The Jammu and Kashmir Reorganisation (Amendment) Bill, 2021

The Jammu and Kashmir Reorganisation (Amendment) Bill, 2021 was introduced in Rajya Sabha on February 4, 2021.  It amends the Jammu and Kashmir Reorganisation Act, 2019.  The Act provides for the bifurcation of the state of Jammu and Kashmir (J&K) into the Union Territory of J&K and Union Territory of Ladakh.  The Bill repeals the Jammu and Kashmir Reorganisation (Amendment) Ordinance, 2021.

Key Features of the Bill include:

  1. Application of provisions on elected legislatures: The Act provides that Article 239A of the Constitution, which is applicable to the union territory of Puducherry, shall also apply to the union territory of J&K.  Article 239A provides for the constitution of a union territory of Puducherry with: (i) a legislature, which may be elected, or partly nominated and partly elected, or (ii)a Council of Minister.  The Bill states that in addition to Article 239A, any other provision of the Constitution which refers to elected members of a legislative assembly of a state and is also applicable to the union territory of Puducherry, will apply to the union territory of J&K.  
  2. Merging of administrative cadres:  The Act specifies that the members of the Indian Administrative Service, the Indian Police Service and the Indian Forest Service serving in the state of J&K would continue to serve in the two union territories, based on allocation decided by the central government.  Further, in future, postings of officers in the two union territories would be from the Arunachal Goa Mizoram Union Territory (AGMUT) cadre.  The AGMUT cadre covers the three states of Arunachal Pradesh, Mizoram and Goa, as well as all the union territories.
  3. The Bill amends these clauses to provide for the merger of the officers in the existing cadre of J&K with the AGMUT cadre.

The Arbitration and Conciliation (Amendment) Bill, 2021

The Arbitration and Conciliation (Amendment) Bill, 2021 was introduced in Lok Sabha on February 4, 2021.  It seeks to amend the Arbitration and Conciliation Act, 1996.  The Act contains provisions to deal with domestic and international arbitration and defines the law for conducting conciliation proceedings.  The Bill replaces an Ordinance with same provisions promulgated on November 4, 2020.

Key Features of the Bill include:

  1. Automatic stay on awards:  The 1996 Act allowed a party to file an application to set aside an arbitral award (i.e., the order given in an arbitration proceeding).  Courts had interpreted this provision to mean that an automatic stay on an arbitral award was granted the moment an application for setting aside an arbitral award was made before a court.  In 2015, the Act was amended to state that an arbitral award would not be automatically stayed merely because an application is made to a court to set aside the arbitral award. 
  2. The Bill specifies that a stay on the arbitral award can be provided (even during the pendency of the setting aside of the application) if the court is satisfied that: (i) the relevant arbitration agreement or contract, or (ii) the making of the award, was induced, or effected by fraud or corruption.  This change will be effective from October 23, 2015.  
  3. Qualifications of arbitrators: The Act specified certain qualifications, experience, and accreditation norms for arbitrators in a separate schedule.  The requirements under the schedule include that the arbitrator must be: (i) an advocate under the Advocates Act, 1961 with 10 years of experience, or (ii) an officer of the Indian Legal Service, among others.  Further, the general norms applicable to arbitrators include that they must be conversant with the Constitution of India.  The Bill removes the Schedule for arbitrators and states that the qualifications, experience, and norms for accreditation of arbitrations will be specified under the regulations.

The National Capital Territory of Delhi Laws (Special Provisions) Second (Amendment) Bill, 2021

The National Capital Territory of Delhi Laws (Special Provisions) Second (Amendment) Bill, 2021 was introduced in Rajya Sabha on February 8, 2021.  It repeals the National Capital Territory of Delhi Laws (Special Provisions) Second (Amendment) Ordinance, 2020 promulgated on December 30, 2020.  The Bill amends the National Capital Territory of Delhi Laws (Special Provisions) Second Act, 2011.  

The 2011 Act provides for:

  1. relocating slum dwellers and Jhuggi-Jhompri clusters in accordance with the provisions of the Delhi Shelter Improvement Board Act, 2010 and the Master Plan for Delhi, 2021,
  2. regularising unauthorised colonies, village abadi areas (and their extensions),
  3. creating a policy or plan for farm houses constructed beyond permissible building limits, and for all other areas of the National Capital Territory of Delhi, and
  4. not taking any punitive action and minimising inconvenience to the people of Delhi in case of any demolition or sealing of structures under the Master Plan for Delhi.  
  5. The Master Plan for Delhi 2021 was notified by the central government on February 7, 2007.  It provides for strategies of housing for urban poor as well as for dealing with the informal sector.

Key Features of the Bill include:

  1. Extension of validity:  The 2011 Act was valid till December 31, 2020.  The Bill seeks to extend this deadline to December 31, 2023.  
  2. Regularisation of Unauthorised Colonies:  The 2011 Act also provided for the regularisation of unauthorised colonies (i) which existed as on March 31, 2002, and (ii) where construction took place till June 1, 2014.  The Bill amends this to provide that unauthorised colonies will be identified for regularisation as per the National Capital Territory of Delhi (Recognition of Property Rights of Residents in Unauthorised Colonies) Act, 2019, and the National Capital Territory of Delhi (Recognition of Property Rights of Residents in Unauthorised Colonies) Regulations, 2019.  Thus, the unauthorised colonies: (i) which existed as on June 1, 2014, and (ii) having 50% development as on January 1, 2015, will be eligible for regularisation.

The Mines and Minerals (Development and Regulation) Amendment Bill, 2021

The Mines and Minerals (Development and Regulation) Amendment Bill, 2021 was introduced in Lok Sabha on March 15, 2021.  The Bill amends the Mines and Minerals (Development and Regulation) Act, 1957.  The Act regulates the mining sector in India.

