by Satyajit Gupta   Introduction It is not uncommon for parties to a commercial dispute in India to initiate criminal action to pressurize the other side to reach a favourable settlement. The motivation to do so could be due to many reasons – including speedier remedies from a criminal court and of course the threat and nuisance value of a criminal action vis-à-vis a civil one. Sometimes a case may apparently look to be of civil nature or may involve a commercial transaction but such disputes may also contain ingredients of criminal offences and such disputes have to be entertained notwithstanding […]

by Arijit Chakravarty and Gohan Raj Background As early as in 2014, in the case of PMP Auto Components (P) Limited TS-263-AT-2014 (Mum) the tax authorities had made a secondary adjustment on account of interest chargeable on loan transaction with Associated Enterprise (AE) as the tax payer assessee had not realized any amount of interest from additional capital investment made to its AE. The same was deleted by the Dispute Resolution Panel (DRP). The said deletion was challenged by Revenue before the tribunal, which agreed with the view of the DRP and upheld the deletion in respect of the secondary […]

By Nilesh Chandra and Abhinav Mishra INTRODUCTION With the volume of stressed assets in India almost doubling in last five years, Asset Reconstruction Companies (ARCs), which act as intermediaries between the borrower and the lender, have been bestowed with the imperative responsibility to clean-up stressed assets by adopting effective resolution and recovery mechanisms and relieve lenders from the mountainous burden. Backed strongly by the RBI, ARCs are a creation of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002 more than a decade ago. Despite the RBI’s encouraging measures towards promoting sale of stressed […]

By Arijit Chakravarty Outbound investments by Indian Companies have grown over the years. These investments are made in jurisdictions having benefits by way of low tax rate, simple regulatory regime, strategic location and business advantage and other beneficial criteria. Often the investments are structured as SPVs. In the context of such outbound investments by Indian entities, the concept of POEM becomes relevant, which would go to determine the residential status in India of such SPVs. In this context, while the draft guidelines for determining POEM of a company was issued around December 2015, the Central Board of Direct Taxes (CBDT) […]

By Satyajit Gupta & Rodrigo Ferraz de Camargo Background Brazil is the world’s fifth largest country and with an estimated population of 200 million, it is also the world’s fifth most populous country after China, India, USA and Indonesia. Brazil is a member of BRICS[1], an association of five major emerging national economies. Generally speaking, Brazil was a relatively closed economy in the 1970s and 1980s. However, similar to India, liberalization took place in the 1990s, resulting in the lifting of trade barriers and protective practices and the local manufacturers are now more competitive internationally. Brazil has rich biodiversity and abundant […]

The Union Budget 2017-18 (“Budget“), presented by the FM for the banking and financial service sector has been a departure from the conventional practice. Yet, this was not entirely unexpected considering several other startling policy/regulatory initiatives and reforms, such as the ground breaking reforms in restructuring, long-pending implementation of the Insolvency and Bankruptcy Code, amendments in the SARFAESI and Debt Recovery Tribunal Acts and of course the demonetization that the sector has already witnessed in the year 2016-17. The statement of the FM prior to unveiling of the budget “The current Financial Year is not a conventional year as many […]

By Rahul Arora & Abhinav Mishra The EPC market size in India has witnessed continued expansion over the past lustrum. Much akin to other financially stable countries requiring substantial infrastructure development, the Indian sub-continent has always provided a host of investment and participation opportunities to engineering, construction and supply-side players across the globe, especially with the government’s growing interest in the development of renewable energy. Under the budget of 2017-18, a rather voluminous inflow of investments has been allocated to the infrastructure sector. Expectedly therefore, the Engineering Procurement Construction (EPC) vertical of the sector is poised to gain from this […]

Aniket Prasoon & Abhishek Kumar The Central Electricity Regulatory Commission by its order dated October 14, 2016 has rejected NTPC’s prayer to grant a separate trading licence. However, it has allowed NTPC to utilize the trading licence already granted to its wholly owned subsidiary – NTPC Vidyut Vyapar Nigam Limited. Set out below is a summary of the order, our analysis and observations on the same. Brief Background NTPC Vidyut Vyapar Nigam Limited (NVVN) was designated as the nodal agency since 2010 under the Jawaharlal Nehru National Solar Mission (JNNSM), now called as National Solar Mission (NSM), for buying power from […]

 – Shradha Sachdev (With inputs from Satyajit Gupta) Introduction Traditionally, India has had a bank-dominated financial services sector. However, the importance of non-banking financial companies (NBFCs) has been recognized, not only as a supplement to mainstream banking in meeting the increasing financial needs of the corporate sector but also for delivering credit to the unorganized sector and to small local borrowers. The RBI Act broadly defines a NBFC as a financial institution that is into lending or investment or collecting monies under any scheme or arrangement but does not include any institutions which carry on agricultural activity, industrial activity, trading and purchase […]

by Sharath Chandrasekhar The peer to peer (“P2P”) lending sector, which currently remains largely unregulated, has undergone substantial growth and has eased the process of financing by facilitating borrowers and lenders (primarily individuals) to connect with each other conveniently on virtual platforms (“P2P Platforms”). P2P Platforms offer an avenue for financing which is distinct from conventional methods like bank financing, by doing away with snags such as complicated application and appraisal processes. However, this sector is presently hampered due to certain legal stipulations that restrict the transfer of the funds relating to the P2P lending transactions through electronic modes, which […]

