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IBC Amendment Bill 2018 passed, puts home buyers at par with creditors

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IBC Amendment Bill 2018 passed, puts home buyers at par with creditors

The Lok Sabha on Wednesday, August 1, passed the Insolvency and Bankruptcy Code (Second Amendment) Bill 2018.

The Bill amends the Insolvency and Bankruptcy Code, 2016 to clarify that allottees under a real estate project should be treated as financial creditors. This aims to provide relief to home buyers who, as financial creditors, will be able to decide the future of defaulting builders alongside their lenders.

The voting threshold for routine decisions taken by the committee of creditors has been reduced from 75 per cent to 51 per cent.

For certain key decisions, this threshold has been reduced to 66 per cent. This makes it easier for banks to agree on salvaging a failed firm from being wound up by lowering the votes needed for taking critical decisions to 66% from 75%, reported Live Mint.

The Bill also allows the withdrawal of a resolution application submitted to the National Company Law Tribunal under the Code.  This decision can be taken with the approval of 90 per cent of the committee of creditors.

The demand from the main opposition party, the Congress, to refer the proposed amendments to a parliamentary panel was not accepted.

Interim finance minister Piyush Goyal, who moved the Bill, said the financial creditor status would help home buyers protect their hard earned savings and that the changes in voting requirements were based on global best practices.

“We looked at global best practices. In the UK, for example, a resolution plan is accepted if 51% of lenders agree. The government decided that some provisions need concessions so that more stressed assets get resolved,” the minister said.

Congress members, however, alleged that lowering the votes needed to clear corporate revival plans to 66% would benefit investors who could buy stressed assets for a song. Congress MP M Veerappa Moily demanded that the bill be referred to a parliamentary panel for review, while P Venugopal of the All India Anna Dravida Munnetra Kazhagam (AIADMK) said it did not specify whether home buyers would be treated as secured creditors.

In his reply to the discussion on the Bill, Goyal said liquidation of companies was the last option and that the intention of the law is to save enterprises wherever possible considering the need for saving jobs.

“Whether home buyers are secured or unsecured creditors will be decided on a case to case basis by the resolution professional and the courts,” said Goyal. The minister also said there was no plan to denationalize any public sector bank.

Opposition alleges move to benefit Reliance

Leader of the Congress Mallikarjun Kharge and several others alleged that the ordinance was brought to facilitate the acquisition of Alok Industries by Reliance Industries.

“People want the government to respond immediately and that is what is appreciated,” he said, adding “we want resolution and not liquidation” of ailing companies.

Kharge alleged that the ordinance was brought by the government to help the Reliance Industries to acquire Alok Industries.

“You brought this ordinance in haste. You do not respond with such alacrity during floods. The minister’s reply is not proper. We protest and walk out,” he said while leading the walkout.

Earlier, several opposition members demanded that the bill may be referred to a Standing Committee.

Participating in the debate on the measure, Congress member Veerappa Moily said the National Company Law Tribunal (NCLT) had become “an instrument for siphoning off funds” of the treasury as banks were taking huge haircuts and corporates were buying out insolvent companies for paltry sums.

“Be fair and refer the bill to the Standing Committee. Because you got stuck up in the NCLT, you brought in the bill. The Ordinance is tainted and sending it to the Standing Committee will remove the taint,” he said, adding that the “greed” behind bringing the bill is to “loot the banks”.

Moily, a former Corporate Affairs Minister, said if the bill was referred to the Standing Committee, then it would submit its report within 15 days. Moily is now the Chairman of the Standing Committee on Finance.

N K Premachandran (RSP) said the promulgation of the IBC (Amendment) Ordinance was a “clear case of crony capitalism”, saying it intended to benefit a particulate industrial house.

“Alok Industries owed Rs 300 crores to banks, Reliance Industries bought it in Rs 50 billion, banks loss was Rs 250 billion,” he asserted, while alleging that undue haste was shown by the government in bringing the bill.

Questioning the government’s urgency in bringing the IBC Ordinance when the Monsoon Session was just a month away, P Venugopal (AIADMK) said a perception was being built that the government has brought in the amendment bill to facilitate one corporate house.

“The IBC is being amended in haste to allow Reliance Industries to take over Alok Industries…. In the name of NPA clean-up, the government should not be seen as supporting crony capitalism,” Venugopal said.

Saugata Ray (TMC) said the government was leading the country to a ‘blind alley’ and the IBC should not be seen as a panacea for all illness.

