 bill no xxxvii of 2015 the personal bankruptcy (declaration and rehabilitation) bill, 2015 a billto provide for mechanism through which a person unable to pay off debts can declare bankruptcy and subject himself to rehabilitation and for matters connected therewith and incidental thereto chapter i preliminarybe it enacted by parliament in the sixty-sixth year of the republic of india as follows:— 1 (1) this act may be called the personal bankruptcy (declaration and rehabilitation)act, 2015short title, extent and commencement(2) it extends to the whole of indiadefinitions2 in this act, unless the context otherwise requires,—(a) "appropriate government" means in the case of a state, the government of that state, and in other cases, the central government;5(b) "bankruptcy" means the legal status of an individual citizen who is unable to pay his creditors;(c) "creditor" means an individual, a bank, a non-banking financial intermediary or any such registered or non-registered institution that does the banking function of accepting deposits and lending money, to which a person owes money;(d) "debt" means an amount owed to a creditor for funds borrowed;10(e) "debtor" means an individual citizen who owes money to a creditor;(f) "defaulter" means any debtor who do not repay the debt despite adequate liquidity;(g) "prescribed" means prescribed by the rules made under this act;15(h) "secured creditor" means any creditor who has the legal right to take a specific property of the debtor and sell it in case of default in payment;(i) "tribunal" means the special bankruptcy tribunal established under section 3of this act;(j) "trustee" means an officer attached to a tribunal under section 5 of this act; chapter iiestablishment of tribunal20composition of the tribunal3 (1) the appropriate governments shall, by notification in the official gazette,establish a special bankruptcy tribunal with effect from such date as may be prescribed, attached to every district court for exercising the jurisdiction, power and authority conferred on such tribunals under this act (2) the tribunal shall consist of;25(a) a chairperson, appointed by the appropriate government, who has servedas judge of the hc for a period not less than five years; and(b) not less than three judicial members, appointed by the appropriate government, who have served as judicial officers for at least five years in civil court or district court of any state304 (1) the chairperson and the judicial members of the tribunal shall hold office fora term of five years and shall be eligible for re-appointment only onceterm salaries and allowances of members(2) the salaries and allowances payable to the chairperson and the judicial membersshall be such as may be prescribed by the appropriate government355 every tribunal shall have one trustee who shall take charge of the property of the debtor who has applied to be declared as bankrupt, attached to the tribunal and who shall reduce every property of the debtor to cash, except the properties listed as "exempt properties" in section 14 of this act, and distribute it to creditors within three months of such applicationtrustee to reduce property to cash and distribute among creditors6 the appropriate governments shall provide such number of officers and staff to assist the tribunal in such manner as may be prescribed40appointment of other officers to the tribunal7 the appropriate governments may, in consultation with the chairpersons of the tribunal, make rules regulating the practices and procedures of the tribunal;appropriate government to make rules chapter iii declaring bankruptcy| 8                                                                                       |  a debtor under the purview of this act, can not file for bankruptcy if;   ||------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|| declaration                                                                              |                                                                            || of                                                                                       |                                                                            || bankruptcy                                                                               |                                                                            || by a debtor                                                                             |                                                                            || 5                                                                                        |                                                                            || (                                                                                        | i                                                                          || his creditors;                                                                           |                                                                            || (                                                                                        | ii                                                                         || fradulent preference, under this act or any other enactment for the time being in force, |                                                                            || if he were to be adjudged an