President of India Pranab Mukherjee last week approved the Banking Regulation (Amendment) Ordinance, 2017, which made amendments to the Banking Regulation Act, 1949 (BRA). The Ordinance in effect gives more powers to the Reserve Bank of India which (apparently) hitherto did not exist. While the Ordinance carries the force of law, it will still need to be validated when both Houses of the Parliament meet in the next session. By way of the Ordinance, two new sub-sections namely, 35AA and 35AB have been added to Section 35A. Section 35A is a broadly worded section, which gives the RBI power to issue directions […]

The Reserve Bank of India (RBI) has come out with its draft regulations on cross border mergers, after the Ministry of Corporate Affairs (MCA) notified Section 234 of the Companies Act, 2013 (Companies Act). The Companies Act for the first time permits outbound mergers i.e. merger of an Indian company with a foreign one, since the erstwhile law permitted only inbound mergers. The MCA, on April 13, 2017, notified [pdf] section 234 of the Companies Act which enables outbound mergers as well, and also amended the Companies (Compromises, Arrangement, and Amalgamation) Rules 2017 by inserting Rule 25A which deals with cross border […]

By Sumit and Vaneesa Agarwal SEBI Board met today in Mumbai and took some important decisions, which shows its approach in the coming years. This board meeting was also important as it was the very first board meeting of new SEBI Chairman Mr. Ajay Tyagi along with Whole Time Members Mr. S Raman, Mr. G Mahalingam and Ms. Madhabi Puri Buch. Suvan Law Advisors scrutinizes each item to explain what, why and the path ahead, in the capital and commodities markets. 1. INSTANT ACCESS FACILITY (IAF) IN MUTUAL FUND SCHEMES AND USE OF e-WALLETS FOR INVESTMENT IN MUTUAL FUNDS SEBI Board Decision: With […]

In a significant departure from the ruling passed by the Mumbai Bench of the NCLT, the Chandigarh Bench while admitting an insolvency petition has observed that the definition of a ‘dispute’ under Section 5(6) of the Insolvency and Bankruptcy Code, 2016 (IBC) shall also include, disputes relating to the quality of goods or services even if no suit or arbitration proceedings have been filed in this regard. In the instant case, an application u/s 9(1) of the Code was filed by Surbhi Body Products Limited (Creditor) against Meyer Apparel Limited (Debtor) for an unpaid sum of ₹11,68,834 (plus interest), for purchase orders […]

The Insolvency and Bankruptcy Board of India (IBBI) last week notified two extremely crucial pieces of the (insolvency) puzzle. On 31st March, 2017, the regulations relating to Information Utilities (IU) and Voluntary Liquidation were notified by the government. The simultaneous notification of both, however, is not because one is dependent on the other. Both regulations have come into effect from 1st April, 2017. Information Utilities This is the third leg of the stool envisaged in the Code, after insolvency professionals and insolvency professional agencies. Provisions relating to IUs are contained in Chapter 5 of the Insolvency and Bankruptcy Code, 2016 […]

The Election Commission of India (EC) yesterday issued a ‘communication’ directed at all ‘print and electronic’ media prohibiting them from telecasting or publishing any content which seeks to predict poll outcomes. This communication comes in light of the recent state elections of Goa, Manipur, Punjab, Uttarakhand and Uttar Pradesh. While the EC had issued a similar notification on 4th March directing all media houses to refrain from disseminating any content which would declare the results of exit polls, it was observed that these directions were not adhered to. These directions were, and have again been issued under Section 126A (1) […]

The Ministry of Corporate Affairs, earlier this week, issued a notification significantly relaxing the requirements for applying to the Competition Commission of India (CCI) for combination approval under Section 5 of the CCI Act, 2002. Under Section 5 of the CCI Act, 2002, all ‘combinations’ that exceed certain thresholds are statutorily required to seek CCI approval. These combinations include mergers, acquisitions and control of voting rights by one enterprise over another. Two tests are applied to check whether these ‘thresholds’ are breached. First, whether the assets of the combined entity exceed the stipulated threshold and second, where the turnover of the combined […]

