Lok Sabha Passes Aadhar Bill, Insolvency and Bankruptcy Code Bill in Parliament

Parliament-India.
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The Lok Sabha on Monday unanimously passed a Bill making Aadhaar mandatory for registration of organisations receiving foreign funds and to give the government powers to stop utilisation of foreign funds by an organisation through a “summary enquiry”.

The Foreign Contribution (Regulation) Amendment Bill, 2020, which seeks amendment to the Foreign Contribution (Regulation) Act, 2010, proposes to include “public servants” in the prohibited category and decrease administrative expenses through foreign funds by an organisation to 20 per cent from 50 per cent earlier.

The Bill was introduced in the House on Sunday. Speaking for the passage of the Bill on behalf of Union Home Minister Amit Shah, Minister of State of Home Nityanand Rai said there was a need to streamline the provisions of the earlier Act by strengthening the compliance mechanism, enhancing transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year and facilitating genuine non-governmental organisations or associations who are working for the welfare of the society.

The Minister assured that amendment in the law is “not against any NGO as well as any religion”. “FCRA is a national internal security law…This amendment is necessary for Aatmanirbhar Bharat,” Rai said while clearing doubts of other MPs regarding the Bill.

“This bill is not to suppress anyone but to control those who try to suppress the people of the country.” Rai said the law does not breach the right of any organisation if they follow the law and do not get distracted from their purpose. “We only take action against any organisation under the rule when they do not follow the law,” he added.

The Minister said the Foreign Contribution (Regulation) Act, 2010 was enacted to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest.

The Minister said the annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act.”Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts. This has led to a situation where the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-Governmental organisations between 2011 and 2019.”

Criminal investigations also had to be initiated against dozens of such non-governmental organisations which indulged in outright misappropriation or mis-utilisation of foreign contribution, he said. Seeking to amend clause (c) of sub-section (1) of section 3 of the Act, the government has proposed to include “public servants” within its ambit, to provide that no foreign contribution shall be accepted by them.

Earlier, it was restricted to legislators, election candidates, journalists, print and broadcast media, judges, government servants or employees of any corporation or any other body controlled or owned by the government.

It has also sought to prohibit any transfer of foreign contribution to any other association or person. Amendment of section 17 of the Act has sought to provide that every person who has been granted certificate or prior permission under section 12 shall receive foreign contribution only in an account designated as ‘FCRA Account’ which shall be opened by him in such branch of the State Bank of India at New Delhi, as the Central Government may, by notification, specify. It has, however, allowed the organisation to transfer these funds to another account for utilisation.

Opposing the Bill, various political parties, including Congress, NCP, BSP and TMC demanded its withdrawal.

Congress Leader of House Adhir Ranjan Chowdhury said the Bill aims to save the PM-CARES fund and raised a question on the need to make the Aadhaar card mandatory.

Congress leader Gaurav Gogoi demanded that the Bill be sent to the Standing Committee for consideration. Initiating the debate, Congress leader Anto Antony said 6,600 NGO were cancelled in the last three years alleging the government was targeting minorities, and sought withdrawal of “unconceived amendments” from the Bill.

BJP’s Satyapal Malik informed the House that 19,000 organisations were not using received foreign funds for the specific purpose.

Saugata Roy said the Bill is being amended to tighten screws against those organisations which are receiving funds from abroad. “The Ministry is trying to put screws on such organisations. If any organisation receives foreign contribution, it cannot transfer the contribution to another organisation.This may also play foreign funding agencies and foreign transmaking organisations registered under FCRA in difficulty.”

NCP’s Supriya Sule and BSP’s Ritesh Pandey also raised objections on the need of Aadhaar as a mandatory identity proof document.

The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, whereby fresh insolvency proceedings will not be initiated for at least six months starting from March 25 amid the coronavirus pandemic.

The Bill mandates that a default on repayments from March 25, the day when a nationwide lockdown began to curb the spread of coronavirus, would not be considered for initiating insolvency proceedings for at least six months. The Bill, which was passed by the Rajya Sabha on Saturday, seeks amendment in the Insolvency and Bankruptcy Code, 2016 and replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 which was promulgated by the President on June 5 this year.

