The Arbitration and Conciliation (Amendment) Act, 2019

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Polity Current Affairs Round-up 365 Module: Amendments and Acts By Jatin Verma

Table of Contents

• The Aadhaar and Other Laws (Amendment) Bill, 2019 • The Jammu and Kashmir Reservation (Amendment) Bill, 2019 • The Protection of Human Rights (Amendment) Bill, 2019 • The Inter-State River Water Disputes (Amendment) Bill, 2019 • The National Medical Commission Act, 2019 • The Arbitration and Conciliation (Amendment) Act, 2019. • The Motor Vehicles (Amendment) Act, 2019 • The Consumer Protection Act, 2019 • The Insolvency and Bankruptcy Code (Amendment) Act, 2019.

The Aadhaar and Other Laws (Amendment) Bill, 2019

• The Aadhaar and Other Laws (Amendment) Bill, 2019 was introduced in Lok Sabha by the Minister of Electronics and Information Technology, in June 2019. • It replaces an Ordinance promulgated on March 2, 2019. • The Supreme Court’s judgment on validity of Aadhar, delivered last September, enjoined Parliament to make certain specific legislative changes.

Background • The Supreme Court in its judgement had held Aadhaar to be constitutionally valid. • However, it struck down few sections of the Aadhaar Act and Regulations and gave several other directions in the interest of protecting the fundamental rights to privacy.

• Consequently it was proposed to amend the Aadhaar Act, Indian Telegraph Act and the Prevention of Money Laundering Act in line with the Supreme Court directives and the report of Justice B.N.Srikrishna (Retd.) committee on data protection, in order to ensure that personal data of Aadhaar holder remains protected against any misuse and Aadhaar scheme remains in conformity with the Constitution.

Heads Original Provisions Changes Sought Offline Under the Aadhaar Act, an The Bill additionally allows ‘offline verification individual’s identity may be verification’ of an individual’s identity, of Aadhaar verified by Aadhaar without authentication, through modes number ‘authentication’. Authentication specified by the Unique Identification holder involves submitting the Aadhaar Authority of India (UIDAI) by regulations. number, and their biometric or demographic information to the Central Identities Data Repository for verification. Voluntary The Act provides for the use of The Bill replaces this provision to state that an use Aadhaar number as proof of individual may voluntarily use his Aadhaar identity of a person, subject to number to establish his identity, by authentication. authentication or offline verification. Entities Under the Act, usage of Aadhaar Deletion of section 57 of the Aadhaar Act using number for establishing the relating to use of the biometric identifier by Aadhaar identity of an individual, by the private entities. State or a body corporate under An entity may be allowed to perform any law, is permitted. authentication through Aadhaar, if the UIDAI is satisfied that it is: (i) compliant with certain standards of privacy and security, or (ii) permitted by law, or (iii) seeking authentication for a purpose specified by the central government in the interest of the State. Disclosure Under the Act, restrictions on The Bill amends this to allow such disclosure of security and confidentiality of only for orders by High Courts (or above). information Aadhaar related information do The Bill amends this to allow such disclosure in certain not apply in case the disclosure is on directions of officers not below the rank of cases pursuant to an order of a District a Secretary. Court (or above). Further, under the Act, an officer not below the rank of a Joint Secretary may issue directions for disclosing information in the interest of national security. UIDAI Fund Under the Act, all fees and The Bill removes this provision, and creates revenue collected by the UIDAI the Unique Identification Authority of India will be credited to the Fund. All fees, grants, and charges received Consolidated Fund of India. by the UIDAI shall be credited to this fund. Complaints Under the Act, courts can take The Bill amends this to allow the individual to cognizance of an offence only if register complaints in certain cases, including the UIDAI registers a complaint. impersonation or disclosure of their identity.

Features • Besides this, the amendments provide for establishment of Unique Identification Authority of India Fund, and confers enhanced regulator-like power on the UIDAI to give directions as it may consider necessary to any entity in the Aadhaar ecosystem. • The changes proposed include a civil penalty of up to ₹1 crore on entities that violate the provisions of the Aadhaar Act, with an additional fine of up to ₹10 lakh per day in case of continuous non compliance.

Features: Aadhaar number of children • The Bill specifies that at the time of enrolling a child to obtain an Aadhaar number, the enrolling agency shall seek the consent of his parent or guardian. • The agency must inform the parent or guardian of the manner in which the information will be used, the recipients with whom it will be shared, and of their right to access the information. • After attaining eighteen years of age, the child may apply for cancellation of his Aadhaar.

Impact • The decision would enable UIDAI to have a more robust mechanism to serve the public interest and restrain the misuse of Aadhar. • Subsequent to this amendment, no individual shall be compelled to provide proof of possession of Aadhaar number or undergo authentication for the purpose of establishing his identity unless it is so provided by a law made by Parliament. • For the convenience of general public in opening of bank accounts, the proposed amendments would allow the use of Aadhaar number for authentication on voluntary basis as acceptable KYC document under the Telegraph Act, 1885 and the Prevention of Money Laundering Act, 2002.

Amongst other things it envisages strengthening of the Aadhaar Act as per the directions of the Supreme Court and recommendations of Justice B.N.Srikrishna(Retd) Committee.

Prelims info Central Identities Data Repository (CIDR) is a government agency in India that stores and manages data for the country's Aadhaar project. CIDR, which is regulated by the Unique Identification Authority of India (UIDAI), is responsible for verifying the authenticity of documents submitted by an individual and that an applicant is actually the person he or she claims to be.

Concerns: • Overlooking the state’s own “pre-legislative consultative policy”: This policy places an onus on the ministry introducing a law to publish the draft of any proposed legislation, together with, among other things, the objectives behind the law and an estimated

assessment of the impact that such legislation may have on fundamental rights, and to thereafter invite comments from the public. • The Bill, was introduced without any prior consultation, leading to a credible belief that the proposed changes are an act of subterfuge. • Originally, Section 57 of the Aadhaar Act allowed both the state and private entities to use the programme to establish an individual’s identity pursuant to a law or a contract. • It was on this basis that various notifications were issued allowing corporations of different kinds, including telecom operators, e-commerce firms and banks, to use Aadhaar. • But when the Supreme Court ruled on the validity of the legislation, although it upheld vast portions of the law through a 4:1 majority, it unanimously struck down Section 57 insofar as it applied to private entities. • Since the Supreme Court has found that the operation of Aadhaar by private entities violates fundamental rights, there is today no avenue available for fresh legislative intervention, unless the government chooses to amend the Constitution. • In any event, the proposed legislative amendments virtually seek to impose Aadhaar as a prerequisite for the availing of certain basic services. • For example, the amendments proposed to the Telegraph Act state that service providers — telecom companies and banks, respectively, — ought to identify their customers by one of four means: authentication under the Aadhaar Act; offline verification under the Aadhaar Act; use of passport; or the use of any other officially valid document that the government may notify.

Issue of fraud • Allowing private corporations to access and commercially exploit the Aadhaar architecture, comes with disastrous consequences — the evidence of reports of fraud emanating out of seeding Aadhaar with different services is ever-growing.

E-introduction of a marginally refurbished Section 33(2): • In its original form, the clause had allowed an officer of the rank of Joint Secretary to the Government of India to direct disclosure of Aadhaar information in the “interest of national security”. • The Supreme Court declared the clause unconstitutional and ruled that while disclosure in the interest of national security may be important, such disclosure should spring out of a request of a “higher ranking officer”. • “A Judicial Officer (preferably a sitting High Court judge) should also be associated with” the process. • However, the Bill, merely seeks to substitute the words “Joint Secretary” with “Secretary” in Section 33(2), completely disregarding the Supreme Court’s order demanding inquiry by a judge. • Ultimately, the Bill seeks to pave the path for Aadhaar to permeate through every conceivable sphere of human activity, transferring all authority over our bodies, in the process, from the citizen to the state, and, in many cases, from the citizen to private corporations.

• Some of the Supreme Court’s concerns are addressed by the Bill, such as the inclusion of a clause intended at ensuring that children are not denied benefits on account of a failure to possess Aadhaar. • But the government should deploy its own “pre-legislative consultative policy” before bringing any law. • Data sovereignty is important to us and it will not be compromised. • The legislation on data protection is a “work in progress” and the government would bring in a comprehensive law after further consultations with the stakeholders.

Mains question: DISCUSS IN DETAIL THE CONCERNS ASSOCIATED WITH AADHAAR AND OTHER LAWS (AMENDMENT) Act, 2019. WHAT ARE THE ISSUES SPECIFICALLY WITH RESPECT TO PRIVACY ISSUES ASSOCIATED WITH IT?

