With the Indian economy currently grappling with mounting non-performing assets (NPA) and creditors including banks, financial institutions and other lenders are left high and dry with sluggish recoveries, pre-packs across jurisdictions are known to plug this wide recovery gap. In fact, pre-pack resolution plans are likely to facilitate adherence to the timelines prescribed under the IB Code. With the increase in threshold to 1 crore, numerous operational creditors especially MSMEs were deprived of remedies under the Code. However, the recent introduction of the pre-packaged insolvency framework is likely to support MSMEs – a major contributor to our GDP and employer to a sizeable Indian population. MSMEs have suffered the most during the pandemic and placing a strict timeline of 120 days on the pre-pack model is likely to soothe the distressed MSMEs. Additionally, the Ordinance is likely to provide a cost-effective and faster resolution process for MSMEs under the debtor in possession model, unlike the normal CIRP where it is RP in possession.
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The introduction of the Prepack framework was supposed to coincide with lifting the moratorium on filing fresh cases of Insolvency. Currently, the government has restricted Prepacks provisions for MSME and will extend to other Corporates in some time. Prepacks will help Corporate Debtors to enter into consensual restructuring with lenders and address entire liability side of the Company. The government needs to further augment the NCLT’s infrastructure so that pre-packs can be implemented in time bound manner. The government may consider setting up specific benches looking at Prepack and Insolvency above a certain size to expedite resolution of large cases in time bound manner
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This is a much-awaited amendment to the IBC. The intent of the government appears to be to provide for an alternative and efficient resolution mechanism especially for MSME’s by introduction of a new chapter in the statute. This is certainly a welcome step although it was hoped that such a framework available to non-MSME’s as well. The framework of the chapter does not reduce the role and involvement of NCLT’s very significantly - it is hoped that given that this process can be initiated only by the companies with the consent of 66% of its unrelated financial creditors, the disputes are minimal allowing the process to run more efficiently than the normal CIRP.
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The Hon'ble FM mentioned about the staggering GST collections. This swelling GST collection will certainly help the Government to meet various expenditures as well as reduce the fiscal deficit.
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The law governing data protection in India is prescribed in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (“Rules”). The Rules broadly regulate (a) the collection, receipt, possession, use, storage, dealing in and handling of sensitive personal data or information (SPDI); (b) the transferor disclosure of SPDI; and (c) the security procedures to be adopted for protecting SPDI. SPDI or personal information is defined as any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person and inter-alia includes (i) password; (ii) financial information such as bank account or credit card or debit card or other payment instrument details; (iii) physical, physiological and mental health condition; (iv) sexual orientation; (v) medical records and history; (vi) biometric information. In terms of the Rules, in India, a body corporate (such as Whatsapp in this case) is required to obtain prior consent in writing from the provider of the sensitive personal data or information (in this case its users) regarding the purpose of usage before collection or transfer of such information which we understand is being obtained by clickwrap agreement by Whatsapp. In the present case, the data privacy rights of the Users is not being compromised (by Whatsapp) so long as the other body corporate / Facebook company (whether located in India or outside) to which the data is proposed to be shared/transferred by Whatsapp maintains the 2 same level of data protection as provided in these Rules, and where such User has consented to data transfer. Having said that, it is incumbent on each User to check what the revised privacy policy of Whatsapp encapsulates and what kind of data (of its Users) is Whatsapp proposing to share / transfer with other Facebook companies. In the event the User is not agreeable to the sharing of its data, he/she is free to delete the account by using the “in-app delete account” feature ensuring that all saved data is also deleted thereby withdrawing consent to use/ process/transfer such Users’ data. So long as Whatsapp is in compliance of the Rules, the rights of the Users are being safeguarded within the ambit of the legislation of data protection in India. Prima facie, in India, there is no embargo on transfer/ disclosure of personal data of an individual so long as consent is obtained for the same and the processes mentioned in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 are adhered to by Whatsapp. However, we are not in a position to comment on this aspect vis-à-vis global privacy and data policy regulations. While India presently does not have any express legislation governing data protection or privacy, the relevant laws in India dealing with data protection are the Information Technology Act, 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules. However, the ever-changing legal and regulatory landscape within India has given rise to the need for having a robust law for the protection of personal data in India. This has paved the way for the birth of the Personal Data Protection Bill, 2019 (“Bill”) which emphasises on the need for increased safeguards vis-à-vis personal data along with stringent penalties. In terms of the Bill, there is increased accountability on the part of the person processing, collecting or using the data, which in turn, increases its risk and exposure to liability unless complied with the provisions of this upcoming law. The Bill is yet to be passed by the Parliament and become a law and it is to be seen in what form and shape it will be enacted.
