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Understanding Plastic Ban In India And Worldwide: Part II

Why Ban Single-Use Plastic?

What we are surrounded with is fuel based plastic. As per UNEP, 98 per cent of single-use plastic products are produced from fossil fuel, or “virgin” feedstock. The production, use and disposal of conventional fossil fuel-based plastics alone contributes to a large amount of  greenhouse gas emissions associated which are predicted to grow to 19 per cent of the global carbon budget by 2040.

Being long chain polymers, plastics are most durable and the nature cannot break them down. They can only be recycled into other products. However, 90% of the plastic is never recycled as it is lost in rivers, seas and land litter.[1] In the environment it breaks up into smaller and smaller pieces called ‘micro plastics’ (maximum of 5 mm) and finally ends up getting into the food chain causing several health issues in ecosystem including grave effect on human health[2]. Most adversely affected is water due to leaching of additives, colorants, stabilizers and fillers present in the different categories of plastic products.[3] As on date, the EU Parliament has recorded that more than 80% of marine litter is plastic. Plastic accumulates in seas, oceans and on beaches in the EU and worldwide. Plastic residues are found in marine species – such as sea turtles, seals, whales and birds, but also in fish and shellfish, and therefore in the human food chain.

Half of the plastic produced and consumed worldwide (which is 300 million tons) is single-use plastic. Single-use plastic also forms large part of the litter that never goes for recycling because of small size of products they are used in (e.g. straws, bags, and cutlery etc.) Such small sized products made of single-use plastic are lost in soil, water/drainage or blown away by wind when littered, much faster than other plastics. It is also vital to understand that single-use plastic, specially cannot be recycled because the products made out of it are usually too small for the machines to process and they get stuck in the machines. The recyclers too, often, decline to accept and recycle such plastics in their facility.

Where all plastics are banned?

As per UNEP report[4], 127 out of 192 countries reviewed had adopted some form of legislation to regulate plastic bags as of July 2018. Among these countries, government interventions have been made varying from reduction in the manufacture, distribution, use and trade of plastics bags, imposing high tax on plastic manufacturing and setting recycling targets. The most common form of regulation, however, is the ban on free retail distribution, which 83 countries have adopted. 61 countries have adopted ban on manufacturing and import. 27 countries have enacted law imposing ban on single-use plastics — either on identified products (e.g. plates, cups, straws, packaging), materials (e.g. polystyrene) or production levels. Till 2018, however, none of these bans were “total”.[5]

In 2002, Bangladesh became the first country in the world to implement a ban on thin plastic bags, when it was found that they played a key role in clogging drainage systems resulting in disastrous flooding countrywide. Other countries began to follow suit.

Plastic bags have been banned in Rwanda since 2008, with strict policies that include luggage searches at the border where any plastic bags found are confiscated. Anyone found violating the plastic bag ban law may receive a fine or, in more serious cases, a prison sentence.[6]

The EU has acted against plastic pollution too. From July 2, 2021, single-use plastic plates, cutlery, straws, balloon sticks and cotton buds cannot be placed on the markets of the EU Member States. In addition, the same measure applies to cups, food and beverage containers made of expanded polystyrene, and all products made of oxo-degradable plastic. Oxo-degradable or “oxo”-biodegradable, are made of bio-additives, such as starch added to polyethylene (PE). These are often falsely marketed as being biodegradable, when they are only degradable.

Wondering about U.S. and China? US has not passed any law as on date despite the fact that the U.S. is one of the world’s largest producers of plastic waste. Out of the plastics littered, it recycles only 5-6%. A major part is exported to developing countries to recycle. As per the CNBC report[7] U.S. Interior Department[8] issued an order on June 8, 2022 to reduce the procurement, sale and distribution of such products and packaging.

China has imposed a limited ban on January 1, 2021 by prohibiting restaurants in the country from providing single-use plastic straws and stores from providing plastic shopping bags in the major cities.

Russia has not imposed banned on plastics yet.

INDIA

India has a whooping per capita plastic consumption of 11 kgs. The Central Pollution Control Board (CPCB) Report (2019-20) states that 3.5 million metric tonnes of plastic waste are generated in India annually. India generates 25,940 tons of plastic waste every day but collects only 60 percent of it.

India is attempting to phase out plastics with a legislative framework set out in 2016.

LEGISLATIVE FRAMEWORK

The first-ever law on waste management was in the form of the Municipal Solid Wastes (Management and Handling) Rules notified in 2000. Thereafter, the Government, under overarching campaign of “Clean and Green”, came up with Solid Waste Management Rules, 2016, Plastic Waste Management Rules, 2016 (PWMR), Plastic Waste Management Amendment Rules, 2018 and most recently, Plastic Waste Management Amendment Rules, 2021 and Plastic Waste Management Amendment Rules, 2022.

Solid Waste Management Rules, 2016 for the first time provided for “extended producer responsibility” (EPR) denied under section 3(21) to mean “responsibility of any producer of packaging products such as plastic, tin, glass and corrugated boxes, etc., for environmentally sound management, till end-of-life of the packaging product.”

Plastic Waste Management Rules, 2016/PWMR were made by the Ministry of Environment, Forest and Climate Change and notified on March 18, 2016[9] in exercise of the powers conferred by sections 3, 6 and 25 of the Environment (Protection) Act, 1986. These were in supersession of the Plastic Waste (Management and Handling) Rules, 2011 published by the Government of India in the erstwhile Ministry of Environment and Forests.

