THE SCOPE OF GEO-TAGGING OF IMMOVABLE ASSETS IN THE CORPORATE INSOLVENCY RESOLUTION PROCESS

Chinna Aswathy Abraham

Associate, Dispute Prevention & Resolution

“Geo-tagging refers to the process of adding geographical identification like latitude and longitude to an asset. The information included in a geo-tag may include place co-ordinates, bearings, altitude, distances, or even place names.”(1) This helps users access location specific information about an asset at the click of a few buttons, without having to physically travel to the said location.

The Indian government has been using geo-tags to monitor assets in several of its national rural development programmes- such as the Mahatma Gandhi National Rural Employment Guarantee Act (‘MGNREGA’), the Integrated Watershed Management Programme, Per Drop More Crop Programme, Pradhan Mantri Awaz Yojana (PMAY), Rashtriya Krishi Vikas Yojana (RKVY) and Pradhan Mantri Gram Sadak Yojana (PMGS) (2) . In fact, last year, the government launched a “new geospatial planning portal, ‘Yuktdhara’, which is to serve as a repository of assets (geotags) created under the various national rural development programmes” (3). “This was a result of the joint efforts of the Indian Space Research Organization (ISRO) and the Ministry of Rural Development made towards realizing a G2G service for rural planning in support of decentralised decision making.”(3)

Recently, the RBI released a framework for geo-tagging of payment system touch points deployed by merchants to receive payments from their customers (4). This will provide insight on regional penetration of digital payments. On the other hand, the City and Industrial Development Corporation (‘CIDCO’) of Navi Mumbai has begun utilizing this technology under its various plot sale schemes.(5) Additionally, geo-tags will also help monitor infrastructure density, assist in town planning and preventing illegal encroachments and also in disaster management. Other governmental agencies within the Forestry, Archeology and Tourism Departments have also been using this technology for various purposes (2).

In the context of Companies, the Ministry of Corporate Affairs through a Notification dated 07.04.2017 (6) “introduced the concept of geo-tagging to track down tangible assets on which charge has been created and registered with the Registrar of Companies” (7). Following the Notification, it is now mandatory to include details such as the latitude, longitude of the asset while submitting Forms CHG-1, CHG-4 and CHG-9.

The newest area where the utility of this technology is being explored is the ‘Corporate Insolvency Resolution Process’ (‘CIRP’) under the Insolvency & Bankruptcy Code, 2016. The Insolvency & Bankruptcy Board of India (‘IBBI’) in its “Discussion Paper On Changes In The Corporate Insolvency Resolution Process To Reduce Delays And Improve The Resolution Value” (‘Discussion Paper’)(8) dated 27.06.2022, discussed the possibility of geo-tagging the immovable assets of the Corporate Debtor.

Under the Insolvency & Bankruptcy Code, 2016 (‘Code’) , the first and foremost duty of the Resolution Professional is to preserve and protect the assets of the Corporate Debtor and manage its operations as a going concern. For this purpose, the Resolution Professional is to immediately take custody and control of all the assets of the Corporate Debtor. He is thereafter required to create an inventory of the asset, which serves as the basis for carrying out his other functions as the Resolution Professional- such as valuation, preparation of Information Memorandum, management of these assets and dealing with any litigation on these assets.

Unfortunately, more often than not, the Resolution Professionals find it difficult to take stock of the assets of the Corporate Debtor, which is usually situated in a faraway factory premise, as opposed to its registered office which may be located in the city. It has also been observed that in several cases, due to situations of labour unrest, the Resolution Professional is prevented from accessing these premises altogether. The non-cooperation on the part of the erstwhile management and their service providers make this exercise even more tedious. Consequently, there is lack of complete information about the Corporate Debtor’s assets, until the Resolution Professional is able to finally take full possession of these assets.

To tackle this situation and to strengthen the information base on these assets, the IBBI in its Discussion Paper has suggested the mandatory geo-tagging of immovable assets of the Corporate Debtor by the Insolvency Professional, wherever possible. Such records can also be made part of the valuation exercise and the Information Memorandum to enable the Committee of Creditors and Resolution Applicants to make an informed choice.

