Just like an unwanted guest, COVID -19 has entered into our lives and is here to stay. Till the time we don’t find a permanent solution we are in its grip. But as it’s said, when patterns are broken new world emerge, time is now to embrace the change and build upon opportunities that lie ahead of us. With the engine of the economy coming to a standstill, and people direly waiting for solutions and answers to their miseries, we believe that it is better to pick up the pieces and harp on the opportunities that can turn things around.
From a legal standpoint, we believe that there will be constant changes and new opportunities will emerge in various field of laws-
Mergers and Amalgamation
Corporates are constantly juggling with the idea to either impede the current deals or expeditiously work on them, this has left them in a tough strategic position amidst the crisis. Until COVID-19, the M & A segment had witnessed a spike in several deals and 2020 was supposedly meant to be the year of a boon in this domain. Nevertheless, every cloud has a silver lining, and there are opportunities in the rarest of circumstances-
- Companies that are on tenterhooks, might end up collaborating with other companies and use mutually benefitting strategy to survive the unprecedented challenges that lie ahead.
- It is certain to say that COVID -19 will end up creating a myriad of stressed assets. Thus the companies that have good cash reserve post-COVID -19, can use the situation to their advantage and proactively plan to acquire the companies that have stressed assets, this will not only help them in expanding their business but will also give the most bang for their buck.
Insolvency and Bankruptcy
The law that gave hope to the creditors against the big corporations has suddenly found itself in a precarious condition. The government has inserted Section 10A by way of which no Application for initiation of CIR Process (u/S 7, 9 or 10) shall be filed for any default arising on or after March 25, 2020, for six months, extendable to such period not exceeding one year. No Application shall ever be filed for initiation of CIR Process on account of default arising within the 6-month (or extended) period put in place under this Ordinance.
But, the explanation to Section 10A clarifies that this Ordinance shall not apply to defaults committed before March 25, 2020. Thus, there is no bar or suspension for filing of Applications on account of default committed before March 25, 2020. Thus, the pending Applications with defaults committed before March 25, 2020, shall not be affected by this Ordinance.
It is a settled law that a statute is presumed to be prospective unless it is held to be retrospective either expressly or by necessary implication. The same has been reiterated in the matter of Fresco India Ltd. v. Om Boseco Rail products Limited having CP no. 1735/KB/2019. In the said case the Hon’ble NCLT, Kolkata bench has admitted the Section 9 petition filed by the Operational Creditor as the demand notice was already served to the Corporate Debtor and all the requirements of Section 9 was fulfilled by the Operational Creditor.
Thus, in light of the principle and the newly inserted Section 10 A which has taken immediate effect, the Adjudicating Authority will have a major role to play while deciding the fate of the parties.
MSME-
Amidst the surrounding capricious situation, which is unfavourable to the Micro, Small and Medium Enterprises, the Central Government has, to usher the industry announced the disbursement of loans. Ancillary to this, the Government has also tweaked the definition of MSME to include a larger number of businesses in the Medium Enterprise category.
This throws light upon the potential opportunity that lies ahead of the businesses to jumpstart their work post lockdown. The enterprises can apply for the loans with the assistance of professionals, thereby promptly getting their loans sanctioned.
With this, there are several other benefits such as the Banks and NBFC will offer up to 20% of entire outstanding credit as on February 29,2020, to MSME, these will be a collateral-free loan. Ancillary to it, to make MSME open to a host of other opportunities, the global tenders in government sector up to Rs.200 crore will be disallowed and shall be open to MSME. Further, to lend support to the MEMEs that are declared as NPAs or are stressed will be eligible for equity support of the government.
Also, to provide assistance and professional advice to the crisis faced by the MSMEs, professionals are dealing specifically to cater to such recurring financial issues. They not only revive the business of the MSMEs but also guide them a way to let their business continue hassle-free.
Labour Laws-
The onset of the pandemic not only impacted the health of the citizens but also zeroed in on the flaws of the economy that we thrive in. The catastrophe faced by the indigent people of the society was alarming, thus unveiling the cracks in the society that we have built. These people have suffered the utmost misery and are in dire need of legal assistance and guidance to restore their rights enshrined in the Constitution of this country.
Different states across the country have amended the Labour laws to incentivise economic activity in respective states, but in doing so the states have ignored the social security that the labourers enjoyed earlier, thus giving way to a myriad of issues that will surface shortly.
There are close to 50 central labour laws dealing with different issues, these laws either cater to the condition of work, social security, employment security and wages and remuneration. But if the government decides to alter these laws to keep the economy running, this might be at the cost of the rights of the Labours enshrined in the Constitution of our country.
Consumer Laws in light of Medical Negligence
The utmost impetus put in by the Government is in in the manufacture of medical assistance tools used to ward off corona cases, thereby creating an environment that is free from the contagious virus. To achieve such a vision, the Government has doled out several schemes and funds to carefully cater to the need and medical emergencies that are on the rise, at present and foreseeable future.
But, considering the ground report, to meticulously work on the patients is an uphill task. The plight of the hospitals in the country and scarcity of skilful doctors and nurses to deal with medical emergencies has always added to the miseries of the patient.
A consumer is defined in Section 2(d) of the Consumer Protection Act, 1986, but it does not specifically include services provided by medical practitioners. Only after the case of Indian Medical Association vs. VP Shantha, the services provided by the medical professionals have been brought under the purview of Consumer Protection Act,1986 vide Section 2(1)(o), 1986 of the act. Though there are exceptions to it, the Act does set its claws onto the malpractices that some medical practitioners are engaged in. Thereby, providing a cushion and support to those aggrieved.
Real Estate Regulatory Authority (RERA)-
The real estate sectors are one of those sectors that have witnessed utmost evolution. But, one of the grave issues that this sector still succumbs to is the non-completion of projects which are invested with the hard-earned money of the homebuyers.
The Act is in place to regulate and promote the real estate sector by regulating the transactions between buyers and promoters of residential as well as commercial projects. One of the main objectives is to enhance transparency and accountability in both real estate and Housing transactions. The Act ensures transparency by mandating all builders to submit original approved plans of their ongoing project to the regulatory authority. It also entails provisions of penalties for Promoters, Real Estate Agent and as well as Allottees thereby making sure that the project is completed well within time and also no party figures a way out to bypass the law.
But, due to the clamping of the pandemic, the miseries of the builders have swollen, as the projects are far from completion before the deadline. This has lead to agitation amongst the homebuyers and postponement of the scheduled deadlines. To aid the builders amid the pandemic, the Government has given six months respite, after which the homebuyers can drag them to the Court if the project still stands unfinished.
But in reality, completion of the remaining projects promptly depends on a lot of factors, such as availability of labour post-pandemic, the flow of funds and other stock readily available for the construction.
Thus, post-pandemic it will be interesting to see how the Act pans out, and how the Courts balance out the situation, keeping in mind the rights of the aggrieved party.