The PWMR, under Rule 4, sets conditions on manufacture, import, stocking, distribution, sale and use of carry bags, plastic sheets or like, or cover made of plastic sheet and multilayered packaging. The PWMR separately defines “carry bags” under Rule 3(c) to mean “bags made from plastic material or compostable plastic material, used for the purpose of carrying or dispensing commodities which have a self carrying feature but do not include bags that constitute or form an integral part of the packaging in which goods are sealed prior to use.” “Multilayered packaging” as per Rule 3(n) means “any material used or to be used for packaging and having at least one layer of plastic as the main ingredients in combination with one or more layers of materials such as paper, paper board, polymeric materials, metalised layers or aluminium foil, either in the form of a laminate or co-extruded structure.

The conditions that have been imposed under Rule 3 of PWMR are:

  • Carry bags to be in natural shade with no or only BIS approved added pigments/colorants.
  • Carry bags or products made of recycled plastic not to be used for storing, carrying, dispensing or packaging ready to eat or drink food stuff.
  • carry bag made of virgin plastic (i.e. plastic material which has not been subjected to use earlier and has also not been blended with scrap or waste) or recycled plastic, shall not be less than 50 microns in thickness.
  • plastic sheet or like, which is not an integral part of multilayered packaging, not to be less than 50 microns in thickness except where the thickness of such plastic sheets impair the functionality of the product.
  • the manufacturers have been restricted from selling or providing or arranging plastic to be used as raw material to an unregistered producer. Rule 13 of the PWMR provides for registration of producers, recyclers and manufacturers.
  • sachets using plastic material not to be used for storing, packing or selling gutkha, tobacco and pan masala. It is a blanket ban. New packaging made of aluminium and paper has been introduced for packing gutkas instead.
  • recycling of plastic waste to conform with the BIS.
  • The provision of thickness shall not be applicable to carry bags made up of compostable plastic. As per Rule 3(e) “compostable plastics” mean “plastic that undergoes degradation by biological processes during composting to yield carbon dioxide, water, inorganic compounds and biomass at a rate consistent with other known compostable materials, excluding conventional petro-based plastics, and does not leave visible, distinguishable or toxic residue”.
  • plastic material, in any form including Vinyl Acetate – Maleic Acid – Vinyl Chloride Copolymer, shall not be used in any package for packaging gutkha, pan masala and tobacco in all forms.

Rule 5 addresses the issue of Plastic Waste Management through recycling by plastic waste recycler, local bodies encouraging the use of plastic waste – preferably the plastic waste which cannot be further recycled – for road construction as per Indian Road Congress, disposal of thermo set plastic waste and disposal of inert from recycling or processing facilities of plastic waste.

‘Thermoset polymers’ or ‘inert waste’ was not defined in the Rules initially.  It was only in 2021 that the definition of “Thermoset plastic”was introduced by way of amendment. ‘Thermoset polymers’ are material, especially, a synthetic plastic or resin that hardens permanently after one application of heat and pressure. These polymers are found in car parts and electrical appliances and thus, have to be durable and heat-resistant. However, typically these cannot be easily recycled or broken down after use.

Inert waste, as different from hazardous and non-hazardous waste, is waste which is neither chemically nor biologically reactive. This in turn means that it takes a long time to dispose of and sometimes it does not get decomposed at all. However, it is not dangerous to health. The problem however lies elsewhere. This kind of waste takes a lot of space and since it takes a long time to decompose or does not decompose at all, it just occupies space. The inert waste would include concrete, rubble, sands, clay, soil and chalk.

The PWMR also make local bodies liable for segregation, collection, storage, transportation, processing and disposal of the plastic waste, to see that no damage is caused to the environment during this process, creating awareness among all stakeholders, engaging civil societies or groups working with waste pickers and ensuring that open burning of plastic waste does not take place.

The most notable feature of the Rules is that it extends the liability to the Gram Panchayats. This is because it is only recently that the plastics, on account of the mini and micro packaging and sachet/pouch culture have found its way to the villages in India.

The PWMR separately impose responsibility on waste generators to minimize generation of plastic waste and segregate plastic waste at source and ensure segregated storage of waste at source and handover segregated waste to urban local body or gram panchayats or agencies appointed by them or registered waste pickers’, registered recyclers or waste collection agencies. All waste generators are required to pay ‘user fee or charge’ as may be specified in the byelaws of the local bodies for plastic waste management such as waste collection or operation of the facility. The waste generators also include every person organizing an event in open space, which involves service of food stuff in plastic or multilayered packaging. Such person is required to segregate and manage the waste generated during such events as per Rule 8(4) of the PWMR.

Rule 9 provides for the responsibility of the producers, importers and brand owners to register itself under the Rules. As per the Rules, the primary responsibility for collection of used multi-layered plastic sachet or pouches or packaging is of producers, importers and brand owners who introduce the products in the market. They need to establish a system for collecting back the plastic waste generated due to their products. The manufacture and use of non- recyclable multilayered plastic, if any, by the producers, importers and brand owners is required to be phased out in two years time.

Retailers and street vendors are prohibited under PWMR to sell or provide commodities to consumer in carry bags or plastic sheet or multilayered packaging, which are not manufactured and labelled or marked, as per prescribed under the Rules. Plastic carry bag is to be provided by only those vendors that are registered. Carry bags in such shops shall be chargeable.

