Daily Current Affairs : 13th May 2023

Daily Current Affairs for UPSC CSE

Topics Covered

1. Cape Town Convention and its Aircraft Protocol   
2. Default bail
3. Model Prisons Act
4. Facts for Prelims

1 . Cape Town Convention and its Aircraft Protocol  

Context: India has been placed on global aviation leasing watchdog’s watchlist, assigning it “negative” outlook following the National Company Law Tribunal’s (NCLT) order restricting bankrupt airline Go First’s lessors from repossessing planes while it is undergoing insolvency process.

What is in news?

• Global aviation leasing watchdog, Aviation Working Group (AWG), that monitors leasing and financial laws on behalf of plane makers and lessors, has put India on a watchlist with a negative outlook. It reasoned that India failed to comply with international aircraft repossession norms after Go First was granted protection under the insolvency proceedings.
• The UK-based AWG’s negative outlook comes under the Cape Town Convention, an international treaty on plane repossessions. India’s score was reduced from 3.5 to 3.
• The watchdog said that India’s inability to process deregistration applications for aircraft, whose leases got terminated before the freeze was imposed, resulted in a negative outlook.
• What is the impact?- The NCLT order preventing recovery of aircraft by lessors “has raised significant concerns among aviation industry lessors and creditors regarding the risks associated with aircraft leasing in India, which could result in higher risk premiums on local airlines, pushing up lease rentals and consequently ticket prices
• This move could make leasing airplanes a costlier affair for Indian airlines, which could in turn impact lessors’ confidence in the world’s third largest domestic aviation market.  
• After India joined the Cape Town Convention in 2008, it made it easier for lessors to take back planes if airlines defaulted on payments, but the NCLT’s bankruptcy protection supersedes the repossession requests.
• Aviation Working Group– AWG is a not-for-profit entity co-chaired by Airbus and Boeing. Its members include major lessors and financial institutions like Aircastle, BOC Aviation, SMBC Aviation Capital, Deutsche Bank, Goldman Sachs and Morgan Stanley.

What is Cape Town Convention and Its Aircraft Protocal?

Cape Town Convention

• At a Diplomatic Conference held in Cape Town in November, 2001 under the auspices of the International Civil Aviation Organisation (ICAO) and the International Institute for the Unification of Private Law (UNIDROIT), two international law instruments were adopted, namely,
  • The Convention on International Interests in Mobile Equipment (the Cape Town Convention) and
  • The Protocol to the Convention on Matters Specific to Aircraft Equipment (the Cape Town Protocol).
• The Convention is general in nature and is meant to be applied to three sectors, viz. Aviation, Railways and Space Equipment.
• A separate Protocol has been adopted for each sector, and the Convention together with the sector specific Protocol constitutes the legal regime for each sector.
• The Aircraft protocol was adopted at Cape Town itself in 2001 along with the base Convention, while the Protocols for the Railways and Space sectors were adopted subsequently.
• Aircraft Protocol– It is a treaty designed to facilitate financing and leasing of aviation equipment
• The principal objective of the Convention/Protocol is to achieve efficient financing of high value mobile equipment, like airframes, helicopters and engines, in order to make the operations as cost effective and affordable as possible.
• The Convention and the Protocol are designed to fulfill the following objectives:
  • (a) Creation of an International Interest in aircraft objects which will be recognized in all Contracting States;
  • (b) Establishment of an electronic International Registry for registration of international interests, accessible online on H+24 basis and providing a search certificate to any person seeking such a certificate in respect of a particular aircraft object giving details of various registered interests in order of priority in that aircraft object;
  • (c) Provision of certain basic default remedies for the creditor, such as deregistration and export of aircraft, as a measure of speedy interim relief;
  • (d)  Creation of a legal regime which is applicable universally and administers justice to both parties in case of a dispute; and
  • (e) By these means, to reduce the level of risk for the intending creditors/lessors, leading to reduction in the cost of aircraft financing/leasing and eventually to reduction in cost of operation. The benefits will finally be passed on to the end user i.e. the passenger and/or shipper.

2 . Default Bail

Context: The Supreme Court, in a rather unusual order directed lower courts to decide pending default bail applications without relying on its own judgment of April 26.

What is the Background of the April 26 Judgement?

