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Policy & Politics

Connecting the dots: Contraband gold and terror funding

It was widely reported by the media from UP on 27 January that ED had submitted a report to Ministry of Home Affairs on Kerala-centred Popular Front of India mobilising funds to finance the cost of demonstrations and gherao against the CAA Bill till 6 January 2020.

Vinod Mathew

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Kerala has had a long history of gold smuggling, going back decades. Over the years, the carriers coming from all walks of life have improvised their skill sets, finding stunningly original ways to bring in the contraband, in all shapes and forms, hidden in the most intriguing places including various parts of their body.

Though not claiming that long a history, a few pockets in Kerala, especially the Kannur-Kozhikode-Malappuram region and certain parts of Ernakulam and adjoining Idukki districts had spawned terror since the 1990s.

The early days saw Abdul Nasser Madani’s brand of radicalism that included planning and pulling off terror strikes like the Coimbatore blasts played hide-and-seek with political aspirations through his People’s Democratic Party. His camp follower Thadiyantavide Naseer never hid his true intent, forging ties with the dreaded Lashkare-Taiba. Since then, there have been numerous terror cases such as the infamous palm chopping case of 2010 that had NIA looking closely at Kerala.

But the tide really began to turn in mid-2016 when Kerala had to take cognisance of the tentacles of ISIS terror having reached the nooks and crannies of the state. From Padna and Trikkaripur in Kasargod, Yakkara in Palakkad, Thammanam in Ernakulam and Attukal in Thiruvananthapuram, the intelligence agencies traced 15 educated youth, including four Christian converts and one Hindu among the team of 15 who went to Syria to engage in jihad. Their route of travel to Syria was traced via Sri Lanka and Afghanistan. Many of them are reported to have been killed.

That was not the end as in 2017 a number of youngsters from Valapattanam in Kannur were found getting recruited by IS in Syria. Then again in 2018, the state woke up to another bout of IS recruitment from Wandoor in Malappuram. A year later came investigations into terror footprints linking the state and Easter church blasts in Colombo and other parts of Sri Lanka.

So far, the investigating agencies have failed to connect these two strands of anti-national activities – gold smuggling and terror links – in a significant way.

That is precisely what the National Investigation Agency (NIA) has set out to do from Day 1 of its engagement in the Thiruvananthapuram gold smuggling through diplomatic channel case that was officially busted on July 5.

 The Customs Department, that apprehended the contraband and followed up with a series of arrests, has been elusive about the source of their alert that culminated in the bust. Meanwhile, the state police have started claiming as to how the whole case began unravelling after their periodic input to the central agencies such as the Directorate of Revenue Intelligence (DRI) and Enforcement Directorate (ED) about money trail leading to possible terror funding.

 It was widely reported by the media from UP on January 27 that ED had submitted a report to Ministry of Home Affairs (MHA) on Kerala-centred Popular of India (PFI) mobilising funds to finance the cost of demonstrations and gherao against the CAA Bill till 6 January, 2020. ED is understood to have come across the information while investigating PFI’s role in an earlier case registered under the Prevention of Money Laundering Act. PFI had come out with a detailed rebuttal of ED’s charges which it said was false.

The ED had claimed to have found details of Rs 120.5 crore credited to accounts related to PFI, suggesting there was direct correlation between the dates of deposits and withdrawals from these accounts vis-à-vis the anti-CAA demonstrations in different parts of the country. One such payment found its way to an accused in a terror case, Abdul Samad, with roots in Mumbai who was arrested from Uttarakhand and taken into custody by NIA in February 2018 for his role in wide-reaching hawala operations and links to LeT.

“There are a number of instances with men from Kerala involved in cases like recruitment to IS, those with established links with LeT and many accused in terror cases across India. Apart from recruitment, their ground-level operations require serious money. Kerala police have cracked two IS recruitment-radicalisation cases and five cases are under investigation. And there have been a number of smuggled gold seizures we have done outside airports,” DGP-Kerala Loknath Behera told this correspondent.

Therefore, when the case of gold smuggling through the diplomatic route was busted on July 5, it appears the theory of the yellow metal being the new instrument of terror funding had already some traction among the intelligence agencies. This gives credence to the inference that the customs department was tipped off about the contraband gold coming in from Dubai. Sources say this gang had already smuggled in over 200 kg when the bust took place. Some say the gang led by Ramees KT (also arrested) was the man controlling the show and had access to Sarith PS and Swapna Suresh through Sandeep Nair. And the Dubai side of activities were handled by Faisal Fareed and Rabins Hameed, also from Kerala. Officers familiar with the probe fear 500-700 kg contraband gold would have been brought in by these players in the past one year.

In August 2019, the DRI arrested Rahul Pandit, inspector in the customs preventive division at Kannur airport for his involvement in gold smuggling at Kannur airport. Three other officers who assisted him too were held. Pandit was suspended from service, probe against others initiated. In November, 2019 the DRI arrested B Radhakrishnan, senior customs officer and former superintendent, Customs Air Intelligence Unit, Thiruvananthapuram on the charge of aiding and abetting import of large quantities of contraband gold through the international airport while manning the X-ray scanning machine. Again the volume of gold smuggled is put in excess of 500 kg before they were caught.

The sleuths are trying to separate the grains from the chaff – the large volume operations held together by operatives owing allegiance to organisations known to engage in anti-national activities and the regular carriers bringing in the contraband for shady jewellers. It is also suspected that all big operations had the same set of key players in the background.

 In retrospect, it was no surprise that the MHA showed no hesitation in asking the NIA to investigate the gold smuggling case. Naturally, the inference can only be that NIA is working the case backwards towards funding of anti-national activities by connecting the dots. And hence its confident assertion in its remand petition filed before the special court in Kochi that the accused in the gold smuggling case were using the proceeds for terror funding. The state police brass admits the gold-terror nexus theory announced by the NIA was not implausible.

 “Most terror outfits have sleeper modules in Kerala. This was the purpose behind reviving the Kerala Anti-Terrorism Squad last year, exactly along the lines of the NIA. That is why we have a dedicated unit within the ATS to track fund flow, mainly connected with gold and real estate. But we have limitations of jurisdiction and often need the help of central agencies. We already have shared a lot of data with NIA,” Behera said, adding there was a good likelihood that gold smuggling in Kerala has links with the sleeper cells of radical outfits with pan-India, even international footprint. And it is not surprising that links are emerging connecting terror funding with gold smuggling, as the yellow metal has always been a source for mobilising money, along with drugs and counterfeit notes. Clearly, those agencies involved in terror activities need funds to fight their court cases and other activities which cannot be raised only through donations, he said.