Speaking on the Bill while moving for passage, Union Finance Minister Nirmala Sitharaman said the amendment was necessitated in the form of ordinance. In Parliament registry, this is among one of those Bills, now an Act, Sitharaman said, which come very quickly each time when the ground situation required changes so that this becomes a robust law.

Giving detailed reasons behind amendment in the law, the minister said the need for such ordinance has never been contextual in the last 100 years. “Such kind of atmosphere cannot be in the coming 100 years too.” Indicating towards the Covid-19 disease, the minister said the dimension and the scale of the pandemic was obvious and therefore we had to come up with an ordinance which clearly suspended the application of three sections – 7, 9 and 10 — of the Insolvency and Bankruptcy Code.

“We had to prevent any company which is experiencing distress because of Covid being pushed into the insolvency proceedings. And therefore we had to suspend these sections.” The ordinance had prohibited the initiation of insolvency proceedings for defaults arising during the six months from March 25 this year (extendable up to one year).

Simply put, no insolvency proceedings can be initiated by either the corporate debtor or any of its creditors for defaults arising during this six-month period beginning March 25.The ordinance came in response to the Covid-19 pandemic, which had created uncertainty and stress for businesses for reasons beyond their control. It was also felt that during the Covid-19-induced lockdown, it may be difficult to find an adequate number of resolution applicants to rescue the corporate debtor who may default in discharging their debt.

The Finance Minister also defended the provision in the Bill to cap the suspension of sections 7, 9 and 10 for one year. By putting the upper limit of one year, the government is ensuring that excessive delegation does not go to the executive and also that Parliament approval would be necessary if the suspension were to be extended beyond one year, she noted. “I would rather not remove (the one-year cap) it. This is a restraint we have put for ourselves,” she said.

With the six-month timeline for the suspension coming to an end on September 25, Sitharaman indicated that a formal announcement on the way forward will be made on September 24. She also asserted that the amendments brought through the ordinance were not intended to protect promoters from their fraudulent transactions.

Finance Minister Nirmala Sitharaman on Monday stated in the Lok Sabha that any company whether it is big, small, micro, medium or nano is important for the country.

Saying that “my friends are the companies”, the Minister said under the Companies Act even MSMEs are registered and anybody who is registered under this act and if, unfortunately, comes for a liquidation has to have a solution.

“Your friend, my friend does not matter. All are friends of this country. Unless business is run by small, medium or big that kind of a job which we are talking about will not happen. So, solution is required for everybody,” the Minister said while addressing the Lower House while pushing for the passage of the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020.

The Bill, which was passed by the Rajya Sabha on Saturday, seeks amendment in the Insolvency and Bankruptcy Code, 2016 and replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 which was promulgated by the President on June 5 this year.

The ordinance had prohibited the initiation of insolvency proceedings for defaults arising during the six months from March 25 this year (extendable up to one year).

Simply put, no insolvency proceedings can be initiated by either the corporate debtor or any of its creditors for defaults arising during this six-month period beginning March 25.

The ordinance came in response to the Covid-19 pandemic, which had created uncertainty and stress for businesses for reasons beyond their control. It was also felt that during the Covid-19-induced lockdown, it may be difficult to find an adequate number of resolution applicants to rescue the corporate debtors who may default in discharging their debt.

In parliament registry, Sitharaman said this is among one of those Bills, now an Act, which come very quickly each time when the ground situation requires changes so that this becomes a robust law.

Giving detailed reasons behind amendment in the law, the Minister said the need of such an ordinance has never been contextual in last 100 years. “Such kind of atmosphere cannot be in the coming 100 years too.”

Hinting at the Covid-19 pandemic, the Minister said the dimension and the scale of the pandemic was obvious and therefore the government had to come up with an ordinance which suspended the application of three sections–7,9 and 10– of the Insolvency and Bankruptcy Code.

“We had to prevent any company which is experiencing distress because of Covid being pushed into the insolvency proceedings. And therefore we had to suspend these sections.”

The Minister said the entire approach that the government has taken is to immediately help companies with some relief and then look at the way in which the second phase can go on.

She said this Bill is the part of the second approach. And the third phase, Sitharaman said, could have some kind of resolution mechanism for those who are not able to survive and hand-holding in particular incidences.

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