The Jammu and Kashmir Reservation (Amendment) Bill, 2019

Context: • Parliament passed the Jammu and Kashmir Reservation Bill which seeks to amend a Presidential Order of 1954 in order to change how reservation was applied in Jammu and Kashmir. • It provides for reservation in appointment and promotions in state government posts, and admission to professional institutions for certain reserved categories. • Through the Presidential Order, the Cabinet applied the 77th Constitutional Amendment of 1995 to J&K, giving benefits of reservation in promotion to Scheduled Castes and Scheduled Tribes in government service. • The Cabinet also applied the 103rd Constitutional Amendment of 2019 to J&K, which gave 10% reservation to Economically Weaker Sections among people in the general category. • With the constitutional amendments, the benefits of reservation available to the residents along the Line of Actual Control (LAC) have been extended to residents living along the International Border (IB). • This benefits residents in Jammu, Samba and Kathua. • The act provides for amendments in the Jammu and Kashmir Reservation Act, 2004 to bring persons residing in the areas adjoining International Border within the ambit of reservation at par with persons living in areas adjoining Actual Line of Control (ALoC). • The act states that any person who has been appointed on the basis of residence in an area adjoining the Line of Control, must serve in such areas for at least seven years. • It also states that any person whose annual income exceeds three lakh rupees or other amount as notified by the state government, would not be included within socially and educationally backward classes. • While no one in J&K has opposed the decision to provide benefits to SCs, STs and EWS, there has been opposition to the route taken by the Centre and its nominee the J&K Governor, on the ground that they “breached” Article 370 while issuing the amendment to the 1954 Presidential Order. • The Act has been questioned on the methods adopted by the Centre in the absence of an elected government in Jammu and Kashmir. • The 1954 order is an executive order issued by the President under Article 370 to extend provisions of an Act of Parliamentto J&K state, which can be done only with the concurrence of the state government. • The Constitution of India applies to Jammu & Kashmir by virtue of Article 370, which provides a mechanism for the way it applies.

• The mechanism for governance of Jammu and Kashmir has been provided in Article 370 of the Indian Constitution. • Article 370 defines the state government as ‘the Maharaja’ and/or the ‘Sadar-i-Riyasat’ aided by a council of ministers. • At the centre of the controversy is the question whether the Governor, in the absence of an elected government, has the authority to give consent to extend a law of Parliament and change the constitutional arrangement between J&K and the Union.

• The 1954 order is an executive order issued by the President under Article 370 to extend provisions of an Act of Parliament to J&K State, which can be done only with the concurrence of the state government. • The J&K Assembly was dissolved by Governor last November in 2018. Since then the state has been under Presidential rule, and elections have been kept in abeyance citing security reasons. • No centrally legislated Act can be extended to J&K until the state government gives its assent to such legislation. However, in the absence of a state government, this is being done on the basis of the governor’s assent. • Government means an elected government and the President cannot seek concurrence of the Governor because “the Governor is a representative of the President. • At the centre of the controversy is therefore the question, whether the Governor, in the absence of an elected government, has the authority to give consent to extend a law of Parliament and change the constitutional arrangement between J&K and the Union. • The issue of the Governor’s powers was defined by the Supreme Court in Mohammad Maqbool Damnoo versus State of J&K (1972). • While dealing with the replacement of an elected Sadr-i-Riyasat with the Centre-appointed Governor, the court observed that a Governor is “head of government aided by a council of ministers”. • It is not as if the state government, by such a change (replacing elected Sadr-i-Riyasat with Centre-appointed Governor) is made irresponsible to the state legislature.

The Protection of Human Rights (Amendment) Bill, 2019

Context: The Parliament has passed the Protection of Human Rights (Amendment) Bill 2019. It amends the Protection of Human Rights Act 1993.

Need: • The NHRC has proposed certain amendments to the Act to address the concerns raised at certain global platforms. • Besides this, certain State Governments have also proposed for amendment of the Act, as they have been facing difficulties in finding suitable candidates to the post of Chairperson of the respective State Commissions owing to the existing eligibility criteria. • Supreme Court has recognized that the NHRC is a "toothless tiger", because the government doesn't heed its suggestions. Several cases are pending before it. • The Protection of Human Rights Act, 1993 was enacted to provide for the constitution of a National Human Rights Commission (NHRC), the State Human Rights Commission (SHRC) and the Human Rights Courts for protection of human rights. • The act defines Human Rights as the rights relating to life, liberty, equality and dignity of the individual guaranteed by the Constitution or embodied in the International Covenants and enforceable by courts in India.

Key Provisions • Composition of NHRC: Under the Act, the chairperson of the NHRC is a person who has been a Chief Justice of the Supreme Court. • The Bill amends this to provide that a person who has been Chief Justice of the Supreme Court, or a Judge of the Supreme Court will be the chairperson of the NHRC. • The Act provides for two persons having knowledge of human rights to be appointed as members of the NHRC. • The Bill amends this to allow three members to be appointed, of which at least one will be a woman. • Under the Act, chairpersons of various commissions such as the National Commission for Scheduled Castes, National Commission for Scheduled Tribes, and National Commission for Women are members of the NHRC. • The Bill provides for including the chairpersons of the National Commission for Backward Classes, the National Commission for the Protection of Child Rights, and the Chief Commissioner for Persons with Disabilities as members of the NHRC.

Composition of NHRC

• Chairperson of SHRC: Under the Act, the chairperson of a SHRC is a person who has been a Chief Justice of a High Court. • The Bill amends this to provide that a person who has been Chief Justice or Judge of a High Court will be chairperson of a SHRC. • Term of office: The Act states that the chairperson and members of the NHRC and SHRC will hold office for five years or till the age of seventy years, whichever is earlier.

The Chairperson and members of the NHRC are appointed by the President of India, on the recommendation of a committee consisting of: The Prime Minister (Chairperson) The Home Minister. The Leader of the Opposition in the Lok Sabha (Lower House)

• The Bill reduces the term of office to three years or till the age of seventy years, whichever is earlier. • Act allows for the reappointment of members of the NHRC and SHRCs for a period of five years. • The Bill removes the five-year limit for reappointment. • Powers of Secretary-General: The Act provides for a Secretary-General of the NHRC and a Secretary of a SHRC, who exercise powers as may be delegated to them. • The Bill amends this and allows the Secretary-General and Secretary to exercise all administrative and financial powers (except judicial functions), subject to the respective chairperson’s control. • Union Territories: The Bill provides that the central government may confer on a SHRC human rights functions being discharged by Union Territories. • Functions relating to human rights in the case of Delhi will be dealt with by the NHRC.

Concerns Raised • Reduction of tenure - A quick change in the leadership of the NHRC can cause inconsistency throughout the process of the commission. • Vacancies: The post of the DG of the NHRC was vacant for three years from 2014, until the Supreme Court pulled up the government over the lapse. A hostile government can cripple the Constitution by not appointing people in office. • Failure to provide clarity to the NHRC, the act is completely unclear about the jurisdiction of the NHRC courts. • The proposed amendments however, will enable both the Commission as well as the State Commissions to be more compliant with the Paris Principles concerning its autonomy, independence, pluralism and wide-ranging functions in order to effectively protect and promote human rights.

Choice of Chairperson: • The Protection of Human Rights (Amendment) Bill, 2019 amends the Protection of Human Rights Act, 1993 to include the provision that apart from a former CJI, a former judge of the Supreme Court can be the Chairperson of the NHRC. • Under the Act, only a person who had been the CJI could be made the NHRC chairperson. • The Act says that if a Chief Justice of India is not available for the post, then there is an option to appoint a Supreme Court judge. • But there is no clarity that if there is an existing Chief Justice, will he be overlooked and a certain hand-picked judge be appointed chairman

Mains question: THE SHIELD OF HUMAN RIGHTS (AMENDMENT) BILL, 2019 WEAKENS THE INDEPENDENCE OF NATIONAL HUMAN RIGHTS COMMISSION’S. CRITICALLY EXAMINE.

The Inter-State River Water Disputes (Amendment) Bill, 2019.

Water in the Constitution of India

• Water is a State subject as per entry 17 of State List and thus states are empowered to enact legislation on water. • Entry 17 of State List deals with water i.e. water supply, irrigation, canal, drainage, embankments, water storage and water power. • Entry 56 of Union List gives power to the Union Government for the regulation and development of inter-state rivers and river valleys to the extent declared by Parliament to be expedient in the public interest.

The Inter-State River Water Disputes (Amendment) Bill, 2019. • The Inter-State River Water Disputes (Amendment) Bill, 2019 was passed by the Lok Sabha on July 31, 2019. • It amends the Inter-State River Water Disputes Act, 1956. • Under the Act, a state government may request the central government to refer an inter-state river dispute to a Tribunal for adjudication. • Earlier, if the central government was of the opinion that the dispute cannot be settled through negotiations, it is required to set up a Water Disputes Tribunal for adjudication of the dispute, within a year of receiving such a complaint. The Bill replaced this mechanism.

