Current Affairs 21 July 2021 – IAS Current Affairs

SC Quashes Provisions of 97th Amendment

Source : Indian Express
Indian Polity

What is discussed under SC Quashes Provisions of 97th Amendment ?

1. About the News
2. Impacted over Newly created Ministry of Co-operation

Why in News ?

Supreme Court  struck down certain provisions of the Constitution 97th Amendment Act, 2011 in so far as it introduced clauses dealing with the working of cooperative societies working within a state.

• The subject matter fell in the state list and belongs wholly and exclusively to the State legislatures to legislate upon and any change would require the ratification by at least one-half of the state legislatures as per Article 368(2) of the Constitution.
• Supreme Court in the case Union of India vs Rajendra Shah and others which annulled Part IXB introduced by the Constitution(97th Amendment).

Key Facts

• SC upheld a 2013 Gujarat High Court verdict that struck down parts of the amendment.
• Struck down only that part of Part IXB which dealt with cooperative societies confined to states.
  • Part IXB of the Constitution of India is operative only in so far as it concerns multi-State co-operative societies both within the various States and in the Union territories of India.
• The amendment introduced Part IX B of the Constitution
  • Defining powers of the state legislature and the Centre to regulate incorporation, elections and governing of these cooperative societies.
  • For multi-state cooperatives and Union Territories, Parliament has the power to issue regulations.
• The powers defined under Part IX B would “restrict” the power of the states to regulate the cooperative societies, since the states already had power to regulate cooperative societies as they fall under Entry 32 of the State List.
  • Entry 43 of List I specifically says that co-operative societies is excluded from the Union List.
  • Entry 43 of List I  : Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities.

The amendment required ratification by the legislatures of at least one-half of the states, as prescribed under Article 368(2) of the Constitution. The ratification of state legislatures is needed if an amendment makes changes to an entry which is included in the List II(State List) of Seventh Schedule.

• Since the states had not ratified the amendment, the Supreme Court struck down the provisions under Articles 243ZJ-243ZS, which prescribed the rules under which the state governments could regulate societies.
• Impact over newly created Ministry of Co-operation
  • The bench by a 2:1 majority held that Part IXB of the Constitution of India is operative only in so far as it concerns multi-state co-operative societies both within the various states and in the Union Territories of India.
  • The newly created central government ministry could well have a huge impact in regulating the large multi-state corporations that are cooperative societies.
  • Based on the new verdict by SC the executive power of the Union Ministry of Cooperation is with respect to multi-state co-operative societies alone.

97th Amendment Major Provisions

• New Article 43B was added in the Directive Principles of State Policy (Part IV) regarding the promotion of cooperative societies.
• Cooperatives was added after unions and associations in Article 19(1)(c) under Part III of the Constitution as part of fundamental rights.
• Introduced Part IX B to the Constitution, which laid down several stipulations for the state legislations governing cooperative societies.

IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016

Source : PIB
Economy

What is discussed under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 ?

1. Amendment made
2. Insolvency and Bankruptcy Board of India (IBBI)

Why in News ?

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2016.

Key Facts

• The amendment regulations enhance the discipline, transparency, and accountability in corporate insolvency proceedings.
• A corporate debtor (CD)
  • May have changed its name or registered office address prior to commencement of insolvency.

    

  • The stakeholders may find it difficult to relate to the new name or registered office address and consequently fail to participate in the CIRP.
  • The amendment requires an insolvency professional (IP) conducting CIRP to disclose all former names and registered office address(es) so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the CD, in all its communications and records.
• The interim resolution professional (IRP) or resolution professional (RP)
  • May appoint any professional, including registered valuers, to assist him in discharge of his duties in conduct of the CIRP.
  • The amendment provides that the IRP/RP may appoint a professional, other than registered valuers, if he is of the opinion that the services of such professional are required and such services are not available with the CD.
  • Such appointments shall be made on an arm’s length basis following an objective and transparent process.
  • The invoice for fee shall be raised in the name of the professional and be paid into his bank account.
• RP is duty bound to find out
  • If a CD has been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the Adjudicating Authority seeking appropriate relief.
  • This not only claws back the value lost in such transactions increasing the possibility of reorganisation of the CD through a resolution plan, but also disincentives such transactions preventing stress to the CD.
  • For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions.
  • The IBBI has specified the format of CIRP 8.
  • This Form needs to be filed in respect of every CIRP ongoing or commencing on or after 14th July, 2021.

Insolvency and Bankruptcy Board of India (IBBI)

• The Insolvency and Bankruptcy Board of India was established on 1st October, 2016 under the Insolvency and Bankruptcy Code, 2016 (Code).
• It is a key pillar of the ecosystem responsible for implementation of the Code.
•  It has also been designated as the ‘Authority’ under the Companies (Registered Valuers and Valuation Rules), 2017 for regulation and development of the profession of valuers in the country.
• It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies, Insolvency Professional Entities and Information Utilities.

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