IBC Current Affairs - 2019
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Krishnamurthy Subramanian, Chief Economic Adviser (CEA) and B. Sriram, former managing director (MD) and chief executive officer (CEO) of Industrial Development Bank of India (IDBI Bank) were appointed part-time members of Insolvency and Bankruptcy Board of India (IBBI).
K Subramanian, an Indian School of Business (ISB) Hyderabad professor was appointed chief economic adviser for a period of 3 years in December 2018.
Their appointment was approved by Appointments Committee of the Cabinet (ACC), which is composed of Prime Minister of India (who is Chairman), Union Minister of Home Affairs and the order for appointment was issued by Department of Personnel and Training (DoPT).
About Insolvency and Bankruptcy Board of India
- IBBI, an insolvency regulatory agency was established on 1 October 2016. It was given statutory powers by Insolvency and Bankruptcy Code (IBC), the bankruptcy law of India which was passed by Lok Sabha on 5 May 2016.
- The IBC 2016 established Insolvency and Bankruptcy Board of India (IBBI), to oversee insolvency proceedings in India and to regulate entities registered under it.
- The IBBI Governing Board consists of 10 members, including representatives from the Ministry of Finance (MoF), Ministry of Law and Justice, Ministry of corporate affairs (MCA), and Reserve Bank of India (RBI).
- IBBI act as a regulator for overseeing insolvency proceedings and entities such as Insolvency Professionals (IP), Insolvency Professional Agencies (IPA) and Information Utilities (IU) in India.
- IBC covers Individuals, Companies, Partnership firms and Limited Liability Partnerships and handles cases under it using tribunals namely National company law tribunal (NCLT) and Debt recovery tribunal (DRT).
Tags: Appointments Committee of the Cabinet • B. Sriram • Cabinet (ACC) • Chief Economic Advise • Debt recovery tribunal
The Delhi High Court has ruled that Prevention of Money Laundering Act (PMLA) prevails over the Bankruptcy Act and insolvency code when it comes to attachment of properties obtained as ‘proceeds of crime’.
The Enforcement Directorate (ED) had challenged the orders of PMLA appellate tribunal on the pleas of various banks. PMLA Tribunal had held that third parties, banks in this case, which have legitimately created rights such as a charge, lien or other encumbrances, have a superior claim over such properties.
Observations made by Delhi High Court
- PMLA, Recovery of Debt and Bankruptcy Act (RDBA), Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act and Insolvency and Bankruptcy Code (IBC) must co-exist and be enforced in harmony.
- The Delhi High Court has set aside the verdict of the PMLA tribunal and held that the objective of PMLA being distinct from the purpose of RDBA, SARFAESI Act and IBC.
- RDBA, SARFAESI Act and IBC doesn’t not prevail over PMLA
- The attachment order under the PMLA will not be illegal only because a secured creditor has a prior secured interest [charge] in the property, within the meaning of the expressions used in RDBA and SARFAESI Act.
- Also mere issuance of an order of attachment under the PMLA does not ipso facto render illegal a prior charge or encumbrance of a secured creditor, the claim of the latter for release [or restoration] from PMLA attachment being dependent on its bonafides.
Delhi High Court has stated that by the virtue of Section 71, PMLA has the overriding effect over other existing laws in the matter of dealing with “money-laundering” and “proceeds of crime”.