Govt Introduces New Rule That Lets Businesses Fix First‑Time Mistakes Before Facing Penalties

The Department of Consumer Affairs has introduced the Improvement Notice mechanism under the Legal Metrology Act, 2009 via the Jan Vishwas (Amendment of Provisions) Act, 2026. This reform allows businesses committing specified first‑time procedural or regulatory lapses to correct them before facing penalties, thereby reducing litigation and promoting Ease of Doing Business while safeguarding consumer interests.

The reform encourages voluntary compliance, reduces unnecessary litigation and compliance burden, while ensuring that strict action continues against fraud, tampering and repeated violations to safeguard consumer interests.

What is the Improvement Notice Mechanism?

• Legal Metrology Officer may issue an Improvement Notice for specified first‑time non‑compliances.
• The notice identifies the deficiency and provides reasonable time to rectify.
• If corrected, penal proceedings are avoided.
• Failure to comply or repeated violations attract strict enforcement.
• Represents a shift to trust‑based regulation.

Why This Reform Matters

• Encourages voluntary compliance and timely self‑correction.
• Reduces unnecessary litigation from inadvertent errors.
• Lowers compliance costs and improves regulatory certainty.
• Allows authorities to focus on fraud and repeated violations.
• Supports the vision of “Minimum Government, Maximum Governance.”

Businesses Covered

• Manufacturers
• Importers
• Packers
• Dealers
• Repairers
• Traders
• MSMEs

Provisions Covered

• Section 25–29: Use, manufacture, or sale of non‑standard weights/measures.
• Section 31–32: Non‑production of documents, failure to obtain model approval.
• Section 34–36(1): Sale/delivery using non‑standard weights or packaged commodities.
• Section 38–39: Import violations.
• Section 41(1), 41(2): Furnishing false information/returns.
• Section 45–47: Manufacture, repair, or sale without registration; tampering with certificates.

Provisions Covered under the Improvement Notice Mechanism

The Improvement Notice mechanism applies to specified first-time procedural and regulatory non-compliances relating to:

• Registration requirements
• Documentation and record maintenance
• Model approval
• Manufacture, sale and repair of weights and measures
• Import of weights and measures. 
• Transactions and packaged commodities. 
• Furnishing statutory information and returns

Government Clarifications

• The mechanism does not dilute consumer protection.
• Applies only to specified first‑time procedural/regulatory non‑compliances.
• Fraud and repeated violations will continue to face strict penal action.

Broader Context

• Part of Jan Vishwas Act 2026 reforms.
• Includes transition from licensing to registration for weights and measures businesses.
• Expansion of Government Approved Test Centres (GATCs).
• Launch of e‑Maap digital portal for registrations, model approvals, and enforcement services.

Conclusion

The Improvement Notice mechanism is a landmark regulatory reform that balances business facilitation with consumer protection. It reduces compliance burden for honest businesses while ensuring strong enforcement against fraud and repeated violations.

IBC Reform Spurs ₹4.32 Lakh Crore Recoveries, Boosting Investor Trust in India

India’s Insolvency and Bankruptcy Code (IBC) has enabled creditors to recover nearly ₹4.32 lakh crore by March 2026, making it one of the most impactful financial reforms in recent decades. The 2026 Amendment Act strengthens timelines, creditor oversight, and procedural clarity, boosting investor trust and reinforcing India’s credit discipline.

The impact of the IBC on credit discipline has also been corroborated by a comprehensive study conducted by IIM Bangalore. The study has analysed data on corporate loan accounts, CIRP, firm-level financial data and NPA data. The study finds that IBC has prompted borrowers to adhere to stipulated loan payment schedules. During the period under review, the study notes a significant reduction in loan accounts deemed ‘Overdue’, both in terms of the Rupee amount as well as in terms of the number of accounts. 

Evolution of India’s Insolvency Framework

• Pre-IBC era: Fragmented laws like the Companies Act, SICA, SARFAESI, and Debt Recovery Tribunals led to prolonged insolvency cases and deteriorating asset values.
• IBC 2016: Introduced a unified, creditor-driven, time-bound framework with the Corporate Insolvency Resolution Process (CIRP).
• Institutional ecosystem: NCLT, NCLAT, and IBBI oversee resolution processes.

Recovery Outcomes Under IBC

• ₹4.32 lakh crore realised through approved resolution plans till March 2026.
• 8,987 CIRPs admitted; 1,419 corporate debtors resolved via plans, with many more settled or withdrawn under Section 12A.
• Banking sector impact: RBI’s 2024–25 report shows IBC contributed ₹54,528 crore (52.4%) of total recoveries by Scheduled Commercial Banks.
• IIM Ahmedabad study: Resolved firms saw 76% sales growth, 50% rise in employee expenses, 130% increase in capital expenditure, and tripled market valuations.
• IIM Bangalore study: Noted 3% reduction in cost of debt and improved governance via independent directors.