The Mumbai Bench of the NCLT, recently passed an order which underlined what constitutes a ‘curable defect’ under the proviso to Section 9(5) of the Insolvency and Bankruptcy Code, 2016 (Code). In this (possibly) first of its kind case, a petition was filed under Section 9 of the Code by Mrs. Seema Gupta, represented by Zain Mookhi, against Supreme Infrastructure India Ltd. & Ors. (Debtor Company), represented by Farhan Dubash. While the Debtor Company had agreed to construct a farm house for Seema Gupta, the Debtor Company failed to do so. Thereafter, amount to the extent of only ₹1.14 crore were refunded […]

The Mumbai Bench of the NCLT has recently passed an order admitting an insolvency petition which highlights a (possible) serious lacunae in the Insolvency and Bankruptcy Code, 2016 (Code). Essar Projects India Ltd. (Essar), represented by Cyril Amarchand Mangaldas, had filed an application against MCL Global Steel Pvt. Ltd. (MCL) in its capacity as an operational creditor, under Sections 8 & 9 of the Code read along with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of corporate insolvency resolution process. An aggregate disputed amount of ₹9,10,60,788 remained unpaid by MCL to Essar, […]

Finance Minister Arun Jaitley’s Budget speech hinted at the reduction in the number of tribunals, and it has emerged that the Centre has done just that with the recent passing of the The Finance Amendment Bill, 2017. The Amendment Bill, which is longer than the original Finance Bill itself, has revealed, among other things, the list of tribunals that are sought to be eliminated and the absorption of their responsibilities. The ninth schedule of the amendment bill provides a list of the tribunals due to be replaced. Here is a list collated by PRS Legislative: What is the problem with the merging? There appear […]

While no stay has been granted on the promotional offers offered by Reliance Jio, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has, indicted Telecom Regulatory Authority of India (TRAI) for its inaction inasmuch as there are inconsistencies in the filings done. Airtel and Idea have been fighting a battle against Jio’s promotional offers, and TRAI’s lack of concern on the violations that these offers have triggered. Airtel had basically approached TDSAT on two grounds: That, TRAI has not been fair in its dealing with Jio to the extent that Jio has been (allegedly) violating various TRAI Tariff orders and the consumer protection […]

In a classic example of regulatory turf war, market watchdog Securities and Exchange Board of India (SEBI), in a recent letter to the banking regulator Reserve Bank of India (RBI), has expressed its displeasure over RBI’s intervention in trading of HDFC’s shares. Trading gone wrong As a preface, the FDI Policy sets the bar at 74% for foreign investment in private sector banks. As per RBI rules, RBI puts stocks which cross 72% threshold on its watchlist and opens up free trading as and when the shareholding falls below 72%. On 16th of February, conversion of some ESOPs in HDFC […]

Following its letter addressed to Cyrus Mistry on December 26 2016, Tata Sons has filed a ‘complaint’ with the Securities and Exchange Board of India (SEBI) against Cyrus Mistry for having violated Regulation 3(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (Insider Trading Regulations). Regulation 3(1) of the Insider Trading Regulations restricts insiders from communicating or providing any ‘unpublished price sensitive’ information to any other person, including other insiders ‘except in furtherance of legitimate purposes’. As per the ‘complaint’ filed with SEBI, Tata Sons has alleged that petition filed by Cyrus Mistry’s investment entities in the National Company […]

The High Court of Bombay has disposed of the writ petition filed by Innoventive Industries challenging the vires of the Insolvency & Bankruptcy Code, 2016 (Code). In December 2016, a petition at the Mumbai Bench of National Company Law Tribunal (NCLT) was filed by ICICI Bank in its capacity as a financial creditor under Section 7(1) of the Code against Innoventive Industries. The petition was for initiation of a insolvency resolution process against Innoventive, following an outstanding debt of ₹1,019,177,034. After the petition was filed by ICICI, the NCLT asked the ICICI’s counsel, Zal Andhyarujina if he was opposing the debtor’s right to be […]

This year’s budget made a short yet significant reference to amendments that will be introduced in the Arbitration Act, 1996 to ‘streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, public-private partnerships and public utility contracts’. This, however, is not the first time that such reforms were suggested in the budget speech. Last year’s budget speech, also, proposed a ‘Public Contracts (Resolution of Disputes) Bill’ which, inter alia, made provisions for institution of separate tribunals for resolution of such disputes. Last year also witnessed, the constitution of India’s first institutional arbitration centre, the MCIA, and a 3-day […]

