{"id":2233,"date":"2025-01-16T15:47:48","date_gmt":"2025-01-16T10:17:48","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=2233"},"modified":"2026-02-06T16:59:32","modified_gmt":"2026-02-06T11:29:32","slug":"daily-newspaper-editorial-analysis-4-january-2025","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/daily-newspaper-editorial-analysis-4-january-2025\/","title":{"rendered":"Daily Newspaper Editorial Analysis 4 January 2025"},"content":{"rendered":"<p>The growth of international trade has underscored the importance of effective regulation to address the complex challenges of cross-border insolvency.<\/p>\n<h2><strong>Context<\/strong><\/h2>\n<ul>\n<li>The\u00a0<strong>growth of international trade has underscored the importance of effective regulation\u00a0<\/strong>to address the complex\u00a0<strong>challenges of cross-border insolvency.<\/strong><\/li>\n<li>A\u00a0<strong>predictable insolvency framework is essential for developing economic stability<\/strong>, attracting foreign investments, and enabling corporate restructuring.<\/li>\n<li>However,\u00a0<strong>India\u2019s historical and current approaches to insolvency law have struggled to address cross-border complexities<\/strong><\/li>\n<\/ul>\n<h2><strong>Historical Evolution of Insolvency Laws in India<\/strong><\/h2>\n<ul>\n<li><strong>Colonial Era<\/strong>\n<ul>\n<li><strong>The Indian Insolvency Act of 1848 was the country\u2019s first insolvency law,<\/strong>\u00a0followed by the Presidency-Towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920.<\/li>\n<li>While these laws provided a structure for managing domestic insolvencies,\u00a0<strong>they were ill-equipped to handle cross-border cases,<\/strong>\u00a0leaving a critical gap in the legal system.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Post-Independence<\/strong>\n<ul>\n<li>Post-independence,\u00a0<strong>these laws remained largely unchanged despite recommendations from the Third Law Commission\u00a0<\/strong>in 1964 for modernisation.<\/li>\n<li><strong>It was only in the 1990s<\/strong>, driven by economic liberalization and globalisation,\u00a0<strong>that the need for a comprehensive insolvency law,<\/strong>\u00a0including provisions for cross-border cases,\u00a0<strong>gained national attention.<\/strong><\/li>\n<li><strong>Committees like the Eradi Committee (2000), Mitra Committee (2001), and Irani Committee (2005) advocated<\/strong>\u00a0for the adoption of the\u00a0<strong>United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, 1997.<\/strong><\/li>\n<\/ul>\n<\/li>\n<li><strong>Introduction of the Insolvency and Bankruptcy Code (IBC)<\/strong>\n<ul>\n<li>The Insolvency and Bankruptcy Code (IBC),\u00a0<strong>introduced in 2016,<\/strong>\u00a0<strong>marked a significant step forward, focusing on domestic insolvency.<\/strong><\/li>\n<li>However, despite the inclusion of Sections 234 and 235 to address cross-border insolvency,\u00a0<strong>these provisions remain dormant due to the lack of reciprocal agreements and government notification,<\/strong>\u00a0rendering them legally unenforceable.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Challenges in India&#8217;s Existing Cross-Border Insolvency Framework<\/strong><\/h2>\n<ul>\n<li><strong>Dormant Provisions in the IBC<\/strong>\n<ul>\n<li><strong>Sections 234 and 235 of the IBC<\/strong>, introduced to manage cross-border insolvency cases,\u00a0<strong>have been rendered ineffective due to their dormant status.<\/strong><\/li>\n<li><strong>Section 234 allows the Indian government to enter into reciprocal agreements<\/strong>\u00a0with foreign countries to enforce insolvency resolutions,\u00a0<strong>while Section 235 outlines the procedure for seeking cooperation from foreign courts<\/strong>\u00a0through letters of request.<\/li>\n<li>However, these provisions are yet to be operationalised because of two primary issues:\n<ul>\n<li><strong>India has not established reciprocal arrangements<\/strong>\u00a0with any foreign jurisdiction. These agreements are vital for enabling mutual recognition and enforcement of insolvency proceedings.<\/li>\n<li>Without such agreements, the implementation of Section 234 remains impractical.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Sections 234 and 235 have not been notified by the government<\/strong>, rendering them legally unenforceable.<\/li>\n<li>This\u00a0<strong>inaction has left a critical gap in India&#8217;s insolvency framework<\/strong>, forcing courts and stakeholders to rely on ad hoc solutions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Judicial Challenges<\/strong>\n<ul>\n<li><strong>Limited Powers of the NCLT<\/strong>\n<ul>\n<li>The\u00a0<strong>National Company Law Tribunal (NCLT) is the primary adjudicating authority for insolvency matters<\/strong>\u00a0under the IBC.<\/li>\n<li>However,\u00a0<strong>it lacks the power to recognise or enforce foreign insolvency judgments<\/strong>. This limitation hampers its ability to address cross-border insolvency comprehensively.<\/li>\n<li>Additionally,\u00a0<strong>Rule 11 of the NCLAT Rules, 2016, which could allow the NCLT to exercise inherent jurisdiction and facilitate comity with foreign courts<\/strong>,\u00a0<strong>has not been implemented<\/strong>\u00a0for IBC matters.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Dependence on Ad Hoc Protocols<\/strong>\n<ul>\n<li>In the absence of a formal framework,\u00a0<strong>Indian courts have resorted to ad hoc cross-border insolvency protocols.<\/strong><\/li>\n<li>While these have been helpful in individual cases,\u00a0<strong>such as Jet Airways (India) Limited vs. State Bank of India (2019), they are temporary solutions.<\/strong><\/li>\n<li><strong>These protocols increase the judicial burden<\/strong>, elevate transaction costs, and delay resolutions, often reducing the value of a debtor\u2019s assets.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Outdated Communication Mechanisms<\/strong>\n<ul>\n<li><strong>Communication between Indian and foreign courts<\/strong>\u00a0in insolvency matters is\u00a0<strong>inefficient and outdated.