 "Of legal loopholes, and defaulters")
The Joint Committee of Parliament on the Insolvency and Bankruptcy Code has recommended that a bankrupt person will be barred from contesting elections to any public office – whether a panchayat, municipality, legislative assembly or council and Parliament. The Bill is likely to be taken up and passed in the ongoing session of Parliament.
However, in so far as elected offices are concerned the Joint Committee's recommendation only plugs a minor loophole in the law. A constitutional disqualification – under Article 102 (1) (c) for Parliament and Article 191 (1) (c) for legislative assemblies/councils – already exists. It both bars an “undischarged insolvent” from contesting elections but also empowers Parliament to disqualify a serving member who has become insolvent.
According to a top Election Commission officer, the difference between the terms ‘bankruptcy’ and ‘insolvency’ is minor and the two are used interchangeably for the purposes of law. Disqualifications for local bodies and panchayats are covered by respective state laws, most of which contain provisions for disqualifying insolvents. “But there could be that some state statutes do not have a specific law for disqualifying insolvents and bankrupts. I think the effort by the Joint Committee is extend the scope to all public offices and bring uniformity to the law,” the officer said.
Joint Committee chairman Bhupender Yadav told Business Standard that the Bill was an effort to bring more clarity to the law. "The existing insolvency law dates back to 1920, that is even before the Constitution was framed. The proposed law covers contemporary challenges and realities on the issue," he told this website.
Apart from this constitutional disqualification, there also exist several statutory disqualifications for seeking election to Parliament. These are mentioned in the Representation of Peoples Act sections 8, 8-A, section 9-A, section 10 and 10-A. The statutory disqualifications mostly relate to conviction in criminal cases and employing corrupt practices.
These do not specifically mention preventing an insolvent or a bankrupt from contesting elections as it is already covered in the Constitution. However, the Representation of Peoples Act does state that any person convicted of any offence and sentenced to imprisonment for not less than two years shall be disqualified from contesting elections from the date of their conviction. Such a person, the Act states, shall continue to be disqualified for a period of six years since their release.
The Joint Committee report on Insolvency and Bankruptcy Code, 2015, has recommended that a bankrupt person should be barred from “being elected to any public office where the appointment to such office is by election; and being elected or sitting or voting as a member of any local authority”.
Currently, the Ethics Committee of the Rajya Sabha is studying whether to expel independent MP Vijay Mallya from the membership of the House. The next meeting of the committee is on Tuesday and it is all set to expel him from the House for not appearing before law enforcement agencies. He has been booked by the Enforcement Directorate in a case of money laundering and is being probed by the Central Bureau of Investigation (CBI) for default of loans of over Rs 9000 crore.