• Article 141- A judgment of the Supreme Court is considered the law of the land. Article 141 of the Constitution provides that the law declared by the Supreme Court shall be binding on all courts within India.
• April 26 Judgement- The April 26 judgment in Ritu Chhabaria versus Union of India had held that central agencies cannot deny accused persons their right to default bail by filing multiple supplementary chargesheets and seeking renewed custody. The judgment held that “the right of default bail under Section 167(2) of the Criminal Procedure Code (CrPC) is not merely a statutory right, but a fundamental right that flows from Article 21 of the Constitution” to protect accused persons from the “unfettered and arbitrary power of the State”.
• Background of the case- The April judgment, delivered by a Division Bench led by Justice Krishna Murari, had come in a petition by Ritu Chhabaria, whose husband, Sanjay, was named in a corruption case. The CBI, which had arrested him in April 2022, got his custody renewed from time to time by filing multiple supplementary chargesheets. He was never released on default bail.

What is the Centre’s argument?

• Following the judgment, the government, through the Enforcement Directorate (ED), moved an urgent application in the apex court to “recall” the Ritu Chhabaria judgment.
• The ED argued that the judgment contradicted the Supreme Court’s own past verdicts. The central agency backed the recall application by separately filing an appeal against the default bail granted by the Delhi High Court to Manpreet Singh Talwar, an accused in a money laundering case who relied on the Ritu Chhabaria verdict.
• The ED argued that the April 26 judgment would not apply to special laws like the Prevention of Money Laundering Act (PMLA).

What is the present status?

• On May 1, a Division Bench led by Chief Justice of India D.Y. Chandrachud directed courts to “defer” any decision on default bail pleas filed on the strength of the Ritu Chhabaria judgment. But this  order “curtails the rights” of undertrial prisoners seeking default bail. Now Chief Justice Chandrachud clarified that the May 1 order had not prevented courts from deciding default bail pleas “independent of the Ritu Chhabaria judgment”.

What is default bail?

• Under Section 167(2) of the Code, a Magistrate can order an accused person to be detained in the custody of the police for 15 days. Beyond the police custody period of 15 days, the Magistrate can authorise the detention of the accused person in judicial custody i.e., jail if necessary. However, the accused cannot be detained for more than:
• i) ninety days, when an authority is investigating an offence punishable with death, life imprisonment or imprisonment for at least ten years; or
• ii) sixty days, when the authority is investigating any other offence.
• In this case, bail is granted because of the default of the investigating agency in not completing the investigation within the specified time, and it is referred to as ‘default bail’ or ‘compulsive bail’. After the period of ninety/sixty days, if the investigation has not been completed and charge-sheet not filed, the accused person has the right to be released on bail as long as he/she applies for bail and agrees to fulfil other bail conditions (such as providing the required bail amount).

Which law regulates bail in India?

• The Code of Criminal Procedure, 1973 regulates the procedural aspects of criminal law, including arrest, investigation and bail.

Default bail as a fundamental right

• Article 21 of the Constitution provides everyone with the fundamental right to life and personal liberty. No person can be deprived of life or personal liberty except according to the procedure established by law, and such a procedure cannot be arbitrary, unfair or unreasonable. The safeguard of ‘default bail’ is linked to Article 21.
• Section 167(2) places time limits on the period of custody of the accused, in proportion to the seriousness of the offence. So, the investigative agency must collect the required evidence within the prescribed time period. If it doesn’t do this, the accused can no longer be detained. This ensures that investigating officers act swiftly and efficiently without misusing the law. This also ensures that the Court takes up the case without any undue delay so that society does not lose faith in the criminal justice system.

The right to get default bail

• Once the accused files an application for bail under Section 167(2), it is considered that he/she has enforced the right to be released on default bail. This right only comes into place after the stipulated time limit for investigation has expired. The right to be released on default bail is enforceable as long as the accused has made an application for such bail. It doesn’t matter if the bail application is still pending, or if the investigating authority files the charge-sheet subsequently after the accused has applied for default bail.

When does default bail not apply?

• If the accused fails to apply for default bail after the investigation time period has expired, and the investigating agency files a charge-sheet or seeks more time before the accused makes such an application for default bail, then the right of default bail is no longer applicable.
• The Magistrate can then grant further time for completion of the investigation. However, the accused may still be released on bail under other legal provisions of the Code.
• It is important to note that even if the Court grants default bail, the actual release of the accused from custody depends on the directions passed by the Court which is granting bail.
• If the accused fails to submit the bail amount and/or comply with the terms and conditions of the bail order as stipulated by the Court, the accused will continue to be detained in custody.

