1.Moving on National medical commission Bill (The Hindu)

2.Potential of Insolvency and bankruptcy code (Live Mint)

3.Electoral Bonds: Everything you want to know (Business Standard, Indian Express)


1.Moving on National medical commission Bill (The Hindu)

Synoptic line: It throws light on the proposed triple talaq bill and its areas of concern. (GS paper III)


  • The winter session of Parliament saw a huge furore and disruptions due to the unending dispute on the notion of triple talaq bill. With the Muslim Women (Protection of Rights on Marriage) Bill pending in the Rajya Sabha, the best option would be to refer it to a select committee to help bring about a consensus on how to address the problem of talaq-e-biddat, as there is no serious opposition to the principle that it is morally abhorrent and legally impermissible.

Triple Talaq bill

  • This Bill makes instant triple talaq or talaq-e-biddat a punishable offence, follows the Supreme Court judgment on August 22, 2017 in the case of Shayara Bano vs. Union of India.
  • In a majority 3:2 judgment the apex court set aside instant talaq as a “manifestly arbitrary” practice. It also said, “Given the fact that Triple Talaq is instant and irrevocable, it is obvious that any attempt at reconciliation between the husband and wife by two arbiters from their families, which is essential to save the marital tie, cannot ever take place.”
  • A man who pronounces talaq on his wife will be punished with a jail term and a fine. This Bill also makes the pronouncement of talaq-e-biddat a non-bailable offence.
  • Clause 4 of the Bill states, “Whoever pronounces talaq referred to in section 3 upon his wife shall be punished with imprisonment for a term which may extend to three years and fine.”
  • Clause 7 says, “an offence punishable under this Act shall be cognizable and non-bailable within the meaning of the Code.” (The Code of Criminal Procedure, 1973)
  • The woman upon whom talaq is pronounced will have to receive an allowance from her husband, and she retains custody of her children.
  • Clauses 5 and 6 of the Bill say, ” a married Muslim woman upon whom talaq is pronounced, shall be entitled to receive from her husband such amount of subsistence allowance for her and dependent children,” and “shall be entitled to custody of her minor children in the event of pronouncement of talaq by her husband.

Key sticking areas

  • The core question is whether resorting to an illegal and arbitrary form of divorce should necessarily lead to a prison term for the offending husband. A three-year prison term, besides a fine, also raises the issue of proportionality.
  • The Opposition has raised three concerns: whether a civil wrong, mainly a breach of a marriage contract in an arbitrary manner, ought to be treated as a crime; whether it is not a contradiction of sorts for the law to jail a husband for pronouncing instant talaq and also mandate that he pay a subsistence allowance to the wife; and whether making it a cognizable and non-bailable offence would lead to it being misused against Muslim men.
  • Further, some see an internal contradiction in the way the law is sought to be framed. On the one hand it says instant triple talaq in any form is void, thereby declaring that the marriage continues to subsist; but it also talks of issues such as the custody of children and maintenance, which would arise only after a divorce.
  • These are valid concerns and cannot be dismissed by the government as arguments aimed to sabotage the Bill.

Way ahead

  • The main Opposition party, let the Bill sail through in the Lok Sabha, but has taken the position that referring it to a parliamentary committee may help remove some lacunae. Initially the party appeared to question the prescription of a jail term, but it has raised a new question. It wants to know whether the government would take care of the sustenance of the woman concerned if her husband is jailed for uttering triple talaq.
  • The dilemma before the Congress is that it cannot be seen as reprising the role it had played over 30 years ago in the Shah Bano episode, when it brought in legislation to scupper a Supreme Court verdict in favour of a Muslim woman’s claim for maintenance. However, hasty legislation passed in the commotion of a divided House may not help the cause. A sound legal framework to deal with all issues arising from instant talaq ought to be crafted after deeper consideration.

Question: Though triple talaq bill is much needed legislation but any passage should not be introduced without any debate and deliberation. Comment.


2.Electoral Bonds: Everything you wan to know (Business Standard, Indian Express) 

Synoptic line: It throws light on the electoral bonds recently notified by the government. (GS paper III)

What are Electoral Bonds?

  • These are interest-free bearer instruments (like Promissory Notes) that will be available for purchase from the State Bank of India within a designated window of 10 days in every quarter of the financial year. An additional period of a month will be notified in the year of elections to Lok Sabha. “The life of the bond would be only 15 days. (It) can only be encashed in a predeclared account of a political party (which) will have to disclose the amount to the Election Commission.

How will the Bonds help?

