Insights Daily Current Affairs + PIB: 16 November 2019
Table of contents:
GS Paper 2:
- Contempt of Court.
- Rules notified to bring financial firms under IBC.
- Regulation on cooperative banks soon.
- Rajasthan’s free medicine scheme ranked first.
- National Mission ‘NISHTHA’ launched in J&K.
GS Paper 3:
- Essar Steel verdict.
Facts for prelims:
- Chile to hold referendum on new Constitution.
- Online Child Sexual Abuse and Exploitation (OCSAE) Prevention/Investigation Unit.
- European Investment Bank to stop fossil fuel funding.
- NASA renames Ultima Thule to ‘Arrokoth’.
- Sisseri River Bridge.
GS Paper 2:
Topics Covered:
- Separation of powers between various organs dispute redressal mechanisms and institutions.
What to study?
For Prelims and Mains: What is Contempt of Court? Provisions in this regard, Criticisms and analysis.
Context: The Supreme Court has held former Ranbaxy promoters Malvinder and Shivinder Singh guilty of contempt for violating its order that had asked them not to divest their shares in Fortis Healthcare Limited.
What is contempt under the Indian law?
In India, the Contempt of Courts Act, 1971, divides contempt into civil contempt and criminal contempt.
‘Civil contempt’ is a ‘wilful disobedience to any judgment, decree, direction, order, writ or other processes of a Court or wilful breach of an undertaking given to the court’.
‘Criminal contempt’ is ‘the publication (whether by words, spoken or written, or by signs, or by visible representation, or otherwise) of any matter or the doing of any other act whatsoever which:
- Scandalises or tends to scandalise, or lowers or tends to lower the authority of, any court.
- Prejudices, or interferes or tends to interfere with the due course of any judicial proceeding.
- Interferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner.’
Need:
Judiciary ensures justice and equality to every individual and institutions, therefore, the makers of the constitution upheld the sanctity and prestige of the revered institution by placing provisions under articles 129 and 215 of the constitution, which enables the courts to hold individuals in contempt if they attempt to demean or belittle their authority.
Is criticism allowed?
Yes. The Contempt of Courts Act, 1971, very clearly states that fair criticism of any case which has been heard and decided is not contempt.
Contempt of Courts (Amendment) Act, 2006:
The statute of 1971 has been amended by the Contempt of Courts (Amendment) Act, 2006 to include the defence of truth under Section 13 of the original legislation.
Section 13 that already served to restrict the powers of the court in that they were not to hold anyone in contempt unless it would substantially interfere with the due process of justice, the amendment further states that the court must permit ‘justification by truth as a valid defence if it is satisfied that it is in public interest and the request for invoking the said defence is bona fide.’
Constitutional Background:
- Article 129: Grants Supreme Court the power to punish for contempt of itself.
- Article 142(2): Enables the Supreme Court to investigate and punish any person for its contempt.
- Article 215: Grants every High Court the power to punish for contempt of itself.
Sources: the hindu.
Topics Covered:
- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Rules notified to bring financial firms under IBC
What to study?
For Prelims: Overview of the new rules and IBC.
For Mains: Need for and significance of inclusion of other firms.
Context: The Centre has issued rules that provide a framework for bringing ‘systemically important financial service providers’ under the purview of the Insolvency and Bankruptcy Code (IBC).
- The Ministry of Corporate Affairs has notified the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.
- These rules aim to provide a generic framework for insolvency and liquidation proceedings of systemically important FSPs other than banks.
Background:
Section 227 of the [Insolvency and Bankruptcy] Code enables the Central government to notify, in consultation with the financial sector regulators, financial service providers (FSPs) or categories of FSPs for the purpose of insolvency and liquidation proceedings, in such manner as may be prescribed.
The new rules:
- As per the new rules, only a regulator will be allowed to refer a non-bank lender or housing financier to a bankruptcy tribunal, unlike in the case of companies that can approach a tribunal on their own, or can be dragged into one either by lenders or operational creditors such as material suppliers.
- The bankruptcy tribunal will appoint an administrator who will try to stitch together a turnaround plan.
- The administrator will be nominated by the regulator, such as the Reserve Bank of India (RBI) in the case of non-bank lenders and housing financiers.
- The registration or the licence of the financial services provider will not be suspended or cancelled during the bankruptcy resolution process.
- In case a turnaround of the financial institution is not possible, before deciding to liquidate it, the tribunal will listen to the views of the regulator.
Significance:
The introduction of an interim framework for resolution of financial service providers under the IBC is a timely and important step for resolution of financial service providers permitting an interplay between regulators, creditors and the NCLT (National Company Law Tribunal) for appropriate actions.
These rules are likely to help out distressed shadow banks and housing financiers, which have been battling a liquidity crunch for a year.
Sources: the Hindu.
Topics Covered:
- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Regulation on cooperative banks soon
What to study?