“Mr Goyal, our caretaker Finance Minister, we can’t see the banking sector collapse… I support the Congress demand of referring the bill to the Standing Committee,” Ray said.

He said under the resolution process, banks were taking huge haircuts and the IBC is leading to “crony capitalism”.

Citing the resolution process of the Alok Industries, Ray said the Reliance Industries could not acquire the company at the first instance since the resolution plan got less than the required 75 per cent vote.

“The IBC amendment bill brought by the government lowers the minimum vote requirement for passing the resolution to 66 per cent from 75 per cent in the original act. Just for 66 per cent vote, you can acquire a company. Just for Reliance Industries, Government has brought an Ordinance,” Ray said.

The TMC member said in case of Bhushan Steel takeover by Tata Steel, the banks had taken 40 per cent haircut and lost Rs 210 billion. In case of Vedanta buying Electrosteel, the haircut was 60 per cent and the banks lost Rs 84 billion.

As regards Alok Industries, banks have taken 83 per cent haircut and the loss is to the tune of Rs 250 billion, he claimed in the House.

The other members who participated in the debate included Subhash Baheria (BJP), P S Chandumajra (SAD), J P Narayan (RJD) and Dushyant Chaoutala (INLD).

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Priyanka Gandhi and Prashant Kishor held talks in Delhi after Bihar election setback

Priyanka Gandhi Vadra and Prashant Kishor reportedly met in Delhi days after both Congress and Jan Suraaj suffered setbacks in the Bihar Assembly election.

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Priyanka Gandhi

Congress MP Priyanka Gandhi Vadra and Jan Suraaj chief Prashant Kishor met in Delhi last week, days after the Bihar Assembly election delivered a setback to both political outfits, sources said. The meeting reportedly took place at Sonia Gandhi’s 10, Janpath residence and lasted several hours.

While the interaction has triggered political speculation, both leaders have publicly played down any significance. When asked about the meeting, Priyanka Gandhi said there was little interest in who she meets or does not meet. Prashant Kishor, on the other hand, denied that any such meeting had taken place

Bihar rout brings renewed focus on opposition strategy

The reported interaction followed disappointing election outcomes in Bihar. Jan Suraaj contested 238 Assembly seats but failed to secure a single win, while the Congress managed only six victories out of the 61 seats it contested, a drop of 13 seats compared to the previous election

Sources familiar with the developments indicated that the poor showing by both sides has reopened conversations about future political strategy, especially with several major state elections scheduled over the next two years

A relationship marked by past cooperation and friction

Prashant Kishor has previously worked with the Congress, with mixed outcomes. In 2017, he played a key role in the Congress’s victory in Punjab, but the same year saw the party suffer defeat in Uttar Pradesh. The contrasting results led to internal disagreements, with some party leaders later questioning Kishor’s approach and influence

Talks of Kishor formally joining the Congress resurfaced ahead of the 2022 Uttar Pradesh election, with discussions involving senior party leaders. However, those negotiations collapsed amid differences over organisational reforms and decision-making authority. Kishor later described his experience with the party as unsatisfactory and ruled out joining it, citing resistance to structural change

Jan Suraaj’s debut and future calculations

After parting ways with the Congress, Kishor launched Jan Suraaj with the aim of reshaping Bihar’s political discourse. Despite claims that the party shifted focus from caste-based politics to employment issues, its electoral debut failed to translate into votes

Sources suggest that recent defeats across the opposition spectrum have prompted fresh assessments ahead of upcoming elections in Tamil Nadu, West Bengal and Assam in 2026, followed by Uttar Pradesh in 2027. The longer-term focus remains the 2029 Lok Sabha election, where the ruling party is expected to seek another term

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Omar Abdullah distances INDIA bloc from Congress’s vote chori campaign

Omar Abdullah has clarified that the INDIA opposition bloc is not linked to the Congress’s ‘vote chori’ campaign, saying each party is free to set its own agenda.

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Jammu and Kashmir Chief Minister and National Conference leader Omar Abdullah has drawn a clear line between the INDIA opposition bloc and the Congress’s ongoing ‘vote chori’ campaign, stating that the alliance has no role in the issue being raised by the grand old party.

Speaking to the media, Abdullah said every political party within the alliance is free to decide its own priorities. He underlined that the Congress has chosen to focus on alleged irregularities linked to voter lists and electoral processes, while other parties may pursue different agendas.