Present Legislations • There are two legislations which have been promulgated under the Constitution to deal with water related disputes. • One is the River Boards Act and another is the Interstate River Water Disputes Act, 1956 which came about after the reorganization of states in the year 1956. • The first legislation is primarily meant to create a body which is meant to advise government on river basins, particularly when projects are set up. • The second one is basically meant to address issues of interstate water disputes. This particular legislation is a consequence of Article 262.

Problems in the Present Legislations • Under the current legislation, each time a problem or a dispute with respect to sharing of water or any kind of issue with respect to river between two states arises, it translates into complaint for constitution of a tribunal.

• The time taken to constitute tribunals has been, in some cases, 6 years, 7 years, 10 years and up to 20 years. • Also, there is a practice that once a dispute is resolved by the tribunal, it has to be notified by the government as part of the official gazette and then it attains the status of decree or an award by the Supreme Court. • Therefore, one does not have access to the Supreme Court over and above that. But still there have been matters going to the Supreme Court citing violation of fundamental rights under Article 31 and Article 32. • The inter-state water disputes have become one of the biggest challenges to the Indian Federalism. • There has been so much infighting between the states and the tempers/ emotions run so high that it actually spillovers from the borders of the states. The Cauvery Water Dispute is an example. • There has been increasing politicization of the issue. • There are arrangements regarding the implementation, in case of Narmada, there is a Narmada Control Authority and in the case of the Cauvery river, there is a Cauvery Water Management Authority. • The framework is there but the implementation certainly depends upon the cooperation of the states. • The Central Water Commission has compiled more than 160 agreements between the states. • There are certain factors that motivate the states to think about working together. The problem is that one does not know what precisely motivates states.

Central Water Commission is a premier Technical Organization of India in the field of Water Resources and is presently functioning as an attached office of the Ministry of Jal Shakti, Department of Water Resources, River Development and Ganga Rejuvenation, Government of India. • The Commission is entrusted with the general responsibilities of initiating, coordinating and furthering in consultation of the State Governments concerned, schemes for control, conservation and utilization of water resources throughout the country, for purpose of Flood Control, Irrigation, Navigation, Drinking Water Supply and Water Power Development. • It also undertakes the investigations, construction and execution of any such schemes as required. • Central Water Commission CWC is headed by a Chairman, with the status of Ex-Officio Secretary to the Government of India.

Key Provisions • Disputes Resolution Committee: Under the Bill, when a state puts in a request regarding any water dispute, the central government will set up a Disputes Resolution Committee (DRC), to resolve the dispute amicably.  The DRC will seek to resolve the dispute through negotiations, within one year (extendable by six months), and submit its report to the central government.  If a dispute cannot be settled by the DRC, the central government will refer it to the Inter-State River Water Disputes Tribunal.  This Tribunal can have multiple benches. All existing Tribunals will be dissolved, and the water disputes pending adjudication before such existing Tribunals will be transferred to the new Tribunal. • Composition of the Tribunal: The Tribunal will consist of a Chairperson, Vice- Chairperson, three judicial members, and three expert members. They will be appointed by the central government on the recommendation of a Selection Committee.  The central government may also appoint two experts serving in the Central Water Engineering Service as assessors to advise the Bench in its proceedings. • Time frames: Under the Act, the Tribunal must give its decision within three years, which may be extended by two years.  Under the Bill, the proposed Tribunal must give its decision on the dispute within two years, which may be extended by another year. • Decision of the Tribunal: Under the Act, the decision of the Tribunal must be published by the central government in the official gazette. This decision has the same force as that of an order of the Supreme Court.  The Bill removes the requirement of such publication. It adds that the decision of the Bench of the Tribunal will be final and binding on the parties involved in the dispute.  There is no provision for appeal. However, the Supreme Court, while hearing a civil suit in the Cauvery dispute, had said the decision of that tribunal could be challenged before it through a Special Leave Petition under Article 136 of the Constitution. • The Act provided that the central government may make a scheme to give effect to the decision of the Tribunal.  The Bill is making it mandatory for the central government to make such scheme. • Data bank: Under the Act, the central government maintains a data bank and information system at the national level for each river basin.  The Bill provides that the central government will appoint or authorise an agency to maintain such data bank. • Retirement: The term of office of the chairperson and vice-chairperson would be five years or until the age of 70 years. That of the other members would be co-terminus with adjudication of dispute or until 67 years.

Need & Benefits • In practice, tribunals have taken much longer to give their decisions. Under the 1956 Act, nine tribunals have so far been set up. • Only four of them have given their awards. • One of these disputes, over Cauvery waters between Karnataka and Tamil Nadu, took 28 years to settle. • The Ravi and Beas Waters Tribunal was set up in April 1986 and it is still to give the final award. • Five major causes for the delays:  No strict time limit for adjudication as the central government kept extending tenure of the tribunals indefinitely, even though they were to resolve disputes within 5 years  No limit for publishing the report of a tribunal  No upper limit for retirement of the chairperson or other members  In case of any vacancy, the Chief Justice of India nominates a person which takes time and causes considerable delays  Absence of data on river basins. • The amendment is bringing a time limit for adjudicating disputes as all disputes would now have to be resolved within a maximum of four-and-a-half years. • The multiplicity of tribunals has led to an increase in bureaucracy, delays, and possible duplication of work. • The replacement of five existing tribunals with a permanent tribunal is likely to result in a 25 per cent reduction in staff strength, from the current 107 to 80, and a saving of Rs 4.27 crore per year. • The current system of dispute resolution would give way to a new two-tier approach. • The states concerned would be encouraged to come to a negotiated settlement through a Disputes Resolution Committee (DRC). Only if the DRC fails to resolve the dispute will the matter be referred to the tribunal.

Concerns • As per the bill, the decision of the tribunal would be binding on the states and have the same force as an order of the Supreme Court", but there have been instances when state governments had not complied with awards, most recently the Cauvery dispute between Karnataka and Tamil Nadu. • Centralization of powers - Instead of the Chief Justice of India nominating persons for appointments, it would now be the central government making such appointments through a selection committee. • Data collection from river basins, government’s decision to outsource it to an external agency could raise questions over its “reliability".

Way-Forward

• Water should not be looked at from a territorial perspective rather it should be looked like a national resource and this approach can resolve many disputes. • On lines of GST council, an interstate water council could be constituted which will look into all the water-related disputes between different states in the country.

It is time that the government should rethink its strategy about water management, not just within states, but at the national level keeping the current and forthcoming water scenarios in mind.

Mains question DISCUSS THE MERITS OF THE RECENTLY SUGGESTED AMENDMENTS TO THE INTER-STATE RIVER WATERS DISPUTES ACT OF 1956 THAT PROVIDES FOR SETTING UP OF A SEPARATE TRIBUNAL EVERY TIME A DISPUTE ARISES, TO WHAT EXTENT CAN SUCH A CHANGE BRING SOLUTIONS TO THE EXISTING INTER-STATE RIVER WATER DISPUTES? EXAMINE.

The National Medical Commission Act, 2019

The National Medical Commission Bill, 2019 was passed by the Parliament in August, 2019. The Bill seeks to repeal the Indian Medical Council Act, 1956. It seeks to provide for a medical education system which ensures: • Availability of adequate and high quality medical professionals. • Adoption of the latest medical research by medical professionals. • Periodic assessment of medical institutions. • An effective grievance redressal mechanism.

Issues behind India’s healthcare system is on “life support” • With a doctor: patient ratio being around 1:1674 (According to the Medical Council of India (MCI)) ; the shortage of Doctors, Nurses, ANMs and Diagnostics and Imaging facilities Technicians is one of the biggest ailments affecting our health-management system. • We need 2.07 million doctors more to achieve a decent doctor: patient ratio being around 1:1000(World Health Organisation (WHO) standard) by 2030. • With too many patients chasing not enough doctors in both rural and urban areas severe shortfall in the supply of medical specialists in India can be attributed to the following reasons. • Public Medical Institutions are limited in number of seats and in Private Institutions it is way too expensive (capitation fees) . India’s 462 medical colleges teach 56,748 doctors this is inadequate for the country's medical needs. • Health being a state subject, disparities and inequities is there not only between states but also between urban and rural areas. For example, eight states, which make up 46% of the national population, have only 21% MBBS seats. • Feeling of professional isolation among healthcare professionals, better opportunities available abroad, violent attacks on doctors and unwillingness on their part to work in rural areas • The sanctioned posts at Community Health Centre (CHC) and Primary Health Centre (PHC) level are inadequate. Many of the sanctioned posts are lying vacant. The recruitment process by States in that regard faces delays and corruption issues. • Poor Health Infrastructure, Lack of facilities related to education, restricted livelihood choices and security-related aspects have led to further shortage of medical staff, especially in rural areas. • Given these statistics a sizable number of India's population is denied timely, accessible, and affordable and quality medical healthcare.

