Centre tweaks rules for companies under IBC
For Prelims: Insolvency and Bankruptcy Code (IBC).
For Mains: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.
Context of News:
- The central government recently notified new rules, which mandated that companies obtain new Central Goods and Service Tax (CGST) and State Goods and Services Tax (SGST) registration numbers once the corporate insolvency resolution process (CIRP) of a company is initiated .Recently it is found that centre is trying to bend rules for companies, which are under IBC.
- The era before IBC were having various scattered laws relating to insolvency and bankruptcy which caused inadequate and ineffective results with undue delays. For example
- SARFAESI – (Securitization and reconstruction of financial assets and enforcement of security interest) Act for security enforcement,
- RDDBFI (Recovery of debt due to banks and financial institutions) for debt recovery by banks and financial institutions,
- Companies Act for liquidation and winding up of the company,
- Presidency Towns Insolvency Act and Provincial Insolvency Act for sick-ness and insolvency of partnership firm, HUF & individual
- Ineffective implementation, conflict in one of these laws and the time-consuming procedure in the aforementioned laws, made the Bankruptcy Law Reform Committee to draft and introduce Insolvency and Bankruptcy Law bill.
About Insolvency and Bankruptcy Code (IBC):
- Insolvency and Bankruptcy Code, 2019 (referred as IBC) which is considered as the biggest insolvency reform, is a central Act enacted for reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons.
- IBC was enacted and came into force w.e.f. 28th May 2016; however, some of the sections were made effective on various dates to implement in a systematic manner. Some of the parts have been amended in 2019 e.g. bankruptcy process for partnership firms and individuals.
- IBC objectives:
- To simplify and expedite the Insolvency and Bankruptcy Proceedings in India.
- Consolidate and amend all existing insolvency laws in India.
- To protect the interest of creditors including stakeholders in a company.
- To revive the company in a time-bound manner.
- To promote entrepreneurship
- To get the necessary relief to the creditors who have been waiting for the payments since a long time
- To curb down the fraudulent corporate persons who have been defaulting in making due payments.
- To work out a new and timely recovery procedure to be adopted by the banks, financial institutions or individuals.
- To set up an Insolvency and Bankruptcy Board of India.
- Maximization of value of assets of corporate persons.
How Rules of IBC are Tweaking?
- The new registration number of the company will be separate from the old registration number of the company, and enable the IRP or the RP to continue paying statutory dues and taxes as required.
- Corporate debtor, who starts functioning as a new entity under the IRP or RP, shall register itself in all states and Union Territories where it had operations before undergoing CIRP process.
- The CGST system software mandates that companies under CIRP must first clear past dues in order to be able to pay new dues. The issue, however, is that once CIRP process is initiated against a company, a total moratorium is imposed, and no refunds are allowed.
- Under the existing laws, once CIRP is initiated against a company and moratorium is imposed, the IBC rules take precedence over all other laws of the country. Central and state governments, which collect CGST, and SGST, are treated as operational creditors and must therefore file applications to claim their share of dues from the IRP.
Reasons for Tweaking IBC Rules:
- Faster Resolution:
- The amendments of IBC are being expected that it will help free up resolution processes that have got stuck for various reasons. The approval of the cabinet for IBC amendments are heartening and will clear several roadblocks currently holding up resolution under the law.
- The government wants to keep the IBC process from dragging on indefinitely because of litigation. It wants to ensure that corporate insolvency resolution process (CIRP) is completed in 330 days, inclusive of any litigation. The current timeline of 270 days has been extended in a number of cases.
- Boost to Home Buyers:
- The government has also addressed a longstanding demand of homebuyers who have filed cases against builders for non-delivery of flats. A proposed amendment will ensure that a majority vote from creditors such as homebuyers will be counted as a 100% vote from that class of creditors in favour of or against a resolution plan. For example, if out of 100 homebuyers, half or more of those present and voting back a resolution plan, then all homebuyers would be considered to have voted for it. This is likely to impact insolvency.
- The same rule cannot apply to every situation and hence the government should carefully look at giving immunity in cases dealing with bankrupt companies: Otherwise, it may end up permitting the sale of assets gained through illegal routes.
- Amending the IBC that will give immunity to assets bought through the NCLT (National Company Law Tribunal) route.
Increasing demand of IVF for Treating Infertility
For prelims: About IVF.
For Mains: Issues Relating to Development and Management of Social Sector/Services relating to Health, Education, Human Resources.
Context of News:
- In Vitro Fertility (IVF) centres in the city have been receiving more enquiries from couples especially “overaged couples” putting the doctors in a dilemma.
- In vitro fertilisation is a process of fertilisation where an egg is combined with sperm outside the body, in vitro. The process involves monitoring and stimulating a woman’s ovulatory process, removing an ovum or ova from the woman’s ovaries and letting sperm fertilise them in a liquid in a laboratory.
- IVF stands for in vitro fertilization. It’s one of the more widely known types of assisted reproductive technology (ART).Then the doctor takes the eggs out of your body and mixes them with sperm in a lab, to help the sperm fertilize the eggs. Then they put 1 or more fertilized eggs (embryos) directly into your uterus.
Risk Associated with IVF:
- Multiple births:
- IVF increases the risk of multiple births if more than one embryo is transferred to your uterus. A pregnancy with multiple foetuses carries a higher risk of early labour and low birth weight than pregnancy with a single fetus does.
- Premature delivery and low birth weight:
- Research suggests that IVF slightly increases the risk that the baby will be born early or with a low birth weight.
- Ovarian hyperstimulation syndrome:
- Use of injectable fertility drugs, such as human chorionic gonadotropin (HCG), to induce ovulation can cause ovarian hyperstimulation syndrome, in which your ovaries become swollen and painful.
- Symptoms typically last a week and include mild abdominal pain, bloating, nausea, vomiting and diarrhea. If you become pregnant, however, your symptoms might last several weeks. Rarely, it’s possible to develop a more severe form of ovarian hyperstimulation syndrome that can also cause rapid weight gain and shortness of breath.
- The rate of miscarriage for women who conceive using IVF with fresh embryos is similar to that of women who conceive naturally — about 15% to 25% — but the rate increases with maternal age.
- Egg-retrieval procedure complications:
- Use of an aspirating needle to collect eggs could possibly cause bleeding, infection or damage to the bowel, bladder or a blood vessel. Risks are also associated with sedation and general anesthesia, if used.
- Birth defects:
- The age of the mother is the primary risk factor in the development of birth defects, no matter how the child is conceived. More research is needed to determine whether babies conceived using IVF might be at increased risk of certain birth defects.
Need of Regulation:
- IVF specialist said that the IVF centres needed proper regulation with qualified staff and required equipment.
- The Human Fertilisation and Embryology Authority (HEFA) provided clear guidelines for the functioning of IVF centres. If any centre was caught violating the guidelines, it would immediately be stripped of the licence, she said.
- Every IVF centre also had an ethics committee which reviewed every case and took a decision. If there was a case where guidelines had to be crossed, the HEFA was contacted for permission, she explained.
- The probability of success with IVF treatments depends upon a number of factors, such as the age of the woman, the cause of infertility, the quality of eggs retrieved and the quality of the semen.
- A woman who is under age 35 and undergoes IVF has a 39.6% chance of having a baby, while a woman over age 40 has an 11.5% chance. However, the CDC recently found that the success rate is increasing in every age group as the techniques are refined and doctors become more experienced, however before using IVF age factor needs to be considered.