In what could be a very significant initiative, the Central government is exploring the possibility of emphasising on pro-bono legal assistance as a criterion for appointment of lawyers as High Court judges. Towards this end, it is planning to create a database of lawyers who would be ready to provide pro-bono assistance to needy litigants. Secretary of Department of Justice, Snehlata Shrivastava has addressed a letter to Chairman of Bar Council of India (BCI) Manan Kumar Mishra on November 10, last year setting out this plan of the government “The government is exploring the possibility of laying emphasis on pro-bono […]

Senior Advocates Harish Salve and Darius Khambata will be part of the law panel at the India Conference to be organised at Harvard, USA. The conference will be held from February 11- February 12. The Harvard India Conference is a student-run conference at the Harvard Business School & Harvard Kennedy School. The conference this year is themed around “India: The Global Growth Engine”. The law panel will focus on international arbitration regime in India owing to the increasing need for faster and alternate methods of dispute resolution mechanisms. Apart from Salve and Khambata, the law panel will also include Dipen […]

The Securities and Exchange Board of India (SEBI) has passed an interim order ‘restraining’ Vijay Mallya, former Chairman of United Spirits Limited (USL), from holding position as a ‘Director’ or ‘Key Managerial Person’ (KMP) of any listed company or to deal in securities market, along with six others. Six others include: Ashok Capoor, Managing Director, who has also been barred from being a director or KMP in a listed company; P.A Murali, Executive Director & CFO; Swomiyanarayanan, Assistant VP – Accounts; S.N. Prasad, Senior VP- Finance and Accounts; Paramajit Singh Gill, President, All India Operations and; Ainapur S.R., Divisional VP- […]

The Telecom Regulatory Authority of India (TRAI), in its most recent consultation paper, has sought stakeholder’s views on governing Net Neutrality (NN) and allied issues. This ‘consultation paper’ comes based on the responses received on the ‘pre-consultation paper’, issued in May last year, which discussed issues of NN and traffic management. Among other things, the paper proposes a legislation for NN, and/or an umbrella regulation on NN. As far as the wider issue of NN is concerned, there have been several rounds of discussions, this being the fifth one, and also a regulation to ban discriminatory pricing. While the issue […]

In the first set of substantial legislative changes post the November 8 announcement of demonetisation, the government has passed one Act and two Ordinances directly related to demonetisation. In addition to the Taxation Laws (Second Amendment) Act, the government has also promulgated the Specified Bank Notes (Cessation of Liabilities) Ordinance, and the Payment of Wages Act (Amendment) Ordinance. This is what they say. 1. The Taxation Laws (Second Amendment) Act [Presidential Assent on December 15] Unlike the other two legislations mentioned above, this legislation was passed by Parliament, albeit in a manner that was far from ideal. Amongst other things, this amendment increases […]

The central government has constituted a High Level Committee to review the institutionalisation of arbitration mechanisms in India. The Committee consists of legal luminaries, including retired judges and Senior Advocates and will be headed by retired Supreme Court judge, Justice BN Sri Krishna. The other members of the Committee are retired Supreme Court judge Justice RV Raveendran, sitting Delhi High Court judge, Justice S Ravindra Bhat, Senior Advocates KK Venugopal and Indu Malhotra, Additional Solicitor General PS Narasimha and Director of Vidhi Centre for Legal Policy, Arghya Sengupta. The terms of reference for the High Level Committee are given below: […]

After two rounds of discussions with various stakeholders, the Software Freedom Law Centre, India recently conducted an event for the launch of its report on ‘Online Harassment’ [pdf]. The crux of this issue can be conceptually associated with the right to freedom of speech and expression, which is, widely considered one of the most ‘sacrosanct of fundamental human rights’. This right, however, more often than not, crosses the line to the point of ‘wanton abuse’. At the very outset, it is important to distinguish between the different manifestations of harmful speech online, which are often used interchangeably. The report recognises the […]