Key Features of the Bill include:

  1. Removal of restriction on end-use of minerals: The Act empowers the central government to reserve any mine (other than coal, lignite, and atomic minerals) to be leased through an auction for a particular end-use (such as iron ore mine for a steel plant).  Such mines are known as captive mines.  The Bill provides that no mine will be reserved for particular end-use.
  2. Sale of minerals by captive mines:  The Bill provides that captive mines (other than atomic minerals) may sell up to 50% of their annual mineral production in the open market after meeting their own needs.   The central government may increase this threshold through a notification.  The lessee will have to pay additional charges for mineral sold in the open market.
  3. Auction by the central government in certain cases: Under the Act, states conduct the auction of mineral concessions (other than coal, lignite, and atomic minerals).  Mineral concessions include mining lease and prospecting license-cum-mining lease.  The Bill empowers the central government to specify a time period for completion of the auction process in consultation with the state government.  If the state government is unable to complete the auction process within this period, the auctions may be conducted by the central government.
  4. Transfer of statutory clearances: Upon expiry of a mining lease (other than coal, lignite, and atomic minerals), mines are leased to new persons through auction.  The statutory clearances issued to the previous lessee are transferred to the new lessee for a period of two years.  The new lessee is required to obtain fresh clearances within these two years.  The Bill replaces this provision and instead provides that transferred statutory clearances will be valid throughout the lease period of the new lessee.
  5. Allocation of mines with expired leases: The Bill adds that mines (other than coal, lignite, and atomic minerals), whose lease has expired, may be allocated to a government company in certain cases.  This will be applicable if the auction process for granting a new lease has not been completed, or the new lease has been terminated within a year of the auction.  The state government may grant a lease for such a mine to a government company for a period of up to 10 years or until the selection of a new lessee, whichever is earlier.
  6. Rights of certain existing concession holders: In 2015, the Act was amended to provide those mines will be leased through an auction process.  Existing concession holders and applicants have been provided with certain rights including: (i) right to obtain prospecting licence or mining lease to a holder of reconnaissance permit or prospecting licence (issued before commencement of the 2015 Amendment Act), and (ii) right for grant of mining lease where the central government had given its approval or letter of intent was issued by the state government before the commencement of the 2015 Amendment Act.  The Bill provides that the right to obtain a prospecting license or a mining lease will lapse on the date of commencement of the 2021 Amendment Act.  Such persons will be reimbursed for any expenditure incurred towards reconnaissance or prospecting operations.
  7. Extension of leases to government companies: The Act provides that the period of mining leases granted to government companies will be prescribed by the central government.  The Bill provides that the period of mining leases of government companies (other than leases granted through auction) may be extended on payment of additional amount prescribed in the Bill.
  8. Conditions for lapse of mining lease: The Act provides that a mining lease will lapse if the lessee: (i) is not able to start mining operations within two years of the grant of a lease, or (ii) has discontinued mining operations for a period of two years.  However, the lease will not lapse at the end of this period if a concession is provided by the state government upon an application by the lessee.  The Bill adds that the threshold period for lapse of the lease may be extended by the state government only once and up to one year.
  9. Non-exclusive reconnaissance permit: The Act provides for a non-exclusive reconnaissance permit (for minerals other than coal, lignite, and atomic minerals).  Reconnaissance means preliminary prospecting of a mineral through certain surveys.    The Bill removes the provision for this permit.

The Marine Aids to Navigation Bill, 2021

The Marine Aids to Navigation Bill, 2021 was introduced in Lok Sabha on March 15, 2021.  The Bill seeks to provide a framework for the development, maintenance, and management of aids to navigation in India.  It repeals the Lighthouse Act, 1927, which provides for the maintenance and control of lighthouses in India. 

Key features of the Bill include:

  1. Application: The Bill applies to the whole of India including various maritime zones including territorial waters, continental shelf, and exclusive economic zone.
  2. Aid to navigation: The Bill defines aid to navigation as a device, system, or service, external to the vessels designed and operated to enhance the safety and efficiency of navigation of vessels and vessel traffic.  A vessel includes a ship, boat, sailing vessel, fishing vessel, submersible, and mobile offshore drilling units.  Vessel traffic service is defined as a service to improve the safety and efficiency of vessel traffic and protect the environment.
  3. Director General of Aids to Navigation: The Bill provides that the central government will appoint: (i) a Director General, (ii) Deputy Director Generals, and (iii) Directors for districts (which the centre may demarcate).  The Director General will advise the central government on matters related to aids to navigation, among others. 
  4. Central Advisory Committee: The central government may appoint a Central Advisory Committee (CAC) consisting of persons representing the interests affected by the Bill, or having special knowledge of the sector.  The government may consult the CAC on matters including: (i) establishment of aids to navigation, (ii) additions, alteration, or removal of, any such aids, (iii) cost of any proposal relating to such aids, or (iv) appointment of any sub-committee.  Further, the CAC may also appoint sub-committees for additional advice on these matters.
  5. Management of General Aids to Navigation and vessel traffic services:  The central government will be responsible for the development, maintenance, and management of all general aids to navigation and vessel traffic services.  Its powers with regard to management of aids to navigation include: (i) establishing, maintaining, adding, altering, or removing any aid to navigation, (ii) authorising to inspect any such aid which may affect the safety of navigation, and (iii) acquiring any land as may be necessary. 
  6. Powers of the central government for management of vessel traffic services include: (i) authorising vessel traffic service provider to operate such service within an authorised area, (ii) accrediting and approving vessel traffic service training and certification, and (iii) adding to, altering, or requiring any person to add to or alter any aspect of a vessel traffic service.
  7. Training and certification: The Bill provides that no person shall be allowed to operate on any aid to navigation (including any ancillary activities), or any vessel traffic service in any place unless he holds a valid training certificate.  The central government will accredit training organisations for imparting training to, or conduct assessments of, persons in the operation of aids to navigation and vessel traffic services.
  8. Levy of marine aids to navigation dues: The Bill provides that marine aids to navigation dues will be levied and collected for every ship arriving at or departing from any port in India, at the rate specified by the central government from time to time.  The central government may wholly or partially exempt certain vessels from these dues.  These vessels include: (i) any government ship, which is not carrying cargo or passengers for freight or fares, or (ii) any other ship, classes of ships, or ships performing specified voyages.
  9. Any dispute related to the marine aids to navigation dues, expenses, or costs, will be heard and determined by a civil court having jurisdiction at the place where the dispute arose.
  10. Heritage Lighthouse: The central government may designate any aid to navigation under its control as a heritage lighthouse.  In addition to their function as aids to navigation, such lighthouses will be developed for educational, cultural, and tourism purposes.
  11. Penalties: The Bill provides certain offences and penalties.  For instance: (i) intentionally causing obstruction of, reduction in, or limitation of, the effectiveness of any aid to navigation or vessel traffic service, will be punishable with imprisonment of up to six months, or a fine up to one lakh rupees, or both, (ii) intentionally causing damage to, or destruction of any aid to navigation or vessel traffic services, will be punishable with imprisonment of up to one year, or a fine up to five lakh rupees, or both.