What essentially the Plastic Waste Management Rules, 2016 has done is also to increase the minimum thickness of plastics to 50 micron and then 75 microns for plastic sheets, to facilitate collection and recycle of plastic waste, expand the applicability to rural areas, introduce responsibilities of producers and generators in plastic waste management including their registrations for monitoring them, to promote use of plastic waste for road construction, introduction of Extended Producer Responsibility on the producers (i.e persons engaged in manufacture, or import of carry bags, multi-layered packaging and sheets or like and the persons using these for packaging or wrapping their products) and brand owners, and restrictions on retailers and street vendors for giving out plastics carry bags amongst other things.

Plastic Waste Management (Amendment) Rules 2018[10] were notified on March 27, 2018. It added the definition of “alternate use” to mean “use of material for a purpose other than for which it was conceived, which is beneficial because it promotes resource efficiency”. It also added the definition of “energy recovery”. Multi-layer plastics were further explained as ones that are not only non-recyclable but also non-energy recoverable and with no alternative use.

Plastic Waste Management Amendment Rules, 2021[11], notified on August 12, 2021, introduced definitions of “Single-use plastic commodity”, “Thermoset plastic” and “Thermoplastic”. The amendments prohibited the use of plastics of less than seventy five microns in thickness with effect from the 30th September, 2021 and one hundred and twenty (120) microns in thickness with effect from the 31st December, 2022. It additionally placed two more conditions in PWMR that the manufacture, import, stocking, distribution, sale and use of identified single-use plastic items including commodities made of polystyrene and expanded polystyrene, shall be prohibited with effect from the 1st July, 2022 which included ear buds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, polystyrene [thermocol] for decoration, plates, cups, glasses, cutlery such as forks, spoons, knives, straw, trays, wrapping or packing films around sweet boxes, invitation cards, and cigarette packets, plastic or PVC banners less than 100 micron and stirrers. It is also stated in the 2021 Amendment Rules that if there is any further notification which will prohibit the manufacture, import, stocking, distribution, sale and use of carry bags, plastic sheets or like, or cover made of plastic sheets and multilayered packaging and single-use plastic, including polystyrene and expanded polystyrene, commodities, issued after this notification, it shall come not come into force before the expiry of ten years from the date of its publication.    

Plastic Waste Management (Amendment) Rules, 2022[12]

The Ministry of Environment, Forest and Climate Change on 16.02.2016 notified the Guidelines on the Extended Producer Responsibility for plastic packaging vide Plastic Waste Management Amendment Rules, 2022. Directions have been issued to E-commerce companies, leading single use plastic sellers/users, and plastic raw material manufacturers with respect to phasing out of identified single use plastic items. EPR is a kind of reverse collection system to be followed by producers and is based on the established principle of ‘Polluter Pays’.

What is banned in India?

India has banned[13] manufacture, import[14], stocking, distribution, sale and use of identified single use plastic items, which have low utility and high littering potential, all across the country from July 1, 2022. This means if you have single use plastic at home, you cannot use it. You also cannot give it to vendors to use it. Keeping at home may also be considered as stocking. The ban is, however, not blanket ban on single-use plastic items but certain items that have been identified in the notification by the Government. They are Ear buds with plastic sticks, Plastic sticks for balloons, Plastic flags, Candy sticks, Ice-cream sticks, Polystyrene (Thermocol) for decoration, Plastic plates, Cups, glasses, cutlery such as forks, spoons, knives, straw & trays, Wrapping or packing films around sweet boxes, Invitation cards, Cigarette packets, Plastic or PVC banners less than 100 micron and stirrers.  

As on March, 2022, states of Uttarakhand, Uttar Pradesh, Tripura, Tamil Nadu, Sikkim, Rajasthan, Punjab, Nagaland, Maharashtra, Madhya Pradesh, Lakshadweep, Karnataka, Jharkhand, Himachal Pradesh, Haryana, Delhi, Daman Diu & Dadra  Nagar Haveli, Chhattisgarh, Chandigarh, Bihar, Assam, Arunachal Pradesh and Andaman & Nicobar Islands had imposed compete ban i.e. complete ban on manufacture, store, import, distribution, transportation, recycle, sell and use of plastic carry bags.[15] Assam has imposed ban on Plastic carry bags, banners, buntings, cups, cling films, flex, flags, plates, sheets (used for spreading on dining tables irrespective of thickness) including the above items made of thermocol and plastic which use plastic micro beads. Delhi has imposed complete ban on manufacture, import,store, sell & use of plastic products (poly Propylene, non-woven fabric type carry bags), plastic film or plastic tube to pack or cover any book including magazine & invitation/greeting cards.

State of Kerala has imposed the ban on large number of item i.e. complete ban on the manufacture, storage, transport and sale of plastic carry bags( irrespective of thickness); plastic sheets( used as table spread); plates, cups and decorative materials made of thermocol/stryrofoam; SUP items like cups, plates, dishes, spoons, forks, straw, stirrer; plastic coated paper cups, plastic coated paper plates, plastic coated paper bowls, plastic coated paper bags; Non woven bags, plastic flags, plastic bunting; plstic water pouches, non branded plastic juice packets ; plastic juice packets; PET/PETE bottles of drinking water of capacities less than 500 ml; garbage bags (plastic); PVC flex materials and plastic packets.[16]


[1] Global recycling percentage is as low as only 9 per cent as per the Indian Government Notification.