  • The current system of cash donations from “anonymous or pseudonymous” sources is “wholly non-transparent”, and “the donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed”.
  • The government says the system of Bonds will encourage political donations of “clean money” from individuals, companies, HUF, religious groups, charities, etc. After purchasing the bonds, these entities can hand them to political parties of their choice, which must redeem them within the prescribed time. The idea, the government has said, is to evolve a transparent system of political funding.

How has India addressed the issue of election funding so far?

  • In 1968, corporate funding was banned. In 1974, the Supreme Court ruled that party spending for a candidate must be included in calculating the candidate’s election spend (Kanwar Lal Gupta vs Amar Nath Chawla & Ors), but Parliament legislated against the order the following year. In 1979, political parties were exempted from income- and wealth tax, provided they filed annual returns including audited accounts, listed donations of Rs 10,000 and above, and disclosed the identities of such donors.
  • An amendment to the Companies Act in 1985 restored corporate funding. Companies could donate up to 5% of their average net profit over the previous three years. More changes came based on Reports on election funding, such as the Dinesh Goswami Committee Report (1990), and the Indrajit Gupta Committee Report (1998), which recommended partial state funding of elections.
  • In 1996, the Supreme Court ruled that political parties must file returns by February 20, as required by the I-T and Wealth Tax Acts. The court also interpreted Explanation 1 of Section 77(1) of The Representation of the People Act, so that election expenditure by a political party would not be included with that of a candidate for the purpose of determining compliance with the expenditure ceiling, if the party had submitted audited accounts of its spends and incomes.
  • In 1998, the government provided partial state subsidy in the form of allocation of free time for national and state parties on state TV and radio.
  • In 2003, the NDA government made individual and company donations fully tax-deductible. However, the cap on how much companies could contribute remained. The government now wants to remove this limit through the Electoral Bonds; individual cash contributions to parties have been capped at Rs 2,000.
  • Of the country’s total demand for electronics, between 50-60% of the products and 70-80% of the components are imported. India’s imports of electronic goods grew 31% between April and October 2017 to $29.8 billion. Meanwhile, the trade deficit reached close to $100 billion during the April-November period of 2017, against $67 billion in the same eight-month period a year ago.
  • This is an ominous sign. If the situation doesn’t change, a report by Deloitte Touche Tohmatsu states, expenses on electronics imports could surpass those on oil imports by 2020. Moreover, the industry has the potential to provide millions of jobs, directly and indirectly.


  • Analysts said the move could be misused, given the lack of disclosure requirements for individuals purchasing electoral bonds.
  • Electoral bonds make electoral funding even more opaque. It will bring more and more black money into the political system. With electoral bonds there can be a legal channel for companies to round-trip their tax haven cash to a political party. If this could be arranged, then a businessman could lobby for a change in policy, and legally funnel a part of the profits accruing from this policy change to the politician or party that brought it about.
  • These bonds share two characteristics with tax havense,secrecy and anonymity. Electoral bonds eliminate the 7.5% cap on company donations which means even loss-making companies can make unlimited donations. The requirement for a company to have been in existence for three years (paving the way for fly-by-night shell companies) is also removed.
  • Companies no longer need to declare the names of the parties to which they have donated so shareholders won’t know where their money has gone. As for political parties, they no longer need to reveal the donor’s name for contributions above ₹20,000, provided these are in the form of electoral bonds. So a foreign company can anonymously donate unlimited sums to an Indian political party without the EC or the IT department ever getting to know.
  • They have potential to load the dice heavily in favour of the ruling partyas the donor bank and the receiver bank know the identity of the person. But both the banks report to the RBI which, in turn, is subject to the Central government’s will to know.

Question: The idea of electoral bonds, the government has said, is to evolve a transparent system of political funding. Comment.


3.Potential of Insolvency and bankruptcy code (Live Mint)

Synoptic line: It throws light on how Insolvency and Bankruptcy Code (IBC) marks the first time the government and RBI are truly on the same page for effective resolution of NPAs. (GS paper III)


  • Even as the Insolvency and Bankruptcy Code (IBC) has recently completed its first year of existence.