Series of Legislative Amendments in IBC

• 2018 Amendment: Allowed withdrawal of insolvency applications under Section 12A, changed voting thresholds for CoC, and tightened eligibility criteria under Section 29A.
• 2019 Amendment: Introduced an overall 330‑day limit for completing insolvency resolution, reinforcing the time‑bound nature of the Code.
• 2020 Amendment: Provided immunity to corporate debtors post‑resolution and suspended initiation of insolvency proceedings for certain defaults during COVID‑19.
• 2021 Amendment: Launched pre‑packaged insolvency resolution process (PPIRP) for MSMEs, enabling faster debtor‑in‑possession resolution with creditor oversight.
• 2026 Amendment: Strengthened timelines (14‑day admission rule), expanded creditor role into liquidation, defined key terms like “service provider” and “fraudulent trading,” allowed inclusion of guarantor assets, and introduced creditor‑initiated insolvency process.

Together, these amendments transformed the IBC from a consolidated insolvency law in 2016 into a dynamic framework emphasizing speed, creditor control, fairness, and revival of viable businesses.

Key Features of the IBC (Amendment) Act, 2026

• Faster timelines: NCLT must admit insolvency applications within 14 days.
• Creditor-led process: Creditors can initiate insolvency directly under defined safeguards.
• Expanded creditor role: CoC supervises liquidation, ensuring continuity of oversight.
• Clearer definitions: Terms like “service provider,” “avoidance transaction,” and “fraudulent trading” codified.
• Moratorium strengthened: Prevents parallel recovery actions via guarantees.
• Fair treatment: Dissenting creditors guaranteed at least liquidation value or resolution plan proceeds.
• Asset expansion: Guarantor assets can be included in resolution.
• Structured liquidation: Defined timelines and creditor supervision make exit orderly.

Why This Matters for Investors

• Boosts confidence: Predictable, time-bound recoveries reduce uncertainty.
• Strengthens credit discipline: Borrowers adhere to repayment schedules, reducing NPAs.
• Improves governance: Independent oversight and creditor control align with global best practices.
• Revival over liquidation: Focus on value maximisation ensures viable businesses survive.

Risks and Challenges

• NCLT capacity constraints: Case backlogs remain a concern.
• Litigation delays: Appeals may still prolong resolution.
• Implementation gaps: Effectiveness depends on consistent enforcement.

Conclusion

The IBC 2016 and its 2026 Amendment Act together mark a decisive shift in India’s insolvency regime. By enabling ₹4.32 lakh crore recoveries, strengthening creditor control, and improving procedural clarity, the reforms have boosted investor trust and positioned India’s financial system on stronger footing.

IBBI Proposes Reform of Liquidation: Ending Inefficient 'Going Concern Sales'

When a business is in financial trouble and can't pay its debts, it might go into liquidation. This means the company is closed down and its assets (things it owns) are sold to pay off its debts. Sometimes, instead of selling everything piece by piece, the business is sold as a whole to keep it running.

This is called a "going concern sale."

The concept of "going concern sales" in liquidation has sparked significant debate. Essentially, it involves selling a company as a whole, rather than breaking it up and selling its assets individually. This approach aims to preserve the business's value and potentially save jobs. However, critics argue that it often leads to unnecessary delays, legal uncertainties, and financial inefficiencies.

The issue is that this process can take a long time and often doesn't help creditors (people or companies the business owes money to) get their money back. In fact, it might make things worse by causing more legal problems and increasing costs.

The Indian government is considering changing the rules to make liquidation faster and more efficient, so creditors can recover more of their money.

The Insolvency and Bankruptcy Board of India (IBBI)'s recent discussion paper has taken a decisive step in addressing these issues, proposing reforms to streamline the liquidation process and maximize recovery for creditors. If implemented, these changes could ensure that liquidation serves its intended purpose more effectively.

India's current framework allows liquidators to keep entities artificially alive, creating a scenario where resources are spent on maintaining a business that has already been deemed unviable. The Insolvency and Bankruptcy Board of India (IBBI) has proposed removing the "sale as a going concern" option from Liquidation Regulations to ensure that liquidation serves its intended purpose.

Empirical data suggests that "going concern" sales in liquidation take just as long as regular dissolution but deliver worse outcomes. Creditors recover only about 2.4% of claims compared to 3.7% in standard dissolutions. This process can fuel legal disputes, inflate costs, and enable bidders to game the system by waiting for price reductions.

For more detailed insights, you can read the full article [here]