As per records available from sources in the Customs Department, the figures for gold seized in Kerala clearly indicate a rise in smuggling of gold. One of the reasons cited is the rise in import duty on gold from an already high 10 per cent to 12.5 per cent in 2019, apart from 3 per cent GST. The tax on gold in UAE at 5 per cent is perhaps the lowest in the world.

2019-20 – 540 kg (4 airports)

2018-19 – 251 kg (4 airports, Kannur started function in December 2018)

2017-18 – 103 kg (3 airports)

It has been the contention of some of the investigating agencies that smuggling cannot happen without the support officers in the Customs Department.

 The state government has come under considerable heat because of the alleged involvement of Chief Minister Pinarayi Vijayan’s former principal secretary and top bureaucrat M Sivasankar with some of the accused in the gold smuggling case. Quick to distance itself from the likely political fallout, the state government suspended the officer. The NIA has got the custody of many suspects arrested by the customs department for gold smuggling. The agency also grilled Sivasankar for two full days this week.

Now, as the NIA tightens the screws and builds a watertight case by connecting the dots between gold smuggling and terror funding, there will be many casualties. Sure, the central agency sleuths are working the case backward, but there is nothing untoward in that as long as the basic premise is on solid ground. It may be a matter of time before it emerges that gold is the new instrument of transaction for terror, especially given the backdrop of meagre liquidity in the postdemonetisation days.

The big question is whether there will be a more comprehensive investigation that covers aspects that do not fall under the purview of the NIA. Because, the smuggled gold could also have gone as payment to officers and politicians for favours rented. Then, the investigation should bring under its purview corrupt practices allegedly followed in awarding lucrative contracts, loss to the state exchequer by way of appointing big consultants and the connection between these two strands.

Just as the NIA strives to link gold smuggling with terror funding, it will take the involvement of another agency like the Central Bureau of Investigation (CBI) to connect the dots. Because, there seems to be a lot of dubious looking dots that appear all over the place and this simply cannot be coincidental.

Kerala’s terror cases and NIA

Kerala has had a long tryst with the NIA right from the days of its inception following the 2008 Mumbai terror attack to combat terror in India. Founding Director General Radha Vinod Raju, though from the J&K cadre, hailed from Kochi. In that team, heading the terror financing and fake currency cell was another officer from Kerala cadre Loknath Behera, now DGP-Kerala.

NIA turned its lens on Kerala when Thadiyantavide Naseer with his LeT connections was found scouting for wannabe jihadis to fight wars in Iraq and Syria. It was NIA that busted terror camps in Vagamon, Narath and Kanakamala. By unravelling the deep-rooted terror links involving young couples getting converted the terror way to turn jihadis in distant lands, NIA ruffled the feathers of quite a few mainstream politicians in the state.  

The special court for NIA cases convicted 13 of the 31 accused in the infamous `palm chopping case’ of July 2010 (members of the Popular Front of India had attacked T J Joseph, then professor at Newman College, Thodupuzha, and chopped off his palm for compiling a question paper that contained material insulting the Prophet). It was widely discussed as to how the masterminds walked free. 

In  November 2019, the NIA court in Ernakulam awarded 14 years› RI to the first accused in the Kanakamala IS case – for hatching a conspiracy, including through social media platforms and later meeting at Kanakamala in Kannur on October 2, 2016, to plan terror attacks in Tamil Nadu and Kerala against Jews, RSS leaders, BJP leaders, judges and police officers.

The Gold Trail

According to World Gold Council statistics, demand for gold in India declined from 760.4 tonnes in 2018 to 690.4 tonnes in 2019, though in value terms it was up three per cent, from Rs 211,860 crore to Rs 217,770 crore respectively. But gold imports, that account for the entire requirement, apart from smuggled gold, as per the Ministry of Commerce and Industry data, gold imports in June 2020, were down 77.42 per cent against a year ago. And things were no better in the preceding months, mainly on account of Covid-19.

However, much of the gold that comes into India finds no place in official records. IMPACT, a Canadian agency that tracks worldwide movement of contraband gold, says in its November 2019 report titled ‘Golden Web: How India became one of the world’s largest gold smuggling hubs’ that India meets 25 per cent of its annual requirement of 1,000 tonnes via the smuggled route and cautions that the leading global gold manufacturing centre must take action to address the weakness in its supply chain. The report acknowledges that refined gold is being smuggled into India primarily from the UAE. ‘’India is at the heart of a web of illicit trade of gold, with threads spanning the gold and almost certainly financing conflict and corruption,’’ highlights the report.

Excerpts from the remand petition filed by NIA’s chief investigating officer on 21 July

‘’It is submitted that Swapna Prabha Suresh (A-2), Sandeep Nair (A-4) and other accused had conspired together and separately at various places in Kerala to damage the monetary stability of India by destabilising the economy by smuggling large quantities of gold from abroad and it is suspected that they had used this proceeds of smuggling for financing terrorism through various means. These deliberate acts of using the diplomatic baggage of UAE as a cover to transact illegal business may have serious repercussions in the diplomatic relations with the government of UAE and it is prejudicial to the monetary and economic security of India as well. Further, the involvement of other people in to this crime as well as the end users and beneficiaries need to be ascertained.

 It is further submitted that during the custodial interrogation the role played by other associates came in to light including one Ramees KT who is one of the kingpin in this case. Sandeep Nair (A-4) stated that Ramees KT insisted for smuggling gold in large quantity and maximum numbers during the lock down period as the financial position of the country is weak etc. A-4 also stated that KT Ramees commands and always moved with a group of persons and have contacts abroad. Steps are under progress to join the said KT Ramees in the investigation of this case.’’ (sic)

Timeline of the diplomatic channel gold smuggling saga

June 30: Diplomatic baggage consignment containing 30 kg of gold from Dubai, addressed to the UAE Consulate (Thiruvananthapuram) Charge D’ Affaires Rashed Khamis al Shameli, reaches Trivandrum International Airport. Customs Department refuses clearance based on alert.

July 5: Consignment opened, after getting necessary MHA, UAE Consulate clearance, 30.25 kg of gold found hidden along with plumbing materials.

July 6: Sarith PS, former PRO of UAE Consulate who had turned up to get consignment released, taken to Customs Office, Kochi for questioning, arrested. Co-accused Swapna Suresh, Sandeep Nair found absconding.

July 10: NIA files case to investigate terror finance behind gold smuggling case.

July 11: NIA takes into custody Swapna, Sandeep from Bengaluru.

 July 13: NIA probe team gets Swapna, Sandeep in custody for 8 days till July 21. Customs team arrests known offender Ramees K T, said to be the brain behind the smuggling racket and one who was pushing large volumes of gold during the Covid-19 lockdown period.