What are the issues in MCI? • The Indian Medical Council Act, 1956 established The Medical Council of India (MCI) which till now is responsible for regulating medical education and practice. • However, over the years, MCI has been marred by several issues regarding its regulatory role, composition, allegations of corruption, and lack of accountability. • In 2009, the Yashpal Committee and the National Knowledge Commission recommended separating the regulation of medical education and medical practice. • MCI is an elected body where its members are elected by medical practitioners themselves, i.e., the regulator is elected by the regulated. This creates a conflict of interest. • MCI is solely dominated by doctors: Since medical education is a diverse stream, MCI should include diverse stakeholders such as public health experts, social scientists, and health economists.  For example, in the United Kingdom, the General Medical Council (the counterpart of MCI), consists of 12 medical practitioners and 12 lay members (such as community health members, administrators from local government). • As per MCI regulations, a college is required to be inspected 25 times to get final recognition. This establishes an Inspector Raj.

Features of the Act: • To secure healthy living for its citizen’s government has come up with National Medical Commission (NMC) Bill to regulate and improve the medical education and services in the country. Key features of the Bill include: • Constitution of the National Medical Commission: The Bill sets up the National Medical Commission (NMC).  Within three years of the passage of the Bill, state governments will establish State Medical Councils at the state level.  The NMC will consist of 25 members, appointed by the central government. • Functions of the National Medical Commission:  Framing policies for regulating medical institutions and medical professionals  Assessing the requirements of healthcare related human resources and infrastructure  Ensuring compliance by the State Medical Councils of the regulations made under the Bill  Framing guidelines for determination of fees for up to 50% of the seats in private medical institutions and deemed universities which are regulated under the Bill. • Medical Advisory Council: Under the Bill, the central government will constitute a Medical Advisory Council.  The Council will be the primary platform through which the states/union territories can put forth their views and concerns before the NMC.  Further, the Council will advise the NMC on measures to determine and maintain minimum standards of medical education.

• Autonomous boards: The Bill sets up autonomous boards under the supervision of the NMC.  The Under-Graduate Medical Education Board (UGMEB) and the Post- Graduate Medical Education Board (PGMEB): These Boards will be responsible for formulating standards, curriculum, guidelines, and granting recognition to medical qualifications at the undergraduate and postgraduate levels respectively.  The Medical Assessment and Rating Board (MARB): MARB will have the power to levy monetary penalties on medical institutions which fail to maintain the minimum standards as laid down by the UGMEB and PGMEB. The MARB will also grant permission for establishing a new medical college, starting any postgraduate course, or increasing the number of seats.  The Ethics and Medical Registration Board: This Board will maintain a National Register of all licensed medical practitioners, and regulate professional conduct. • Community health providers: Under the Bill, the NMC may grant a limited license to certain mid-level practitioners connected with the modern medical profession to practice medicine.  These mid-level practitioners may prescribe specified medicines in primary and preventive healthcare. • Entrance examinations: There will be a uniform National Eligibility-cum-Entrance Test for admission to under-graduate and post-graduate super-speciality medical education in all medical institutions regulated under the Bill. • The Bill proposes a common final year undergraduate examination called the National Exit Test for the students graduating from medical institutions to obtain the license for practice.  This test will also serve as the basis for admission into post-graduate courses at medical institutions under this Bill.

There are six reasons why governments would like to regulate medical education; • To ensure that doctors are appropriately trained and skilled to address the prevailing disease burden. • To ensure that medical graduates reflect a uniform standard of competence and skills. • To ensure that only those with basic knowledge of science and aptitude for the profession get in. • To ensure ethical practice in the interest of the patients. • To create an environment that enables innovation and research. • To check the corrosive impact of the process of commercialisation on values and corrupt practices.

Issues to consider • Composition of the National Medical Commission - The Bill replaces the MCI with the NMC which is not an elected body.  The Parliamentary Standing Committee (2016) when examining the composition of the MCI noted that it is not diverse and consists mostly of doctors who look out for their own interest over public interest.  The Committee recommended that to reduce the monopoly of doctors, the MCI should include diverse stakeholders such as public health experts, social scientists, health economists, and health related non-government organisations. • The question of the Power to set the fees - The Bill gives the NMC the power to frame guidelines for determination of fees for up to 50% of seats in private medical colleges. NMC as a regulator should regulate fees charged by private medical colleges.  The NITI Aayog Committee (2016) was of the opinion that a fee cap would discourage the entry of private colleges, therefore, limiting the expansion of medical education in the country.  Parliamentary Standing Committee (2018) has recommended continuing the current system of fee structures being decided by the Committee under the chairmanship of a retired High Court judge. • Appeal on decisions related to professional and ethical misconduct - NMC is an appellate authority with regard to matters related to professional or ethical misconduct of medical practitioners. Disputes related to ethics and misconduct in medical practice may require judicial expertise. • Further, the Bill does not specify a time period for the NMC to decide on such an appeal. Note that the Parliamentary Standing Committee (2018) stated that giving the appellate jurisdiction to the central government does not fit into the constitutional provision for separation of powers. It recommended constitution of a Medical Appellate Tribunal instead. • For example, in the UK, the regulator for medical education and practice – the General Medical Council (GMC) receives complaints with regard to ethical misconduct and is required to do an initial documentary investigation in the matter and then forwards the complaint to a Tribunal. This Tribunal is a judicial body independent of the GMC. • Composition of State Medical Councils - Currently, 29 states have established state medical councils which are required to prescribe a code of ethics for regulating the professional conduct of medical practitioners and take disciplinary action against them for violating the code of ethics. . In this context, NITI Aayog on the Draft NMC Bill (2016) has noted that there may be a conflict of interest if members of the ‘regulator’ (State Medical Councils primarily consist of medical practitioners) are elected by those that are ‘regulated’ by it (medical practitioners).

. The Parliamentary Standing Committee (2016) observed that the State Medical Councils delay ethics related adjudications beyond six months (the stipulated time limit to give a decision) and no action gets taken against errant doctors. . The Committee recommended inclusion of lay persons in the State Medical Councils to ensure more accountability on issues of medical ethics. • Renewal of licence to practice - The Bill introduces a National Exit Test for students graduating from medical institutions to obtain the licence to practice as a medical professional.  The Bill does not specify the validity period of this licence to practice. In other countries such as the United Kingdom (UK) and Australia, such a licence to practice needs to be periodically renewed.  This effectively also removes the opportunity to reappear for PG selection.  Moreover, the examination being objective in nature, would increase the workload and stress level of the students manifold.  The current system allows medical graduates to practise irrespective of the status of his/her PG NEET. • Community health providers - The term Community Health Provider has been vaguely defined to allow anyone connected with modern medicine to get registered in NMC and be licensed to practise modern medicine. • Mid-level health workers like Community Health Providers are very much needed but their training programmes, competencies and roles have to be clearly defined to differentiate them from medical graduates. • A common exit examination is needed for standardisation and postgraduate course selection but must be preceded by a college-level testing of practical clinical skills as a qualifier for the theory-based NEXT (National Exit Test).

Why doctors are opposing it? • They are objecting to section 45 of the bill, which, they claim, empowers the Union government to override any suggestion of the National Medical Commission. • The IMA is also opposing the decision to introduce NEXT by scrapping the NEET-PG and regulation of fees by the NMC for 50 per cent seats in private medical colleges and deemed universities. • Doctors claim that the bill will encourage quackery. It stems from the fact that although the bill does not openly talk of a bridge course for Ayush doctors, it does stress on "enhancing the interface between systems of medicine" — such as Central Council of Homoeopathy and Central Council of Indian Medicine.

In the previous version of the Bill, the government had said a two- year bridge course should be introduced to allow AYUSH doctors to prescribe modern medicines to address shortage of allopaths in rural areas — a suggestion that was vehemently opposed by many doctors’ bodies. Provided that there are nearly 10 lakh registered allopaths in India, it means that nearly 3.3 lakh AYUSH practitioner will be licenced to provide primary level health care to patients.

• The bill also envisages defining Community Health Providers (CHPs) as persons granted a licence to practice medicine at mid-level. It's not yet clear as to what kind of professionals could be certified as CHPs. • These CHPs would be allowed to prescribe specified medicines independently in primary/preventive healthcare, but "only under the supervision of medical practitioners" at higher levels, says the bill.