3 . Model Prisons Act

Context: The Ministry of Home Affairs (MHA) has prepared the ‘Model Prisons Act 2023’ that will replace a British-era law to overhaul the prison administration that will focus on the reformation and rehabilitation of inmates

What are the features of the Model Prisons Act?

• The Model Prisons Act, 2023 aims to address the gaps in the existing Prisons Act by providing guidance on the use of technology in prison management, making provisions for parole, furlough, and remission to prisoners to encourage good conduct, special provisions for women and transgender inmates, and a focus on the reformation and rehabilitation of inmates.
• Some salient features of the new Model Prisons Act include a provision for security assessment and segregation of prisoners, individual sentence planning, grievance redressal, the establishment of a prison development board, and a focus on the physical and mental well-being of prisoners.
• The Act also includes provisions for the use of technology in prison administration, such as video conferencing with courts and scientific and technological interventions in prisons. It also includes provisions for the punishment of prisoners and jail staff for using prohibited items like mobile phones in jails.
• Additionally, the Act provides for the establishment and management of high-security jails, open jails (open and semi-open), and the protection of society from the criminal activities of hardened criminals and habitual offenders.
• The Act also provides for legal aid to prisoners and provisions for parole, furlough, and premature release to incentivise good conduct. The Act focuses on vocational training and skill development of prisoners to facilitate their reintegration into society.
• State governments and Union Territory Administrations can benefit from the Model Prisons Act, 2023 by adopting it in their jurisdictions with such modifications as they may consider necessary and repeal the existing three Acts in their jurisdictions.

4 . Facts for Prelims

LIBOR & SOFR

• LIBOR– The London Inter-Bank Offered Rate (Libor)is an interest rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from other banks.
• It is the primary benchmark, along with the Euribor, for short-term interest rates around the world.
• Libor was phased out at the end of 2021, and market participants are being encouraged to transition to risk-free interest rates such as SOFR and SARON.
• SOFR– Secured Overnight Financing Rate (SOFR) is a secured overnight interest rate. SOFR is a reference rate (that is, a rate used by parties in commercial contracts that is outside their direct control) established as an alternative to LIBOR. LIBOR has been published in a number of currencies and underpins financial contracts all over the world. Because LIBOR is derived from banks’ daily quotes of borrowing costs, banks were able to manipulate the rates through lying in the surveys. Deeming it prone to manipulation, UK regulators decided to discontinue LIBOR in 2021.
• SOFR uses actual costs of transactions in the overnight repo market, calculated by the New York Federal Reserve. With US government bonds serving as collateral for borrowing, SOFR is calculated differently from LIBOR and is considered a less risky rate. The less risky nature of SOFR may result in lower borrowing costs for companies.
• Features– SOFR is based on the Treasury repurchase market (repo), Treasuries loaned or borrowed overnight. SOFR uses data from overnight Treasury repo activity to calculate a rate published at approximately 8:00 a.m. New York time on the next business day by the US Federal Reserve Bank of New York.
• Unlike Libor, SOFR uses banks’ actual borrowing costs rather than unverifiable estimates submitted by a panel of banks. However, it may still be vulnerable to manipulation. Banks can borrow and lend at biased rates in the wholesale funding market, which can lead them to profit in the much larger market for benchmark-indexed contracts. It was therefore suggested that the lending costs of individual banks be published to increase transparency and deter manipulation.

Global Financial Innovation Network (GFIN)

• The Global Financial Innovation Network (GFIN) was formally launched in January 2019 by an international group of financial regulators and related organisations.
• The GFIN is a network of over 60 organisations committed to supporting financial innovation in the interests of consumers.
• The GFIN seeks to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. This includes a pilot for firms wishing to test innovative products, services or business models across more than one jurisdiction.
• It also aims to create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.
• Functions of GFIN
  • To act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models, and to provide accessible regulatory contact information for firms.
  • To provide a forum for joint regtech work and collaborative knowledge sharing/lessons learned.
  • To provide firms with an environment in which to trial cross-border solutions.