July 14-18: Customs pick up a number of suspects, many of them known gold smugglers.

 July 19: News break of Faisal Fareed arrest in Dubai police on Friday. Allegations made about his involvement with known names in Malayalam film industry.

July 20: The name of yet another link surfaces – Rabbins from Muvattupuzha, said to be the man sent to Dubai by the hawala dealers in Kerala to supervise Fareed,

July 21: NIA gets custody of Swapna, Sandeep extended till July 24. Stage set for DRI to enter fray as records emerge of illegal holdings in land, deposits in bank lockers.

July 23: NIA questions senior bureaucrat M Sivasankar about his relationship with the main accused in the case, Swapna, Sarith and Sandeep, seeks CCTV footage of his office adjoining the CM›s office in the Secretariat.

 July 27/28: Sivasankar questioned by NIA in Kochi; no clean chit even after 25 hours of grilling over three days.

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Policy & Politics

Can Budget 2021 be panacea for the pandemic?

The preparation of the Budget 2021 will need to take stock of the impact of the Covid-19 pandemic on the economy and the government’s fiscal position and evaluate the fiscal space for continued priority crisis spending and recovery measures.

Neeti Shikha

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The 2020 budget faced wide diversions from its projected course due to high uncertainty caused by the COVID-19 pandemic. Initially designed to cater to varying economic needs of multiple sections of society, in the backdrop of sluggish growth and low tax collections clubbed with slow domestic demand, the 2020 budget did maintain fiscal prudence. It was focused on structural reforms in the financial sector and on credit access. It had proposed changes in the banking laws to enable public sector banks to raise funds from capital markets and flexible debt restructuring for the NBFCs. However, with economy hit by pandemic, the newer challenges had emerged. Government had to take a cautious approach in response to the social and economic impacts of the coronavirus crisis. In this regard, a stimulus package of Rs 20 trillion was announced for businesses and workers. Whether the stimulus was sufficient for the economy is another debate, the unprecedented challenges posed by the pandemic has led to steep rise of the fiscal deficit and for year ending in March 2021, it is likely to be over 7% of gross domestic product, against the initial prediction of 3.5 %.

The budget exercise 2021 has thus put a natural strain on the government. The preparation of the 2021 budget will need to take stock of the impact of the COVID 19 crisis on the economy and the government’s fiscal position and evaluate the fiscal space for continued priority crisis spending and recovery measures. The budgetary exercise is a strategy setting stage that will be closely evaluated by investors. Given that pandemic is still not over, it is better to have a medium term orientation to planning. Most importantly, the government should assess its financing needs and adopt a transparent approach towards its fiscal responses as it will help gain both market as well as investor confidence. One thing that markets don’t like is unpredictability. For this, adoption of medium term oriented plan and an accountable and transparent system of implementation of such plans will infuse confidence of both market and its investors. This is because unpredictability factor is high in long term planning given the current crisis.

India needs to continue its momentum towards structural reforms. The current government’s work has so far been laudable in this regard. But the government should not let the aftermath of pandemic defocus itself from its objective. Market reforms that pushes for easy lending, more expenditure, high public deposit should be encouraged.

The budget planning thus needs to be a concerted effort to ensure that the budget is focused on revival and resurrects the growth without hurting the vulnerable class. The planning activity may adopt the following approaches:

1. Focused budget with medium term objective

2. Increased transparency of the institutions

3. Protection of vulnerable class of people through state initiated plans as well as private participation

4. Determination of priority areas such as infrastructure, health, financial markets etc

5. Special support for MSMEs in terms of easy access to finance and regulatory ease

6. Employment generation through focus on informal sectors.

ALLOWING INDUSTRIAL HOUSES TO OPEN BANKS TO TAP DOMESTIC CAPITAL TO EFFECTIVELY

In past, government has considered allowing private industrial houses into banking business. Probably, this year, government could start with allowing a few. It will be in the interest of the market that invisible hands are strengthened and newer equal opportunities are provided for new entrants. In past, government has infused large amounts of taxpayer money into the ailing public sector banks which has weakened the backbone of Indian economy. Allowing industrial houses to open banks will allow tapping into domestic capital for effective capitalisation. Government then can use its own fiscal resources in other sectors like health and education.

FOCUS ON REVIVAL AND DEVELOPMENT OF BOND MARKET

In 2020, India saw high volatility in bond market with $13.7 billion worth of outflows even as most of its Asian peers saw record inflows. While the equity market continues to see record dollar inflows but foreign investors are still exiting bond market. Given the stress in financial institutions, it is imperative that debt market, especially bond market, develops. In India, the bond market has remained underdeveloped due to extensive compliance and disclosure. For instance, due to regulatory restrain, private placement is preferred which could be made to a maximum of 50 qualified institutional buyers. Thus, despite the potential, the bond market has faced a stunted growth.

INCREASING TAX BUOYANCY

Another area where attention needs to be given increasing tax buoyancy which is an important indicator of efficiency and responsiveness of tax revenue mobilisation to GDP growth. Tax is said to be buoyant if the gross tax revenues increase more than proportionately in response to a rise in GDP figures. Experts have argued that ideally India should target at achieving target of 1.2 to 1.3. Formalisation of economy and GST has increased direct tax buoyancy. Agricultural reforms, if implemented, could have added to this. Indirect tax buoyancy increases with additional cess collected. However, the burden does hurt both rich and the poor. Thus, if the government is thinking of adding coronavirus cess, it should not become burden on the poor who have already been hit by pandemic.

REORIENTED FOCUS ON HEALTHCARE & INCREASE HEALTH EXPENDITURE

Post pandemic, most of the countries will reorient their focus on healthcare. India’s past expenditure in healthcare sector has been low. In 2018-19, India’s spending on health sector was 1.5% of GDP. European countries spend 7 to 8 % of their GDP on healthcare. India should target to increase its healthcare expenditure to at least 4 % in next 5 years. Focus should be on increased infrastructure for medical facilities. Healthcare is country’s largest sector, both in terms of revenue and employment. The healthcare market holds potential to increase to Rs. 8.6 trillion by 2022. In Union Budget 2020 -21, Rs. 35,600 crore was allocated for nutrition-related programmes and Rs. 69,000 crore outlay for the health sector that was inclusive of Rs. 6,400 crore for PMJAY in Union Budget 2020–21. Government is mulling over to increase the healthcare budget to 2.5 % by 2025 but there is no gainsay that healthcare is one of the most important sector which needs greater attention.

INCREASING INFRASTRUCTURE EXPENDITURE

Spending on infrastructure will help government come back to path of economic stability quickly. As mentioned earlier, healthcare infrastructure must develop in all parts of the country. It must be realised that in this regard, much of it is done by state governments and not the central governments. Thus, getting the money out to the states is crucial. GST compensation due to states should be disbursed timely.