MAINS QUESTION DOES THE MEDICAL COMMISSION BILL ENCOURAGE QUACKERY?

The Arbitration and Conciliation (Amendment) Act, 2019.

• The Arbitration and Conciliation (Amendment) Bill, 2019 was passed by the Parliament in August, 2019. • It seeks to amend the Arbitration and Conciliation Act, 1996. • The Arbitration and Conciliation Act, 1996, was amended by the Arbitration and Conciliation (Amendment) Act, 2015 in order to make arbitration process user friendly, cost effective and ensure speedy disposal and neutrality of arbitrators.

Process of Arbitration in India • Arbitration in India is governed by the law of arbitration in India which states that the for adopting the arbitration as a dispute resolution mechanism an agreement to that effect should be signed between the disputing parties. • The Arbitration and Conciliation Act 1996 is the key law governing arbitration in India. • The Act provides for the procedure of arbitration proceedings in India and steps of arbitration. The act has four parts: • Part I sets out general provisions on domestic arbitration. • Part II addresses the enforcement of foreign awards (Chapter 1 deals with New York Convention awards and Chapter II with awards under the 1927 Geneva Convention). • Part III deals with conciliation and Part IV sets out certain supplementary provisions. • Parts I and II are the most significant and are based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law and the New York Convention respectively.

Following are the stages of arbitration or arbitration process step by step • Arbitration Clause - An agreement or the clause specifically stating that if the dispute arises between the parties they will resolve it through the process of arbitration. • Arbitration notice - the party against whom the default has been committed will send an arbitration notice for invoking arbitration process steps between the parties. • Appointment of Arbitrator- both the parties will appoint the arbitrators in the manner as specified in the arbitration agreement or arbitration clause. • Statement of Claim- Statement of claim contains the dispute between the parties, events which lead to the dispute and the compensation claimed from the defaulting party. • Hearing of Parties - Arbitral tribunal will hear both the parties and their evidence. • Award - After hearing the parties, the arbitral tribunal will pass the decision. The decision of the tribunal is known as ‘Award’ and is binding on the parties. However, an appeal against the arbitral award can be filed before the High Court. • Execution of Award - Once the award has been passed by the tribunal it has to be executed.

Need for amendments: • However, to give a boost to institutional, arbitration vis-a-vis ad hoc arbitration and to remove some practical difficulties in applicability of the Arbitration and Conciliation (Amendment) Act, 2015, a High Level Committee (HLC) under the Chairmanship of Justice B. H. Srikrishna, was constituted by the Government. • The proposed amendments are as per the recommendations of the High Level Committee.

The Act contains provisions to deal with domestic and international arbitration, and defines the law for conducting conciliation proceedings. Key features of the Bill are: • Arbitration Council of India: The Bill seeks to establish an independent body called the Arbitration Council of India (ACI) for the promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms. • Its functions include framing policies for grading arbitral institutions and accrediting arbitrators, making policies for the establishment, operation and maintenance of uniform professional standards for all alternate dispute redressal matters, among others. • Composition of the ACI: The ACI will consist of a Chairperson who is either: (i) a Judge of the Supreme Court, a Judge of a High Court; or Chief Justice of a High Court or an eminent person with expert knowledge in conduct of arbitration.  Other members will include an eminent arbitration practitioner, an academician with experience in arbitration, and government appointees. • Appointment of arbitrators: Under the Bill, the Supreme Court and High Courts may designate arbitral institutions, which parties can approach for the appointment of arbitrators. For international commercial arbitration, appointments will be made by the institution designated by the Supreme Court. For domestic arbitration, appointments will be made by the institution designated by the concerned High Court.

 Under the 1996 Act, parties were free to appoint arbitrators. In case of disagreement on an appointment, the parties could request the Supreme Court, or the concerned High Court, or any person or institution designated by such Court, to appoint an arbitrator. • Relaxation of time limits: Under the Act, arbitral tribunals are required to make their award within a period of 12 months for all arbitration proceedings.  The Bill seeks to remove this time restriction for international commercial arbitrations. It adds that tribunals must endeavour to dispose off international arbitration matters within 12 months. • Completion of written submissions: Currently, there is no time limit to file written submissions before an arbitral tribunal.  The Bill requires that the written claim and the defence to the claim in an arbitration proceeding, should be completed within six months of the appointment of the arbitrators. • Confidentiality of proceedings: The Bill provides that all details of arbitration proceedings will be kept confidential except for the details of the arbitral award in certain circumstances. Disclosure of the arbitral award will only be made where it is necessary for implementing or enforcing the award.

Importance • Putting India on the world map in arbitration proceedings - It aims to make India an international arbitration hub by providing facilities for settlement of commercial disputes. • To reduce burden on courts- With the huge backlog of cases, the courts are already overburdened. An effective ACI will share this burden of the court and even facilitate speedy appointment of arbitrators. This would further aid quick resolution of disputes outside the court. • To provide exhaustive list to choose an arbitrator- The parties to an arbitration agreement can choose their own arbitrator, this choice is sacrosanct to arbitration process. • To speed up arbitration process- The bill provides for statement of claim and defence to be completed within six months from the date the arbitrator receives the notice of appointment. The Amendments in the Act of 1996 will facilitate achieving the goal of improving institutional arbitration by establishing an independent body to lay down standards, make arbitration process more party friendly, cost effective and ensure timely disposal of arbitration cases.

Recent developments • In a significant ruling, the Supreme Court struck down Section 87 of the Arbitration and Conciliation Act, saying its retrospective effect was manifestly arbitrary. • Introduced as an amendment Act this year, Section 87 had allowed automatic stay on all arbitral awards.

• The bench criticised the provision saying it turned the clock back and pushed firms into insolvency. • “The automatic stay provision denies an opportunity to companies to pay their creditors from the money received from arbitral awards in cases where there is no stay, or even in cases where conditional stays are granted,” the bench observed.

MAINS QUESTION RECENT LEGAL REFORMS AND JUDGMENTS HAVE POINTED TOWARDS INDIA AS A COUNTRY GRADUALLY DEVELOPING INTO AN ARBITRATION-FRIENDLY REGIME. COMMENT ON THE STATEMENT IN THE LIGHT OF RECENTLY PASSED THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019.

The Motor Vehicles (Amendment) Act, 2019.

• The Motor Vehicles (Amendment) Bill, 2019 was passed by the Parliament on 31st July, 2019. The Bill seeks to amend the Motor Vehicles Act, 1988 to provide for road safety. • In the last few years, with growing urbanisation and rising incomes, the number of motor vehicles in India has been increasing steadily. • The number of registered motor vehicles in India grew by 123% between 2005 and 2013. • Between 2005 and 2015, the number of road accidents increased by 14%, and road accident fatalities increased by 54%. During the same period, the road network grew by 44%. • An increase in the number of vehicles on roads, along with the absence of a coordinated policy to control the problem has been attributed to an increase in the number of road accidents. • According to the road transport and highways ministry, half a million accidents are reported in India every year, in which 150,000 people lose their lives.

The Ministry of Road Transport and Highways appointed the Committee on Road Safety in 2007 (Chair: Mr. S. Sundar) to examine the magnitude of road traffic injuries and fatalities. • The Committee recommended setting up road safety authorities (at both national and state levels). • The Sundar Committee had observed that the existing institutions in India do not have the required capacity to look into road safety. • The responsibility for road safety is diffused across various bodies, and there is no effective coordination mechanism between these bodies. • The existing National Road Safety Council does not have the adequate statutory backing, resources, or the mandate to affect road safety. • In April 2016, the central government constituted a group of state transport ministers (Chair: Mr. Yoonus Khan) to recommend reforms for the road transport sector. • The group recommended that the Motor Vehicles Act, 1988 be amended to address urgent issues related to road safety. • The 2019 Act provides for grant of licenses and permits related to motor vehicles, standards for motor vehicles, and penalties for violation of these provisions.

Key provisions of the Act • Compensation for road accident victims: The central government will develop a scheme for cashless treatment of road accident victims during the golden hour.  The Bill defines golden hour as the time period of up to one hour following a traumatic injury, during which the likelihood of preventing death through prompt medical care is the highest.