The Juvenile Justice (Care and Protection of Children) Amendment Bill, 2021

The Juvenile Justice (Care and Protection of Children) Act, 2015 states that adoption of a child is final on the issuance of an adoption order by the civil court.  The Bill provides that instead of the court, the district magistrate (including additional district magistrate) will issue such adoption orders.

Key Features of the bill include:

  1. Adoption:  Under the Act, once prospective adoptive parents accept a child, an adoption agency files an application in a civil court to obtain the adoption order.  The adoption order issued by the court establishes that the child belongs to the adoptive parents.  The Bill provides that instead of the court, the district magistrate (including additional district magistrate) will perform these duties and issue all such orders. 
  2. Appeals: The Bill provides that any person aggrieved by an adoption order passed by the district magistrate may file an appeal before the Divisional Commissioner, within 30 days of such order.  Such appeals should be disposed within four weeks from the date of filing of the appeal.
  3. The Act provides that there will be no appeal for any order made by a Child Welfare Committee concluding that a person is not a child in need of care and protection.  The Bill removes this provision.
  4. Serious offences: The Act provides that the Juvenile Justice Board will inquire about a child who is accused of a serious offence.  Serious offences are those for which the punishment is imprisonment between three to seven years.  The Bill adds that serious offences will also include offences for which maximum punishment is imprisonment of more than seven years, and minimum punishment is not prescribed or is less than seven years.
  5. Designated Court: The Act provides that offences against children that are punishable with imprisonment of more than seven years, will be tried in the Children’s Court (equivalent to a Sessions Court).  Other offences (punishable with imprisonment of less than seven years) will be tried by a Judicial Magistrate.  The Bill amends this to provide that all offences under the Act will be tried in the Children’s Court.  
  6. Offences against children: The Act provides that an offence under the Act, which is punishable with imprisonment between three to seven years will be cognizable (where arrest is allowed without warrant) and non-bailable.  The Bill provides that such offences will be non-cognizable and non-bailable.
  7. Child Welfare Committees (CWCs): The Act provides that states must constitute one or more CWCs for each district for dealing with children in need of care and protection.  It provides certain criteria for the appointment of members to CWC.  For instance, a member should be: (i) involved in health, education, or welfare of children for at least seven years, or (ii) a practising professional with a degree in child psychology, psychiatry, law, or social work.  The Bill adds certain criteria for a person to be ineligible to be a member of the CWC.  These include: (i) having any record of violation of human rights or child rights, or (ii) being a part of the management of a child care institution in a district.

The Government of National Capital Territory of Delhi (Amendment) Bill, 2021

The Government of National Capital Territory of Delhi (Amendment) Bill, 2021 was introduced in Lok Sabha on March 15, 2021.  The Bill amends the Government of National Capital Territory of Delhi Act, 1991.  The Act provides a framework for the functioning of the Legislative Assembly and the government of the National Capital Territory (NCT) of Delhi.  The Bill amends certain powers and responsibilities of the Legislative Assembly and the Lieutenant Governor.

Key Features of the bill include:

  1. Restriction on laws passed by the Assembly: The Bill provides that the term “government” referred to in any law made by the Legislative Assembly will imply Lieutenant Governor (LG). 
  2. Rules of Procedure of the Assembly: The Act allows the Legislative Assembly to make Rules to regulate the procedure and conduct of business in the Assembly.  The Bill provides that such Rules must be consistent with the Rules of Procedure and Conduct of Business in the Lok Sabha.
  3. Inquiry by the Assembly into administrative decisions: The Bill prohibits the Legislative Assembly from making any rule to enable itself or its Committees to: (i) consider the matters of day-to-day administration of the NCT of Delhi and (ii) conduct any inquiry in relation to administrative decisions.   Further, the Bill provides that all such rules made before its enactment will be void.
  4. Assent to Bills: The Act requires the LG to reserve certain Bills passed by the Legislative Assembly for the consideration of the President.  These Bills are those: (i) which may diminish the powers of the High Court of Delhi, (ii) which the President may direct to be reserved, (iii) dealing with the salaries and allowances of the Speaker, Deputy Speaker, and members of the Assembly and the Ministers, or (iv) relating to official languages of the Assembly or the NCT of Delhi.  The Bill requires the LG to also reserve those Bills for the President which incidentally cover any of the matters outside the purview of the powers of the Legislative Assembly.
  5. LG’s opinion for executive actions: The Act specifies that all executive action by the government, whether taken on the advice of the Ministers or otherwise, must be taken in the name of the LG.  The Bill adds that on certain matters, as specified by the LG, his opinion must be obtained before taking any executive action on the decisions of the Minister/ Council of Ministers.  

The Insurance (Amendment) Bill, 2021

The Insurance (Amendment) Bill, 2021 was introduced in Rajya Sabha by the Minister of Corporate Affairs, Ms. Nirmala Sitharaman, on March 15, 2021.  The Bill amends the Insurance Act, 1938.  The Act provides the framework for functioning of insurance businesses and regulates the relationship between an insurer, its policyholders, its shareholders, and the regulator (the Insurance Regulatory and Development Authority of India).  The Bill seeks to increase the maximum foreign investment allowed in an Indian insurance company.

Key Features of the Bill include:

  1. Foreign investment:  The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity.  The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control.  However, such foreign investment may be subject to additional conditions as prescribed by the central government.
  2. Investment of assets:  The Act requires insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities.  If the insurer is incorporated or domiciled outside India, such assets must be held in India in a trust and vested with trustees who must be residents of India.  The Act specifies in an explanation that this will also apply to an insurer incorporated in India, in which at least: (i) 33% capital is owned by investors domiciled outside India, or (ii) 33% of the members of the governing body are domiciled outside India.  The Bill removes this explanation.