Further, the upcoming Budget for 2021-2022 is a good opportunity to take forward the efforts in clean energy. Given the impetus for Atmanirbhar Bharat, greater emphasis on power can lay the foundation for long-term growth opportunities, create jobs and attract foreign investments. For this, regulatory bottlenecks need to be addressed.

FOCUS ON EMPLOYMENT GENERATION

The litmus test for all the reforms will be whether government can reduce the unemployment rate. The year 2020 was particularly bad for employment. As per CMIE data, as a result of first lockdown, over 11.3 crore people lost jobs as the entire economy went into shutdown mode. The decline in employment will lead most of the labour reforms fruitless. As an expert as pointed, India cannot have jobless growth. Hence, government needs to find means and ways to boost employment. Focus on developing infrastructure, boosting growth of MSMEs have to be part of this major plan. For job creation, government should have focused approach. It should boost labour intensive sectors and also make policy intervention to reduce layoffs. For instance, in order to ensure more labour is deployed into the work force, a temporary policy intervention could be made introducing reduced working hours for labours. This will enable more number of labours into workforce albeit at a reduced economic output per labour.

BUDGET CANNOT BE PANACEA FOR THE PANDEMIC

Troubled times call for timely troubleshoots. While stimulus packages through a combination of both fiscal and monetary action partially arrested the impact of pandemic and imparted much-needed confidence of market , there is a lot need to be done. The Budget 2021 should be used as an opportunity to provide an additional dose of economic stimulus in seeking inclusive growth. But one needs to realise that Budget 2021 cannot be panacea for the pandemic. The recovery from the aftermaths of pandemic may take more than a year but what is important is that we take the right direction and work towards it. Government should focus on continuing the momentum of structural reforms. While it may not be the best time to bringing in sweeping change till the pandemic is over, some tweaking in regulations to suit the interest market should be adopted. Further, attempt should be made to make financial market more attractive for investors. This must be adopting medium term objective and mid-term review. After all, budget 2021 will pave a way for an “Aatmanirbhar Bharat”.

Dr Neeti Shikha is Head, Centre for Insolvency and Bankruptcy, Indian Institute of Corporate Affairs. Views are personal.

The litmus test for all the reforms will be whether government can reduce the unemployment rate. The year 2020 was particularly bad for employment. As per CMIE data, as a result of first lockdown, over 11.3 crore people lost jobs as the entire economy went into shutdown mode. The decline in employment will lead most of the labour reforms fruitless. As an expert as pointed, India cannot have jobless growth. Hence, government needs to find means and ways to boost employment.

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Policy & Politics

An open invitation to lawlessness during the 72nd Republic Day

It is Centre which must own up its moral responsibility for what all has happened during the 72nd Republic Day and should now promptly remove all those who occupy road and rail tracks without any discrimination whatsoever. Centre must now immediately stop allowing anyone from occupying road and rail tracks because allowing this is certainly the surest path to anarchy and an open invitation to lawlessness.

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It is beyond belief that a government led by PM Narendra Modi could have learnt nothing from the past most unfortunate Shaheen Bagh episodes and the subsequent riots that claimed many innocent lives! It is beyond belief that PM Modi could have again allowed farmers to occupy all key entry points to Delhi thus giving green signal to lawlessness! It is beyond belief that PM Modi could again have given the green signal and an open invitation to lawlessness on 72nd Republic Day that is on 26 January 2021 for entry of so many tractors in Delhi inspite of receiving inputs from NIA and intelligence agencies about entry of Khalistani elements among the crowd thus learning nothing or no lesson from the Shaheen Bagh episode and allowing hoodlums, rogues and scoundrels to have a free run all over the way wherever they went in Delhi!

From 1995 till 2021, I must have written 2000 articles on enacting strictest law for blocking of roads, rail tracks and allowing mob with majority to take India for granted but very few got published and even then we still see that with PM Narendra Modi gaining power, the hoodlums, vandalisers and goons started believing that they can occupy road and rail tracks whenever they wanted, wherever they wanted and as they wanted and which they have done on a number of occasions and for which the political establishment must take the responsibility and so also must the judiciary for kowtowing in front of them by not ordering immediate removal of all road blockers and rail track blockers as we saw in Punjab, Rajasthan and other parts apart from Delhi and then they would get the invitation to hold talks with them again and again! I was most amazed when I saw PM Modi ordering immediate eviction of retired defence services personnel who had gathered in Ramlila Maidan in Delhi against One Rank One Pension scheme as many felt it was not given in entirety and there was a lot of discrimination according to the ranks with only senior rank officers of rank of Maj General and above enjoying all the benefits! But why that same promptness disappeared during the Shaheen Bagh agitation against the Citizenship Amendment Bill (CAA) and this further encouraged others to believe that they can hold the nation to ransom by occupying key roads and rail tracks! National interest must reign supreme and not vote bank politics!

Needless to say, there can be no excuse of any kind for blocking of roads and rail tracks under any circumstances. Senior and high profile lawyers like Prashant Bhushan and Dushyant Dave of Supreme Court must now learning from this most disgraceful episode of tractor rally which has left out whole nation shocked, shamed and sullied in front of the world never appear for any such group which wants Centre to kowtow before it after first occupying roads with full force as a brazen display of lathi power! This 72nd Republic Day celebration has ashamed all Indians as the rowdy elements under the garb of farmers were allowed free run in Delhi which they should never have been allowed!

What has happened at Red Fort is nothing less than a terror attack rather worse than it as those who have done this most cowardly, dastardly and shameful act have done it under the garb of farmers protest and it has hugely damaged our international reputation no matter how hard any one of us may try to deny! Why tractor rally with such huge crowd was allowed under such tense environment and that too right in the capital itself and that too on ‘Republic Day’? Our nation has become a laughing stock!

Why Centre kowtowed in front of them just like earlier they did during Shaheen Bagh movement which only emboldened them further and due to which many precious lives were lost from all sides? Why Supreme Court also refused to take a bold stand on blocking of roads and rails? Why Supreme Court stayed the “farm laws” when making laws is entirely in the remit of Centre and judiciary has nothing to do with it and this was acknowledged even by Justice Deepak Gupta who was not happy with Supreme Court’s interference in farm laws?

Bluntly put: Why Supreme Court never takes a strong stand on blocking of road and rail tracks and allowed it to continue for more than 100 days in Shaheen Bagh and so also for more than two months on rail tracks in Punjab and similarly in Rajasthan now also and earlier during Gujjar reservation stir also? Is this not an open invitation to lawlessness? Why do Supreme Court and Centre dare to allow blocking of rail tracks and roads?