• The central government may also make a scheme for providing interim relief to claimants seeking compensation under third party insurance. The Bill increases the minimum compensation for hit and run cases. • Compulsory insurance: The Bill requires the central government to constitute a Motor Vehicle Accident Fund, to provide compulsory insurance cover to all road users in India. • Good samaritans: The Bill defines a good Samaritan as a person who renders emergency medical or non-medical assistance to a victim at the scene of an accident.  Such a person will not be liable for any civil or criminal action for any injury to or death of an accident victim, caused due to their negligence in providing assistance to the victim. • Recall of vehicles: The Bill allows the central government to order for recall of motor vehicles if a defect in the vehicle may cause damage to the environment, or the driver, or other road users. • National Transportation Policy: In consultation with state governments. The Policy will establish a planning framework for road transport, develop a framework for grant of permits, and specify priorities for the transport system, among other things. • National Road Safety Board: The Board will advise the central and state governments on all aspects of road safety and traffic management. • Offences and penalties: The Bill increases penalties for several offences under the Act. The central government may increase fines mentioned under the Act every year by up to 10%. • Taxi aggregators: The Bill defines aggregators as digital intermediaries or market places which can be used by passengers to connect with a driver for transportation purposes (taxi services). These aggregators will be issued licenses by state further, they must comply with the Information Technology Act, 2000.

Issues to consider • Electronic Monitoring of Road Safety - Ensuring electronic monitoring across roads in a state could incur a significant amount of infrastructure investment on part of the states (such as CCTV cameras, speed detectors, training programmes, etc.).  The Bill does not specify whether such costs will be borne through a central scheme or through additional grants to the states from the centre. • The financial memorandum of the Bill also does not provide for any financial support to states to implement such infrastructure. • Agency responsible for road safety - While the amendments provide for setting up a National Road Safety Board, it would still be advisory in nature. As per the amendments, the Board will provide advice to the central and state governments on the setting of road standards. • There will be implementation challenges at all-India level.

• Road transport being a subject on the Concurrent List, State governments are also free to make their own laws and rules. Some states feel that the amendment infringes upon the rights of the states. • For effective monitoring of traffic violations and accidents and ensuring that the perpetrators don’t go scot-free, electronic surveillance is essential that needs installation of CCTVs, Speed guns, and other equipments. • This could involve substantial investment, and it is not clear who will bear the cost. • Laxity of vehicle-manufacturers in implementing safety features is also a concern. • Road design and engineering - The Bill provides that the central government will set the design, construction and maintenance standards.  The Sundar Committee on Road Safety had recommended that the powers to set standards and follow up on their compliance cannot be vested in the same department or Ministry which is also responsible for the construction and maintenance of roads. • Penalty for non-compliance with safety standards - The penalty for non-compliance with the safety standards will be a fine of up to one lakh rupees. The question is whether a fine of one lakh rupees would be a sufficient deterrent for contractors when the cost of such projects is above Rs 15 crore per km on average • The Bill caps the maximum liability for third party insurance, but does not cap the compensation amount that courts can award. In cases where courts award compensation higher than the maximum liability amount, it is unclear who will pay the remaining amount. • Under the Act, compensation for hit and run victims comes from a Solatium Fund. The Bill creates a new Motor Vehicle Accident Fund in addition. With a Fund already existing to provide compensation for hit and run accidents, the purpose of the new Accident Fund is unclear. • State governments will issue licenses to taxi aggregators as per central government guidelines. Currently, state governments determine guidelines for plying of taxis. There could be cases where state taxi guidelines are at variance with the central guidelines on aggregators.

Way-Forward • The Standing Committee examining the 2016 Bill had recommended that the central government should help states with the technical expertise, and logistics to make roads safer. • The Sundar Committee had recommended that the National Road Safety Board should have the freedom to set safety standards with regard to the design, construction and maintenance of roads and motor vehicles. • It should also have the power to monitor compliance, issue directions regarding compliance and levy penalties, where necessary. • Road design should be such that it corrects driver behaviour towards safer alternatives. Other countries, such as Sweden and Australia, recognise that humans will make errors, and

therefore focus on designing road transport systems which minimise the opportunity for human error.

Road safety Initiatives in India • Ministry of Road Transport and highways took several steps in the past to improve road safety: • National Road Safety Policy outlines various policy measures such as promoting awareness, establishing road safety information database, encouraging safer road infrastructure including application of intelligent transport, enforcement of safety laws etc. • National Road Safety Council as the apex body to take policy decisions in matters of road safety. • A dashboard for road accident data, through which people can access related data and other information both state-wise and the national averages, has been introduced. • Comic books Swachha Safar and Surakshit Yatra have been been released, with an aim to create awareness among children about road safety. • VAHAN (an ICT-based solution for vehicle registration) and SARATHI (for licencing) app to curb malpractices in issuing licences and vehicle registration. • Setu Bharatam programme to make all national highways free of railway crossings by 2019. • Tamil Nadu model of integrated data-driven road safety initiatives: the Supreme Court- appointed three-member road safety committee led by Justice (retd) KS Radhakrishnan praised Tamil Nadu’s efforts in reducing fatalities in road accidents. NCRB data reveals that road accident deaths in TN came down in 2018 by 24.39%, the biggest decrease recorded in the country.

Mains question DISCUSS THE KEY FEATURES OF RECENTLY CLEARED MOTOR VEHICLES (AMENDMENT) BILL 2019. EXPLAIN IN WHAT WAY IT CAN PROVIDE AN EFFICIENT, SAFE AND CORRUPTION FREE TRANSPORT SYSTEM IN THE COUNTRY.

The Consumer Protection Act, 2019

The Consumer Protection Bill, 2019 was passed by the parliament in August, 2019. The Bill replaces the Consumer Protection Act, 1986.

Context • The Consumer Protection Act, 1986 enforces rights of consumers, and provides for redressal of complaints at the district, state and national level. Over the years, there have been challenges in the implementation of the Act. • A high number of consumers were unaware of their rights under the Act. • While the disposal rate of consumer cases was high (about 90%), the time taken for their disposal was long. It took 12 months on an average to resolve a consumer case. • Also, the Act does not address consumer contracts between a consumer and manufacturer that contain unfair terms.

Even after three amendments to The Consumer Protection Act 1986 in 1991, 1993 and 2002, the problems remained unresolved and new ones continue to mushroom, as the legislation did not keep pace with the new market dynamics. In this context, the Law Commission of India had recommended that a separate law be enacted and presented a draft Bill in relation to unfair contract terms.

Key features of the Bill include • Definition of consumer: A consumer is defined as a person who buys any good or avails a service for a consideration. It does not include a person who obtains a good for resale or a good or service for commercial purposes. It covers transactions through all modes. • Rights of consumers: Six consumer rights have been defined in the Bill, including the right to: i. be protected against marketing of goods and services which are hazardous to life and property ii. be informed of the quality, quantity, potency, purity, standard and price of goods or services iii. be assured of access to a variety of goods or services at competitive prices iv. Seek redressal against unfair or restrictive trade practices. • Central Consumer Protection Authority: The central government will set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce consumer rights as a class.  It can issue safety notices for goods and services, order refunds, recall goods and rule against misleading advertisements.

 Penalties for misleading advertisement: The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement.  CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year. • Consumer Disputes Redressal Commission (CDRCs) will be set up at the district (for cases that do not exceed Rs one crore), state (for cases that do not exceed Rs 10 crore), and national levels (for cases that exceed Rs 10 crore).

 Appeals from a District CDRC will be heard by the State CDRC. Appeals from the State CDRC will be heard by the National CDRC. Final appeal will lie before the Supreme Court. • Product liability: Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service. • Unfair contracts: A contract is said to be unfair if it causes significant change in the rights of the consumer, which include the following:  Requiring excessive security deposits  Imposing a disproportionate penalty for a breach of contract  Refusing to accept early repayment of debts  Terminating the contract without reasonable cause  Transferring a contract to a third party to the detriment of the consumer without his consent  Imposing unreasonable charge or obligations which put the consumer at a disadvantage. • The State and National Commissions may determine if the terms of a contract are unfair and declare such terms to be null and void. • Unfair and restrictive trade practices An unfair trade practice includes:  Making a false statement regarding the quality or standard of a good or Service  Selling of goods not complying with standards  Manufacture of spurious goods  Non-issuance of a receipt for a good or service sold  Refusing to withdraw or refund goods or services within 30 days  Disclosing personal information provided by a consumer to any other person.  A restrictive trade practice is one that imposes unjustified costs or restrictions on consumers, including: (i) delays in supply that lead to increase in price; and (ii) requiring purchase of certain goods or services as a condition for procuring any other goods or services

The CCPA may take steps to prevent and discontinue unfair and restrictive trade practices. The District, State or National Commissions may order the discontinuation of unfair and restrictive trade practices.

Comparison of the Consumer Protection Act, 1986 with the Consumer Protection Act, 2019

Provision 1986 Act 2019 Act

Ambit of law All goods and services All goods and services, including telecom and housing for consideration. construction, and all modes of transactions (online, Free and personal teleshopping, etc.) for consideration. services are excluded. Free and personal services are excluded. Unfair trade Includes six types of Adds three types of practices to the list, namely: practices such practices, like (i) failure to issue a bill or receipt false representation, (ii) refusal to accept a good returned within 30 days misleading (iii) Disclosure of personal information given in advertisements. confidence, unless required by law or in public interest. Contests/ lotteries may be notified as not falling under the ambit of unfair trade practices. Product No provision. Claim for product liability can be made against liability manufacturer, service provider, and seller.