In this edition of The Viewpoint, the team from Advaita Legal shares their thoughts on the demand and recovery provisions contemplated under the Goods and Services Bill of 2016.  Introduction: This note focuses on the provisions dealing with the demands and recovery provisions which are encapsulated under Chapter XIV. We have dealt with the relevant sections in the aforesaid chapter and compared the same with the corresponding provisions (if any) stipulated under the Finance Act, 1994 (“Finance Act”) and a sample VAT legislation [we have used the Delhi Value Added Tax Act, 2004 (“Delhi VAT Act”) as the sample for […]

Promoters of Indian listed companies have generally been viewed with a jaundiced eye, if and when a material decision is taken at their behest, with respect to their company. The recent notification of provisions in relation to dissenting shareholders, by way of insertion of chapter VI-A in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 appear to further and, in a way, institutionalize this perception. These provisions require the promoters or persons in control of the listed company to provide shareholders who vote against a proposed variation in fund raising objects or contracts entered into by the company […]

Introduction When a Court restrains a party to a suit or proceeding before it from instituting or prosecuting a case in another Court including a foreign Court, it is known as an anti-suit injunction. Anti-suit injunction is specie of injunctions and is governed by the principles governing grant of injunction, an equitable relief, by a Court. Of the various forms of provisional relief in the context of international litigation, none has sparked as much interest and controversy as the international anti-suit injunction.[1] It is a common ground that the Courts in India have power to issue an anti-suit injunction to […]

Chapter XVII of the Negotiable Instruments Act, 1881 (“Act”), including Sections 138 142, was introduced by the Parliament of India in 1988 in order to improve the acceptability of cheques by criminalizing the issuance of cheques by a person without sufficient funds in his bank account. Position of law before and after the decision of the Apex Court in Dashrath Rupsingh Rathod v. State of Maharashtra and Anr. In the landmark case of Dashrath Rupsingh Rathod v. State of Maharashtra and Anr. (“Dashrath”), a 3 judge bench of the Supreme Court of India extensively examined the ingredients of Section 138 […]

The long awaited Companies Act, 2013 (Act) was notified by the Ministry of Corporate Affairs (MCA) on August 29, 2013 with certain sections coming into force from September 12, 2013 and majority of the sections coming into force from April 1, 2014. While the Act introduced significant changes in the provisions related to governance, disclosure norms, auditors and mergers & amalgamation and introduced new concepts, inter-alia, such as one person company, class action suits and corporate social responsibility, it also faced criticism from various stakeholders due to the lack of clarity in several sections of the Act and rules framed […]

Modern commercial transactions often lead to complex legal questions. Usually, the shareholders of a company enter into a shareholders agreement setting out in detail the rights and obligations. These agreements, more often than not, contain an arbitration clause. In view of the judgment of V B Rangaraj v. V B Gopalakrishnan,[1] the company concerned is also made a party to such an agreement and the relevant provisions of the shareholders agreement are reflected in the Articles of Association. This has led to a debate as to whether such a dispute between the shareholders regarding to oppression and mismanagement ought to […]

Minority Squeeze Outs – reduction of share capital of Cadbury India Limited In a matter involving the reduction of share capital of Cadbury India Limited (“Cadbury India”), a recent judgment of the Bombay High Court has addressed important issues relating to the squeeze out of minority shareholders. As part of a Group policy to operate only though branches or wholly-owned subsidiaries, Cadbury India undertook a series of buy-backs and open offers from its shareholders. The current judgment was in relation to Cadbury India seeking sanction of the Court for a reduction of its share capital, previously approved by a majority […]

Plea Bargaining in India Plea bargaining was viewed conservatively by the Indian courts prior to 2005.[1] The principle justification for this conservative approach was that a crime is a wrong committed against the society at large[2] and a system, such as plea bargaining, which allows the accused to “bargain” away his guilt should not be allowed. Earlier, the courts in India permitted leniency to be shown in the form of lighter sentences being given depending on the facts of each case, however, outrightly rejected the court being a party to a bargain.[3] On the other hand, there also existed a […]

There is no doubt that one of the key challenges for the new government would be kick starting investment in infrastructure, which is currently estimated at INR 40.9 trillion. Most new infrastructure projects are proposed to be based on Public Private Partnership (PPP) model and funded by the private sector. However, India has consistently fallen short of meeting such targets in the last few years. Implementation issues are faced by developers at all stages, from development stage (such as securing consents and approvals, land etc.), to securing financing for the project and finally, executing it within cost and time. To […]

