Insolvency and Bankruptcy Code
The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020.
What is the amendment?
- The Insolvency and Bankruptcy Code, 2016 (Code) envisages appointment of an authorised representative (AR) by the Adjudicating Authority to represent financial creditors in a class, like allottees under a real estate project, in the committee of creditors.
- For this purpose, the Regulations require the interim resolution professional to offer a choice of three Insolvency Professionals (IP) in the public announcement, and the creditors in a class to choose one of them to act as their authorised representative.
- The amendment made to the Regulations provide that the three IPs offered by the interim resolution professional must be from the State or Union Territory, which has the highest number of creditors in the class as per records of the corporate debtor. This will facilitate ease of coordination and communication between the AR and the creditors in the class he represents.
- The amendment made to the Regulations provide that after evaluation of all compliant resolution plans as per evaluation matrix, the committee of creditors shall vote on all compliant resolution plans simultaneously. The resolution plan, which receives the highest votes, but not less than sixty-six percent of voting share, shall be considered as approved.
About ‘Insolvency and Bankruptcy Code of India’ –
- The IBC 2016 applies to companies and individuals. It provides for a time-bound process to resolve insolvency.
- When a default in repayment occurs, creditors gain control over debtor’s assets and must take decisions to resolve insolvency within a 180-day period.
- To ensure an uninterrupted resolution process, the Code also provides immunity to debtors from resolution claims of creditors during this period.
- The Code also consolidates provisions of the current legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.
- National Company Law Tribunal (NCLT) – The adjudicating authority (AA), has jurisdiction over companies, other limited liability entities.
- Debt Recovery Tribunal (DRT) has jurisdiction over individuals and partnership firms other than Limited Liability Partnerships.
- The Insolvency and Bankruptcy Board of India (IBBI) – It is the apex body for promoting transparency & governance in the administration of the IBC; will be involved in setting up the infrastructure and accrediting IPs (Insolvency Professionals (IPs) & IUs (Information Utilities). It has 10 members from Ministry of Finance, Law, and RBI.
Economically Weaker Section (EWS)
The Supreme Court has referred to a five-judge Constitution Bench a batch of petitions challenging the 103rd Constitution Amendment of 2019 that provides 10% reservation for Economically Backward Section (EWS).
What is the amendment?
- It provides for 10% reservation in government jobs and educational institutions for EWS, by amending Articles 15 and 16 that deal with the fundamental right to equality.
- While Article 15 prohibits discrimination on grounds of religion, race, caste, sex or place of birth, Article 16 guarantees equal opportunity in matters of public employment.
- An additional clause was added to both provisions, giving Parliament the power to make special laws for EWS like it does for Scheduled Castes, Scheduled Tribes and Other Backward Castes. The states are to notify who constitute EWS to be eligible for reservation.
Why is it challenged?
The law was challenged primarily on two grounds –
- First, it violates the Basic Structure of the Constitution. This argument stems from the view that the special protections guaranteed to socially disadvantaged groups is part of the Basic Structure and that the 103rd Amendment departs from this by promising special protections on the sole basis of economic status.
- The petitioners have also challenged the amendment on the grounds that it violates the SC’s 1992 ruling in Indra Sawhney & Ors v Union of India, which upheld the Mandal Report and capped reservations at 50%. In the ruling, the court held that economic backwardness cannot be the sole criterion for identifying backward class.
- Another challenge has been made on behalf of private, unaided educational institutions. They have argued that their fundamental right to practise a trade/profession is violated when the state compels them to implement its reservation policy and admit students on any criteria other than merit.
Arguments of government –
- The government argued that under Article 46 of the Constitution, part of Directive Principles of State Policy, it has a duty to protect the interests of economically weaker sections. “The State shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation,” the law says.
- On the challenge that the amendment violates the Basic Structure, the government argued that “to sustain a challenge against a constitutional amendment, it must be shown that the very identity of the Constitution has been altered”.
- Countering the claims that the amendment violates the Indra Sawhney principle, the government relied on a 2008 ruling— Ashok Kumar Thakur v Union of India, in which the SC upheld the 27% quota for OBCs. The argument is that the court accepted that the definition of OBCs was not made on the sole criterion of caste but a mix of caste and economic factors, to prove that caste need not be the sole criterion for according reservation.
- For the unaided institutions, the government argued that the Constitution allows the Parliament to place “reasonable restrictions” on the right to carry on trade.
