Insolvency, Bankruptcy, Legal Reforms Common Man Perspective

B V Raisinghani(chartered mechanical engineer) - July 03, 2022 - - 0 |
Insolvency, Bankruptcy, Legal Reforms Common Man Perspective

During the process of budget making, and in the post budget context, and even generally a lot of digital and print media debates take place on how economists think India is doing? Also there is a lot of discussion on the common man’s viewpoint on the performance of India’s economy?
The common man’s analysis depends primarily on the numbers he looks at. Cartoonist Laxman, for 50 years had been posting a cartoon on the front page of India’s largest selling English daily newspaper, trying to predict the common man’s view point of India’s progress.

Here’s presenting some cartoons that give a glimpse of the common man’s frame of reference:

One of my favorites shows some homeless people on a pavement. One of them is reading a newspaper, with the headline, ‘The Economy.’ He comments, “Terrific Progress! In growth rate, in industry, in exports, and in exchange reserves—what a change from the miserable situation we were in!”

Another depicts two beggars at the foot of the stairs to the Stock
Exchange, down which five portly and happy men are coming. “Look we
are really fortunate—the Sensex must have gone up still further,” one of the beggars exclaims.

In 2004, the vast expansion of telephony in India was being celebrated.
Another cartoon shows a minister berating a group of villagers who have surrounded him. “All the time you ask for drinking water. Don’t you ever want to progress? I’m telling you I’m giving you telephones.”

The Common Man’s Law is a belief in the concept of ‘justice prevails’ that is inculcated in the mind of every individual who has faith and respect in the rule of law and judiciary. In layman’s terms this concept is known as ‘Justice for the common man.’ The concept arose out of the cartoonist’s long-standing personal views regarding what the true role of the judiciary ought to be: “The judiciary has the responsibility to serve the common man because the judges are in charge of administering the law.

In Dalmia Cement (Bharat) Ltd vs. Union of India case, it was said that, Law is the manifestation of principles of justice, equity and good conscience. Rule of law should establish a uniform pattern for harmonious existence in a society where every individual exercises his rights to his best advantage to achieve excellence, subject to protective discrimination. The best advantage of one person could be the worst disadvantage to another. Law steps in to iron out such creases and ensures equality of protection to individuals as well as group liberties. Man’s status is a matter of substantive as well as procedural law to which legal incidents may be attached. Justice, equality and fraternity are the trinity for social and economic equality. Law is the foundation on which the potential of the society stands.

Thus, careful examination of the above definition of law gives us a clear understanding that it is a set of rules, which are followed in society for ensuring proper development, progress and justice to the members of society, the major part of which is comprised of the common man.

Law needs to secure human happiness and forbid those acts and attempts that are injurious to the welfare of any individual and society. It has been rightly mentioned in the Institutes of Justinian law, that the percepts of law are these: to live honestly, to injure no one, and to give every man his due. The basic theme on which law operates is to provide justice to the honest and innocent individuals and to protect their rights.

Ours is a major economy, but because of the handicaps of poor infrastructure and corruption, progress has been far less than what it could have been. Today, there are two levels of corruption; the first is the scams -large or small – of public funds and State activities and the second is the corruption that the common man has to face. This majorly impacts the life of ordinary citizens.

Law reforms have been a continuous process in India. After independence in 1947, there had been demands in Parliament and outside for establishing a Central Law Commission to recommend revision and updating of extant laws. The first Law Commission after independence was set up in the year 1955. Law reforms involved a process of examining existing laws, and advocating and implementing changes in a legal system, usually with the aim of enhancing justice or efficiency.

Law reforms continue to contribute to the shaping of democracies to suit changing political and legal environments and the benefits are enormous. Most importantly, laws need to be reformed to adapt to societal changes while adhering to constitutional norms and principles.

As part of legal reforms the Central Government constituted the National Company Law Tribunal (NCLT). This was done under section 408 of the Companies Act, 2013 (18 of 2013), w.e.f. 01st June 2016. In the first phase the Ministry of Corporate Affairs set up eleven Benches, one Principal Bench at New Delhi and the rest Regional Benches.