Unfair No provision. Defined as contracts that cause significant change in contracts consumer rights.

Regulator No provision. Establishes the Central Consumer Protection Authority (CCPA)

Alternate No provision. Mediation cells will be attached to the District, State, dispute and National Commissions. redressal mechanism E-commerce No provision. Defines direct selling, e-commerce and electronic service provider. The central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling.

Key Issues and Analysis ● The Bill does not specify that the Consumer Disputes Redressal Commissions (quasi-judicial bodies to adjudicate disputes) will comprise a judicial member. If the Commissions were to have members only from the executive, the principal of separation of powers may be violated. ✔ One may also argue that prescribing the qualifications through Rules may be an excessive delegation of powers. ● The Bill leaves the composition of the Consumer Disputes Redressal Commissions to the central government. This could affect the independence of these quasi-judicial bodies. ● The State and National Councils are headed by Ministers in-charge of Consumer Affairs. The Bill does not specify whom the Councils will advise. If the Councils advise the government, it is unclear in what capacity such advice will be given.

Way-Forward Following recommendations of the standing committee must also be incorporated in the present legislation through amendments to make it more effective; • The right to terminate a contract on the grounds of quality of goods or services received should be included under consumer rights outlined in the Bill. • In order to facilitate early disposal of cases, involvement of advocates in complaints involving compensation value of up to Rs 20 lakh should be prohibited. • The Standing Committee noted that Consumer Commissions do not admit complaints in relation to services to which a special law applies. It recommended that a provision may be inserted to clarify that the proposed Bill will apply to any matter covered under a special law, unless the special law excludes the application of the proposed Bill. • The advertising code presently being followed by the Advertising Standards Council of India (ASCI) should be given legal backing. It is recommended that a provision may be incorporated in the Bill to the effect that the misleading advertiser is compelled to issue a corrective advertisement.

MAINS QUESTION DISCUSS THE KEY FEATURES OF RECENTLY PASSED CONSUMER PROTECTION BILL, 2019. WHAT ARE THE ISSUES AND CONCERNS INVOLVED? DISCUSS ALONG WITH SIGNIFICANCE OF THE SAME.

The Insolvency and Bankruptcy Code (Amendment) Act, 2019.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2019 was passed by the Parliament in August, 2019. The Bill amends the Insolvency and Bankruptcy Code, 2016.

About IBC • The Code provides a time-bound process for resolving insolvency in companies and among individuals. Insolvency is a situation where individuals or companies are unable to repay their outstanding debt. • Under the Code, a financial creditor may file an application before the National Company Law Tribunal (NCLT) for initiating the insolvency resolution process. • The NCLT must find the existence of default within 14 days. Thereafter, a Committee of Creditors (CoC) consisting of financial creditors will be constituted for taking decisions regarding insolvency resolution. • The CoC may either decide to restructure the debtor’s debt by preparing a resolution plan or liquidate the debtor’s assets. • The CoC will appoint a resolution professional who will present a resolution plan to the CoC. • The CoC must approve a resolution plan, and the resolution process must be completed within 180 days. This may be extended by a period of up to 90 days if the extension is approved by NCLT. • If the resolution plan is rejected by the CoC, the debtor will go into liquidation. The Code provides an order of priority for the distribution of assets in case of liquidation of the debtor. • This order places financial creditors ahead of operational creditors (e.g., suppliers). • In a 2018 Amendment, home-buyers who paid advances to a developer were to be considered as financial creditors. They would be represented by an insolvency professional appointed by NCLT.

Major Achievements of IBC

Institution created under code Insolvency and Bankruptcy Board: It will comprise of members from RBI and the Ministries of Finance, Corporate Affairs and Law. It will regulate the activities of insolvency professionals, insolvency professional agencies and information utilities. Insolvency professionals: It will be a cadre of licensed professionals. They will be tasked with the administration of the resolution process, management of debtor’s assets, as a source of information to creditors, to help them in decision making. Information Utilities: The utility would specialise in procuring, maintaining and providing/supplying financial information to businesses, financial institutions, adjudicating authority, insolvency professionals and other relevant stakeholders. In 2017, National e- Governance Services Ltd (NeSL) became India’s first information utility (IU). Insolvency Professional Agencies: It registers insolvency professionals. The agencies conduct examinations to certify insolvency professionals and enforce a code of conduct for their performance. Adjudicating authorities: Act created National Company Law Tribunal (NCLT) for corporates and Debt Recovery Tribunal (DRT), for individuals as well as partnership firms for the adjudication of the resolution process.

Difference between insolvency, bankruptcy and liquidation? Insolvency refers to a financial state of an entity, which can either be a person or a company. In this state, the entity is not able to repay its operational or financial debts to the creditors. In laymen’s terms, it is a state where you don’t have enough money to clear your debts with your lenders. Bankruptcy is the declaration of insolvency. Through insolvency declaration, the insolvent entity’s goal is to ask for the help of the government. It is also a sign that insolvency resolution process is about to be initiated. Liquidation is one of the results of insolvency resolution process. In liquidation, the assets of the insolvent debtor are sold, or liquidated to repay the creditors.

• Before learning about the 2019 (Amendment) Bill, we should learn about the Essar Steel issue which prompted the 2019 Amendment.

Why is the Essar Steel case so important? • This being one of India's most high-profile insolvency cases, any order on Essar Steel is likely to have ramifications for similar resolution schemes. • Recently the National Company Law Appellate Tribunal (NCLAT) approved the resolution plan filed by Arcelor-Mittal for Essar Steel. • The ₹42,000-crore bid is the largest single recovery of debt under the fledgling Insolvency and Bankruptcy Code (IBC) enacted in 2016.

What was the judgment? • Earlier, the resolution plan had proposed to pay financial creditors 92.5 per cent of their dues. • But the appellate tribunal modified the manner in which the proceeds from the sale would be distributed. • As per the order, both financial and operational creditors will recover 60.7 per cent each of their admitted claims.

What was the dispute? • Essar Steel owes around Rs 54,500 crore to its creditors - financial creditors and operational creditors combined. • The company had been put on the block under IBC to recover the unpaid dues. • The Ahmedabad bench of National Company Law Tribunal (NCLT) had in March 2019 approved global steel-giant ArcelorMittal’s bid for Essar Steel. • ArcelorMittal had offered an upfront cash payment of about Rs. 42,000 crore to the financial creditors and capital infusion of Rs. 8,000 in the next few years. • The operational creditors had opposed the bid on the basis that they were getting notional payment while 92.5% of the financial creditors' dues were being paid.

What is the difference between a financial creditor and an operational creditor? The difference between a financial creditor and an operational creditor is that a financial creditor is an individual whose relationship with the entity is solely based on financial contracts, such as a loan or debt security.

Whereas, an operational creditor is an individual whose liabilities from the entity comes in the form of future payments in exchange for goods or services already delivered.

Concerns about National Company Law Appellate Tribunal judgment: • To argue that claims of financial creditors can be treated at par with operational creditors would muddy the waters as it loses sight of the basic distinction between secured and unsecured creditors. • In fact, in its judgement on the constitutionality of the IBC, the Supreme Court had justified the difference between financial and operational creditors, making a critical distinction between financial debts which are secured and operational debts which are unsecured.

National Company Law Appellate Tribunal (NCLAT) • It hears appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June, 2016. • It is the Appellate Tribunal for hearing appeals against the orders passed by NCLT(s) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC). • It is the Appellate Tribunal for hearing appeals against the orders passed by Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC. • It is the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI).

Composition: • The President of the Tribunal and the chairperson and Judicial Members of the Appellate Tribunal shall be appointed after consultation with the Chief Justice of India. • The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of: • Chief Justice of India or his nominee—Chairperson. • A senior Judge of the Supreme Court or a Chief Justice of High Court— Member. • Secretary in the Ministry of Corporate Affairs—Member. • Secretary in the Ministry of Law and Justice—Member. • Secretary in the Department of Financial Services in the Ministry of Finance— Member.

What is the SC judgement on NCLAT’s ruling? • The Supreme Court decision overrules NCLAT’s July 2019 judgment. • The verdict paves the way for ArcelorMittal’s takeover of the bankrupt Essar Steel. • The court said that the CoC will have a final say in the resolution plans under the Insolvency and Bankruptcy Code (IBC). • The NCLT and NCLAT cannot interfere with the commercial decisions taken by the CoC.