[2] A detailed article on impact of plastics on human health is written by Neeti Rustagi, S. K. Pradhan, and Ritesh Singh and is available at  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3299092/

[3] A complete report has been prepared by UNEP and is available at https://www.unep.org/resources/report/water-pollution-plastics-and-microplastics-review-technical-solutions-source-sea; A quick read can be found at https://www.unep.org/news-and-stories/story/plastic-planet-how-tiny-plastic-particles-are-polluting-our-soil;

[4] Legal Limits on Single-Use Plastics and Microplastics: A Global Review of National Laws and Regulations published in July 2018.

[5] Exceptions exist for certain products or materials, such as for so-called biodegradable plastics.

[6] https://plasticoceans.org/rwanda-plastic-bag-ban

[7] https://www.cnbc.com/2022/06/08/us-to-ban-sale-of-single-use-plastic-on-public-lands-national-parks-by-2032.html#:~:text=Group%20%7C%20Getty%20Images-,The%20U.S.%20Interior%20Department%20said%20on%20Wednesday%20it%20will%20phase,recycling%20rate%20continues%20to%20decline.

[8] https://www.doi.gov/sites/doi.gov/files/elips/documents/so-3407.pdf

[9] https://pib.gov.in/newsite/printrelease.aspx?relid=138144#:~:text=Based%20on%20the%20recommendations%20of,properties%20lead%20to%20commercial%20success.

[10] https://cms.pib.gov.in/WriteReadData/userfiles/PWMnotification%201%20001.pdf

[11] https://static.pib.gov.in/WriteReadData/specificdocs/documents/2021/aug/doc202181311.pdf

[12] file:///C:/Users/HP/Downloads/233568.pdf

[13] Please see for details: https://static.pib.gov.in/WriteReadData/specificdocs/documents/2022/jul/doc20227169001.pdf

[14] An instruction dated 22.06.2022 bearing no. 09/2022  was separately sent by the Ministry of Finance to Commissioner of Customs for restriction on import of products made of plastic.

[15] https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1807646

[16] https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1807646

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Understanding Plastic Ban In India And Worldwide: Part-I

As per United Nations Environmental Programme (UNEP), plastic pollution soared from two million tonnes in 1950, to 348 million tonnes in 2017, becoming a global industry valued at $522.6 billion.[1] It is expected to double in capacity, by 2040. Recently, during historic resolution at the UN Environment Assembly in Nairobi on 02.03.2022 to end plastic pollution, Norway’s Minister for Climate and the Environment, Espen Barth Eide lamented, “Plastic pollution has grown into an epidemic.”

This man-made situation is undeniably grave.

Tangible steps have been taken around the world to phase out the use of plastics. Countries after countries have realized that the problem will soon turn fatal. Bangladesh was the first country to realize the magnitude of the problem and immediately imposed ban on plastics in 2002, when the plastics were found to be the reasons for choking of drains and consequential drastic flooding in the country. There is specific checking of luggage for plastics in countries like Rwanda at the airport when the passenger arrives.

India has recently followed the league by systematically and methodically working on the same for the last one decade and more significantly since 2016. Hon’ble Prime Minister Modi while recently addressing the United Nations Conference on Desertification said, “I think the time has come for the world to say goodbye to single-use plastics…” Effective July 1, 2022, India imposed complete ban on identified items made of single-use plastic.

Plastic: The Frankenstein

Plastic is a long chain of synthetic polymers/carbon atoms arranged in repeating units. They are often much longer than those found in nature. This gives it the characteristic strength and flexibility along with light weight. This strength, however, is also the reason that the plastics don’t break down when left alone in the environment. Polymers are naturally present – cellulose being most common of all. Man started producing plastics firstly from these natural polymers and then moved to using carbon atoms from petroleum and other fossil fuels.

As per Directive (EU) 2019/904, ‘plastic’ means “a material consisting of a polymer to which additives or other substances may have been added, and which can function as a main structural component of final products, with the exception of natural polymers that have not been chemically modified.”

As per Rule 3(o) of the Plastic Waste Management Rules, 2016, “plastic” means material which contains as an essential ingredient a high polymer such as polyethylene terephthalate, high density polyethylene, Vinyl, low density polyethylene, polypropylene, polystyrene resins, multi-materials like acrylonitrile butadiene styrene, polyphenylene oxide, polycarbonate, Polybutylene terephthalate.

Plastics have been categorized into seven types as per the method they would be recycled.[2] They are depicted in numbers inside the three arrow triangle recycling symbol. This number is a reference to what type of plastic the container is made of. The category can be checked from the bottom of the plastic container or carry bag. The recycling numbers aid recyclers in the sorting process. All plastics may look alike but they are not. They are made of different molecules or set of molecules which do not mix. Therefore, sorting the plastics before recycling is essential. The recycling code constitutes of the numbers 1 through 7 – PET-Polyethylene terephthalate (eg. Water bottles, dispensing containers, biscuit trays), HDPE-High density polyethylene (eg. Shampoo bottles, milk bottles, freezer bags, ice cream containers), V-Vinyl (PVC) (eg. Blister packaging, wire jacketing, siding, windows, piping), LDPE– Low density polyethylene (eg. Bags, trays, containers, food packaging film), PP-Polypropylene (eg. Potato chip bags, microwave dishes, ice cream tubs, bottle caps, single-use face masks), PS-Polystyrene and Other means all other resins and multi-materials like ABS (Acrylonitrile butadiene styrene) (eg. Cutlery, plates, cups), PPO (Polyphenylene oxide), PC (Polycarbonate), PBT (Polybutylene terephalate) (eg. Three- and five-gallon water bottles, bullet-proof materials, sunglasses, DVDs, iPod and computer cases, signs and displays, certain food containers, nylon) etc.[3]

The most widely accepted plastics for recycling are number 1 and 2.