It must be asked: Is this the best way to justify “right to dissent”? Shame on all of us who try to justify it under the most senseless ground of “right to dissent”! It is nothing but stupidity of the highest order that the blocking of rail and road tracks is becoming the order of the day especially during the second term of PM Narendra Modi!

Truth be told, I had stated in one of my earlier articles that a new trend has started in India to block road and rail routes so that Centre or State can be compelled to toe the line which the protesters demand. We saw this abundantly in Shaheen Bagh which finally culminated in the Delhi riots in which there was huge violence as the protesters started blocking more and more roads and this led to unrest and clashes which left many dead and also many more injured. For this PM Narendra Modi is directly responsible as he is time and again succumbing in front of hoodlums who occupy roads or rail tracks! Now once again in protest against farmers bill the farmers of few states have occupied all key points to enter Delhi due to which thousands of crores of rupees worth business is suffering daily and the people are further made to face inconvenience since more than about fifty days and have threatened to carry out tractor rally on 26 January if their demand of withdrawing all the 3 farm bills are not complied with unconditionally and even Supreme Court has voiced its concern on the possibility of violence breaking out which cannot be dismissed lightly! Centre must promptly take adequate steps to ensure that road blockade is lifted and no one is allowed to hold the nation to ransom!

But Centre paid no heed to what I said and many others who voiced the strong apprehension of terrorists hijacking the agenda under the garb of farmers protest! The dangerous consequences are for now all out to see for ourselves as we saw on 26 January! Will Centre again keep allowing blocking of all entry points to Delhi?

What has happened under PM Narendra Modi’s regime of allowing the blockade of road and allowing the most dangerous tractor rally during Republic Day celebration has never happened before and what ensued was a direct attack on the very concept of India by the hoodlums who did not even spare Red Fort and planted their own flag on it! It is so shocking that all this happened so easily and that too right in the presence of police! Should such a huge crowd have been allowed the unfettered freedom to hold the whole nation to ransom?

It was vandalisers, hoodlums and rogues who were allowed the free run on our 72nd Republic Day celebration under the garb of tractor rally and our whole nation stands bruised due to it! We cannot be true Indians if we have not felt the pain of what has happened under the garb of tractor rally! Nothing on earth can be more unfortunate than this!

It is not for nothing that Kangana Ranaut has equated this barge into Red Fort with a terror attack and this is most shocking that all this happened on the eve of Republic Day celebration! If it was some other country those hoodlums would have been immediately shot dead but in India we still follow “Sab Chalta Hain” approach! Most shocking! Most disgraceful!

It is Centre which must own up its moral responsibility for what all has happened on 72nd Republic Day occasion and should now promptly remove all those who occupy road and rail tracks without any discrimination whatsoever! Targeting just retired defence service personnel is no solution. Law has to be same for everybody and if there is different standard then the perilous consequences are there for all of us to see for ourselves as we are seeing right now! Centre must now immediately stop allowing anyone from occupying road and rail tracks because allowing this is certainly the surest path to anarchy and an open invitation to lawlessness as we all saw for ourselves!

No doubt, any person with some wisdom could have easily guessed that farmers would resort to what they did in Delhi. Many of them had openly challenged and said that they would enter Red Fort and display their flag as shown in many news channels. Still, everything was taken lightly and they were allowed subject to certain conditions which they had already made up their mind to violate with impunity which they did. It is our nation which has been made a laughing stock in front of the world.

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Policy & Politics

Making it happen: Gram panchayat development plan

Anil Swarup

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It was the first Monday after the Union Budget of 2015, when S M Vijayanand, an IAS officer belonging to Kerala cadre took over as Secretary, Panchayati Raj, Government of India. There was a palpable gloom in the Ministry. The annual allocation of the Ministry had been slashed from over Rs.8,000 crore to just a measly Rs.90 crore, much less than the allocation for Rural Development to most of the districts in the country. More damaging was the spirit behind such a decision; the Ministry of Panchayati Raj was just not wanted, it appeared that the Ministry had no place in the scheme of things for national development.

The Ministry had an outstanding team, strong in experience, stronger in determination to succeed and strongest in its capacity to work as one. Led by Vijayanand, with more than twenty five years of experience in rural development, it was blessed with competent Additional Secretaries, Dr.Reshmi Shukla Sharma and A.K.Goyal . Amongst a committed set of Joint Secretaries were Sarada Muraleedharan, Neerja Sekhar and Sushil Kumar. Rema Hariharan, a senior professional from the National Informatics Centre completed this dream team that was deprived of all resources except their indomitable spirit and professional knowledge.

Monday morning brain storming of all the senior officials of the Ministry, started by the previous Secretary, came handy for freewheeling discussions. In a couple of weeks, the gloom started dissipating as the team realized that as it was not burdened with traditional schemes, it had total freedom as nobody would be asking what they were doing as they were a ‘marginalized’ lot, a rare advantage in a highly-centralized system of governance.

During the Monday morning meetings, it suddenly dawned that, within the next five years along with MGNREGS, Village Panchayats would have a say in planning and spending Rs.4 lakh crore, a whopping sum. Fortunately, the Fifth Finance Commission had stated that grants should flow in a timely fashion, “enabling them to plan and execute the works better”. Thus, local planning was clearly intended. It was decided to use this small opening creatively. The team decided that Government of India should not give any directions, but nothing prevented it from giving professional advice to the State Governments and persuading them to utilize the opportunity to build the capacity of Gram Panchayats to prepare local development plans which later was given the generic name, Gram Panchayat Development Plan (GPDP). Since the Constitution mandated the Panchayats to prepare plans for economic development and social justice and all the States had elaborated it in their State laws, no policy decision was required to prepare local plans. However, the stupendous challenge was to get it done in nearly 2,50,000 Gram Panchayats spread over twenty nine states with wide differences in the roles, responsibilities and powers of panchayats. After hours and hours of productive brain storming, the following plan of action was implemented.

1. GETTING THE OWNERSHIP OF STATES

No letter was written and no directions were given. A meeting of State Secretaries in charge of Panchayati Raj was held and it was unanimously agreed that it would make sense to get Gram Panchayats to prepare a local development plan for the resources over which they had command mostly MGNREGS and FFC Grants. Thereafter, the Secretary visited the States. Interactions were held with Chief Ministers/Ministers. The political policy buy in was easier than anticipated.

2. DEVELOPING THE UNDERSTANDING

In an unusual move, the Secretary made a presentation in each of the State capitals, which was attended by the Secretaries in charge of Rural Development and other officers that included those from the field. The presentations were state specific and gave a possible methodology for local participatory planning and strategies and systems needed to operationalize that. This ensured total clarity and deepened the administrative buy in.

