Five Bills with serious ramifications for the country were passed during monsoon session

Just before the monsoon session, the Pegasus hacking scandal broke. Inflation, three contentious farm laws, and the steep fuel price hikes were hovering. There was hope that at least a couple of these issues would be discussed. But it wasn’t. The government refused the Opposition the chance to raise these issues; instead 38 Bills were ramrodded through Parliament, without much discussion and when the Houses were not in order.

Of the 38 Bills that were passed, five - Tribunal Reforms Bill, 2021, Insolvency and Bankruptcy Code (Amendment Bill), 2021, Essential Defence Services Bill, 2021, Taxation Laws (Amendment) Bill, and General Insurance Business (Nationalisation) Amendment Bill, 2021 – have serious ramifications for the country.

The refusal of the government to allow the Opposition to raise issues led the deputy leader of the Congress in the Lok Sabha Gaurav Gogoi to comment that the government was treating Parliament like a Cabinet meeting of PM Narendra Modi. Trinamool Congress leader and Rajya Sabha MP Derek O’Brien tweeted that Bills were passed with an average time of under seven minutes per Bill.

This was a dilemma. “Yes, the Opposition disrupted proceedings to demand discussion on Pegasus, farm laws and fuel prices, but the BJP government has the responsibility to resolve the issues as they are in power,” said NK Premachandran, Lok Sabha MP and RSP member. In part, said TMC MP Dola Sen, the government deliberately avoided discussions to avoid conversation on controversial Bills, which would draw attention of the nation to the government’s plan. “They believe only Treasury benches are required to run the country.”

They were taking advantage of the disruption as they did not want “the smooth functioning of the House because they want to hide and move many Bills which are anti-people and anti-poor,” explained Premachandran. He pointed out that the Bills were passed when the Houses were not in order. “Such a situation has never happened in the history of Parliament. Whenever there is deadlock in Parliament, the government will and has to take initiative to run the House.”

Tribunal Reforms Bill 2021

The Bill, which was introduced by finance minister Nirmala Sitharaman in Lok Sabha on August 2, was passed in the lower House on August 3 and the Upper House on August 9. The provisions in this Bill include the minimum age criterion, four-year term, dissolution of certain appellate bodies and the transfer of their powers to existing bodies, the search-cum-selection committee recommending two candidates, and the central government having the power to approve the decision in three months.

All of these provisions had been struck down by the Supreme Court in July and the apex court had observed that there should not be “executive influence” in tribunal appointments. The Government had passed these laws through a Finance Act in 2017 and it was challenged in court. The Supreme Court had struck down these rules in 2019 and 2020 as the government had attempted to notify similar rules in both years respectively. The SC had observed that the government must adhere to the independence of the tribunals.

But, the new Bill reintroduces all the provisions that the Court had struck down. The Bill provides for a four-year term of office and specifies a minimum age requirement of 50 years for appointment of a chairperson or a member. In November 2020, the Supreme Court had struck down both the provisions stating both were “unconstitutional” and underscored that advocates with at least 10 years of experience could be appointed as members.

It was dismaying, said Congress MP Shashi Tharoor, that in a blatant disregard of the apex court’s dictum, the government had decided to proceed with the incorporation of provisions, on minimum age limit and term for members. Further, on the pretext of streamlining administration of justice, “I’m afraid that we would lose out on the technical expertise and nuanced subject matter understanding that these Tribunals have to offer,” added Tharoor.

The Bill gives the impression that “the union government has powers to control tribunals and now, they can constitute any tribunal,” underscored Premachandran, the MP from Kollam.

The Tribunals appear to have been chosen for abolition without consultation with the affected stakeholders. For instance, the Film Certification Appellate Tribunal is considered indispensable by the film industry, whose unanimous protests at its abolition have gone unheeded.

Earlier, different Acts were required to constitute new tribunals, so it would have to be discussed in Parliament. Pros and cons could be highlighted in the House, but now with this Bill, Parliament’s authority has been reduced. “They can do what they want now without any oversight. This is centralisation of powers,” added Premachandran, the MP from Kollam.

Essential Defence Services Bill, 2021

It was introduced by the Defence minister Rajnath Singh in Lok Sabha on July 22, 2021, and was passed by the Lower House on August 3, 2021, and the Upper House on August 5, 2021. It allows the union government to prohibit strikes, lock-outs, and lay-offs in units engaged in essential defence services and employees violating it will be punished with up to one year imprisonment of Rs 10,000 fine.

The Bill states that the Government had decided to convert the Ordnance Factory Board into one or more one hundred percent government-owned corporate entity or entities to be registered under the provisions of the Companies Act, 2013.

This move of the union government comes amidst rising concerns of national security due to ongoing territorial disputes with Pakistan and China. “Its robust functioning is crucial for our country’s well-being,” underscored Tharoor, the Thiruvanthapuram MP, who was the chairperson of Standing Committee on External Affairs from 2014 to 2019. There is no denying that the defence manufacturing sector is, said Tharoor, strategically important and serves as a backbone to India’s defence services.

This is an attempt to corporatise the ordnance factories, said Trinamool Congress MP Saugata Roy, and it would ultimately lead to privatisation of the ordnance factories. There are 41 ordnance factories and these are being brought under a few Boards directly under the Ministry of Defence. “We should remember that now, 100% Foreign Direct Investment is allowed in defence production,” added Roy.

The workers of these factories are totally opposed to this and Roy said, “TMC is also against it”. The draconian provisions of preventing and penalising strikes, lockouts, and layoffs by employees, not “only takes away their precious freedom to voice their discontent but also poses disturbing implications for national security,” explained Tharoor.