NCLT will pass an order approving the resolution plan approved by the committee of creditors, after being satisfied that the resolution plan meets the requirements of the IBC. NCLT order of approval of the resolution plan will be binding on the corporate debtor and its employees and members.

January 5, 2020, was the last time the National Company Law Tribunal [1]
(NCLT) had a full time president. Since then there have been five acting presidents – four of them in the last six months alone – as the post had to be filled by the most senior person in line. One of them had only a one-day tenure left, while another had some three days at the time of their top posting.

While the government is concerned that both NCLT and Appellate Tribunal – NCLAT – are without president and chairman for more than a year, over 20,000 cases have piled up at the adjudicating authority. Of these, more than half – 13,000 cases are insolvency and bankruptcy cases.

There is a need for reforms for tribunals. The idea behind creating the tribunal was to fast track matters. They have to have a framework separate from the courts, otherwise it would be tough to speed up things,” a government official said.

Experts said NCLT had a sanctioned strength of 63 members just to deal with the Company Law matters. At present, there are 12 judicial and 17 technical members – to deal with matters relating to the IBC, mergers & acquisitions and operation and management matters as well.
As for numbers, since its inception in 2016, the tribunal has managed to dispose off more than 56,000 cases.

Strength of manpower aside, lawyers and government officials believe
NCLT members often do not have the subject expertise to deal with financial matters. According to a person in the know, one of the NCLT benches while hearing a high profile IBC case asked the lawyers to explain the basic creditor-debtor and debt equity concepts.

“NCLT requires domain experts. Even bureaucrats who have not handled any company law related matters become technical members. Judicial appointments are driven by seniority and not merit,” a senior official said.

An IBC lawyer said that secured and unsecured lenders were not equal but the appellate tribunal did not think so. “What is the expertise we are talking about then? (((No one respected a Company Law expert and with long experience in that subject getting appointed,” the IBC lawyer said.)))

The final appointments have to be decided by the Appointments Committee of the Cabinet. For members, the recommendations come from a two- judge Supreme Court bench. The matter goes to the chief justice next, followed by the law ministry, corporate affairs ministry and then the Prime Minister’s Office.

“There is no leader (at NCLT) and for a long time. It affects the productivity and answerability of the members. You need someone at the top,” a former NCLT member said.

According to tribunal members and legal experts, bureaucratic control over NCLT is a conflict of interest, and can influence decision-making.
While experts say this is true of most tribunals, which fall under a specific ministry, NCLT especially attracts attention because of the money and high profile cases involved.

Among the many suggestions for reforms, tribunal service agency is gaining traction. According to a paper by consulting firm Alvarez and
Marsal, outsourcing of administration function to a specialized agency is critical, in order to allow the judges to focus on the core judicial function only.

Pratik Dutta, researcher with the National Institute of Public Finance and Policy said that since 1997, the Supreme Court has time and again recommended creation of an independent agency for administration of all tribunals in India. “There is a growing realization that tribunals themselves are bogged down by the same problems that they were originally meant to solve,” Dutta said.
With the pandemic slowing things down, the tribunal finds itself overstretched. According to an NCLT official, each bench holds two courts a day and hears around 50 matters, at a time when the focus is on ensuring Covid appropriate behaviour more than anything else.

India is amongst the most unequal countries in the world. While
India’s economy is growing inequality is growing faster. Since the
1980s, India is the country with the largest gap between growth of incomes for the top 1% and for the population as a whole.

Thomas Piketty has documented the growth of inequality in the world, and in India, in the last 50 years. Some Indian economists say Piketty has got it all wrong. They give their versions of progress. They point out that poverty has been reducing and give the numbers of people in India who have risen above the poverty line. They say globally inequality has been reducing too (primarily because of the remarkable growth of incomes in China).