What clinched the issue was a “Write-Shop” held in the Kerala Institute of Local Administration (KILA) at Thrissur in July, 2015. Senior Officers from all the States were persuaded to attend this five-day event. The second day was spent visiting Village Panchayats of Thrissur District in small groups with each group having an expert as mentor. The teams re-assembled on the third day and independently drafted detailed guidelines for Gram Panchayat level planning as implementable in their States – what they could adopt from Kerala, what they could do better and what they couldn’t do. At the end of five days, draft State-specific guidelines were developed after fully understanding the concept of local planning.

3. FOLLOW UP

The understanding attained had to be deepened through rigorous and systematic follow up, simultaneously, across the country. This was achieved through rapid visits to the States by senior officers in quick succession backed up by calls from the Secretary, to the State Secretaries. Teams were set up at the State level to refine the guidelines developed in the “write-shop”.

Another meeting of State Secretaries was held to tie up the loose ends. In this meeting the State Secretaries felt that they require funds for operationalizing GPDP and the analogy of MGNREGS providing 6% for a similar purpose was mentioned. The Ministry of Panchayati Raj worked intensively with the Ministry of Finance. It was a grey area as the FFC and had not mentioned the use of the award for support arrangements. But a positive-thinking bureaucrat, Ajay Narayan Jha who was earlier Secretary, FFC and now Secretary, Expenditure in Finance Ministry, allowed use up to 10% of the funds for support systems and other essential costs involved in preparing plans. However, the expenses had to be incurred only by the Gram Panchayats. This was a big break-through.

4. CAPACITY BUILDING

This was even a greater challenge. The States were guided by the Additional Secretaries and Joint Secretaries to modify their training plan to suit the needs of GPDPA. A National Resource Group was constituted for identifying the best talent from the experienced practitioners within and outside the Government and the States were given the freedom to choose the service of any expert(s) they wanted. UNDP and UNICEF chipped in with their technical assistance.

5. ACTION

Then, the Gram Panchayats started preparing their plans. Within one year, more than 2,40,000, had prepared some sort of their plan for the first time in the history of Panchayati Raj. The quality of plans did require improvement, but it was a giant leap for Panchayati Raj. Vijayanand and his team demonstrated that persuasion and convincing through rational arguments accompanied by easy and friendly behavior resulted in trust and good relationship. As a leader, Vijayanand also established that an ignored set of officials could work as a team and deliver what was probably one of the biggest game changers in decentralization, arguably one of the best exercises of cooperative federalism, done silently, working beneath the radar but with zest and zeal. He and his team made-it-happen.

Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Office. He has also served as Secretary, Ministry of Coal and Secretary, Ministry of School Education.

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A tough road ahead for President Joe Biden

Task of reversing Trump’s decisions begins, but is it easy to get America back on the track?

Vijay Darda

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Joe Biden took over as US President in the midst of much acrimony. Outgoing President Donald Trump was supposed to attend the ceremony but he didn’t. He disappeared like an upset and angry child. There was an atmosphere of mistrust. Fear ruled the roost to such an extent that around 36,000 security personnel were deployed for the swearing-in ceremony and out of which 25,000 were National Guards. Every attendee was being frisked and questioned whether he or she was a Trump supporter. You can gauge the gravity of the situation from the fact that 13 personnel of the National Guards were removed from duty before the oath because the Federal Bureau of Investigation suspected that they were supporters of Trump and could do something at the last minute.

America has never seen this kind of mistrust in its 250-year-old democratic history! This example is enough to understand where America stands now after Trump’s four-year term and how big the challenges are for the new President. Biden also understands this and that is why within a few hours of assuming office, he reversed several of Trump’s decisions. He also said that he has no time to waste.

Now, Biden has announced that he will adopt strict measures to deal with the coronavirus epidemic. Masks and social distancing have been made mandatory. Trump kept avoiding this which led to deaths of more than four lakh people. Trump preferred to save the economy over the lives of people. He repeatedly rejected the lockdown. However, he could not even handle the economy.

Today, there is a huge problem of unemployment in America. Government statistics show that about one crore people have become unemployed and they have also applied for unemployment allowance. Providing employment for such people will be the biggest challenge for Biden.

But there is an even greater challenge. Trump has spread the poison of fundamentalism throughout American society by raising slogans of nationalism and America First. The American society is already struggling with the evil of apartheid; this new fundamentalism has made the situation worse.

Trump supporters’ attack on the US Congress reflects the dangers of this fundamentalism. During his tenure, Trump had an antagonistic attitude towards Muslims. Biden has tried to give a message of harmony by abolishing Trump’s Muslim travel ban, but when the wounds of discrimination arise in the society, it takes time to heal them. Many countries of the world are facing similar emotional wounds at this time. The whole world is waiting to see how Biden will deal with this situation.

Even at the global level, Trump has created such a terrible mess that it will take Biden a full term to clear and fix it. The decision to rejoin the Paris Climate Agreement and rejoin the World Health Organisation is certainly a good step by Biden. Trump had left the World Health Organization and left the entire field to China. At this time, WHO is completely under Chinese control. How the US will normalise the situation, it is difficult to say because China is in an aggressive mood everywhere. To carry forward its expansionist policies, it is also continuously attacking the US in various ways. The day Joe Biden was sworn in, China banned 28 officials in key positions during Donald Trump’s tenure from entering China. These people will not be able to go to Hong Kong or Macau either. By the way, Trump also closed the doors of the US to 14 Chinese officials last year. Now, how will Biden respond to this Chinese attack?

Here, the whole world is also eyeing what Biden’s stance will be against the background of tension on the borders between India and China. We Indians are very happy with the presence of more than 20 people of Indian origin, including Vice President Kamala Harris in Biden’s team, but how much will these people of Indian origin in America support India or be in a position to do so only time will tell!

Looking at the history, India has not gained much during the regime of Democrat Presidents. India didn’t gain anything during the presidential regimes of Bill Clinton and Barack Obama. The nuclear treaty with America took place in 2005 at the time of George W. Bush (Jr.), who was a Republican. Then Manmohan Singh was the Prime Minister of India. Trump may have antagonised the world with his antics and acts but none can deny that he strongly supported India on the issue of Chinese aggression and also tightened the screws on Pakistan to a large extent.

It is expected that Biden will support India but only the passage of time will tell that!

In fact, it is not just we who have an eye on America, but the whole world is watching it because whatever happens in America affects the whole world.

The author is the chairman, Editorial Board of Lokmat Media and former member of Rajya Sabha.

New US President Joe Biden has started to reverse Donald Trump’s decisions. A flurry of executive orders signed by Trump is planned to be reversed, but the biggest question is whether Biden will find it easy to bring the US out of the mess created by Trump with his antics?