Who made Frankenstein?

John Wesley Hyatt made the first synthetic polymer by treating cellulose, derived from cotton fiber, with camphor. This was used as a substitute to ivory and was considered a blessing as it saved brutal elephant killings. Bakelite was the first fully synthetic plastic invented by Leo Baekeland in 1907. As per United Nations Environmental Programme, Polyethylene, the most commonly used plastic, was created by accident at a chemical plant in Northwich, England in 1933. In 1965, one-piece polyethylene shopping bag, designed by engineer Sten Gustaf Thulin, was patented by the Swedish company Celloplast.

It was not until the World War-II that the demand for plastics and for the item made out of it exponentially increased and finally steeply rose in 1970s.[4] Since the 1950s, 8.3 billion metric tons of plastics have been produced, and half of that in the past 15 years alone.[5] As per UNEP, worldwide, one million plastic bags were consumed every minute in 2011.

What is single use plastic?

Any plastic that is made from polymers of HDPE, LDPE, PET, PS, PP, EPS is single use plastic. Natural Resources Defense Council (NRDC), a non-profit organization founded in US in 1970 defines ‘single use plastic’ as “goods that are made primarily from fossil fuel–based chemicals (petrochemicals) and are meant to be disposed of right after use—often, in mere minutes”.

As per Directive (EU) 2019/904 ‘single-use plastic product’ means “a product that is made wholly or partly from plastic and that is not conceived, designed or placed on the market to accomplish, within its life span, multiple trips or rotations by being returned to a producer for refill or re-used for the same purpose for which it was conceived.”

The term ‘single-use plastic’ was not defined under the 2016 rules when the rules were introduced. Vide Plastic Waste Management (Amendment) Rules, 2021, notified by the Ministry on 12.08.2021, a definition of ‘Single-use plastic commodity’ was introduced under sub-rule (va) of Rule 3. It means “a plastic item intended to be used once for the same purpose before being disposed of or recycled.”

Single-use plastics are most commonly used for packaging, plastic bags, and serviceware, such as bottles, stirrers, clamshells, wrappers, straws, and bags.


[1] https://news.un.org/en/story/2022/03/1113142

[2] Rule 11(2) of 2016 Rules.

[3] For details and understanding please visit https://www.unep.org/interactives/beat-plastic-pollution/

[4] https://www.unep.org/news-and-stories/story/birth-ban-history-plastic-shopping-bag#:~:text=2002%20%E2%80%93%20Bangladesh%20is%20the%20first,drainage%20systems%20during%20disastrous%20flooding.

[5] https://www.nrdc.org/stories/single-use-plastics-101#what

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Recovery Certificate would Qualify as a “Financial Debt” under the Insolvency and Bankruptcy Code, 2016 and Give Rise to a Fresh Cause of Action

In a recent judgment in Kotak Mahindra Bank Limited versus A. Balakrishnan & Anr [Civil Appeal No. 689 of 2021], the Hon’ble Supreme Court settled the position w.r.t. the holder of recovery certificate issued under the Recovery of Debts and Bankruptcy Act, 1992 (“RDB Act”) who shall be a ‘Financial Creditor’ under Insolvency and Bankruptcy Code, 2016 (“IBC/Code”) and shall have a fresh cause of action to initiate CIRP under section 7 of the Code.

In the present matter, Kotak Mahindra Bank, which procured a recovery certificate from Debt Recovery Tribunal, filed an application under section 7 of the Code on the basis of the recovery certificate. The application was admitted but immediately challenged before the Hon’ble NCLAT which set aside the order of the NCLT on the basis of the cause of action being time barred.

The order of NCLAT was challenged before the Hon’ble Supreme Court on the ground that the application before NCLT was made well within the period of three years from the date on which the recovery certificates were issued and therefore the application under section 7 was within limitation.

The Court set aside the order of NCLAT. The Court upheld the decision in Dena Bank (now Bank of Baroda) vs. C. Shivakumar Reddy & Anr, 2021 SCC OnLine SC 543 which inter alia held that the a fresh period of limitation period would accrue for an application under Section 7 from the date of a recovery certificate. The Court reasoned that a recovery certificate is a “financial debt” within the unexhausted definition provided under Section 5 (8) of the Code. While an application under section 7 of the IBC may be filed in respect of a ‘default’ which means non-payment of a debt as per section 3 (12) of the Code, “debt” is defined as a “liability in respect of a claim as per Section 3 (11) of the Code, and “claim” in turn, as per section 3(6) of the IBC, means a right to payment, whether or not such right has been reduced to judgment. In this case, the claim has been reduced to judgment by way of a recovery certificate. The Court also went into interpreting Sections 19 (22) and 19 (22A) of the RDB Act and held that they do not restrict initiation of CIRP based on a recovery certificate.

