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Procedural safeguards & immunities under the NDPS Act

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INTRODUCTION

The Narcotic Drugs and Psychotropic Substances Act, 1985 views drug offences very seriously and prescribes stiff penalties. The Act follows a graded system of punishment with the punishment varying with the quantum of punishment being dependent upon whether the offence pertains to small, commercial and intermediate quantities of narcotic drugs and psychotropic substances. For offences involving commercial quantities of drugs, a minimum penalty of ten years rigorous imprisonment is prescribed, which may extend to twenty years. Repeat offences attract one and half times the penalty and in a few cases even the death penalty. Alongside these stringent provisions, the Act has procedural safeguards as follows:

Personal search: Any person being searched has a right to be searched before a Gazetted Officer or a Magistrate (Section 50). The officer searching the person has to explain to the person that he has a right to be searched before a Gazetted Officer or a Magistrate and if the person wishes to be searched before a Gazetted Officer or a Magistrate he should be taken to the Gazetted Officer or the Magistrate and searched. However, if the officer has reason to believe that it is not possible to take him to a Gazetted officer or a magistrate without giving him a chance to part with the drug, controlled substance, etc., he can search him under Section 100 of the Cr. P. C. [Section 50(5) and 50 (6)].

Searches: As per Section 41 of the NDPS Act, Gazetted Officers of the empowered Departments can authorize searches. Such authorization has to be based on information taken down in writing. As per Section 42, searches can be made under certain circumstances without a warrant (from a magistrate) or an authorization (from a Gazetted Officer). In case of such searches, the officer has to send a copy of the information taken in writing or the grounds of his belief to his immediate official superior within 72 hours.

Arrests: The person who is arrested should be informed, as soon as may be, the grounds of his arrest [Section 52 (1)]. If the arrest or seizure is based on a warrant issued by a magistrate, the person or the seized article should be forwarded to that magistrate [Section 52(2)].

The officer who arrests a person has to make a full report to his official superior within 48 hours [section 57 ].

 

Dilution of safeguards under Sections 42 and 50 of the NDPS Act

The Report mentions section 42 (procedure for conducting search without a warrant) and section 50 (procedure for searching a person suspected of carrying drugs) of the NDPS Act in passing. This is surprising as these provisions lay down important safeguards for persons accused of drug offences. During the first ten years of the NDPS Act coming into force, Courts zealously enforced these protections by observing that:-

“It must be borne in mind that the severer the punishment, the greater has to be the care taken to see that all the safeguards provided in a statute are scrupulously followed.”

Compliance with these provisions was considered mandatory and a violation of the conditions contained therein was a ground for acquittal.

 

Immunities for Drug Offences.

Officers: Officers acting in discharge of their duties in good faith under the Act are immune from suits, prosecution and other legal proceedings (Section 69).

Addicts: Addicts charged with consumption of drugs (Section 27) or with offences involving small quantities will be immune from prosecution if they volunteer for de-addiction. This immunity may be withdrawn if the addict does not undergo complete treatment (Section 64A).

Offenders: Central or state governments can tender immunity to an offender in order to obtain his evidence in the case. This immunity is granted by the government and not by the court (Section 64).

Juvenile offenders: Juvenile offenders (below 18 years of age) will be governed by the Juvenile Justice (Care and Protection of Children) Act, 2000.

Immunities to diplomats as applicable.

Conclusion

The importance of this Act in the present scenario is that nowadays we hear a lot about consumption of drugs and such other illicit substances. Even the Government took a brave step by banning all such drugs like HANS, KHAINI, etc. But people are still consuming such deadly substances as they are still available in the market. Another problem arising out of this issue is that even the school going children have started consuming such illicit substances with the help of many middlemen between them and the suppliers of such drugs. Such situations have to be handled by the concerned authorities and also by the parents so that they stop using such drugs. No actions can be adopted by the authorities if there is no public participation in such issues. People living in residential communities may arrange certain awareness programs and periodical inspections at the places where they feel there is a regular consumption of such products. People can also form various action committees for abolishing the explicit usage of such items from the society as such acts do not affect a person alone, but the society as a whole.