insolvent;                                                  |                                                                            || 10                                                                                       |                                                                            || (                                                                                        | iii                                                                        || the territories to which the respective act extends or departs from his dwelling house   |                                                                            || or usual place of business or otherwise absent himself or if the debtor secludes         |                                                                            || himself so as to deprive his creditors of the means of communicating with him;           |                                                                            || (                                                                                        | iv                                                                         || about to suspend, payment of his debts; or                                               |                                                                            || 15                                                                                       |                                                                            || (                                                                                        | v                                                                          |9 a debtor shall be entitled to file a bankruptcy petition if,—entitlement for filing bankruptcy(i) he is a non-wilful defaulter; (ii) his debts amount to rupees 10,000 or more; or (iii) he is under arrest or imprisonment for payment of money; or (iv) an order of attachment has been made against his property2010 a debtor, entitled to file a bankruptcy petition, shall do so before the special bankruptcy tribunal of the district where he residespetition to be filed in appropriate jurisdictioncontents of the petition11 each bankruptcy petition shall be in writing, duly signed and verified in the manner as may be prescribed and each petition shall contain:25(i) a statement that the debtor is unable to pay his debts; (ii) the place where he ordinarily resides or carries on business or personallyworks, or, if he has been arrested or imprisoned, the place where he is in custody;(iii) the court order under which he has been arrested or imprisoned, or an orderwhich has been made for the attachment of his property;30(iv) the amount and particulars of all pecuniary claims against him, togetherwith the names and residences of his creditors;(v) the amount and particulars of his property, a specification of the value of allsuch property not consisting of money, the place or places at which any such property is located ; and35(vi) a statement whether the debtor has on any previous occasion filed a petition to be adjudged an insolvent and in that case—(a) if such petition has been dismissed, the reasons for such dismissal, or(b) if the debtor has been adjudged an insolvent, concise particulars of the insolvency, including a statement whether any previous adjudication has been annulled and, if so, the grounds therefore4012 (1) a creditor shall file a bankruptcy petition against his debtor, only if he is of the opinion that the debtor is a wilful defaulter;creditor to file bankruptcy petition(2) every bankruptcy petition presented by a creditor or creditors shall set forth the full particulars of the debtor and shall also specify,—(i) the act of insolvency committed by such debtor, together with the date of its commission;5(ii) the amount and particulars of his or their pecuniary claim or claims against such debtor however, provided no ]bankruptey petition shall be filed against corporations, joint ventures, companies or partnerships under this act;5 of 190810(3) the procedure laid down in the code of civil procedure, 1908 with respect to the admission of complaints, shall so far as it is applicable, be followed in the case of bankruptcy petitions;(4) no petition, whether presented by a debtor or a creditor, shall be withdrawn without the leave of the court chapter iv15 procedure at the tribunal13 (1) subject to the conditions specified in this act, once a creditor or debtor files a petition of bankruptcy after following the procedures laid down in this act, the tribunal may issue an order adjudging bankruptcy of the debtorprocedure for adjudging bankruptcy of debtor20(2) the tribunal shall fix a date for hearing of the petition after receiving a bankruptcy petition, such that the notice of such an order, fixing the date of hearing shall be served to the debtor as well as the creditors;(3) on the day fixed for the hearing of the petition or on any other day to which the hearing is postponed, the debtor or creditor shall prove before the tribunal that he is entitled to file the petition:25(a) where the debtor is the petitioner, he shall furnish such documents to prove that he is a non-wilful defaulter;(b) where the creditor is the petitioner, he shall furnish such documents to prove that the debtor is a wilful defaulter30(4) the tribunal shall, if deemed necessary and sufficient cause shown, grant time to the debtor or creditor to produce further evidence