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HOW TO REVOKE/CANCEL A POWER OF ATTORNEY

A power of attorney is an instrument which is a creature of contract of agency executed between two or more parties authorising the agent to act in on behalf of the principal(s) and act for the benefit of the principal(s). It is called “a document of convenience”[1]. Any act done or document executed by the agent under the strength of power of attorney will be deemed to be the act of or execution by the principal.[2]

A power of attorney (“PoA”) may be revocable or irrevocable[3]. Moreover, a PoA may be general or for a specific purpose. Interestingly, a deed of power of attorney does not require consideration. As per section 185 of the Indian Contract Act, 1872, no consideration is necessary to create an agency. PoA is therefore, an exception to sections 10 r/w 23 of the Contract Act which provides that consideration is an essential ingredient of a lawful agreement.

The law regarding power of attorney (“PoA”) is primarily governed by Power of Attorney Act, 1882 (“1882 Act”) and the Indian Contract Act, 1872 (“Contract Act”).  The Stamp Act, 1899 and Registration Act, 1908 also make provisions for the stamping and registration of the instrument.

The Law

The PoA is defined under section 1A of the 1882 Act. According to section 1A, “power-of-attorney” includes any instrument empowering a specified person to act for and in the name of the person executing it.” Section 2(21) the Indian Stamp Act, 1899 also defines the term. It is further governed by Chapter X of the Contract Act where Section 182 of the Contract Act defines ‘agent’. Chapter X is on contract of agency, the effect of it and its termination.

The effect of execution of power of attorney has been succinctly captured under section 2 of the 1882 Act which has been reproduced herein below:

2. Execution under power-of-attorney.—The donee of a power-of-attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. This section applies to powers-of-attorney created by instruments executed either before or after this Act comes into force.

Section 4 of the 1882 Act lays down a few requirements for the instrument to be sufficient evidence. As per section 4 of the 1882 Act, it must be supported by an affidavit, statutory declaration or other sufficient evidence which shall be deposited in the High Court/District Court and another set must be maintained for inspection by any person. The copy so deposited may be stamped or marked as a certified copy, and, when so stamped or marked, shall become a certified copy which shall be sufficient evidence of the contents of the instrument and of the deposit thereof in the High Court or District Court, without further proof. The relevant provision of 1882 Act is reiterated herein below:

4. Deposit of original instruments creating powers-of-attorney.— (a) An instrument creating a power-of-attorney, its execution being verified by affidavit, statutory declaration or other sufficient evidence, may, with the affidavit or declaration, if any, be deposited in the High Court 9 [or District Court] within the local limits of whose jurisdiction the instrument may be.

(b) A separate file of instruments so deposited shall be kept; and any person May search that file, and inspect every instrument so deposited; and a certified copy thereof shall be delivered out to him on request.

(c) A copy of an instrument so deposited may be presented at the office and may be stamped or marked as a certified copy, and, when so stamped or marked, shall become and be a certified copy.

(d) A certified copy of an instrument so deposited shall, without further proof, be sufficient evidence of the contents of the instrument and of the deposit thereof in the High Court 1 [or District Court].

(e) The High Court may, from time to time, make rules for the purposes of this section, and prescribing, with the concurrence of the State Government, the fees to be taken under clauses (a), (b) and (c).

g) This section applies to instruments creating powers-of-attorney executed either before or after this Act comes into force.

In practice, the power of attorney is executed in front of two witnesses and a notary public. Notarisation has the effect of registration. This shall essentially change if it is a special power of attorney executed say, for sale of property. Registration shall become mandatory in such cases and the parties will also be liable to pay the stamp duty as per Article 48 of the Schedule of the Stamp Act. As per the judgments of the Apex Court, a PoA is strictly construed.[4] Therefore, a deed of power of attorney needs to be very carefully worded. If it a PoA for sale of property, the power should also expressly authorise the power to agent to execute the sale deed and must include power to present the document before the Registrar and to admit execution of the document before the Registrar. 

Revocation or termination of power of attorney

As per the Contract Act, agency can be revoked by either the principal or the agent. The revocation may be expressed or implied by conduct. Such contract of agency will get automatically revoked on death of principal or agent or them becoming of unsound mind. Additionally, it is revoked by operation of law on principal being adjudicated insolvent. The only exception to it is in case where agent has an interest in subject matter of agency. As per section 202 of the Contract Act, the agency cannot be revoked to the prejudice of such interest. Further, the agency can be revoked at any time before the authority has been exercised. However, if an agency is to continue for any period of time, the party prematurely revoking the agency, without any sufficient cause, must compensate the other.

The termination or revocation of the agency may or may not immediately come into effect. Section 208 of the Contract Act stipulates that the termination of the authority of the agent will take effect only when it becomes known to the agent. Similarly, it will take effect as regards the third party when it becomes known to the third party.

These provisions equally apply in case of a PoA. The party, however, has to follow a procedure. For an express revocation, the party is required to issue a notice to the other party stating the reasons for revocation, the effective date and consequences of the revocation. In case of an unregistered PoA it is advisable that the party also issues a public notice in local newspapers. The third party, if any, is further required to be put to notice.

In case of a registered deed of PoA, the party must register the deed for cancellation/revocation after preparing the cancellation deed which must again state the reasons for revocation, the effective date and consequences of the revocation. The principal is then required to serve the copy of the cancellation deed to the agent/attorney. In case of registered PoA also, one is advised to make a newspaper publication of such cancellation.

