Why “Go First” gone insolvent: IBC 2016

Lately, the low-cost carrier “Go First” got bankruptcy protection by National Company Law Tribunal (NCLT), after it has made an application to the tribunal reporting losses arising out of grounding of its of half of Airbus A320neos i.e. 54 due to the faulty Pratt&Whitney engines. Now, with the acceptance of its bankruptcy application, the tribunal has ordered the moratorium period as well as appointed an IRP (Interim Resolution Professional) under IBC 2016, further directing the IRP to not lay-off its employees. During this resolution period, no lessor or creditor can take any adverse action against the company. This move by the company will help it in restructuring its contracts and debts. The company owes around 6,521 crores to financial creditors and Indian banks. 

What is Bankruptcy protection?

The Insolvency and Bankruptcy Code, 2016 was introduced to overhaul the past enactments on corporate distress resolution procedure and loan recovery procedures. It deals with the default committed by the debtor and gives them opportunities to mend their financial defects in efficient way to tackle with the debt owed to the creditors. It also relieves the formal court from pilling up cases. It aims to resolve the matter as soon as within 330 days as provided in the code.

On the initiation of insolvency proceedings two things follows i.e. resolution or liquidation. The former gives opportunity to the debtor to come up with restructure or new owner which has been prioritized in the code. The later is the result of failure of resolution and all the assets of the debtor are liquated to meet the obligations of debt he owed. Under section 10 of the code, a corporate debtor can make an application for insolvency resolution process with the adjudication authority. Thereupon the authority is required to admit it or reject it within 14 days from the date of receipt of such application. Once the application is admitted, it results in temporary stay on collection and legal proceeding in respect of debt in financial matters. During this stay, no enforcement or appeal of judicial proceedings or administrative action shall take place against the debtor. The properties and assets of the debtor shall be as it is till the completion of bankruptcy proceeding. Moratorium period is also imposed to prevent lessor from taking back possessions. The same has transpired in the “Go First” issue right now and it means that no lessor can repossess the aircrafts it had lent.

What lies ahead for “Go First”?

As the tribunal has accepted the insolvency application of it, now lessor won’t be able to take back its possession of aircraft till the resolution process. The lessor will be also losing on the rental payments of its aircraft. The company’s board of directors has been suspended and IRP has been appointed to proceed with the resolution process and it has also been directed to deposit 5 crores with the IRP to meet the expenses in carrying out the resolution process. Currently, the lessor and its concerned about its possession and future workforce respectively. On May 22, NCLAT (National Company Law Appellate Tribunal) has upheld the decision of the tribunal in petition filled by the lessor.

 

CHAOS IN MANIPUR: CHASM BETWEEN ETHNIC GRUOP

 

Manipur violence is hitting the national headlines for a week now. The violence is the culmination of several past events which were simmering for a decade now. Manipur is a place to many ethnic groups in which Meities group constitute about more than 50% of the population and live in valley region, which forms 10% of total Manipur area, and rest include Naga and Kuki who reside in hill areas. From shoot-at-sight order by state government to pervasive clampdown in the state, the violence has taken at least 60 lives and left hundreds of people wounded leading to state emergency under article 355 of the constitution by the Centre to protect state from internal and external insurgency and disturbance. Now, the state has been heavily deployed with Indian army. Thousands of people have been displaced by the fierce clash in the state and they are taking shelter in government relief camp. Majorly, all these tensions are due to lack of trust of the ethnic communities towards one another.

Background:

Recent fierce clash broke out on 3^rd May in a march by Naga and Kuki communities against the Manipur HC’s order a month ago directing the state government to send the recommendation to the central government for according the status of ‘Schedule Tribe’ to the Meteis community, who constitute more than 50% of the state population and are also dominating the political positions in the state. However, there are several past reasons as well which intensified the skirmishes in the state between the ethnic groups.

The Manipur state is being led by the BJP govt and its CM in the February has taken a decision to protect the forest while reserving the forest. For which eviction drive was carried in the hills area which is dominated by the Naga and Kuki ethnic group. It is alleged that in this eviction drive many houses have been bulldozed as well as 1 or 2 churches have been demolished citing illegal encroachment on the government lands. Furthermore, Naga and Kuki groups have protested peacefully against the government’s move as well as for not rehabilitating the displaced people.

Many a times Naga and Kuki groups have been being termed as refugee, which fuelled anger among these group against Meteis group. These entire anti-tribe moves have triggered the current violence in the Manipur.

 

Concerns of the ethnic groups:

Meteis group feels marginalized and has been demanding for ST status since 2012 because of decrease of its population to 44% as per the 2011 census from 59% in 1951. It says that they have been recognized STs before merging with India in 1949. It demands STs Status for representational opportunities in government employment, health and educational sectors and also to preserve their culture, language and identity. They also feel that they have been marginalized in ancestral land. They believe that they can preserve their culture, language, identity and tradition if they are accorded constitutional safeguard by way of acquiring ST status.