on the case;(5) the tribunal shall dismiss the petition, after due examination of the documents and other evidences, if in the case of the petition being filed by:(a) a debtor, and the tribunal is not satisfied that he is not a non-wilful defaulter;35(b) a creditor, if the tribunal is not satisfied that the debtor is not a wilful defaulter; (6) the tribunal shall order an enquiry to be conducted to establish that the current monthly income of the debtor is not higher than a desired limit as decided by the tribunal, given that such income is not above the median income of the state where the debtor resides;40(7) if the petition, after due examination of evidence, is accepted, then the tribunal shall issue an order of bankruptcy adjudging the debtor as bankrupt, and the copy of such an order shall be served both on the debtor and the creditor/creditors14 once the order is made, the tribunal shall entrust the properties, if any, of the debtor, with the trustee of the tribunal, except the exempt properties which include:45(a) the house of the debtor;(b) the area  where the house is built;power to entrust property with trustee and list of exempt properties(c) the essential utilities and utensils required for the house, as prescribed in the rules made under this act; and(d) the essential instruments to continue his work/job in the case of debtors who are farmers, carpenters and the like5responsibility of trustee to liquidate properties15 the trustee shall be responsible to liquidate the propertise to money, in themanner as may be prescribed, and distribute the money to the creditors in such order of preference, fully secured creditors, partly secured creditors to the extent they are secured, realization expenses and remuneration of the trustee, preferential creditors and unsecured creditors:10provided that nothing in this section shall affect the power of any secured creditor torealise his security, in the manner as he would have been entitled otherwisecertificate of discharge16 (1) if after the distribution is completed, the debtor is required to obtain a certificate of dischrage from the tribunal, such that, the tribunal, for the issue of such a certificate, shall be convinced that the default in payments by the debtor was not wilful and the conduct of the debtor has been satisfactory during the tribunal proceedings;15(2) on obtaining the certificate of discharge, the unpaid debts are cancelled and the debtor is liberated from the demands of his creditors;(3) the time taken from the filing of the petition to the issue of the certificate of discharge shall not be more than 3 months:20provided that if the tribunal has reasons to believe that the procedure of liquidatingthe properties of the debtor should take more time, on the request of the trustee, the tribunal shall grant an additional time not exceeding one month for the completion of all procedures(4) the certificate of discharge, shall not be release to the debtor from;(a) any debt due to the government;25(b) any debt or liability incurred by any means of fraud or fraudulent breach oftrust to which be is party;(c) any debt or liability in respect of which he was obtained forbearance by any fraud to which he was a party; or2 of 1974(d) any liability under an order for maintenance made under section 125 of the code of criminal procedure 197330 chapter v rehabilitationprotection to debtor and kin17 after the issue of the order of bankruptcy, the debtor, his immediate relatives and his properties shall be protected from all coercive methods, physical and emotional, of the creditors or anyone intermediately thereof;35bankruptcy rehabilitation fund18 the appropriate government shall constitute a bankruptcy rehabilitation fund as may be prescribed made under this act to help revive declared bankrupts, within a year of enactment of this act, and ensure that;40(i) every person who is declared bankrupt by the tribunal by order of bankruptcy, shall be provided with the minimum social benefits by the appropriate government; and(ii) the debtor, if the tribunal feels necessary, shall be recommended to be given loan from the bankruptcy rehabilitation fund of the appropriate government, at an interest rate as may be prescribed by the tribunal4519 (1) a debtor, who is declared bankrupt with no properties except his house to pay off debts, shall be required to submit a proposal outlining his plan to pay off the debts,plan to pay off debt in case of no properties except exempt properties(i) the plan may be submitted to the tribunal within 3 months of him beingdeclared bankrupt; and(ii) the plan shall pay off debts within a time period of 3 years or as deemed right by the tribunal;(iii) the tribunal, if satisfied with the proposal, shall allow an extension of the said time period, to issue his certificate of discharge;5(2) if the debtor is a farmer and declared bankrupt, an extension of at least two years shall be given to the farmer to pay off his debts and issue his certificate of discharge:provided that the default in payment of a debtor is caused by natural calamities, the tribunal shall recommend the creditors for a moratorium for the payments of the debtor chapter vi10 civil record and penalty20 after issue of the order of bankruptcy by the trinbunal, the record of bankruptcy shall remain on the debtors credit record and civil record till the next seven years along with the certificate of discharge