Japan marks 75 years of atomic bombing
On 6th August, Japan has marked 75 years since the world’s first atomic bomb attack. Japan’s Prime Minister Shinzo Abe pledged to do his best for the “realisation of a world without nuclear weapons”.
Chain of events –
On August 6, 1945, the US dropped an atomic bomb on the Japanese city of Hiroshima, and three days later, on August 9, it dropped another bomb on Nagasaki, killing hundreds of thousands of people and affecting many more who would suffer the effects of the radiation from the blast and the “black rain” that fell in the aftermath of the explosions.
Why did US bomb Japan?
- After the conclusion of World War II in 1945, the relations between Japan and the US worsened, especially after Japan forces decided to take an aim at Indo-China with the intention of capturing the oil-rich areas of the East Indies. Therefore, US president Harry Truman authorised the use of atomic bombs in order to make Japan surrender in WWII, which it did.
- One historian Gar Alperovitz argued in his 1965 book that the use of nuclear weapons on Japanese cities was “intended to gain a stronger position for postwar diplomatic bargaining with the Soviet Union, as the weapons themselves were not needed to force the Japanese surrender,” a US government website mentions.
Why Hiroshima was chosen?
- Truman decided that only bombing a city would make an adequate impression and, therefore, target cities were chosen keeping in mind the military production in the area and while making sure that the target sites did not hold cultural significance for Japan, like Kyoto did. This was because the aim was to destroy Japan’s ability to fight wars.
- Hiroshima was primarily a military target with a population of about 318,000 people. Hiroshima at the time was also the seventh-largest city of Japan and served as the headquarters of the Second Army and of the Chugoku Regional Army, making it one of the most important military command stations in Japan. It was also the site of one of the largest military supply depots and the foremost military shipping point for troops and supplies.
Tick borne virus
China is facing a new health threat – a disease called ‘Severe Fever with Thrombocytopenia Syndrome (SFTS), caused by a tick-borne virus. It has killed seven and infected at least 60, setting off alarm bells among health officials in the country. A large number of the cases reported were concentrated in East China’s Jiangsu and Anhui provinces, local media reported.
While the disease is transferred to humans through tick bites, Chinese virologists have warned that human-to-human transmission of the virus cannot be ruled out.
What is the SFTS virus?
- Severe fever with thrombocytopenia syndrome virus (SFTSV) belongs to the Bunyavirus family and is transmitted to humans through tick bites. The virus was first identified by a team of researchers in China over a decade ago. The first few cases were reported in rural areas of Hubei and Henan provinces in 2009.
- According to a report by Nature, the virus killed at least 30 per cent of those infected. The current case fatality rate rests between approximately 16 and 30 per cent, according to the China Information System for Disease Control and Prevention.
- Due to the rate at which it spreads and its high fatality rate, SFTS has been listed among the top 10 priority diseases blue print by the World Health Organisation (WHO).
- Virologists believe an Asian tick called Haemaphysalis longicornis is the primary vector, or carrier, of the virus. The disease is known to spread between March and November. Researchers have found that the total number of infections generally peaks between April and July.
Scientists have found that the virus is often transmitted to humans from animals like goats, cattle, deer and sheep. Despite being infected by the virus, animals generally do not show any symptoms associated with SFTSV.
- According to a study conducted by a team of Chinese researchers in 2011, the incubation period is anywhere between seven and 13 days after the onset of the illness.
- Patients suffering from the disease usually experience a whole range of symptoms, including, fever, fatigue, chill, headache, lymphadenopathy, anorexia, nausea, myalgia, diarrhoea, vomiting, abdominal pain, gingival haemorrhage, conjunctival congestion, and so on.
- Some of the early warning signs of the disease include severe fever, thrombocytopenia or low platelet count and leukocytopenia, which is low white blood cell count. The risk factors observed in more serious cases include multi-organ failure, hemorrhagic manifestation and the appearance of central nervous system (CNS) symptoms.
Transmission to other countries –
- In 2011, the virus eventually travelled to other East Asian nations, including Japan and South Korea. Since the virus was first discovered, the total number of cases has risen significantly.
- While in 2013, as many as 36 cases were reported in South Korea, the number rose sharply to 270 by 2017. Meanwhile, China registered 71 cases in 2010 and 2,600 in 2016. The number of infections reported in Japan increased by 50 per cent between 2016 and 2017, a Nature report stated.
While a vaccine to treat the disease is yet to be successfully developed, the antiviral drug Ribavirin is known to be effective in treating the illness.