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REPUBLIC DAY: WHY IT MATTERS

ASHOK BHAN

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Indian National Congress proclaimed on 26th.January 1929 the Declaration of Indian Independence-“PURNA SWARAJ”as opposed to the DOMINION status offered by the British Regime.

The Indian self-rule movement was a mass-based movement that encompassed various sections of society. It also underwent a process of constant ideological evolution. Although the underlying ideology of the campaign was anti-colonial, it was supported by a vision of independent economic development coupled with a secular, democratic, republican, and civil-libertarian political structure. After the 1930s, the movement took on a strong socialist orientation. The work of these various movements ultimately led to the Indian Independence Act 1947, which ended the suzerainty in India, and the creation of Pakistan. India remained a Dominion of the Crown until 26 January 1950, when the Constitution of India came into force, establishing the Republic of India; Pakistan was a dominion until 1956 when it adopted its first republican constitution. In 1971, East Pakistan declared independence as the People’s Republic of Bangladesh.

India achieved independence from British Raj on 15 August 1947 following the Indian independence movement. Pt.Jawhar Lal Nehru became the first Prime Minister of Independent India. His phenomenal speech on the eve of Independence-Tryst with Destiny still resonates in the hearts and minds of all Indians. On 29 August 1947, a Drafting Committee, was appointed to draft a permanent constitution for the independent India,with Dr B R Ambedkar as chairman.

Republic Day is a national Pride day for India. It is the date on which the Constitution of India came into effect on 26 January 1950 replacing the British colonial Government of India Act (1935) as the governing document of India and thus, turning the nation into a newly formed Independent republic.

The Constitution was adopted by the Indian Constituent Assembly on 26 November 1949 and came into effect on 26 January 1950 with a democratic government system, completing the country’s transition towards becoming an independent republic. 26 January was chosen as the date for Republic day because it was on this day in 1929 when the Declaration of Indian Independence (Purna Swaraj) was proclaimed by the Indian National Congress as opposed to the Dominion status offered by the British Regime.

Freedom from British Raj on 15 August 1947 was achieved following the Indian independence movement. The independence came through the Indian Independence Act 1947 an Act of the Parliament of the United Kingdom that partitioned British India into the two new independent Dominions of the British Commonwealth .India obtained its independence on 15 August 1947 as a constitutional monarchy with George VI as head of state and the Earl Mountbatten as governor-general. The country, though, did not yet have a permanent constitution; instead its laws were based on the modified colonial Government of India Act 1935. On 29 August 1947, a resolution was moved for the appointment of Drafting Committee, which was appointed to draft a permanent constitution, with Dr B R Ambedkar as chairman.

While India’s Independence Day celebrates its freedom from British Rule, the Republic Day celebrates the coming into force of its constitution. A draft constitution was prepared by the committee and submitted to the Constituent Assembly on 4 November 1947. The Assembly met, in sessions open to public, for 166 days, spread over a period of two years, 11 months and 18 days before adopting the Constitution. After many deliberations and some modifications, the 308 members of the Assembly signed two hand-written copies of the document (one each in Hindi and English) on 24 January 1950. Two days later which was on 26 January 1950, it came into effect throughout the whole nation. On that day, Dr. Rajendra Prasad’s began his first term of office as President of the Indian Union. The Constituent Assembly became the Parliament of India under the transitional provisions of the new Constitution.

Indian President Dr Rajendra Prasad -in the horse-drawn carriage took part in the first Republic Day parade on Rajpath, New Delhi, in 1950.

The main Republic Day celebration is held in the national capital, New Delhi, at the Rajpath before the President of India. On this day, ceremonious parades take place at the Rajpath, which are performed as a tribute to India; its unity in diversity,rich cultural heritage and constitutional democracy.

The Republic Day parade and celebrations are held in the capital, New Delhi. These are organised by the Ministry of Defence. Commencing from the gates of the Rashtrapati Bhavan (the President’s residence), Raisina Hill on Rajpath past the India Gate, this event is the main attraction of India’s Republic Day Celebrations and lasts for more than three days. The parade showcases India’s Defence Capability, diverse Cultural and Social Heritage.

Almost Nine to twelve different regiments of the Indian Army in addition to the Navy, and Air Force with their bands march past in all their finery and official decorations. The President of India who is the Commander-in-Chief of the Indian Armed Forces, takes the salute. Several contingents of various para-military forces of India and police forces also take part in this parade.

The Beating Retreat ceremony is also held after officially denoting the end of Republic Day festivities. It is conducted on the evening of 29 January, the third day after the Republic Day. It is performed by the bands of the three wings of the military, the Indian Army, Indian Navy and Indian Air Force. The venue is Raisina Hill and an adjacent square, Vijay Chowk, flanked by the North and South block of the Rashtrapati Bhavan(President’s Palace) towards the end of Rajpath.

The Chief Guest of the function is the President of India who arrives escorted by the President’s body guards , a cavalry unit. When the President arrives, the PBG commander commands for the National Salute, which is followed by the playing of the Indian National Anthem, Jana Gana Mana, by the Army. The Army develops the ceremony of display by the massed bands in which Military Bands, Pipe and Drum Bands, Buglers and Trumpeters from various Army Regiments besides bands from the Navy and Air Force take part which play popular tunes like Abide With Me, Mahatma Gandhi’s favourite hymn, and Saare Jahan Se Achcha.Hindustan Hamara.

On the eve of Republic Day, the President of India distributes Padma Awards to the civilians of India every year. These are the second highest civilian awards in India after Bharat Ratna. These awards are given in three categories, viz. Padma Vibhushan, Padma Bhushan and Padma Shri, in decreasing order of importance.

Padma Vibhushan for “exceptional and distinguished service”. Padma Vibhushan is the second-highest civilian award in India.

Padma Bhushan for “distinguished service of a high order”. Padma Bhushan is the third-highest civilian award in India .

Padma Shri for “distinguished service”. Padma Shri is the fourth-highest civilian award in India.

While being national honours, the Padma awards do not include cash allowances, benefits, or special concessions in rail/air travel. As Per a December 1995 judgment of the Supreme Court of India, no titles or honorifics are associated with the Bharat Ratna or any of the Padma awards; Honorees cannot use them or their initials as suffixes, prefixes or pre- and post-nominals attached to the awardee’s name. This includes any such use on letterheads, invitation cards, posters, books etc. In the case of any misuse, the awardee will forfeit the award, and he or she will be cautioned against any such misuse upon receiving the honour.

The decoration comprises a sanad (Certificate) issued under the hand and seal of the President and a Medallion. The recipients are also given a replica of the medallion, which they can wear during any ceremonial/State functions etc., if they desire. A commemorative brochure giving out brief details in respect of each award winner is also released on the day of the investiture ceremony.