The National Bank for Financing Infrastructure and Development (NBFID) Bill, 2021

The National Bank for Financing Infrastructure and Development Bill, 2021 was introduced in Lok Sabha on March 22, 2021.  The Bill seeks to establish the National Bank for Financing Infrastructure and Development (NBFID) as the principal development financial institution (DFIs) for infrastructure financing.  DFIs are set up for providing long-term finance for such segments of the economy where the risks involved are beyond the acceptable limits of commercial banks and other ordinary financial institutions.  Unlike banks, DFIs do not accept deposits from people.  They source funds from the market, government, as well as multi-lateral institutions, and are often supported through government guarantees.  

Key Features of the bill include:

  1. NBFID: NBFID will be set up as a corporate body with authorised share capital of one lakh crore rupees.  Shares of NBFID may be held by: (i) central government, (ii) multilateral institutions, (iii) sovereign wealth funds, (iv) pension funds, (v) insurers, (vi) financial institutions, (vii) banks, and (viii) any other institution prescribed by the central government.  Initially, the central government will own 100% shares of the institution which may subsequently be reduced up to 26%.
  2. Functions of NBFID: NBFID will have both financial as well as developmental objectives.  Financial objectives will be to directly or indirectly lend, invest, or attract investments for infrastructure projects located entirely or partly in India.  Central government will prescribe the sectors to be covered under the infrastructure domain.  Developmental objectives include facilitating the development of the market for bonds, loans, and derivatives for infrastructure financing.  Functions of NBFID include: (i) extending loans and advances for infrastructure projects, (ii) taking over or refinancing such existing loans, (iii) attracting investment from private sector investors and institutional investors for infrastructure projects, (iv) organising and facilitating foreign participation in infrastructure projects, (v) facilitating negotiations with various government authorities for dispute resolution in the field of infrastructure financing, and (vi) providing consultancy services in infrastructure financing.  
  3. Source of funds: NBFID may raise money in the form of loans or otherwise both in Indian rupees and foreign currencies, or secure money by the issue and sale of various financial instruments including bonds and debentures.  NBFID may borrow money from: (i) central government, (ii) Reserve Bank of India (RBI), (iii) scheduled commercial banks, (iii) mutual funds, and (iv) multilateral institutions such as World Bank and Asian Development Bank.
  4. Management of NBFID:  NBFID will be governed by a Board of Directors.  The members of the Board include: (i) the Chairperson appointed by the central government in consultation with RBI, (ii) a Managing Director, (iii) up to three Deputy Managing Directors, (iv) two directors nominated by the central government, (v) up to three directors elected by shareholders, and (vi) a few independent directors (as specified).  A body constituted by the central government will recommend candidates for the post of the Managing Director and Deputy Managing Directors.  The Board will appoint independent directors based on the recommendation of an internal committee.
  5. Support from the central government: The central government will provide grants worth Rs 5,000 crore to NBFID by the end of the first financial year.  The government will also provide guarantee at a concessional rate of up to 0.1% for borrowing from multilateral institutions, sovereign wealth funds, and other foreign funds.  Costs towards insulation from fluctuations in foreign exchange (in connection with borrowing in foreign currency) may be reimbursed by the government in part or full.  Upon request by NBFID, the government may guarantee the bonds, debentures, and loans issued by NBFID.
  6. Prior sanction for investigation and prosecution: No investigation can be initiated against employees of NBFID without the prior sanction of: (i) the central government in case of the chairperson or other directors, and (ii) the managing director in case of other employees.  Courts will also require prior sanction for taking cognisance of offences in matters involving employees of NBFID.
  7. Other DFIs: The Bill also provides for any person to set up a DFI by applying to RBI.   RBI may grant a licence for DFI in consultation with the central government.  RBI will also prescribe regulations for these DFIs.

The Inland Vessels Bill, 2021

The Inland Vessels Bill, 2021 was introduced in Lok Sabha on July 22, 2021.  It replaces the Inland Vessels Act, 1917.  The Act provides for the regulation of inland vessel navigation by states including the registration of vessels, and safe carriage of goods and passengers.  The Bill seeks to introduce a uniform regulatory framework for inland vessel navigation across the country.

 Key features of the Bill include:

  1. Mechanically propelled inland vessels: The Bill defines such vessels to include ships, boats, sailing vessels, container vessels, and ferries.  The central government will prescribe the: (i) classification, (ii) standards of design, construction, and crew accommodation, and (iii) type and periodicity of surveys, for these vessels.  Construction or modification of such vessels will require prior approval of a designated authority, as prescribsed by the central government.  
  2. Operation:  To operate in inland waters, all such vessels must have a certificate of survey, and a certificate of registration.  Vessels with Indian ownership must be registered with the Registrar of Inland Vessels (appointed by the state government).  The registration certificate will be valid across the country.  The certificate of survey will be granted by state governments, in a form as prescribed by the central government.  This certificate will indicate the inland water zones (areas of operation to be demarcated by states) for such vessels.  The vessels must also have an insurance policy to cover liability for death, injury, or damage caused due to the usage of the vessel (including accidental pollution).  
  3. Navigation safety:  Such vessels will be required to follow certain specifications for signals and equipment to ensure navigation safety, as specified by the central government.  In case of a navigation hazard, the master of a vessel must immediately send a danger or distress signal to other such vessels in proximity and to the concerned state government.  If a vessel master abstains from rendering assistance after answering a distress call, he will be penalised with a fine of up to Rs 10,000, unless he is unable to render such assistance on certain specified grounds. 
  4. Inquiry into accidents:  All accidents aboard such vessels must be reported to the head officer of the nearest police station, as well as to a state government appointed authority.  The state may require the District Magistrate to inquire into these matters and submit a report recommending actions to be taken. 
  5. Manning requirements: The central government will prescribe the minimum number of people that vessels must have, for various roles.  Violating these requirements will attract a penalty of up to Rs 10,000 for the first offence, and Rs 25,000 for subsequent offences.  The central government will prescribe the standards for qualification, training, examination and grant of certificate of competency, which indicate the fitness of the recipients to serve in the specified roles.  State governments will grant these certificates.
  6. Prevention of pollution: Vessels will discharge or dispose sewage, as per the standards specified by the central government.  The central government will notify the list of pollutants which will be prohibited for discharge or disposal.  State governments will grant vessels a certificate of prevention of pollution, in a form as prescribed by the central government.  
  7. Database on inland vessels: The central government will maintain an electronic centralised record of data on inland vessels.  These records will include information on: (i) registration of vessels, (ii) crew and manning, and (iii) certificates issued. 
  8. Development fund: The Bill provides for a development fund which will be utilised for various purposes including: (i) emergency preparedness, (ii) containment of pollution, and (iii) boosting inland water navigation.  Each state will constitute such a development fund.  Sources of contribution to the fund include: (i) schemes of state governments, (ii) stakeholders, and (iii) collections from sale of wreck or cargo.
  9. Non-mechanically propelled inland vessels:  The Bill empowers state governments to delegate certain functions related to non-mechanically propelled inland vessels to their local governments.  These include collating data, and conducting advisory programmes for owners, operators, and users of such vessels.  State governments will prescribe the criteria (such as size, purpose, age, and design) for the identification and categorisation of such vessels. 