 

While on the other hand, the Naga and Kuki community opposes this demand and they feel that if Meteis is conferred with ST status, then they would be further marginalized. Also, because Meteis groups are already dominant in the state with greater number representation in assembly and other social and educational institutions, it would be become unfair for the other ethnic groups. Moreover, their language is already included in the 8^th schedule of the constitution and some Meteis communities are already benefiting from being classified as OBCs and SCs. So, by conferring this extra status would lead to further domination of this group at the expense of further marginalization of other already less dominant tribes. Further, granting schedule tribe status to the Meteis would lead to less job opportunities and other affirmative action given by government for the other ethnic group.

There is a deep chasm between these ethnic groups which has been the main reason behind all the ethnic violence in the state of Manipur.

 

Current Situation:

After the sudden breakdown of law and order in the state and resultant violence, several people have fled to neighboring state to save their lives. Indian military has been deployed on mass level to arrest the ethnic unrest in the state. Several houses have been set on fire leading to lot of casualties to the people. Assam rifle and army are taking rescue operations. A huge loss has been caused to the economic activity in the state. Malls and several other buildings have been set on fire. There is widespread concern for the lives of the people. Several states have arranged special flights for their residents. Situations still seem to be tensed and a state of uncertainty is still prevailing in the state.

 

Possible way forward:

Equal representation of the entire ethnic group in state is required in political and social institutions. Concerns of residents of hill areas should be prioritized and huge infrastructure investment should be made in the hill regions. Culture of the tribe should be protected and reselected for fostering inclusivity. A special forum should be established to carry out inter-community dialogue for building understanding and trust. Educational and employment opportunities should be created for tribal youth. Social and political institutions in hill areas need to be strengthened to empower the tribal community to participate in decision-making process. Their voices must be mooted and heard with outmost sincerity by the government officials. Equal resources and power should be devolved in hill areas to promote grassroots democracy. The state should strive for creating economical interdependency among the different tribes to promote harmony among the people and also to avoid such future violence in the state.

ONDC: A breakthrough in e-commerce

In the world of rapid growth of technology, digital economy has grown to manifold in the recent times. For a days now, ONDC is doing round in the country, that is claimed to democratize the digital commerce in the country. However, it has been started way back in September 2022 by the department for promotion of industry and internal trade (DPIIT). With the aim of increasing the e-retail penetration in India from existing 4.3% to its maximum potential, it has been brought in. It is similar to that of UPI, which is now being used by Google pay, Paytm, Phone pay and the like, and it is not an app like Swiggy and Zomato. It is available on different platform like- Paytm, Meesho, Magicpin, Spice Money and so on. It is a step towards the end of duopoly of the Zomato and swiggy in food delivery business backed by the government.

Unlike existing digital market where the buyer and seller are supposed to be on the same platform/application to carry out transaction, the ONDC do away with this system and substituted it with the network-centric model, where buyer and seller can transact no matter what application/platform they use as long as they are connected to this open network.

 

What is ONDC?

ONDC (Open Network for Digital Commerce) developed by the government of India to connect restaurants and store retailers directly to its consumers and do away with the middlemen. It has been conceptualized in such a way that makes it stand apart from any specific platform. It aims to make e-commerce more accessible and affordable for users, as several private players are trying to dominate the e-commerce. It is not limited to food delivery aspect rather it can compete with application like Amazon, Flipkart and the like in the coming days.

 

How it works?

Local businesses can be found more easily thanks to the network. Consumers can find a retailer's offerings on e-commerce platforms that adhere to the ONDC's open protocol once they have listed their goods or services there. When looking for a product, a customer can view the seller's location and choose to purchase from a local store that can deliver more quickly than an online retailer. This might encourage hyper-local consumer-to-seller delivery of items like food.

 

What makes it different from Swiggy and Zomato?

It has been doing round because of the prices at which it offers its service and price sensitive market like India it has gained its popularity. ONDC charges a very minimal percentage for middlemen cut, unlike Swiggy and Zommato which charges the middlemen cut from 30% to 35%. Now, the data of the users will be directly shared to the restaurants and retail shops, which was previously only shared to platform/application like Swiggy and Zommato. Unlike Swiggy and Zommato’s delivery executives, with network sellers have to send their own delivery boy.

 

Challenges:

ONDC is in its nascent stage and it is yet to function at its full potential, also it is being expected to get better in coming days. Currently, it is limited to a few cities. The challenges includes are:-

Now, order made on ONDC by customer, the restaurant has to send its own runner which could be difficult in cases of bulk order being at the same by different customers and it might be not able to serve all those, which could be a major drawback of the ONDC. Also, unlike Swiggy and Zommato, it doesn’t provide estimated delivery of time. As the data will be shared with the restaurants and retail shops, it raises issues of privacy of the customers.

 

How to use?

To order food via ONDC you have to go to platforms like Paytm, Spice Money, Meesho and so on. For example to order food on Paytm, you have to follow the following steps:-

·         Open Paytm and click on “search”

·         Search for “ONDC”. You will see a ONDC store.

·         In the store, you will see a list of restaurants and dishes that are available

·         Click on the food that you want to order.

·         Add the address where you want your food to be orderd.

·         Place your order and pay

·         You can also track your order to see the status.