The conscientious message of the freedom fighters and the forefathers of the constitution is in the PREAMBLE

The preamble is based on the ‘Objectives Resolution which was drafted and moved in the Constituent Assembly by Jawaharlal Nehru on 13 December 1946.[2] B. R. Ambedkar said about the preamble:

It was, indeed, a way of life, which recognizes liberty, equality, and fraternity as the principles of life and which cannot be divorced from each other: Liberty cannot be divorced from equality; equality cannot be divorced from liberty. Nor can liberty and equality be divorced from fraternity. Without equality, liberty would produce the supremacy of the few over the many. Equality without liberty would kill individual initiative. Without fraternity, liberty and equality could not become a natural course of things.

The Supreme Court of India originally stated in the Berubari case presidential reference that the preamble is not an integral part of the Indian constitution, and therefore it is not enforceable in a court of law. However, the same apex court, in the 1973 Kesavananda case, over-ruled earlier decisions and recognised that the preamble may be used to interpret ambiguous areas of the constitution where differing interpretations present themselves. In the 1995 case of Union Government Vs LIC of India, the Supreme Court once again held that the Preamble is an integral part of the Constitution.

Indian Nation State has evolved only one religion,that is “CONSTITUTIONALISM”

It means that the relationship between the government and religious groups are determined according to constitution and law. It separates the power of the state and religion. There is no difference of religion i.e.Hinduism, Buddhism, Jainism, Sikhism, Christianity and Islam are equally respected and moreover, there is no state religion. All the citizens of India are allowed to profess, practice and propagate. Explaining the meaning of secularism as adopted by India, Alexander Owics has written, “Secularism is a part of the basic structure of the Indian Constitution and it means equal freedom and respect for all religions.”

Ashok Bhan, Senior Advocate, Supreme Court of India

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INSOLVENCY AND BANKRUPTCY CODE, 2016 REQUIRES FURTHER FINE-TUNING

RAHUL NAIR

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The Insolvency and Bankruptcy Code, 2016 has ushered in a new era of restructuring process in India. This effective legal framework for timely resolution of insolvency and bankruptcy proceedings has promoted the availability of credit and emboldened the investors’ confidence in the Indian economy. While earlier, there existed multiple laws which led to the creation of multiple fora for dealing with corporate insolvency, the Code has been successful in creating a single unified umbrella which is exhaustive and complete in itself. The establishment of Insolvency and Bankruptcy Board of India (IBBI) as a separate regulatory authority makes regulations robust and precise, relevant to the time and for the purpose.

CONCERNS

However, no system is perfect, and the Code too, notwithstanding its distinct qualities, is not an exception. Chapter II of the Code lists out the process wherein Corporate Insolvency Resolution Process (CIRP) may be initiated against a corporate debtor in case of default of payment. Once the National Company Law Tribunal (NCLT) admits the application, it appoints an Insolvency Profession who manages the affairs of the Corporate Debtor. The lack of emphasis within the Code on the need of aggrandising the value of the property of the debtor and reorganisation of the company is worrying. This not only takes away the protection offered in doing business but provides no incentive for the Committee of Creditors (CoC) to work towards the revival and reorganisation of the corporate debtor during the CIRP. This often results in liquidation of the company, immediately followed by substantial economic loss.

The relatively nascent jurisprudence on the subject and the constant changes made in the Code adds to the problem. The recent amendment brought about by the Government in insolvency law does not inspire much confidence either. In light of the unprecedented pandemic, the Section 10A amendment to the Code grants protection to corporate persons who may have defaulted in discharge of their debt obligation, from any insolvency proceedings against them, starting from 25th March of 2020 until March 25 of this year. The amendment, however, is silent on granting the same relief to the corporate and personal guarantors, who may have been equally affected by the pandemic. This leaves them in a vulnerable position, wherein the creditors have the recourse to take action against them under the Code. Moreover, due to this blanket immunity, it creates an environment wherein corporate debtors are encouraged to commit defaults intentionally, without regard to the creditors.

The Code would do well by incorporating a ‘pre-packaged insolvency scheme’ similar to the practice used extensively in the United States, where the stressed company prepares a reorganisation plan before the Adjudicating Authority for approval. This could be viewed as a pre-IBC window having twofold benefit – it expedites the resolution process, and ipso facto results in less value destruction of the assets, thereby offering better value to the creditors. Such an intended measure assumes special significance at a time when creditors have had to endure long delays even under the new framework of insolvency provisions. Consider the latest IBBI quarterly newsletter as an illustrative example. Out of the 1942 CIRPs filed and pending under the IBC as of 30th September 2020, 1442 have been going on for more than 270 days, while another 349 have been pending for more than 180 days but fewer than 270 days. This structural problem is clearly reflected in the World Bank’s “Ease of Doing business Index” with US ranking 6th whereas India ranks a lowly 63rd.

The complication further arises due to the territorial nature of the statute which seldom acknowledges the international character of insolvency matters. Herein lies the need to implement the UNCITRAL Model Law on Insolvency in India which effectively deals with cross-border insolvency issues without interfering with the individual sovereignty of nations.

Another area of concern is the jurisdictional indifference of the tribunals against the commercial viability of resolution plans. A case in point is the recent order passed by the National Company Law Appellate Tribunal in the case of Kundan Care Products v. Amit Gupta, wherein the bench rejected the successful resolution applicant’s plea for withdrawal of his plan which became unviable post CoC’s acceptance, citing lack of jurisdiction to entertain such plea post CoC’s approval. However, a careful perusal of I&B Code suggests that it does not contain any provision to compel specific performance of a Resolution Plan by an unwilling Resolution Applicant. Moreover, rule 11 of NCLAT rules 2016 gives it ‘inherent powers’ to pass orders as it may deem fit. Such self-imposed restraints on the exercise of powers would deter prospective resolution applicants from laying out their plans, thereby defeating the very purpose of IBC law, which is to maximise the value of assets in the interest of all stakeholders. Nevertheless, the issue must be dealt judiciously, since excessive laxity too, can risk degenerating resolution application into a farce.

CONCLUSION

While the Code has indeed allowed for higher legal clarity when there arises any question of insolvency or bankruptcy, the implicitly incomplete statutory provisions, rising cost of rehabilitation and somewhat questionable jurisprudential layout is threatening to undo much of its positives. Overall, the IBC 2016 could well be termed as a knight, indulging in the classic one step sideward and two step forward movement, as displayed in chess. In this unprecedented time, the level of fine-tuning made in the Code will be crucial in determining the future course of insolvency and bankruptcy law in India.

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