For this purpose, it has been proposed that the Explanation under Regulation 36(2) (a) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter ‘CIRP Regulations’) be amended to read as follows:

Explanation: ‘Description’ includes the details such as date of acquisition, cost of acquisition, remaining useful life, identification number, depreciation charged, book value, and any other relevant details. Further, such description must include the details of the immovable assets along with geo-tagging of all places at which such assets are situated.

Comments and suggestions on the Discussion Paper were sought from the public and other stakeholders until 17.07.2022, thereafter which a gist of these comments/suggestions were published on the website of the IBBI (9). The same have been enumerated below:

1. The words “wherever possible” is not mentioned in the proposed Regulation. The same needs to be suitably included in the Regulation.

1. ii. It should be responsibility of the promoters / Board of directors of the CD to provide first level base Fixed Assets register to the RP within 14 days of the commencement of the CIRP.

With respect to point (ii) above, it has been clarified by the Board that the same is already provided for in the Code.

In addition to the comments received vide the portal of the IBBI, comments were also received from Insolvency Professional Agencies, Insolvency Professionals, Ministry of Corporate Affairs, PHD Chamber of Commerce & Industry etc. Interestingly, while many suggestions/comments were received in favour of the proposed Amendment, none were received against the same.

The unanimous support for the proposal is testament to the fact that stakeholders are keen on leveraging technology to aid the various aspects of the CIRP. The IBBI would have to shed light on what technology would be adopted for the geo-tagging of the immovable assets and whether the expenses incurred by the said Resolution Professional would be included in the CIRP costs.

REFERENCES:

1. ‘Geo-Tagging’, Assetcomply <https://assetverificationtagging.com/geo-tagging-services/> accessed on 10^th September 2022.

• ‘How Geo-tagging Is Introducing Transparency In MGNREGA Scheme’, Swarajya <https://swarajyamag.com/infrastructure/how-geo-tagging-is-introducing-transparency-in-mgnrega-scheme> accessed on 10^th September 2022.

• ‘New portal launched to facilitate geospatial planning of MGNREGA’, The Economic Times, <https://economictimes.indiatimes.com/news/india/new-portal-launched-to-facilitate-geospatial-planning-of-mgnrega-assets/articleshow/85582209.cms?from=mdr> accessed 10^th September 2022.

• ‘Framework for Geo-Tagging of Payment System Touch Points’, Reserve Bank of India <https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53469> accessed on 27th  September, 2022.

• ‘CIDCO starts geo-tagging land parcels in Navi Mumbai’, Economic Times <https://economictimes.indiatimes.com/industry/services/property-/-cstruction/cidco-starts-geo-tagging-land-parcels-in-navi-mumbai/articleshow/85540973.cms?from=mdr> accessed on 27^th September, 2022.

• Ministry of Corporate Affairs Notification No. G.S.R. 339(E) dated 07.04.2017 <https://indiacorplaw.in/wpcontent/uploads/2017/05/companiesRegistrationofChargesAmendmentRules_08042017.pdf> accessed 10^th September 2022.

• Umakanth Varottil, ‘Geotagging: A New Way to Track Charged Assets’, IndiaCorpLaw <https://indiacorplaw.in/2017/05/geotagging-new-way-to-track-charged.html > accessed 10^th September, 2022.

• Insolvency & Bankruptcy Board of India ‘Discussion Paper On Changes In The Corporate Insolvency Resolution Process To Reduce Delays And Improve The Resolution Value’ <https://ibbi.gov.in/uploads/public_comments/CIRP%20Discussion%20paper%20June%202022.pdf> accessed 10^th September, 2022.

• Gist Of Public Comments On Consultation Paper On Issues Related To Reducing Delays In The Corporate Insolvency Resolution Process, Improving Resolution Value And Views Of The Division Thereon < https://ibbi.gov.in//uploads/public_comments/Comments-on-Comments-21092022.pdf> accessed on 27^th September, 2022.