For Prelims: Cooperative banks- composition, functions and regulations.
For Mains: The issue of dual regulation and ways to address it.
Context: The government will, in the upcoming Winter Session of Parliament, seek to make amendments in certain laws so as to bring the banking activities carried out by cooperative societies under the purview of the Banking Regulation Act.
The government is also planning to increase the amount of deposits in banks that are insured, from the current ₹1 lakh.
What are co-operative banks?
Co-operative banks are financial entities established on a co-operative basis and belonging to their members. This means that the customers of a co-operative bank are also its owners.
These banks provide a wide range of regular banking and financial services. However, there are some points where they differ from other banks.
Structure of co-operative banks in India:
Broadly, co-operative banks in India are divided into two categories – urban and rural.
Rural cooperative credit institutions could either be short-term or long-term in nature.
- Short-term cooperative credit institutions are further sub-divided into State Co-operative Banks, District Central Co-operative Banks, Primary Agricultural Credit Societies.
- Long-term institutions are either State Cooperative Agriculture and Rural Development Banks (SCARDBs) or Primary Cooperative Agriculture and Rural Development Banks (PCARDBs).
Urban Co-operative Banks (UBBs) are either scheduled or non-scheduled. Scheduled and non-scheduled UCBs are again of two kinds- multi-state and those operating in single state.
Who oversees these banks?
In India, co-operative banks are registered under the States Cooperative Societies Act. They also come under the regulatory ambit of the Reserve Bank of India (RBI) under two laws, namely, the Banking Regulations Act, 1949, and the Banking Laws (Co-operative Societies) Act, 1955.
They were brought under the RBI’s watch in 1966, a move which brought the problem of dual regulation along with it.
Dual Regulation of Urban Cooperative Bank:
Urban Co-operative Banks are regulated and supervised by State Registrars of Co-operative Societies (RCS) in case of single-State co-operative banks and Central Registrar of Co-operative Societies (CRCS) in case of multi-State co-operative banks and by the RBI.
- The RCS exercises powers under the respective Co-operative Societies Act of the States with regard to incorporation, registration, management, amalgamation, reconstruction or liquidation and in case of UCBs that have multi-State presence, are exercised by the CRCS.
- The banking related functions such as issue of license to start new banks/branches, matters relating to interest rates, loan policies, investments and prudential exposure norms are regulated and supervised by the Reserve Bank under the provisions of the Banking Regulation Act, 1949.
Sources: the Hindu.
Topics Covered:
Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
Rajasthan’s free medicine scheme ranked first
What to study?
For Prelims: Key features and significance of the scheme.
For Mains: Can it be implemented at the national level? Challenges therein and ways to address them.
Context: Rajasthan’s flagship free medicine scheme, launched in 2011-12, has once again secured the first rank from the National Health Mission.
Background:
The State registered 94.59% of online free medicine distribution at counters in public health facilities and 84.76% use of the drugs and vaccine distribution management system at primary health centres.
About the Scheme:
Rajasthan Mukhyamantri Nishulk Dava Yojana was launched on 2nd October 2011.
It has 2 components:
- Free Medicines: To provide commonly-used essential medicines free of cost to patients visiting government healthcare institutions (introduced on 2nd October 2011), and
- Free Tests: To provide free tests (introduced on 7th April 2013).
For the successful implementation of the same, Rajasthan Medical Services Corporation Limited (RMSCL) was incorporated as a Public Limited Company.
Since 2011, it has benefitted around 67 crore patients, and a record number of 712 medicines are covered under it.
How are these schemes ranked?
National Health Mission under its Free Drug Service Initiative, started giving rankings to the states, in order to encourage them to provide free drugs to their patients coming to public health facilities.
Aim: to reduce out of pocket expenditure of patients suffering from cancer, heart and kidney-related diseases, and other severe ailments.
Implemented by the Ministry of Health & Family Welfare in order to support the states.
The performance of the states was assessed by NHM on the basis of 10 parameters including: The stock of drugs, Value of drugs about to expire, and Effective compliance with the Drugs and Vaccine Distribution Management System (DVDMS), etc.
Need:
- Rewarding the states will act as a catalyst for ensuring the inclusive accessibility and affordability of health care services to the most downtrodden and the poorest sections of our society.
- This will also promote the spirit of co-operative and competitive federalism, whereby other states can take the lead and follow similar successful initiatives.
Sources: the Hindu.
Topics Covered:
Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
National Mission ‘NISHTHA’ launched in J&K
What to study?
For Prelims and mains: Key features and significance of the scheme.
Context: NISHTHA- National Initiative for School Heads’ and Teachers’ Holistic Advancement (NISHTHA) has been launched in the Union Territory of Jammu and Kashmir.
Key features of the scheme:
- It is a Mission aimed at improving learning outcomes at Elementary level through integrated Teacher Trainings.