With the phasing out of the SICA, the Government is all set to usher in the new Insolvency & Bankruptcy Code (Code). Several parts of the Code are gradually being notified in a phased manner, and the insolvency resolution process is now in place. In November, the rules relating to Insolvency Professionals (IPs) and Insolvency Professional Agencies (IPAs) were notified. The three IPAs that have been registered so far are, the Indian Institute of Insolvency Professionals of ICAI, the ICSI Insolvency Professionals Agency and the Insolvency Professional Agency of ICAI, which are entities registered under Section 8 of the Companies Act, 2013. […]

By Sonam Chandwani & Tanaya Desai  The Securities and Exchange Board of India (SEBI), in its board meeting held on November 23, 2016, introduced amendments to the SEBI (Alternative Investment Funds) Regulations, 2012, thus ushering in a more liberalised and progressive era for fund-raising in start-ups as also enhancing the scope of investment of foreign investors in unlisted debt securities. In order to further develop the alternative investment industry and the startup ecosystem in India, SEBI, in March 2015, constituted a Committee of experts drawn from across market participants called the “Alternative Investment Policy Advisory Committee” (“AIPAC”) under the chairmanship […]

Bar & Bench will bring you the latest regulatory and policy updates from different ministries and regulatory authorities. In the this edition of the Bar & Bench Regulatory Updates, we analyse the latest updates by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). RBI Rules relating to withdrawal, exchange and use of demonetised currency The RBI has issued several notifications since the first one issued on 8 November, following which ₹ 500 & 1000 notes ceased to be legal tender. These notifications appear to be a periodical response to the unanticipated chaos that is being caused due to demonetisation of the […]

In an event that took more than a decade to fructify, the Ministry of Finance vide a notification [pdf] dated 25th November 2016, has repealed the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) with effect from 1 December this year. In 2003, the Sick Industrial Companies (Special Provisions) Repeal Act was enacted which gave the Central Government the power to repeal SICA, and dissolve the BIFR. However, the Act was never notified. Why did it take so long? Alok Dhir, founding partner at Dhir & Dhir Associates, explains, “When the [Sick Industrial Companies (Special Provisions) Repeal] Act was passed in […]

Bar & Bench will bring you the latest regulatory and policy updates from different ministries and regulatory authorities. In the this edition of the Bar & Bench Regulatory Updates, we analyse the latest circulars by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). SEBI Tightens norms for credit rating agencies In a bid to boost transparency, SEBI has tightened the disclosure norms [pdf] for credit rating agencies (CRA) by inter alia standardising the rating criteria, method of public disclosures, the internal functioning of rating committees and disallowing the suspension of ratings. In order to avoid ‘rating shopping’ […]

The Indian arbitration sector is seeing an upswing. And how. The past year has not only seen several amendments to arbitrations laws (and consequent litigation), but also the establishment of the MCIA. Just two weeks back, the country saw a 3-day conference on ‘Strengthening Arbitration and Enforcement in India’ organised by Niti Ayog. Recently, the government has also revealed a list of firms shortlisted for representing the country at an international stage as per a PTI report published on LiveMint. In a first of a kind move by the Ministry of Finance, based on a Request for Proposal (RPF) issued earlier in January […]

Apart than the much discussed Speech Bill, which seeks to decriminalize defamation, the upcoming winter session of the Parliament will also table an amendment to the Narcotics Drugs and Psychotropic Substances (NDPS) Act that will effectively ‘legalize’ the recreational use of cannabis. In a country like India, which still struggles with enforcement of fundamental rights, Dr. Dharamvir Gandhi, a Member of Parliament who has been suspended from the Aam Aadmi Party, has introduced the NDPS (Amendment) Bill, 2016 (Bill). The Bill has been cleared by the legislative branch of the Parliament i.e. the contents of the Bill have been vetted to ensure its […]

Bar & Bench will bring you the latest regulatory and policy updates from different ministries and regulatory authorities. In the this edition of the Bar & Bench Regulatory Updates, we analyse the latest circulars by the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA). RBI RBI issues operating guidelines for Payments, Small Finance Banks The RBI has issued operating guidelines for payment banks[pdf] and small finance banks[pdf] in India, intended to improve financial inclusion in the country. These guidelines have largely been drawn from the Basel standards. For both these differentiated financial entities, […]