if issued under section 16record of bankruptcy in civil and credit record1521 whoever make any mis-representation in the statement of bankruptcy in the credit or civil record shall be punished with imprisonment for one month and also with fine which may extend to ten lakh rupees:provided that all sums realised by way of fines shall be credited in the bankruptcy rehabilitation fundmisrepresentation of statement of bankruptcy or other records as a purnishable offence chapter vii20 miscellaneousrepeal and saving3 of 1909 5 of 192022 (1) the presidency-towns insolvency act, 1909 and the provincial insolvency act, 1920 are hereby repealed25(2) the repeal by this act of any enactment shall not affect any act in which such enactment has been applied, incorporated or referred to and this act shall not affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred, or any remedy or proceeding in respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand, or any indemnity already granted, or the proof of any past act or thing;3023 the central government will from time to time, provide, after  due appropriation made by the parliament by law in this behalf, requisite funds for crrying out the purposes of this actcentral government to provide funds power to remove difficulty24 if any difficulty arises in giving effect to the provisions of this act, the appropriate government may make such order or give such direction, not inconsistent with the provisions of this act, as appears to it to be necessary or expedient for the removal of any difficulty35power to make rules25 the appropriate government, may be notification in the official gazette, makerules for carrying out the provisions of this act statement of objects and reasonsindia's ranking fell from 109 to 132 among 185 economies in 2012 when it comes to ease of resolving insolvency issues according to the world bank personal bankruptcy laws help people who are no longer in a position to pay off their debts and are distressed due to coercive methods used by creditors, thus unable to make a fresh start the personal bankruptcy framework in india is weak and barely has provisions for any statutes, apart from the few passed almost over a century ago, during the british regime, namely, the provincial insolvency act, 1920 and the presidency towns insolvency act, 1909 the bill repeals the two archaic lawsin the context of massive growth of different types of loans, credit card usage and the like, the law should also be progressive and effective bankruptcy and insolvency is specified in the entry 9 of the concurrent list of the seventh schedule of the constitution of india the centre as well as the state government have the power to legislative on the same and both share responsibility to take to task the matter of bankruptcy the bill is an attempt to make a comprehensive legislation regarding personal bankruptcy it vests upon the appropriate government to establish special tribunals to admit petitions of bankruptcy and issue notices to hear cases of personal bankruptcythe bill lays down the guidelines for functioning of the tribunal as well as safeguards to rehabilitate debtors and make for a transparent, expeditious and just procedure for settling debt there are separate provisions for farmers who are debtors, in which case, the legislation is comparatively liberal with regard to the allocation of time the record of bankruptcy will be present in the civil and credit record of the person for a period of 7 years from the date of issue of the order of bankruptcy by the tribunal along with the certificate of dischargethe bill also provides for a bankruptcy rehabilitation fund for the revival of those declared bankrupt along with imposing penalty in the form of fine or imprisonment, or both in the event of misrepresentation of the statement of bankruptcy in the civil and credit record of any person the remuneration earned thereof would be deposited in the bankruptcy rehabilitation fundhence this billvivek gupta financial memorandumclause 3 of this bill requires the central government to set up special tribunals to hear cases of personal bankruptcy clause 18 of the bill provides for the establishment of a bankruptcy rehabilitation fund by the central government therefore, the bill, if enacted, will involve a non-recurring expenditure towards establishing tribunals and the rehabilitation fund of around one hundred crore rupeesthe bill will also involve a recurring expenditure towards the salaries of those serving at the tribunal and for maintenance of records and proceedings amounting to ten crore rupees annually clause 23 of the bill makes it obligatory for the central government to provide requisite funds for carrying out the purposes of this bill the bill, if enacted will involve therefore expenditure from the consolidated fund of india which as of we can not be precisely estimated memorandum regarding delegated legislationclause 25 of this bill gives power to the appropriate government to make necessary rules for carrying out the purposes of the bill the rules will relate to matters of details onlythe delegation of legislative power is of normal character———— a billto provide for mechanism through which a person unable to pay off debts can declare bankruptcy and subject himself to rehabilitation and for matters connected therewith and incidental thereto————(shri vivek gupta, mp)gmgipmrnd—2153rs(s3)—07-08-2015