Insolvency and bankruptcy code

  • The Insolvency and Bankruptcy Code, 2016(IBC) is the bankruptcy law which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
  • The bankruptcy code is a one stop solution for resolving insolvencies which at present is a long process and does not offer an economically viable arrangement. A strong insolvency framework where the cost, time, incurred is minimised in attaining liquidation has been long overdue in India.  The code will be able to protect the interests of small investors and make the process of doing business a cumbersome-less process.
  • Insolvency Resolution: The Code outlines separate insolvency resolution processes for individuals, companies and partnership firms.The process may be initiated by either the debtor or the creditors. A maximum time limit, for completion of the insolvency resolution process,has been set for corporates and individuals. For companies, the process will have to be completed in 180 days, which may be extended by 90 days, if a majority of the creditors agree. For start ups (other than partnership firms), small companies and other companies (with asset less than Rs. 1 crore), resolution process would be completed within 90 days of initiation of request which may be extended by 45 days.
  • Insolvency regulator: The Code establishes the Insolvency and Bankruptcy Board of India, to oversee the insolvency proceedings in the country and regulate the entities registered under it. The Board will have 10 members, including representatives from the Ministries of Finance and Law, and the Reserve Bank of India.
  • Insolvency professionals: The insolvency process will be managed by licensed professionals. These professionals will also control the assets of the debtor during the insolvency process.
  • Bankruptcy and Insolvency Adjudicator: The Code proposes two separate tribunals to oversee the process of insolvency resolution, for individuals and companies: (i) the National Company Law Tribunal for Companies and Limited Liability Partnership firms; and (ii) the Debt Recovery Tribunal for individuals and partnerships.

A significance reform

  • As such, the institutions established by the state should promote freedom to start a business (entry), to run the business (level playing field) and to exit/discontinue the business. The reforms of the 1990s focused on freedom of entry (dismantling the licence-quota raj) and then, from the beginning of this century, the focus shifted to freedom of continuing business. The third leg, which is freedom to exit, has now been provided in the shape of the IBC, to provide a mechanism to stressed businesses to resolve insolvency in an orderly manner.
  • All past efforts in the direction of the third leg have fallen far short of expectations due to poor implementation and the legal loopholes available for defaulters. According to the World Bank, the average time taken for completion of the bankruptcy process is 4.3 years in India, whereas Singapore, Finland and the US take just 0.5-1.5 years. Also, the recovery percentage in India is as low as 26%, whereas this ranges from 78-92% in the developed world.
  • The IBC seeks strict time-bound initiation of corrective action even at the stage of the very first default either to the bank or to the business counter parties. By ensuring certainty and clarity in all aspects of the process, the code hopes to achieve speedy resolution, higher recoveries and, in course of time, encourage lenders to go in for higher levels of debt financing.
  • The IBC seeks to consolidate scattered and unstructured jurisprudence on insolvency prevalent in various Acts, like the Presidency Towns Insolvency Act, 1909, Sick Industrial Companies Act, 1985, Limited Liability Partnership Act, 2008, Companies Act, 2013, etc.
  • A committee has been formed recently under the chairmanship of the secretary, Union ministry of corporate affairs, for a comprehensive review of the IBC, including cross-border insolvency, development and regulation of information utilities and instances of insolvencies in group companies.
  • There is, anyway, bound to be a whirlwind of judicial pronouncements on various interpretational issues that should result in the development of robust IBC jurisprudence in the days to come.
  • On the positive side, we are witnessing that debtors are now reconciling with the ‘creditor in control’ scenario, with the committee of creditors (CoC) becoming all- powerful in the resolution process.
  • It is, therefore, incumbent on this CoC to be fair to all stakeholders in the stressed company. After all, a company is an amalgam of stakeholders and its corporate governance norms are expected to maximize the value of its assets and balance the interests of all entities linked to the company. The IBC supports this by generally preferring resolution over liquidation.

Other dependent factors

  • The success of the IBC is dependent on the alacrity with which the government, courts, tribunals and Insolvency and Bankruptcy Board of India (IBBI) respond to early-stage issues arising in their domain, post implementation.
  • However, the role played by debtors and creditors during implementation will also be critical to its success. At the centre of it all is the insolvency professional (IP). Today, there are over 1,200 IPs certified by the IBBI, most with virtually no experience of being in the hot seat of a resolution professional.
  • They are expected to take all steps to keep the company as a going concern and display utmost integrity, impartiality and independence in their day-to-day conduct. IPs need to possess the skills and acumen to balance commercial reality with the legal requirements to preserve the entitlements of all stakeholders.

Way ahead

  • It is the first time that the government and Reserve Bank of India are on the same page for effective resolution of the problem of bad debt and improving overall financial discipline in the way business is conducted in India. A number of features of the IBC and the pronouncements of various high courts and Supreme Court motivate us to look at this latest effort in a positive manner. The coming months will show us the early trends in actual resolutions under the code. Hopefully, it will prove to be a game changer in the interest of the Indian economy’s health and long-term growth. As Nelson Mandela said, “I never lose; I either win or I learn.” The jury is still out on the IBC even though the World Bank has acknowledged the effort. Let’s hope all involved entities implement the lessons they learn along the way for cracking this debilitating problem of non-performing assets and financial indiscipline facing the country.

Question: How the coming months will show us the early trends in actual resolutions under the Insolvency and Bankruptcy Code.