- This Mission aims to build the capacities of 42 lakh participants covering all teachers and Heads of Schools at elementary level in all Government Schools across the country, faculty members of SIEs/SCERTs, DIETs etc.
Sources: the Hindu.
GS Paper 3:
Topics Covered:
Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
What to study?
For Prelims: Overview of the IBC.
For Mains: Insolvency process- issues involved, concerns and ways to address them.
Context: In a landmark judgment, the Supreme Court has upheld the supremacy of the Committee of Creditors comprising the financial creditors of the bankrupt firms over the distribution of claims.
- The verdict:
The Supreme Court quashed the earlier NCLAT order which brought parity between financial and operational creditors of Essar Steel in matters of distribution of proceeds. - The two set of creditors will be treated differently during the insolvency proceedings and taking over of a debt-ridden firm by another company.
There is no principal of equality between secured and unsecured creditors. - The Court has done away with the 330-day mandatory deadline for the resolution of insolvency and bankruptcy cases after which liquidation will be invoked. The mandatory nature of the 330-day mark as a violation of Article 14 (right to equal treatment) of the Constitution and an “excessive and unreasonable restriction on the litigant’s right to carry on business under Article 19(1)(g) of the Constitution”.
What was the issue?
In its judgment in July this year, the NCLAT placed financial (secured and unsecured) and operational creditors on the same footing, setting aside the categorisation by the resolution plan.
Peeved with the NCLAT ruling, the financial creditors had approached the apex court saying that the NCLAT order exceeds the scope of the IBC.
They also argued that secured creditors have the first right over funds.
Way ahead:
The order will finally pave the way for resolution of Essar Steel, one of the oldest cases in the IBC process. It was one of the original Dirty Dozen referred by the RBI to NCLT for Corporate Insolvency Resolution Process under the IBC Code.
With the Supreme Court finally upholding CoC’s primacy over distribution of funds, a major area of concern has been addressed.
Basics:
What is the purpose of enactment of the Insolvency and Bankruptcy Code 2016?
- To consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, as a regulatory body for Insolvency and Bankruptcy law.
Who shall be termed as creditor under the Code?
A Creditor means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree holder.
What is the difference between Financial Creditor and Operational Creditor?
Financial creditor is any person to whom a financial debt is owned and includes a person to whom such debt has been legally assigned or transferred to.
Operational creditor is any person to whom operational debt is owned and includes a person to whom such debt has been legally assigned or transferred to. They are suppliers of good or services to any company or operational debtor.
Sources: the Hindu.
Facts for prelims:
Chile to hold referendum on new Constitution:
Chile has announced that it will stage a referendum to replace the country’s Constitution.
Need: The current charter, in force since 1980 and enacted by the military dictatorship, does not establish the State’s responsibility to provide education and healthcare — two demands made by millions of Chileans who have taken to the streets.
Online Child Sexual Abuse and Exploitation (OCSAE) Prevention/Investigation Unit:
- The Central Bureau of Investigation (CBI) has set up an Online Child Sexual Abuse and Exploitation (OCSAE) Prevention/Investigation Unit.
- The unit, which will function under the agency’s Special Crime Zone in Delhi, will collect and disseminate information on online child sexual abuse and exploitation.
- It will also probe such offences covered under the IPC, the Protection of Children from Sexual Offences Act and the Information Technology Act, apart from other relevant laws.
European Investment Bank to stop fossil fuel funding:
The European Investment Bank is to stop funding oil and coal projects at the end of 2021.
- The EIB’s new policy demands that the energy projects applying for funding must prove that they can produce 1 Kilo watt hour of energy emitting less than 250 grams of carbon dioxide.
- The new rules being adopted are not applicable to gas-based energy projects.
NASA renames Ultima Thule to ‘Arrokoth’:
National Aeronautics and Space Administration (NASA) has recently renamed farthest cosmic body, earlier known as ‘Ultima Thule’ to ‘Arrokoth’ or Sky.
The old name attracted controversy because the word ‘Thule’has been associated with Nazis in the past.
Key facts about Arrokoth:
- Located in the Kuiper belt in the outermost regions of the Solar system.
- Measures approximately 30 km in diameter, and is irregularly shaped.
- It has a reddish color, probably caused by exposure of hydrocarbons to sunlight over billions of years.
- It belongs to a class of Kuiper belt objects called the “cold classicals”, which have nearly circular orbits with low inclinations to the solar plane.
Sisseri River Bridge:
- Recently, the Defence Minister inaugurated the Sisseri River Bridgelocated at lower Dibang Valley in Arunachal Pradesh.
- The 200m long bridge provides connectivity between Dibang Valley and Siang.
- The bridge was constructed by ‘Project Brahmank’ of Border Roads Organisation (BRO).
This bridge is strategically important from the military viewpoint and will be a part of Trans Arunachal Highway.
