Sabha has passed Insolvency and Bankruptcy Code (Amendment) Bill, 2018 to bring relief to the home buyers and Micro, Small and Medium Enterprises (MSMEs). The Bill replaces ordinance promulgated in this regard and amends the Insolvency and Bankruptcy Code, 2016.
Insolvency and Bankruptcy Code (IBC), 2016 provides time-bound process to resolution of insolvency among companies and individuals. Insolvency is situation where individual or company is unable to repay their outstanding debt. Government in November 2017 had set up Insolvency Law Committee to review IBC and identify issues in its implementation and suggest changes. The Committee had made several recommendations such as exempting MSMEs from certain provisions of IBC, treating allottees under real estate project as financial creditors, reducing voting thresholds of committee of creditors (CoC), among others. Subsequently, President had promulgated Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 in June 2018 after approval of Central Government.
Key Features of Bill
Status of allottees: The Bill clarifies that allottee under real estate project i.e. buyer of under-construction residential or commercial property will be considered as financial creditor, as amount raised from allottees for financing real estate project has commercial effect of a borrowing.
Representative of financial creditors: It specifies that in certain cases, such as when debt is owed to a class of creditors, the financial creditors will be represented on committee of creditors by authorised representative. These representatives will vote on behalf of financial creditors as per prior instructions received from them.
Voting threshold of committee of creditors: The voting threshold for decisions of committee of creditors has been lowered from 75% to 51%. For certain key decisions of committee like appointment of resolution professional, approval of the resolution plan and increasing time limit for insolvency resolution process threshold has been reduced from 75% to 66%.
Ineligibility to be resolution applicant: Bill amends criteria which prohibits certain persons from submitting resolution plan. It provides that this criterion will not apply if such applicant is financial entity and not related party to debtor with certain exceptions. It specifies that such bar will apply if such guarantee has been invoked by creditor and remains unpaid.
Applicability of Code to Micro, Small, and Medium Enterprises (MSMEs): The Bill specifies that ineligibility criteria for resolution applicants regarding Non Performing Assets (NPAs) and guarantors will not be applicable to persons applying for resolution of MSMEs. It empowers Central government in public interest to modify or remove other provisions of IBC while applying them to MSMEs.
Withdrawal of submitted applications: The Bill increases vote required for withdrawal resolution application from National Company Law Tribunal (NCLT) after such process has been initiated by 90% vote of committee of creditors.