The Essential Defence Services Bill, 2021

The Essential Defence Services Bill, 2021 was introduced in Lok Sabha by the Minister of Defence, Mr. Rajnath Singh, on July 22, 2021.  The Bill seeks to replace the Ordinance promulgated in June 2021.  The Bill allows the central government to prohibit strikes, lock-outs, and lay-offs in units engaged in essential defence services. 

Key features of the Bill include:

  1. Essential defence services: Essential defence services include any service in: (i) any establishment or undertaking dealing with production of goods or equipment required for defence related purposes, or (ii) any establishment of the armed forces or connected with them or defence.  These also include services that, if ceased, would affect the safety of the establishment engaged in such services or its employees.  In addition, the government may declare any service as an essential defence service if its cessation would affect the: (i) production of defence equipment or goods, (ii) operation or maintenance of industrial establishments or units engaged in such production, or (iii) repair or maintenance of products connected with defence.
  2. Public utility service: The Bill amends the Industrial Disputes Act, 1947 to include essential defence services under public utility services.  Under the Act, in case of public utility services, a six-week notice must be given before: (i) persons employed in such services go on strike in breach of contract or (ii) employers carrying on such services do lock-outs.
  3. Strikes: Under the Bill, strike is defined as cessation of work by a body of persons acting together.  It includes: (i) mass casual leave, (ii) coordinated refusal of any number of persons to continue to work or accept employment, (iii) refusal to work overtime, where such work is necessary for maintenance of essential defence services, and (iv) any other conduct which results in, or is likely to result in, disruption of work in essential defence services.
  4. Prohibition on strikes, lock-outs, and lay-offs: Under the Bill, the central government may prohibit strikes, lock-outs, and lay-offs in units engaged in essential defence services.  The government may issue such order if necessary in the interest of: (i) sovereignty and integrity of India, (ii) security of any state, (iii) public order, (iv) public, (v) decency, or (vi) morality.  The prohibition order will remain in force for six months, and may be extended by another six months.
  5. Strikes and lock-outs that are declared after the issue of the prohibition order, or had commenced before the prohibition order was issued will be illegal.  The prohibition will not apply to lay-offs made due to power shortage or natural calamity, or lay-offs of temporary or casual workmen.
  6. Punishment for illegal lock-outs and lay-offs: Employers violating the prohibition order through illegal lock-outs or lay-offs will be punished with up to one year imprisonment or Rs 10,000 fine, or both.
  7. Punishment for illegal strikes: Persons commencing or participating in illegal strikes will be punished with up to one year imprisonment or Rs 10,000 fine, or both.  Persons instigating, inciting, or taking actions to continue illegal strikes, or knowingly supplying money for such purposes, will be punished with up to two years imprisonment or Rs 15,000 fine, or both.  Further, such an employee will be liable to disciplinary action including dismissal as per the terms and conditions of his service.  In such cases, the concerned authority is allowed to dismiss or remove the employee without any inquiry, if it is not reasonably practicable to hold such inquiry.
  8. All offences punishable under the Bill will be cognisable and non-bailable.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was introduced in Lok Sabha on July 26, 2021.  It amends the Insolvency and Bankruptcy Code, 2016.  Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.  The Bill replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, which was promulgated on April 4, 2021.

The Code provides a time-bound process for resolving the insolvency of corporate debtors (within 330 days) called the corporate insolvency resolution process (CIRP).  The debtor himself or its creditors may apply for initiation of CIRP in the event of a default of at least one lakh rupees.  Under CIRP, a committee of creditors is constituted to decide on the insolvency resolution.  The committee may consider a resolution plan which typically provides for the payoff of debt by merger, acquisition, or restructuring of the company.  If a resolution plan is not approved by the committee of creditors within the specified time, the company is liquidated.  During CIRP, the affairs of the company are managed by the resolution professional (RP), who is appointed to conduct CIRP.

Key Features of the bill include:

  1. Pre-packaged insolvency resolution:  The Bill introduces an alternate insolvency resolution process for micro, small, and medium enterprises (MSMEs), called the pre-packaged insolvency resolution process (PIRP).  Unlike CIRP, PIRP may be initiated only by debtors.  The debtor should have a base resolution plan in place.  During PIRP, the management of the company will remain with the debtor.
  2. Minimum default amount: Application for initiating PIRP may be filed in the event of a default of at least one lakh rupees.  The central government may increase the threshold of minimum default up to one crore rupees through a notification. 
  3. Debtors eligible for PIRP:  PIRP may be initiated in the event of a default by a corporate debtor classified as an MSME under the MSME Development Act, 2006.  Currently, under the 2006 Act, an enterprise with an annual turnover of up to Rs 250 crore, and investment in plant and machinery or equipment up to Rs 50 crore, is classified as an MSME.  For initiating PIRP, the corporate debtor himself must apply to the National Company Law Tribunal (NCLT).  The authority must approve or reject the application for PIRP within 14 days of its receipt.
  4. Approval of financial creditors:  For applying for PIRP, the debtor must obtain approval of at least 66% of its financial creditors (in value of debt due to creditors) who are not related parties of the debtor.  Before seeking such approval, the debtor must provide creditors with a base resolution plan.  The debtor must also propose the name of RP along with the application for PIRP.  The proposed RP must be approved by at least 66% of the financial creditors.
  5. Proceedings under PIRP:  The debtor will submit the base resolution plan to the RP within two days of the commencement of the PIRP.  A committee of creditors will be constituted within seven days of the PIRP commencement date, which will consider the base resolution plan.  The committee may provide the debtor with an opportunity to revise the plan.  The RP may also invite resolution plans from other persons.  Alternative resolution plans may be invited if the base plan: (i) is not approved by the committee, or (ii) is unable to pay the debt of operational creditors (claims related to the provision of goods and services).
  6. A resolution plan must be approved by the committee (with at least 66% of the voting shares) within 90 days from the commencement date of PIRP.  The resolution plan approved by the committee will be examined by the NCLT.  If no resolution plan is approved by the committee, the RP may apply for the termination of PIRP.  The authority must either approve the plan or order termination of PIRP within 30 days of receipt.  Termination of PIRP will result in the liquidation of the corporate debtor.
  7. Moratorium:  During PIRP, the debtor will be provided with a moratorium under which certain actions against the debtor will be prohibited.  These include filing or continuation of suits, execution of court orders, or recovery of property.
  8. Management of debtor during PIRP:  During PIRP, the board of directors or partners of the debtor will continue to manage the affairs of the debtor.  However, the management of the debtor may be vested with the RP if there has been fraudulent conduct or gross mismanagement.
  9. Initiation of CIRP:  At any time from the PIRP commencement date but before the approval of the resolution plan, the committee of creditors may decide (with at least 66% of the voting shares) to terminate PIRP and instead initiate CIRP.

The Coconut Development Board (Amendment) Bill, 2021

The Coconut Development Board (Amendment) Bill, 2021 was introduced in Rajya Sabha on July 29, 2021, by the Minister of Agriculture and Farmers Welfare, Mr. Narendra Singh Tomar.  The Bill amends the Coconut Development Board Act, 1979.  The Act established the Coconut Development Board for the development of the coconut industry.  The Bill seeks to amend the composition of the Coconut Development Board to improve its management and administration.  

Key features of the Bill include: 

  1. Functions of the Board: Under the Act, the Board may recommend measures to improve the marketing of coconut and its products in India.  The Bill adds that the Board may also recommend measures for improving the marketing of coconut and its products outside India.  
  2. The Act allows the Board to finance suitable schemes, in consultation with the central and state governments, to improve the quality and increase the production of coconut.  This would apply to areas where coconut is grown on a large scale.  The Bill amends this provision to extend such financing to all coconut producing states.  
  3. Changes to the management:  Under the Act, the Chairman of the Board, who also functions as the Chief Executive Officer (CEO), is appointed by the central government.  The Chairman is entitled to a salary and allowance, as prescribed by the central government.  The Bill proposes to make the post of Chairman a non-executive one, and entitles him to only allowances to be prescribed by the central government.  
  4. The Bill creates a separate post of CEO, who will also be appointed by the central government and may be of the rank of Joint Secretary to the central government, or above.  The duties, salary, and allowances of the CEO will be prescribed by the central government.  
  5. Under the Act, two members representing the departments of Revenue and Civil Supplies and Co-operation are appointed to the Board by the central government.  The Bill proposes to substitute the member representing the department of Civil Supplies and Co-operation with a member representing the department of Consumer Affairs. 
  6. The Bill adds an ex-officio member to the Board.  The member will be the Joint Secretary to the central government, in charge of the Mission for Integrated Development of Horticulture.  
  7. State representatives: Under the Act, the Board includes three members representing the states of Kerala, Tamil Nadu, and Karnataka, all appointed by the central government.  The Bill adds that a fourth representative from Andhra Pradesh (appointed by the central government) will also be included in the Board.   
  8. Under the Act, the Board also includes five members appointed in rotation by the central government.  These members represent five states (Andhra Pradesh, Assam, Maharashtra, Orissa, and West Bengal) and five union territories (Andaman and Nicobar Islands, Goa, Daman and Diu, Lakshadweep, and Pondicherry).  The Bill reduces this to provide for four members representing eleven states (removing Andhra Pradesh from the existing list, and adding Bihar, Chhattisgarh, Goa, Gujarat, Nagaland, Telangana, and Tripura) and three union territories (removing Goa, and Daman and Diu).
  9. Representatives of coconut growers: Under the Act, the Board includes two members representing the coconut growers of Kerala and one each representing the coconut growers of Tamil Nadu and Karnataka.  All these members are appointed by the central government.  The Bill adds two more members, each representing coconut growers of Andhra Pradesh and Gujarat.  These members will also be appointed by the central government.  

The Commission for Air Quality Management in National Capital Region and Adjoining Areas Bill, 2021

The Commission for Air Quality Management in National Capital Region and Adjoining Areas Bill, 2021 was introduced in Lok Sabha on July 30, 2021.  The Bill provides for the constitution of a Commission for better co-ordination, research, identification, and resolution of problems related to air quality in the National Capital Region (NCR) and adjoining areas.  Adjoining areas have been defined as areas in Haryana, Punjab, Rajasthan, and Uttar Pradesh, adjoining the National Capital Territory of Delhi and NCR, where any source of pollution may cause adverse impact on air quality in the NCR.  The Bill also dissolves the Environment Pollution Prevention and Control Authority established in the NCR in 1998.  An Ordinance establishing a similar Commission was promulgated in October 2020.  It lapsed in March 2021 and was repromulgated in April 2021.  The Bill repeals the 2021 Ordinance.  