These macroeconomists are worried that globalization and liberalization are becoming unpopular ideologies among common people around the world. With their “big picture” analysis, they try to convince the common man that globalization is good, and that liberalization of the economy too is good. However, their headline numbers are too abstract. They are no comfort to an Indian farmer contemplating suicide because he cannot make ends meet, or to a young Indian graduate willing to do even a peon’s job because he cannot get any other.

These economists talk about people as if they are numbers. And they present a picture of progress in numbers, which people do not understand, and that do not relate to the realities of their lives. They seem to love ‘data mining’ and numbers more than they like listening to people.
There is plenty of evidence today of the unhappiness, and even anger, amongst young Indians about inadequate employment opportunities. Their frustrations are spilling out into political movements. In spite of this evidence on the ground, some economists have recently reported with delight that by mining databases, they can prove that the Indian economy is actually generating a large number of jobs! This information is unlikely to pacify the youth, and jobs will remain a hot political issue.

Politicians have to listen to the people, and economists should too. The government should not even try to convince the people with these numbers that enough jobs are being generated. It should recall the great anger against the United Progressive Alliance (UPA) government, when it had tried to pacify people with numbers about millions of people having crossed the poverty line along with economic growth. The people reacted.
They accused the economists in the Planning Commission who produced the numbers, of being out of touch with reality.

Another cartoon by Laxman shows a minister surrounded by villagers in a rural area. One explains to the minister, “No, sir, this is neither a flood-hit nor a drought-hit area. We are only hit by bad government.”

While the growth of India’s GDP numbers is among the fastest in the world, its human development has been amongst the slowest. The government must work for the people and provide them public health services, public education, and civic services. In countries in the West, and even the East, those that boast of the best human development indicators, do so about services provided by the governments, and not by for-profit private companies.

Some economists pooh-pooh the ballyhoo about inequality of wealth. They say poor people do not resent the wealth of the rich. On the contrary it inspires the poor to become richer themselves. Poor people may not mind inequality of wealth, but they do resent inequality of opportunities compared to the rich, due to their poorer education, poorer health, and poorer access to the policy-makers who fix the rules of the game.

An Indian economist said the country’s economy works at night when the government sleeps. Many economists have been carried away with the international tide of pro-market and anti-government rhetoric. The truth is governments are required to make markets work, by protecting property rights, enforcing contracts, and creating healthy competition by preventing monopolies.

The question is not whether there should be maximum or minimum government, but whether there is good or bad government.

Neelakanta Ramakrishna Madhava Menon (4 May 1935 – 8 May 2019), an Indian civil servant, lawyer and legal educator, considered by many as the father of modern legal education in India has expressed: “All laws are little more than words on paper if they are not enforced. We as law students and future law practitioners and interpreters of law, must ensure that society is made aware of its rights and duties. Ignorance of law is widespread. We must therefore work towards educating and empowering our people.

Attention must be paid to ensure that the judicial administration is efficient. Principles of morality and justice, which are pillars of natural law should be followed to provide peace and security to the people.

The present law students are the hope of every country, and it is their duty to realize the need of the hour, give priority to work as per top national relevance.

The Common Man while remaining witness to day to day happenings, derives solace from expectations about which one of the spiritual masters of Inner engineering Sadguru says:

“The purpose of all economic processes is human well-being. Excluding a large segment of human population from the economic process has been both wasteful and punishing upon the world. Conducting the economic processes, with the short-term vision of quarterly balance sheets, is just a ‘fits and starts’ way of running the economy. This has in many ways undermined the might and the potential of the global economic process.
Inclusive Economics is a way of empowerment of the whole of humanity to participate in a robust and all-inclusive economic process. For example, providing good health care and quality education for the underprivileged or disadvantaged populations is not charity but an investment, creating quality human resource and expanded markets, furthering the reach and scope of the economic engine.”

In order to sustain itself, it is imperative that the economic engine be driven, not by ambition, but by VISION. It is extremely important that individuals in key leadership positions who shape the life and future of humanity and the planet are firmly established in a source of joyousness. Joyful interiority naturally leads to gentler and more generous external activity.

Only those who know true well-being can create well-being for others!

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