Greenwashing

• Greenwashing is a term used to describe a false, misleading or untrue action or set of claims made by an organization about the positive impact that a company, product or service has on the environment
• How does it work?- Greenwashing happens when a company makes an environmental claim about something the organization is doing that is intended to promote a sense of environmental impact that doesn’t exist.
• The green claim is typically about some form of positive effect on the environment. It could have some elements of truth but fails to consider the total impact. For example, a car vendor claims that a vehicle is eco-friendly because it is more fuel-efficient, while failing to mention or consider the larger industrial impact of vehicle manufacturing on the environment
• Effects of greenwashing- When a company, product or service is caught or discovered to be greenwashing, there is a general sense of distrust that occurs. Consumers will no longer trust the brand or product in question and might also begin to question other claims.
• How to avoid or prevent greenwashing?– Be specific, Use data, Avoid misleading images, be truthful

Protection of Women from Sexual Harassment (PoSH) Act

• The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, commonly known as the PoSH Act, was passed in 2013.
• It defined sexual harassment, lay down the procedures for complaint and inquiry, and the action to be taken in cases of sexual harassment.
• Background – The 2013 law broadened and gave legislative backing to what are known as the Vishaka Guidelines, which were laid down by the Supreme Court in a judgment passed in 1997.
  • The Vishaka Guidelines defined sexual harassment and imposed three key obligations on institutions — prohibition, prevention, redress. The Supreme Court directed that they should establish a Complaints Committee, which would look into matters of sexual harassment of women at the workplace. The court made the guidelines legally binding.
• Complaints Committee- The PoSH Act subsequently mandated that every employer must constitute an Internal Complaints Committee (ICC) at each office or branch that had 10 or more employees. It defined various aspects of sexual harassment, and lay down procedures for action in case of a complaint. 
• The aggrieved victim under the Act can be a woman “of any age whether employed [at the workplace] or not”, who “alleges to have been subjected to any act of sexual harassment”. In effect, the Act protects the rights of all women who are working or visiting any workplace, in any capacity.

What Constitutes Sexual Harassment Under the PoSH Act?

• Under the 2013 law, sexual harassment includes “any one or more” of the following “unwelcome acts or behaviour” committed directly or by implication:
  • Physical contact and advances
  • A demand or request for sexual favours
  • Sexually coloured remarks
  • Showing pornography
  • Any other unwelcome physical, verbal or non-verbal conduct of sexual nature.  

What is the Procedure for Complaint Under the Act?

• It is not compulsory for the aggrieved victim to file a complaint for the ICC to take action. The Act says that she “may” do so — and if she cannot, any member of the ICC “shall” render “all reasonable assistance” to her to complain in writing.
• If the woman cannot complain because of “physical or mental incapacity or death or otherwise”, her legal heir may do so.
• Under the Act, the complaint must be made “within three months from the date of the incident”. However, the ICC can “extend the time limit” if “it is satisfied that the circumstances were such which prevented the woman from filing a complaint within the said period”.  
• The ICC “may”, before inquiry, and “at the request of the aggrieved woman, take steps to settle the matter between her and the respondent through conciliation” — provided that “no monetary settlement shall be made as a basis of conciliation”.
• The ICC may either forward the victim’s complaint to the police, or it can start an inquiry that has to be completed within 90 days. The ICC has powers similar to those of a civil court in respect of summoning and examining any person on oath, and requiring the discovery and production of documents.
• When the inquiry is completed, the ICC must provide a report of its findings to the employer within 10 days. The report must also be made available to both parties.
• The identity of the woman, respondent, witness, any information on the inquiry, recommendation and action taken, should not be made public.

What happens after the ICC has filed report?

• If the allegations of sexual harassment are proved, the ICC will recommend to the employer to take action “in accordance with the provisions of the service rules” of the company. These may vary from company to company.
• The ICC may also recommend that the company deduct the salary of the person found guilty, “as it may consider appropriate”. The compensation is determined based on five aspects: suffering and emotional distress caused to the woman; loss in career opportunity; her medical expenses; income and financial status of the respondent; and the feasibility of such payment.
• If either the aggrieved woman or the respondent is not satisfied, they may appeal in court within 90 days.

What Protection is available in the Act against a false complaint of Sexual Harassment?

• Section 14 of the Act deals with punishment for false or malicious complaint and false evidence.
• In such a case, the ICC “may recommend” to the employer that it take action against the woman, or the person who has made the complaint, in “accordance with the provisions of the service rules”.
• The Act, however, makes it clear that action cannot be taken for “mere inability” to “substantiate the complaint or provide adequate proof”.