Key features of the Bill include: 

  1. Composition: The Commission will consist of: (i) a Chairperson, (ii) an officer of the rank of a Joint Secretary as the member-secretary and Chief Coordinating Officer, (iii) a serving or former Joint Secretary from the central government, (iii) three independent technical members with expertise in air pollution, and (iv) three members from non-government organisations.  The Chairperson and members of the Commission will have a tenure of three years or till the age of seventy years, whichever is earlier.  
  2. The Commission will also include ex-officio members: (i) from the central government and concerned state governments, and (ii) technical members from Central Pollution Control Board, Indian Space Research Organisation, and NITI Aayog.  It may also appoint representatives of certain ministries.
  3. Selection of Commission: The central government will constitute a selection committee to recommend appointments of members of the Commission.  The Committee will be headed by the Minister of Environment, Forest and Climate Change.  Members of the Committee will include the Cabinet Secretary and the Minister of: (i) Commerce and Industry, (ii) Road Transport and Highways, and (iii) Science and Technology.
  4. Functions of the Commission:  Functions of the Commission include: (i) co-ordinating actions by concerned state governments (Delhi, Haryana, Punjab, Rajasthan, and Uttar Pradesh), (ii) planning and executing plans to prevent and control air pollution in NCR, (iii) providing a framework for identifying air pollutants, (iv) conducting research and development through networking with technical institutions, (v) training and creating a special workforce to deal with issues related to air pollution, and (vi) preparing action plans such as increasing plantation and addressing stubble burning.
  5. Powers of the Commission:  Powers of the Commission include: (i) restricting activities influencing air quality, (ii) investigating and conducting research related to environmental pollution impacting air quality, (iii) preparing codes and guidelines to prevent and control air pollution, and (iv) issuing directions on matters including inspections, or regulation which will be binding on the concerned person or authority.  
  6. The Commission will be the sole authority with jurisdiction over matters defined in the Bill (such as air quality management).  In case of conflicts, directions of the Commission will prevail over the orders of the respective state governments, the Central Pollution Control Board (CPCB), state PCBs, and state-level statutory bodies.
  7. Sub-Committees: The Commission is required to form sub-committees on: (i) monitoring and identification, (ii) safeguarding and enforcement, and (iii) research and development.  
  8. Penalties: Contravention of provisions of the Bill, or orders and directions of the Commission will be punishable with imprisonment of up to five years, or fine of up to one crore rupees, or both.  The Bill excludes farmers from the scope of these penalties.  However, the Commission may collect an environmental compensation from farmers causing pollution by stubble burning.  This compensation will be prescribed by the central government.  Appeals against the Commission’s orders will lie with the National Green Tribunal.  

The Limited Liability Partnership (Amendment) Bill, 2021

The Limited Liability Partnership (Amendment) Bill, 2021 was introduced in Rajya Sabha on July 30, 2021.  The Bill seeks to amend the Limited Liability Partnership Act, 2008.  The Act provides for regulation of limited liability partnerships (LLP).  LLP is an alternative corporate body form to traditional partnership firms.  Under LLP, a partner’s liabilities are limited to their investment in the business.  The Bill converts certain offences into civil defaults and changes the nature of punishment for these offences.  It also defines small LLP, provides for appointment of certain adjudicating officers, and establishment of special courts. 

Key features of the Bill include:

  1. Certain offences decriminalised:  The Act specifies the manner of operations of LLPs, and provides that violating these requirements will be punishable with a fine (ranging between two thousand rupees and five lakh rupees).  These requirements include: (i) changes in partners of the LLP, (ii) change of registered office, (iii) filing of statement of account and solvency, and annual return, and (iv) arrangement between an LLP and its creditors or partners, and reconstruction or amalgamation of an LLP.  The Bill decriminalises these provisions and imposes a monetary penalty.
  2. Change of name of LLP:  The Act states that the central government may direct an LLP to change its name on certain grounds (such as the name being undesirable or identical to a trademark pending registration).  Failing to comply with such direction is punishable with a fine ranging from Rs 10,000 to five lakh rupees.  The Bill removes some of these grounds, and empowers the central government to allot a new name to such an LLP instead of levying a fine.
  3. Punishment for fraud: Under the Act, if an LLP or its partners carry out an activity to defraud their creditors, or for any other fraudulent purpose, every person party to it knowingly is punishable with imprisonment of up to two years and a fine between Rs 50,000 and five lakh rupees.  The Bill increases the maximum term of imprisonment from two years to five years.
  4. Non-compliance of orders of Tribunal: Under the Act, non-compliance with an order of the National Company Law Tribunal (NCLT) is punishable with imprisonment up to six months and fine up to Rs 50,000.  The Bill removes this offence.
  5. Compounding of offences:  Under the Act, the central government may compound any offence under the Act which is punishable only with a fine.  The amount imposed may be up to the maximum fine prescribed for the offence.  The Bill amends this to provide that a regional director (or any officer above his rank), appointed by the central government, may compound such offences.  The amount imposed must be within the minimum and maximum fine for the offence.  If an offence by an LLP or its partners was compounded, then a similar offence cannot be compounded within a three-year period.
  6. Adjudicating Officers:  Under the Bill, the central government may appoint adjudicating officers for awarding penalties under the Act.  These will be central government officers not below the rank of Registrar.  Appeals against orders of the Adjudicating Officers will lie with the Regional Director.
  7. Special courts:  The Bill allows the central government to establish special courts for ensuring speedy trial of offences under the Act.  The special court will consist of: (i) a Sessions Judge or an Additional Sessions Judge, for offences punishable with imprisonment of three years or more; and (ii) a Metropolitan Magistrate or a Judicial Magistrate, for other offences.  They will be appointed with the concurrence of the Chief Justice of the High Court.  Appeals against orders of these special courts will lie with High Courts.
  8. Appeals to Appellate Tribunal:  Under the Act, appeals against orders of the NCLT lie with the National Company Law Appellate Tribunal (NCLAT).  The Bill adds that appeals cannot be made against an orders that have been passed with the consent of the parties.  Appeals must be filed within 60 days (extendable by another 60 days) of the order. 
  9. Small LLP:  The Bill provides for formation of a small LLP where: (i) the contribution from partners is up to Rs 25 lakh (may be increased up to five crore rupees), (ii) turnover for the preceding financial year is up to Rs 40 lakh (may be increased up to Rs 50 crore).  The central government may also notify certain LLPs as start-up LLPs (as recognised through notifications). 
  10. Standards of accounting:  Under the Bill, the central government may prescribe the standards of accounting and auditing for classes of LLPs, in consultation with the National Financial Reporting Authority.