The aspect of cancellation is crucial since the veracity of documents executed by an agent on the strength of the PoA come into question on the ground of him not having a valid PoA because of alleged termination/cancellation of PoA before the time when the agent executed such document.

The issue regarding the revocation of a registered PoA was addressed most recently in Amar Nath v. Gian Chand [2022 SCC OnLine SC 102] by the Hon’ble Apex Court. In the said matter the plaintiff had executed a special power of attorney in favour of the Defendant No. 2 for the sale of plaintiff’s property in favour of Defendant No. 1. The Defendant No. 1 was not in a position to arrange for money. Therefore, Defendant No. 2 surrendered the original power of attorney to the plaintiff and the plaintiff drew a cut line on it and wrote ‘cancelled’. He also told Defendant No. 1 that the same stood cancelled. Subsequently, Defendant No. 2, allegedly in collusion with Defendant No. 1, applied for the copy of the power of attorney, and fraudulently executed the sale deed in between themselves for a consideration of Rs. 30,000/-. The mutation was also sanctioned. On becoming aware of it, the plaintiff challenged the sale deed by filing a suit for declaration by way of permanent injunction mainly on the grounds firstly that the Defendant No. 2, during the registration of the sale deed, could not have produced the original PoA before the registering officer under Registration Act and secondly, the sale deed was executed without authority since special power of attorney was deemed to have been cancelled.

The lower courts declined the relief sought by the plaintiff.  The High Court proceeded to set aside the findings of the lower courts and held that the mutation showing the sale in favour of the Defendant no. 1 was null and void. The High Court relied on Section 18A of the Registration Act and held that it was necessary for the Registering Authority to see the true copy of the special power of attorney. Since original power of attorney was cancelled, the same could not be relied upon by the Registering Authority for the purpose of execution of the sale deed.

The Apex Court in the very beginning observed that Section 18A contemplates the production of a true copy of a document which is sought to be registered. In the present case it was the sale deed which was to be registered and the production of the sale deed is not in question. The Court then went on to analyse the applicability of other provisions under section 32, 33 and 34 of the Registration Act and held that there was a certified copy of power of attorney which authorised Defendant No. 2 and if it was not cancelled (as per law) and he had executed the sale deed, he is within his rights to present the documents before the registering officer. Further, the duty of the Registering Officer extends only to enquire and find that such person is the person who has executed the document he has presented and further be satisfied about the identity of the person. On the contention of the plaintiff that original power of attorney was cancelled by cutting it and writing on it ‘cancelled’ and thus Defendant No. 2 had no authority thereafter, the Court, in this regard, observed that the power of attorney was registered. The plaintiff neither did get the power of attorney cancelled at the Sub-Registrar Office nor did he send any notice of cancellation. The Court clarified that “This we say as even in the absence of a registered cancellation of the power of attorney, there must be cancellation and it must further be brought to the notice of the third party at any rate as already noticed.” Therefore, the making of a cancellation deed, its registration as well as notice to the donee/agent/power of attorney holder are equally essential for a valid revocation of power of attorney.


[1] State of Rajasthan v. BasantNahata, (2005) 12 SCC 77]

[2] It was held in A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC 790 thatThe power-of-attorney holder is the agent of the grantor. When the grantor authorises the attorney holder to initiate legal proceedings and the attorney holder accordingly initiates such legal proceedings, he does so as the agent of the grantor and the initiation is by the grantor represented by his attorney holder and not by the attorney holder in his personal capacity…However, we make it clear that the power-of-attorney holder cannot file a complaint in his own name as if he was the complainant. In other words, he can initiate criminal proceedings on behalf of the principal.

[3] Suraj Lamp and Industries Private Limited vs. State of Haryana & Anr. (2012) 1 SCC 656

[4] Church of Christ Charitable Trust & Educational Charitable Society v. Ponniamman Educational Trust, (2012) 8 SCC 706

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Power of Courts to Remand the Matters to Arbitral Tribunal

As per the Arbitration and Conciliation Act, 1996, when an application under section 34 of the 1996 Act is moved by the Award Debtor along with the application for remitting the matter to the Arbitrator, the only power invested in the Court is to adjourn the proceedings for the limited purpose mentioned in Section 34(4) of the 1996 Act. As per the Section 34(4), the Court can defer the hearing of the objection filed under Section 34 on a written request made by a party to enable the Arbitral Tribunal to resume the arbitral proceedings so that the grounds for setting aside or in other words, the deficiencies in the arbitral award may be eliminated by the Arbitral Tribunal. The matter cannot be remanded for fresh decision by the Arbitral Tribunal which has become functus officio.

The law has also been laid in clear terms in the matter of McDermott International Inc. v. Burn Standard Co. Ltd. [(2006) 11 SCC 181]. In the matter of Radha Chemicals v Union of India [Civil Appeal No. 10386 of 2018] it was once again laid down that “the court while deciding a Section 34 (Arbitration and Conciliation Act, 1996) petition has no jurisdiction to remand the matter to the Arbitrator for a fresh decision”. The issue has been addressed in the matters of Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd. (2018) 11 SCC 328 wherein it was held that objective behind section 34(4) is to make the award enforceable and in Som Datt Builders Limited v. State of Kerala (2009) 10 SCC 259 wherein the Court held that in view of Section 34(4) of the Act, the High Court ought to give the Arbitral Tribunal an opportunity to give reasons, if the same have not been given in the original arbitral award.