According to Abdullah, the INDIA bloc as a collective is not associated with the ‘vote chori’ narrative. He added that no party within the alliance should dictate what issues another constituent should raise in public discourse.

The remarks came days after the Congress organised a large rally in the national capital to intensify its campaign. The party has alleged that the Election Commission is working in favour of the BJP to influence electoral outcomes. Both the poll body and the ruling party have rejected these claims.

INDIA bloc cohesion under scrutiny

Abdullah’s comments have gained significance as they follow his recent observation that the INDIA bloc is currently on “life support”. That remark, made during an interaction at a leadership summit in Delhi, triggered mixed reactions from alliance partners.

At the event, Abdullah had said the opposition grouping revives intermittently but struggles to maintain momentum, especially after electoral setbacks. He also pointed to the Bihar political developments, suggesting that decisions taken by the alliance may have contributed to Nitish Kumar returning to the NDA fold. He further cited the inability to accommodate the Hemant Soren-led Jharkhand Mukti Morcha in Bihar seat-sharing talks as a missed opportunity.

Allies respond to Omar Abdullah’s remarks

Reactions from within the INDIA bloc reflected differing views on Abdullah’s assessment. RJD leader Manoj Jha termed the remarks “rushed” and said responsibility for strengthening the alliance lies with all constituents, including Abdullah himself.

CPI general secretary D Raja called for introspection among alliance partners, questioning the lack of coordination despite the stated objective of defeating the BJP and safeguarding democratic values.

Samajwadi Party MP Rajeev Rai disagreed with the “life support” analogy, saying electoral defeats are part of politics and should not demoralise opposition forces. He cautioned that internal pessimism only serves the BJP’s interests.

BJP targets opposition unity

The BJP seized on the comments to attack the opposition bloc’s unity. Senior leader Shahnawaz Hussain dismissed the INDIA alliance as defunct, claiming it lost relevance after the Lok Sabha elections and lacks leadership and a clear policy direction.

Abdullah’s latest clarification on the ‘vote chori’ campaign reinforces the visible differences within the opposition alliance, even as its constituents continue to debate strategy and coordination ahead of future political battles.

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Nitin Nabin terms BJP working president role a party blessing, thanks leadership

BJP national working president Nitin Nabin has termed his appointment a blessing of the party, thanking its leadership and pledging to work on the ideals of his late father.

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Nitin Nabin

Newly appointed BJP national working president Nitin Nabin on Monday described his elevation as a blessing bestowed by the party and expressed gratitude to its top leadership for placing faith in him.

Speaking to reporters in Patna after paying floral tributes to a statue of his late father, former BJP MLA Nabin Kishor Prasad Sinha, the Bihar minister said he would continue to work on the principles he inherited from his family and the organisation.

“I have always worked on the ideas of my father, who treated the party like his mother and put the nation above everything else. I believe that is why the party has given me this responsibility,” Nabin said. He later visited Mahavir Mandir in the city to offer prayers.

Gratitude to Prime Minister, focus on Antyodaya

Thanking Prime Minister Narendra Modi for his guidance, Nabin said development under the current leadership has reached towns and villages across the country. He added that the party has expanded its presence and emerged as a platform representing the poor.

According to Nabin, no section of society has remained untouched by the welfare initiatives of the NDA government. He said the idea of Antyodaya has now reached every corner of India, recalling the contributions of Deendayal Upadhyaya, Syama Prasad Mookerjee and Atal Bihari Vajpayee in shaping the philosophy.

On elections and party organisation

Responding to questions on upcoming elections, including in West Bengal, Nabin said BJP workers remain active at all times. He remarked that unlike other parties, BJP cadres work round the year and remain prepared in every state.

At 45, Nabin is a five-time MLA from the Bankipur assembly constituency and has served twice as a minister in the Bihar government. He comes from an RSS background and is currently part of the Nitish Kumar-led state cabinet.

A generational shift in the party

Nabin’s appointment as national working president on Sunday was seen as a significant organisational move. The position, though not mentioned in the party constitution, has earlier served as a transition role before elevation to the top post.

Prime Minister Modi publicly endorsed the decision, describing Nabin as a hardworking and grounded leader with strong organisational experience. Party leaders have projected the move as part of a generational shift, with Nabin expected to follow a trajectory similar to that of the current national president, who had earlier served as working president before taking charge of the organisation.

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