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“The draft report on pre-packaged insolvency is a step in the right direction but falls short of clear criteria on many vital concepts. For instance, the select committee has suggested that the trigger for the initiation of a pre-pack scheme should occur on subjective criteria such as ‘covid defaults’ or ‘pre-default stress’. While it is clear that a successful pre-pack insolvency scheme will need to attract debtors to resolve impending credit issues even before a default has occurred, terms such as above need definitional precision for any uptake by prospective users.”
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Changes such as storing of undelivered messages and media files on its servers may be a concern for users, although these will be stored in encrypted form. The major takeaway is that WhatsApp is letting users know about how it shares data with businesses that use WhatsApp and its parent company Facebook. So in terms of user rights, we are better informed about WhatsApp’s ongoing practices. While this is a global update, there are some items which differ for the EU because the privacy law there is significantly different. Interestingly, users have no option but to accept the Privacy Policy as it is, or stop using the app altogether. Most global privacy laws require companies to take staggered consent based on the type of data they are collecting. Take the example of cookies, this Privacy Policies does not give you the option of disallowing cookies being placed on your device - something which you must have seen on many websites. This is a clear confirmation that data about you that is collected on Facebook, Instagram and WhatsApp is fast becoming one dataset. This Privacy Policy is a good insight into how WhatsApp will operate as we see it expand further into payments, e-commerce, and even insurance going forward. We find repeated mention of user data being shared for marketing and survey purposes, over and above the many reminders that Facebook companies also have access to your information. As WhatsApp’s operations grow, all of these interlinkages will become more relevant and data from one type of service will feed into another, as we have already been noticing. This policy will also have to be re-looked after the Personal Data Protection Bill is implemented, which is aligned to global regulations in many respects.
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WhatsApp has been the most chosen messaging platform in India, largely for two reasons, first – it’s end-to-end encryption model, and second - it’s a free app with no advertisements. But, the company’s recent decision to share the users information and data with their parent company Facebook and other third-parties can be seen in outright conflict with their earlier policy stand that ‘Respect for your privacy is coded into our DNA’. They fail to understand, that why would any user consent to share his chat and other critical information with any third party, to his detriment. It has become even more alarming, since now the platform has introduced an in-app payment option as well, which means giving our banking and financial information to WhatsApp, with a rider that it can also be shared with third parties. Is this in contravention of any of the global consumer privacy and data policy regulations? Triggering from the 2018 Cambridge Analytica episode to Facebook’s recent Privacy Tracking Lawsuit in the United Sates, it can be deduced that the company has used the user data towards unauthorized and shady activities. In this era of information age, Facebook owns four of the most downloaded apps of the decade, i.e. – Facebook’s own app, Messenger, WhatsApp and Instagram. Any steps towards compromising with the user data (of which, recent WhatsApp privacy policy update is a leading example) will lead to Facebook abusing it’s dominant position. Very recently, an anti-trust case has been opened up against Facebook for abusing its dominance in the digital marketplace and engaging in anti-competitive behavior. Further, an Indian Parliamentary panel has also been set up since there were complaints of political bias, content regulation and data safety over it’s platform, to which Facebook is yet to answer. Hence, it’s not only the recent WhatsApp update that’s worrisome, but Facebook’s history with user’s privacy. . In June of 2020, Apple released their new privacy labels rules, through which, developers were required to disclose what all kinds of data they were collecting through any app. Not so surprising, WhatsApp and Facebook climbed to top of the list collecting most information, while apps like Signal and iMessage collected least. On top of it, WhatsApp recent decision to give the users one-month ultimatum to either accept their new policy terms or quit the platform has set the alarm bell ringing. Hence, it can be presumed if WhatsApp doesn’t amend their policy update soon, people will be forced to move to other more secured platforms.
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