Ordinance Current Affairs - 2019
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The Union Cabinet headed by Prime Minister Narendra Modi has cleared the ordinance for the Reservation Roster for University Teachers.
What was the issue?
Following an order by the Allahabad high court in April 2017, the University Grants Commission had announced in March last year that an individual department should be considered as the base unit to calculate the number of teaching posts to be reserved for the Scheduled Castes and Scheduled Tribes candidates.
This order of UGC led to a series of protests. The protestors were demanding the restoration of the 200-point roster and the government had filed a review petition against the verdict of the Allahabad High Court which was dismissed by the Supreme Court. The ordinance has been brought in by the Supreme Court to nullify the verdict of the Supreme Court.
What is the 200-point Roster System?
200 point roster system is a roster system for faculty positions that includes 99 posts reserved for the SC, ST and OBC communities and 101 posts for the unreserved. Under this roster, in case there is a deficit of reserved seats in one department, it could be compensated by more people from the reserved communities in other departments in the university. It considers college or university as a unit for reservation in teaching posts.
Whereas under the new 13 point roster proposed by the UGC, an individual department should be considered as the base unit to calculate the number of teaching posts to be reserved for the Scheduled Castes and Scheduled Tribes candidates. This system had drawbacks for small departments of the university or college. Also, the 200 point roster system provided an advantage wherein the deficit in reservation in one department could be compensated by other departments. The government has brought an ordinance to restore the 200-point roster system.
President Ram Nath Kovind has assented to the promulgation of Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 on June 6, 2018. This ordinance makes some fine-tuning mechanisms in the Insolvency and Bankruptcy Code, 2016.
This ordinance brings some specific changes affecting mainly real estate and financial sectors. The notable changes are as follows:
Homebuyers Recognized as Financial Creditors
After this amendment, the IBC law will recognize the homebuyers as financial creditors, giving them due representation in the Committee of Creditors (CoC). Thus, now home buyers will be an integral part of the decision making process. The CoC will also have representation from security holders, deposit holders and all other financial creditors.
Special Provisions for MSME
The amendment ordinance gives some special benefits to the Micro, Small and Medium Sector Enterprises. Now, the promoters of MSMEs are allowed to bid for their companies as long as they are not wilful defaultersand don’t attract any other related disqualification. This has corrected the anomaly in the section 29A of the existing act which had barred promoters of defaulting assets from bidding for their assets.
Withdrawal of Insolvency Application
The ordinance permits the withdrawal of the insolvency applications only if it is approved by 90% vote share of the CoC. Further, the CoC voting threshold has been brought down to 66 percent from 75 percent for all major decisions such as approval of resolution plan, extension of insolvency period etc. This is to encourage resolution versus liquidation.
Other notable provisions are as follows:
- It brings more clarity by laying down mandatory timelines, processes and procedures for corporate insolvency resolution process.
- Addresses some issues such as non-entertainment of late bids, no negotiation with the late bidders and a well laid down procedure for maximizing value of assets.
- Exempts pure play financial entities from being disqualified on account of NPA and NPA acquired under Insolvency Code shall not disqualify an entity for the next three years.
- Successful resolution applicants will get a minimum one-year grace period to fulfill various statutory obligations.
- It also addresses the much litigated issue of enforcement of guarantees.
This part, the corporate debtors who want to themselves trigger insolvency will need shareholders approval via special resolution.
Significance for Real Estate
This ordinance provides relief to home buyers by recognizing their status as financial creditors. Due representation in the Committee of Creditors (CoC) makes them integral part of the decision-making process. Section 7 of the law will allow financial creditors to file application seeking insolvency resolution process. This is important because many home buyers are facing hardships on account of delayed and incomplete real estate projects.