Significance of SC Judgement Primacy - The apex court has upheld the primacy of financial creditors over operational creditors in the repayments process. • It is the financial creditors who provide capital to an enterprise and their interests are secured in the form of collaterals on the firm’s assets. • Operational creditors are unsecured creditors and they cannot claim equality or precedence over financial creditors. • The ruling clarifies that the CoC is supreme when it comes to deciding on commercial issues, including the repayment waterfall, in an insolvency resolution. • A waterfall payment is a repayment system by which senior lenders receive principal and interest payments from a borrower first, and subordinate lenders after.

IBC amendment a response to Essar Steel bankruptcy case • The amendments give committee of creditors of a loan defaulting company explicit authority over the distribution of proceeds in the resolution process and fixes a firm timeline of 330 days for resolving cases referred to the IBC. The Amendments addresses three issues; 1. It strengthens provisions related to time-limits. 2. It specifies the minimum payouts to operational creditors in any resolution plan. 3. It specifies the manner in which the representative of a group of financial creditors (such as home-buyers) should vote.

 Resolution plan: The Code provides that the resolution plan must ensure that the operational creditors receive an amount which should not be lesser than the amount they would receive in case of liquidation. 1. The Bill amends this to provide that the amounts to be paid to the operational creditor should be the higher of: (i) amounts receivable under liquidation, and (ii) the amount receivable under a resolution plan, if such amounts were distributed under the same order of priority (as for liquidation). 2. For example, if the default were for Rs 1,000 crore and the resolution professional recovered Rs 800 crore, the operational creditor must at least get an amount which they would have received if Rs 800 crore have been obtained through liquidation proceeds. • Initiation of resolution process: As per the Code, the NCLT must determine the existence of default within 14 days of receiving a resolution application. Based on its findings, NCLT may accept or reject the application.  The Bill states that in case the NCLT does not find the existence of default and has not passed an order within 14 days, it must record its reasons in writing. • Time-limit for resolution process: The Code states that the insolvency resolution process must be completed within 180 days, extendable by a period of up to 90 days.  The Bill adds that the resolution process must be completed within 330 days. This includes time for any extension granted and the time taken in legal proceedings in relation to the process. • Representative of financial creditors: The Code specifies that, in certain cases, such as when the debt is owed to a class of creditors beyond a specified number, the financial creditors will be represented on the committee of creditors by an authorised representative. These representatives will vote on behalf of the financial creditors as per instructions received from them.  The Bill states that such representative will vote on the basis of the decision taken by a majority of the voting share of the creditors that they represent.

Proposed Benefits • The proposed amendments to the Code are aimed at filling critical gaps in the corporate insolvency resolution framework while at the same time maximising value from resolution. • The changes in the law are aimed at timely admission of applications and timely completion of the corporate insolvency resolution process. • The proposed amended Code is also aimed at providing greater clarity on permissibility of corporate restructuring schemes, clarity on the rights and duties of authorised representatives of voters, manner of distribution of amounts amongst financial and operational creditors and applicability of the resolution plan on all statutory authorities. • The approval of amendments to the Insolvency and Bankruptcy Code (IBC) would enhance its efficacy, could bring relief to banks, foreign investors and on the country's credit systems

Concern - Minimum payouts to operational creditors – higher than the amount stipulated in the original IBC, may have an adverse impact on the amount received by the financial creditors in future. If that happens, then some financial creditors, at least, may become wary of providing loans. Operationalisation of IBC, till now, has been spoiled by myriad factors ranging from frivolous challenges posed by operational creditors and promoters to shortage of judges in tribunals. Timely amendments, which provide more teeth to the Code, can only rescue the process.

Issue related to cross-border insolvency cases: The Insolvency Law Committee (ILC), tasked with suggesting amendments to the Insolvency and Bankruptcy Code of India (IBC), has recommended for adopting the UN model to handle cross-border insolvency cases.

About UNCITRAL Model Law of Cross Border Insolvency

• It is a model law issued by the secretariat of UNCITRAL in 1997 to assist states for the regulation of corporate insolvency and financial distress involving companies which have assets or creditors in more than one state. • It defines a cross-border insolvency as one where the insolvent debtor has assets in more than one state, or where some of the creditors of the debtor are not from the state where the insolvency proceeding is taking place. • The model law deals with four major principles of cross-border insolvency namely: • direct access to foreign insolvency professionals and foreign creditors to participate in or commence domestic insolvency proceedings against a defaulting debtor; • recognition of foreign proceedings & provision of remedies; • Cooperation between domestic and foreign courts & domestic and foreign insolvency practioners; coordination between two or more concurrent insolvency proceedings in different countries.

Supreme Court judgments • The Supreme Court upheld changes to the Insolvency and Bankruptcy Code (IBC) that allows homebuyers to initiate proceedings under the law against real estate developers in case they default on debt repayments, putting them on par with financial creditors. • However, the court also said that vacant posts in the insolvency benches, the appellate bodies and regulatory agencies should be filled. • Homebuyers can get their money back plus interest under IBC, which provides the framework for states to set up real estate regulators. • This would be in addition to their existing remedies of moving either the consumer court or using the Real Estate (Regulation and Development) Act or RERA for relief.

About Insolvency and Bankruptcy Code (second amendment) bill, 2018 • It identified allottees under a real estate project as Financial creditors as homebuyers were the biggest source of funds for the developer, more than lenders and deposit holders. • The voting threshold for routine decisions taken by the committee of creditors was reduced from 75% to 51%. • It provided for the withdrawal of a resolution application submitted to the NCLT under the Code. This decision can be taken with the approval of 90% of the committee of creditors. • The Act was followed by a batch of more than 200 petitions filed by the real estate developers challenging the constitutionality of the Insolvency and Bankruptcy Code, 2018 Amendment.

Challenges facing the IBC process • In comparison to the maximum stipulated timeline of 270 days, as mentioned in IBC code, on an average, resolution of cases took 324 days. • The current strength of National Company Law Tribunals (NCLT) benches is insufficient to deal with the larger number of pending cases.

• There have been loopholes in the functioning of Committee of Creditors. Nominated members of financial creditors does not have any authority to take decisions upfront. It leads to a conflict of interest in reaching a revival plan. • There is no proper infrastructure of the Information Utilities (IU) that provide access to credible and transparent evidence of default. • There is a multiplicity of regulators to Insolvency Professionals i.e. presence of numbers of insolvency professional agencies (IPAs) to regulate professionals. • Litigation has choked the pipeline with resolution for only three of the RBI’s first IBC list of 12, only 63 of the total 1,484 cases admitted under the IBC have the highly desirable outcome of being withdrawn under Section 12A (withdrawal from insolvency prior to expression of interest stage with consent of 90 per cent of lenders). • Recovery rates are still lower than global averages, and 31 per cent of the 898 ongoing insolvency cases at the end of 2018 have breached the 270-day deadline. • The issues such as the proposed eligibility criteria for bidders have left it bogged down and suppressed its capacity to help out creditors efficiently. • Also, the strict time limit for the resolution process as mandated by the IBC is an area that has drawn much attention, and it merits further review in order to balance the twin objectives of speedy resolution and maximising recovery for the lenders. • When a loan is not repaid, the default is automatically construed as criminal conduct under the Code. But there could be situations where the default is purely a result of market forces.

Way forward • Need of more NCLT courts: According to experts, bankruptcy courts are over-burdened as they also address other company law matters relating to mismanagement and oppression, mergers and acquisitions and cases of de-registration of companies on account of defaulting on statutory annual return filing requirements. • Digitization of the NCLT/NCLAT platform would improve their performance. • Proactive training/onboarding of judges, lawyers, and other intermediaries will be necessary for effective implementation of the code. • Technological infrastructure needs to be strengthened to avoid any kind of data loss and to maintain confidentiality. There is a requirement of enhanced IU infrastructure. • The tribunals that deal with IBC cases could do with stricter guidelines to distinguish between financial and operational creditors. • Secured lenders need to be marked apart from unsecured lenders with greater clarity. • Resolution orders should not end up casting the basis on which banks lend money in doubt. • Going forward, amendments to the bankruptcy code should primarily be driven by the goal of maximising the sale price of stressed assets. • This requires a robust market for stressed assets that is free from all kinds of entry barriers.

• The Insolvency Law Committee (ILC), tasked with suggesting amendments to the Insolvency and Bankruptcy Code of India (IBC), has recommended for adopting the UN model to handle cross-border insolvency cases.It should be done.

MAINS QUESTION DO YOU THINK INSOLVENCY AND BANKRUPTCY CODE CAN EMERGE AS THE LYNCHPIN FOR RESOLVING STRESSED ASSETS IN A TIME-BOUND MANNER? CRITICALLY ANALYSE.