<\/strong><\/li>\n<li>Traditional methods of issuing letters of request lack the transparency and speed required for\u00a0<strong>resolving complex cross-border cases.<\/strong><\/li>\n<li>This creates additional delays,\u00a0<strong>increasing uncertainty for stakeholders.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Regulatory and Legislative Shortcomings<\/strong>\n<ul>\n<li><strong>Unclear Framework for Recognition of Foreign Proceedings<\/strong>\n<ul>\n<li>Unlike countries that have adopted the UNCITRAL Model Law on Cross-Border Insolvency,\u00a0<strong>India does not have a clear mechanism for recognising foreign insolvency proceedings<\/strong>.<\/li>\n<li>This\u00a0<strong>results in inconsistent judicial decisions<\/strong>, as courts often rely on discretionary powers or general principles of comity.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Inadequate Coordination with Foreign Jurisdictions<\/strong>\n<ul>\n<li><strong>Cross-border insolvency cases often require seamless coordination<\/strong>\u00a0between domestic and foreign jurisdictions.<\/li>\n<li>However, I<strong>ndia&#8217;s lack of a structured framework for judicial cooperation undermines the efficiency and fairness<\/strong>\u00a0of insolvency proceedings.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Case Study: State Bank of India vs. Jet Airways (India) Limited (2019)<\/strong><\/h2>\n<ul>\n<li><strong>The Jet Airways case is a landmark example of the challenges posed by India\u2019s inadequate cross-border insolvency framework<\/strong>. The NCLT highlighted two major issues:<\/li>\n<li>The\u00a0<strong>absence of a reciprocal agreement<\/strong>\u00a0between India and the Netherlands made it impossible to enforce insolvency proceedings in the latter jurisdiction.<\/li>\n<li><strong>Sections 234 and 235,<\/strong>\u00a0which could have addressed these issues,\u00a0<strong>were deemed \u201cdead letters\u201d due to their non-operational status.<\/strong><\/li>\n<li>Although\u00a0<strong>an ad hoc cross-border insolvency protocol was developed<\/strong>\u00a0to coordinate proceedings between Indian and Dutch administrators,\u00a0<strong>this solution was neither sustainable nor efficient.<\/strong><\/li>\n<\/ul>\n<h2><strong>Recommendations for Reform<\/strong><\/h2>\n<ul>\n<li><strong>Adopting the UNCITRAL Model Law<\/strong>:\n<ul>\n<li><strong>The model law offers a structured and internationally recognised framework\u00a0<\/strong>for managing cross-border insolvencies.<\/li>\n<li>Its adoption would enhance predictability, improve efficiency, and strengthen investor confidence in India\u2019s insolvency regime.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Modernising Judicial Communication<\/strong>\n<ul>\n<li>Outdated communication methods between Indian and foreign courts\u00a0<strong>hinder the resolution of cross-border insolvency cases.<\/strong><\/li>\n<li><strong>Implementing the Judicial Insolvency Network (JIN) Guidelines (2016) and its Modalities of Court-to-Court Communication (2018) would modernise judicial coordination<\/strong>, enhance transparency, and streamline cross-border insolvency proceedings.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Expanding the Powers of the NCLT<\/strong>\n<ul>\n<li><strong>Section 60(5) of the IBC restricts civil courts from exercising jurisdiction over insolvency matters,<\/strong>\u00a0making the NCLT the sole adjudicating authority.<\/li>\n<li>However,\u00a0<strong>the NCLT lacks the authority to recognize or enforce foreign judgments, limiting its effectiveness.<\/strong><\/li>\n<li><strong>Expanding the NCLT\u2019s powers and implementing Rule 11 of the NCLAT Rules<\/strong>, 2016, would enable it to address cross-border insolvency issues comprehensively.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Conclusion<\/strong><\/h3>\n<ul>\n<li><strong>India\u2019s economic integration<\/strong>\u00a0with the global market\u00a0<strong>necessitates a robust cross-border insolvency framework.<\/strong><\/li>\n<li>While the IBC has laid a strong foundation for managing domestic insolvencies,\u00a0<strong>its limitations in addressing cross-border cases remain a significant challenge.<\/strong><\/li>\n<li><strong>Adopting the UNCITRAL Model Law, modernising judicial communication<\/strong>, and empowering the NCLT are\u00a0<strong>crucial steps toward bridging this gap.<\/strong><\/li>\n<\/ul>\n<p><strong>source<\/strong>: <a href=\"https:\/\/www.thehindu.com\/opinion\/op-ed\/india-cross-border-insolvency-and-legal-reform\/article69058679.ece#:~:text=The%20need%20for%20reform&amp;text=The%20adoption%20of%20the%20Judicial,handling%20cross%2Dborder%20insolvency%20matters.\" target=\"_blank\" rel=\"nofollow noopener\">The Hindu<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The growth of international trade has underscored the importance of effective regulation to address the complex challenges of cross-border insolvency.<\/p>\n","protected":false},"author":8,"featured_media":86401,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[138],"tags":[141,142,144],"class_list":{"0":"post-2233","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-daily-editorial-analysis","8":"tag-daily-editorial-analysis","9":"tag-daily-newspaper-editorial-analysis","10":"tag-daily-newspaper-editorial-analysis-4-january-2025","11":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=2233"}],"version-history":[{"count":1,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2233\/revisions"}],"predecessor-version":[{"id":86402,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2233\/revisions\/86402"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/86401"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=2233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=2233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=2233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}