The Right to Strike has been identified as a statutory right in our country as per The Industrial Disputes Act, 1947, and the Bill “impinges upon the cherished ideals of Equality and Free Speech recognised as Fundamental Rights under our Constitution,” added Tharoor.

Taxation Laws (Amendment) Bill, 2021

Introduced in Lok Sabha by finance minister Nirmala Sitharaman, the Bill was passed in the Lower House on August 6, 2021, and in the Upper House on August 9, 2021. The Bill amends the Income Tax Act, 1961 (IT Act) and the Finance Act, 2012, to nullify retrospective basis for taxation.

This Bill amends the retrospective tax, which was enacted by former Indian President Pranab Mukherjee, when he was the finance minister in 2012. “This amendment does not just concern retrospective taxation. While I agree that retrospective taxes should be removed, successive finance ministers P Chidambaram and Arun Jaitley did not remove it because imposing taxation is the sovereign function of the government. It cannot be taken away,” noted Premachandran.

With this Bill, the government has relinquished the sovereign function of the government to impose taxes with retrospective effect. This function becomes important in certain exigencies. Every government should have powers to impose taxes either with retrospective or prospective effect. “Now, if the government has to do it, a Bill has to be brought in again,” added Premachandran.

Insolvency and Bankruptcy Code (A) Bill, 2021

This Bill was passed in Lok Sabha on July 28, 2021, and on August 3 in the Rajya Sabha, amidst Opposition protests. It replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, which was promulgated on April 4, when Parliament was not in session.

It amends the Insolvency and Bankruptcy Code, 2016, and claims to provide a pre-packaged corporate resolution mechanism for micro, small and medium enterprises. With this, a debtor can initiate the corporate insolvency resolution process (CIRP) if there is a default of at least one lakh rupees.

The issue here being MSMEs cannot be governed by the same laws that are for corporates. The entire culture of governance in MSMEs is different from that of conglomerates. MSMEs are entities where “there are no layers of management. They may have Boards, but they are only namesake,” explained Upendra Goel, a MSME promoter based in Delhi-NCR.

The basic concept of the Code is if a creditor files an application against a company with National Company Law Tribunal, then NCLT appoints a resolution professional, who takes over the running of the company pending the resolution of the issue. This worked when Bhushan Steel was taken over by Tata Steel and Bhushan Power was taken over by Jindal Steel. When the resolution professional takes over a company, the day-to-day functioning would be run by layers of management; only the board of directors would be removed and the appointed person would act as the administrator of the company.

In a MSME, if a resolution professional takes over and the promoter, who is also the operational head of the unit, is removed, the company stops functioning. “Very few companies which have been referred to the corporate insolvency resolution process (CIRP) have survived; most have gone for liquidation,” added Goel.

MSMEs are the second largest employment provider in the country after agriculture. They provide work to almost 80% of the industrial work force. “If MSMEs are also targeted through the same law which targets large corporations, you are asking for disaster. Here, the aim should be to solve the issue as the liquidation would result in job losses of at least 200-300 persons per company,” explained Goel.

MSMEs were included under the IBC only from November 2016 as earlier there was the Securitisation Act 2002, which Goel said was harsh enough.

The stated intention of the IBC is to help MSMEs and the amendment mentions that for interim resolution too, 66% of the shareholders must approve, “which is not possible to get,” underscored Manickam Tagore, the Congress MP, who is one of the whips of the Congress party in Lok Sabha.

Pre-packaged solutions can be brought in by the promoters, but, Goel added the main issue was the proposal had to be cleared by 66% of the creditors. “No creditor is likely to approve proposals brought by a borrower. So, the vicious cycle remains.” All creditors are either bankers or financial institutions who have no involvement in the company.

“If the government could have stipulated that once a promoter brings a workable proposal, NCLT had to coerce financial institutions to approve the plan, unless it was an impossible plan, then the law would have been fruitful. This law is hogwash,” asserted Goel.

This law, pointed out Premachandran, was out of touch with ground realities. “If MSMEs have to survive, they should be brought out from this Code,” underscored Premachandran.

General Insurance Business (Nationalisation) Amendment Bill, 2021

Finance Minister Nirmala Sitharaman introduced the Bill in Lok Sabha, which passed the Bill on August 2, 2021, and it was rushed through the Rajya Sabha on August 11, 2021, just before the Upper House was adjourned sine die.

The Bill seeks to amend the General Insurance Business (Nationalisation) Act, 1972, where it has removed the provision that shareholding of the central government in government insurance companies should be 51%. The Bill also empowers the central government to notify the terms and conditions of those employed in these insurance companies. It also introduces Section 24B which mandates that the Centre can relinquish control over a public sector insurer from a certain date.

National Insurance, New India Assurance, Oriental Insurance, and United India Insurance were nationalised through General Insurance Business (Nationalisation) Act, 1972. The Act was subsequently amended in 2002 to transfer the control of these four subsidiary companies from GIC to the central government, thereby making them independent companies.

This Bill extremely anti-people and the employees of these insurance companies have been protesting, but the government has turned a blind eye. “This is de-nationalisation of the four national insurance companies. All these companies were nationalised in 1972 after bank nationalisation. This is total privatisation. If the government controls these insurance companies, it will have to be at least slightly customer-centric, but private companies will not care,” pointed out Tagore, who is one of the whips of the Congress party in Lok Sabha.

If more than 51% share of these insurance companies is with the private sector, then the government will lose control. “It is important to look at who will benefit from this? Reliance is already in the insurance business. Adani Group or any other private company can now buy into these national insurers,” added Tagore.