The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021

The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 was introduced in Rajya Sabha by the Minister of Finance, Ms. Nirmala Sitharaman, on July 30, 2021.  The Bill seeks to amend the Deposit Insurance and Credit Guarantee Corporation Act, 1961.  The Act established the Corporation to provide insurance for bank deposits and guarantee credit given by banks and financial institutions.  The Bill seeks to provide depositors time-bound access to their insured deposit amount, in case they are restricted from accessing their bank deposits.
 Key features of the bill include:

  1. Under the Act, the Corporation is liable to pay the insured deposit amount to depositors of an insured bank.  Such liability arises when an insured bank undergoes: (i) liquidation, i.e., sale of all assets on closing down of the bank, (ii) reconstruction or any other arrangement under a scheme, or (iii) merger or acquisition by another bank, i.e., transferee bank.  Once the Corporation makes the payment to the depositors, the liquidator or the insured or transferee bank (as the case may be) becomes liable to repay the same amount to the Corporation.  The amount paid by the Corporation in respect of a deposit reduces its liability against the deposit by that amount. 
  2. Interim payment to depositors: The Bill adds that the Corporation will be liable to pay the insured deposit amount to depositors on an interim basis.  The liability will arise on the date the depositors are restricted from accessing their bank deposits.  This liability will arise if such restrictions get imposed under any order or scheme under the Banking Regulation Act, 1949.  This will also apply if such order or scheme is made before the enactment of the Bill, but the business of the insured bank remains suspended at the time of enactment.
  3. The Corporation will not be liable to make the interim payment if: (i) the Reserve Bank of India (RBI) removes the restrictions put on the bank for payment to depositors, and (ii) the insured or transferee bank is in a position to pay the depositors without any restrictions.
  4. Once the Corporation makes the interim payment to a depositor, the value of his deposit in the insured bank will reduce by the amount paid.  The insured bank will then be liable to pay that amount to the Corporation.
  5. Timeline for interim payment: The Bill mandates the Corporation to pay the insured amount to the depositors within 90 days of the date such liability arises.  Within the first 45 days, the insured bank must furnish the details of all outstanding deposits to the Corporation.  Within 30 days of the receipt of details, the Corporation will verify the authenticity of the claims and check with each depositor if they are willing to receive the insured deposit amount.  Within 15 days of the verification, the Corporation must make the payment to such depositors.
  6. The date on which the Corporation becomes liable to pay the depositors may be extended by an additional 90 days.  The extension may be given if RBI finds it expedient for finalising a scheme for the reconstruction, arrangement, merger, or acquisition of the insured bank.
  7. Premium paid by banks to the Corporation: Under the Act, insured banks are required to pay a premium to the Corporation on their deposits.  The rate of premium for a bank is notified by the Corporation with the prior approval of RBI.  The Act limits the rate of premium (per annum) for a bank at 0.15% of its total outstanding deposits.  The Bill allows the Corporation to increase this maximum limit with the prior approval of RBI.  It may increase the limit considering its financial position and the interests of the banking system of the country.
  8. Repayment by the bank to the Corporation: Under the Act, once the Corporation makes a payment to the depositors, the insured or transferee bank, as the case may be, becomes liable to repay the same amount to the Corporation.  The bank is required to repay within such time as prescribed by the Board of Directors of the Corporation.  The Bill adds that the Corporation may change this time limit for such period and on such terms as prescribed by the Board through regulations.  These regulations must also provide for: (i) prudential principles to assess the capability of the bank to repay the Corporation, and (ii) prohibition on the bank to discharge other specified liabilities until repayment.
  9. The Bill provides that the Corporation may charge a penal interest for delay in repayment.  The penal interest rate may be up to two percent points higher than the repo rate (the rate at which RBI lends money to banks).

The Tribunals Reforms Bill, 2021

The Tribunals Reforms Bill, 2021 was introduced in Lok Sabha by the Finance Minister, Ms. Nirmala Sitharaman, on August 2, 2021.  The Bill seeks to dissolve certain existing appellate bodies and transfer their functions (such as adjudication of appeals) to other existing judicial bodies (see Table 1).  The Bill replaces a similar Ordinance promulgated in April 2021.

Key features of the bill include:
  1. Amendments to the Finance Act, 2017: The Finance Act, 2017 merged tribunals based on domain.  It also empowered the central government to notify rules on: (i) composition of search-cum-selection committees, (ii) qualifications of tribunal members, and (iii) their terms and conditions of service (such as their removal and salaries).  The Bill removes these provisions from the Finance Act, 2017.  Provisions on the composition of selection committees, and term of office have been included in the Bill.  Qualification of members, and other terms and conditions of service will be notified by the central government. 
  2. Search-cum-selection committees: The Chairperson and Members of the Tribunals will be appointed by the central government on the recommendation of a Search-cum-Selection Committee.  The Committee will consist of: (i) the Chief Justice of India, or a Supreme Court Judge nominated by him, as the Chairperson (with casting vote), (ii) two Secretaries nominated by the central government, (iii) the sitting or outgoing Chairperson, or a retired Supreme Court Judge, or a retired Chief Justice of a High Court, and (iv) the Secretary of the Ministry under which the Tribunal is constituted (with no voting right).  
  3. State administrative tribunals will have separate search-cum-selection committees.  These Committees will consist of: (i) the Chief Justice of the High Court of the concerned state, as the Chairman (with a casting vote) (ii) the Chief Secretary of the state government and the Chairman of the Public Service Commission of the concerned state, (iii) the sitting or outgoing Chairperson, or a retired High Court Judge, and (iv) the Secretary or Principal Secretary of the state’s general administrative department (with no voting right).  The central government must decide on the recommendations of selection committees preferably within three months from date of the recommendation.
  4. Eligibility and term of office: The Bill provides for a four-year term of office (subject to the upper age limit of 70 years for the Chairperson, and 67 years for members).  Further, it specifies a minimum age requirement of 50 years for appointment of a chairperson or a member.  

About the Author: This post is prepared by Ms. Unnati Mishra, law student at Maharishi University of Information Technology, Noida and is a Student Coordinator at MyLawman. She can be reached at unnatimylawman@gmail.com. 

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