Author: Mohit Mathur

Editor: Adv. Aditya Bhatt & Adv. Chandni Joshi

Corporate Insolvency Resolution Process

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Corporate Insolvency Resolution Process

INTRODUCTION

In India, the Corporate Insolvency Resolution Process (“CIRP”) takes place under the Insolvency and Bankruptcy Code, 2016 (“IBC”). It involves a Resolution Professional inviting resolution plans for the corporate debtor undergoing insolvency. These plans are submitted by various Resolution Applicants and the best resolution plan is approved by the Committee of Creditors and sanctioned by the National Company Law Tribunal. Thus, from an acquisition perspective, the potential acquirer of the stressed asset is required to provide the best bid (in the form of the resolution plan) for the stressed asset which would be able to garner the approval of the Committee of Creditors.

Corporate Insolvency and Resolution Process - iPleaders

 

CIRCUMSTANCES WHEN CORPORATE INSOLVENCY RESOLUTION PROCESS TRIGGERED.

Corporate social insolvency process has been defined under the Chapter II of IBC licensed professional administrators the resolution process, manages the assets of the debtor, and provides information for creditors to assist them in decision making. The CIRP Triggered under Section 6 of IBC that is Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate a corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under preceding sections of chapter II of IBC like under section 7 Financial creditor can initiate the the resolution process by giving an application of corporate insolvency resolution process. (CIRP), same can be done by Operational creditor under section 8 & Section 9 and by Corporate applicant under section 10.

Section 7: Initiation of corporate insolvency resolution process by financial creditor.

(1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.

Provided that for the financial creditors, referred to in clauses (a) and (b) of sub-section (6A) of section 21, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. of the total number of such creditors in the same class, whichever is less:

Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less:

Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first and second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first or second proviso within thirty days of the commencement of the said Act, failing which the application shall be deemed to be withdrawn before its admission.

Explanation.—For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.

(2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed.

(3) The financial creditor shall, along with the application furnish—

(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified.
(b) the name of the resolution professional proposed to act as an interim resolution professional and
(c) any other information as may be specified by the Board.

(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).

Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.

(5) Where the Adjudicating Authority is satisfied that—

(a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:

Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).

(7) The Adjudicating Authority shall communicate—
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;

(b) the order under clause (b) of sub-section (5) to the financial creditor,

within seven days of admission or rejection of such application, as the case may be.

Section 8: Insolvency resolution by operational creditor.

(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor—

(a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute.

(b) the payment of unpaid operational debt—

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.

Explanation.—For the purposes of this section, a “demand notice” means a notice served by an operational creditor to the corporate debtor demanding payment of the operational debt in respect of which the default has occurred.

After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process under Section 9.

Section 10-Initiation of corporate insolvency resolution process by corporate applicant.

(1) Where a corporate debtor has committed a default, a corporate applicant thereof may file an application for initiating corporate insolvency resolution process with the Adjudicating Authority.

(2) The application under sub-section (1) shall be filed in such form, containing such particulars and in such manner and accompanied with such fee as may be prescribed.
(3) The corporate applicant shall, along with the application, furnish-

(a) the information relating to its books of account and such other documents for such period as may be specified.

(b) the information relating to the resolution professional proposed to be appointed as an interim resolution professional and

(c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total number of partners of the corporate debtor, as the case may be, approving filing of the application.

(4) The Adjudicating Authority shall, within a period of fourteen days of the receipt of the application, by an order—

(a) admit the application, if it is complete and no disciplinary proceeding is pending against the proposed resolution professional; or

(b) reject the application, if it is incomplete or any disciplinary proceeding is pending against the proposed resolution professional :

Provided that Adjudicating Authority shall, before rejecting an application, give a notice to the applicant to rectify the defects in his application within seven days from the date of receipt of such notice from the Adjudicating Authority.

(5) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (4) of this section.

“10A. Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date as may be notified in this behalf.”

Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.

Explanation- For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.

Further Committee of creditor is to be made under Section 21 of IBC The committee of creditors shall comprise all financial creditors of the corporate debtor party to whom a corporate debtor owes a financial debt shall not have any right of representation, participation or voting in a meeting of the committee of creditors Whereas the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them, The Board may specify the manner of determining the voting share in respect of financial debts issued as securities under sub-section (6) of Section 21. When a corporate debtor is accepted into the CIRP (Corporate Insolvency Resolution Process), it checks the board of directors. Further, the management is placed under an independent “interim resolution professional”. From this and till the end of the CIRP (Corporate Insolvency Resolution Process), the management ceases to have any control over the activities of the company.

MORATORIUM

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