Recently, in the matter of Dr. A. Parthasarathy & Ors v. E Springs Avenues Pvt. Ltd &Ors.  [SLP (C) Nos. 1805-1806/2022], the Hon’ble Supreme Court dealt with an impugned order wherein the High Court, in exercise of power under Section 37 of the 1996 Act, had set aside the award passed by the learned Arbitrator and has remanded the matter to the Arbitrator for fresh decision. While deciding the issue, the Hon’ble Supreme Court wholly relied upon its decisions in Kinnari Mullick and Anr. Vs. Ghanshyam Das Damani (2018) 11 SCC 328 and I-Pay Clearing Services Pvt. Ltd. Vs. ICICI Bank Ltd. (2022) SCC OnLine SC 4. The Court held that the High Court under section 37 of the 1996 Act either may refer the parties for fresh arbitration or may consider the appeal on merits on the basis of the material available on record within the scope and ambit of the jurisdiction under Section 37 of the 1996 Act. The Court clarified that the High Court does not have the jurisdiction to remand the matter to the same arbitrator for fresh decision/arbitration. This is otherwise permissible only by the consent of both the parties that the matter be referred to the same arbitrator.

In the Kinnari Mullick the Hon’ble Supreme Court elaborately discussed various aspects of power to remand the matter – when can the matter be remanded, what is the objective of remand and what are the limitations to the power in the light of provision under section 34(4) of the 1996 Act. The central issue involved in the case was whether Section 34(4) of the Arbitration and Conciliation Act, 1996 empowers the Court to relegate the parties back before the Arbitral Tribunal after having set aside the arbitral award in question. Additionally, it was also determined whether the court can exercise the power in absence of any specific application/prayer of the parties in this regard.

In Kinnari Mullick the award was challenged by the appellants and was set aside on the ground that it is devoid of any reasons for its findings. On appeal, the decision of the Single Bench of the Hon’ble High Court was affirmed. The Division Bench additionally suo moto decided to remand the matter back before the Ld. Arbitral Tribunal directing the Ld. Tribunal to provide reasons in support of the findings. The said part of the decision of the Division Bench was challenged before the Supreme Court.

Adverting to Section 34(4) of the 1996 Act, the Court observed that the Court can defer the hearing of the application filed under Section 34 only on a written request made by a party so that the grounds for setting aside or in other words, the deficiencies in the arbitral award may be eliminated by the arbitral tribunal. The Court cannot ive a direction suo moto. The Court added that “The quintessence for exercising power under this provision is that the arbitral award has not been set aside.” In other words, even a party cannot move an application under section 34(4) of the 1996 Act once the award has been set aside by the court. The Court explained that this is because consequent to disposal of the main proceedings under Section 34 of the 1996 Act, the Court would become functus officio.

In the matter of I-Pay Clearing, the appellant, along with the application under section 34, moved an application under section 34(4) seeking directions to adjourn the proceedings for a period of three months and direct the learned Arbitrator to issue appropriate directions with regard to an issue where the Arbitrator had failed to give its findings. The main objection was filed on the ground that the Arbitrator has failed to record detailed reasons for its findings and thus, the same is patently illegal and erroneous. The High Court dismissed the application under section 34(4) of the 1996 Act on the ground that the defect in the arbitral award is not curable. The appellant preferred an appeal before the Hon’ble Supreme Court against the said order of dismissal of application under section 34(4) of the 1996 Act.

The Court explained that there is a difference between a finding and reasons. Findings are the decision on an issue. Reasons are the links between the materials on which certain findings are based and the actual findings. Section 34(4) of the Act, can be resorted to record reasons on the finding already given in the award or to fill up the gaps in the reasoning of the award. However, when prima facie it is case of patent illegality, as was pleaded by the respondent also, the same is required to be considered by the Court itself. Further, the Court has discretion to decide on the question as to whether a good case has been made out for relegating the parties back to the arbitral tribunal under section 34(4) of the 1996 Act i.e. showing that “there is inadequate reasoning or to fill up the gaps in the reasoning, in support of the findings which are already recorded in the award”. It is not obligatory on the Court to remit the matter in all the cases where party makes an application. The Court further clarified that, “If there are no findings on the contentious issues in the award or if any findings are recorded ignoring the material evidence on record, the same are acceptable grounds for setting aside the award itself…. A harmonious reading of Section 31, 34(1), 34(2A) and 34(4) of the Arbitration and Conciliation Act, 1996, make it clear that in appropriate cases, on the request made by a party, Court can give an opportunity to the arbitrator to resume the arbitral proceedings for giving reasons or to fill up the gaps in the reasoning in support of a finding, which is already rendered in the award.” Therefore, we may conclude that the law is more than settled as to the limited purpose for which and in limited circumstances in which a matter may be relegated to the Arbitral Tribunal by the Court exercising its discretionary jurisdiction under section 34(4) of the 1996 Act on application moved by a party in this regard. Needless to say this is different from the power of the Arbitral Tribunal to correct the award under section 33 of the 1996 Act and to make an additional award under section 33(4) of the 1996 Act where the parties can move an application directly before the Arbitral Tribunal and seek an appropriate remedy.

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