INTRODUCTION The recent decision of the Supreme Court of India in Swastik Gas v. Indian Oil Corporation Limited[1] (“Swastik Gas”) has brought a degree of clarity to the vexed question of the interpretation of jurisdiction clauses in commercial contracts. The judgement, rendered by a three judge bench of the Supreme Court, finally laid to rest the controversy with regard to the specific wording of exclusive jurisdiction clauses. In this brief piece, we attempt to evaluate the impact of Swastik Gas, with particular regard to choice of jurisdiction clauses in domestic contracts. The first part of this article examines the legal […]

Introduction After numerous drafts, delays and parliamentary debates, a new company law – the Companies Act, 2013 (‘2013 Act’) was finally enacted on 29 August 2013. The 2013 Act has been lauded by the corporates and lawyers alike for providing business friendly corporate regulations, enhanced disclosure norms, investor protection and better corporate governance amongst other things. While the 2013 Act is being appreciated by many; it also poses some practical difficulties for companies while structuring their transactions. Since only 98 sections of the 2013 Act have been notified, this Article seeks to focus on the impact of the notified sections […]

By Chakrapani Misra and Sukanya Bhaumik The termination of arbitration proceedings is envisaged by Section 32 of the Arbitration and Conciliation Act, 1996 (“Act”). The Section provides that the arbitral proceedings will be terminated by the final arbitral tribunal or by an order of the arbitral tribunal as provided in Section 32(2) of the Act. Under Section 32(2) of the Act, the arbitral tribunal will issue an order for the termination of the arbitral proceedings where the claimant has withdrawn his claim unless objections have been raised by the respondents and the tribunal recognises that there is a legitimate interest […]

The Indian infrastructure sector is in a transitory phase. While the growth rate of India’s economy averaged 8% in the Eleventh Five Year Plan, it did not meet the target of 9% due to a global economic slowdown. The Twelfth Five Year Plan by the Planning Commission has identified revival of investments as the immediate policy challenge for the Government of India to reverse the deceleration in growth. The Twelfth Five Year Plan has further predicted that the infrastructure sector will need investments of over one trillion US dollars. Given the fact that the majority of these investments have to […]

 This article attempts to set out the rules for valuation, as prescribed in various regulations, which have an impact on M&A transactions in India. Calculation of Price – Investments Foreign direct investment in an Indian company (“FDI”) is inter alia subject to the pricing guidelines as issued by the Reserve Bank of India (“RBI”). Transfer and Issue to Persons Resident outside India: Prior to April 21, 2010, (a) the transfer or issuance of shares of a listed company made to a person resident outside India, was to be made at a price equal to or above the guidelines issued by […]

By Raj Panchmatia and Meghna Rajadhyaksha Introduction Investment arbitration appears to have opened a new avenue for foreign investors to seek redressal for treatment accorded to them by the Government of India. Such arbitration, available under Bilateral Investment Treaties signed by India with various countries, gives individual investors access to protection under international law, for various acts of omission and commission on part of the Government of India. The impact of such proceedings first came to light in November 2011, when an ad-hoc arbitral tribunal delivered the first ever published award against the Republic of India, in an international investment arbitration. […]

by Nandish Vyas and Sayantan Banerjee The Companies Act, 1956 (the “Act”) under Section 100 of the Act provides that a company can reduce its share capital in any manner. Sections 100 to 105 of the Act provide for the procedure by which a company limited by shares can reduce its share capital. Further, under the provisions of Section 78 of the Act, unless the securities premium account is applied for certain specific purposes, the utilisation of the securities premium account is also treated as a reduction of capital. This article seeks to analyse the manner in which the provisions […]

By Sanjeev K Kapoor The recent judgement of the Supreme Court of India in the case of Novartis AG v Union of India[1] has highlighted the protective provisions of Indian Patents Act, 1970, as amended by the Patents (Amendment) Act, 2005, (Patents Act) which imbibe the intent of striking a balance between incentivising genuine innovation and larger public interest of making available quality medicine at affordable prices. Briefly understanding the history of the patent regime in India, the Patents and Designs Act, 1911, provided for product patent protection and also had several provisions relating to compulsory licenses for products including […]

  By Chakrapani Misra and Arijeet Mukherjee An arbitral award may be challenged under the provisions of the Arbitration and Conciliation Act, 1996 (Arbitration Act). While a domestic award may be challenged under Section 34 of the Arbitration Act, enforcement of a foreign award may be challenged under the provisions of Section 48 of the Arbitration Act. A domestic award is an award rendered by an arbitral tribunal with its seat of arbitration in India. A foreign award is an award rendered by an arbitral tribunal with its seat of arbitration in a country governed by either the New York […]

  By Sayantan Banerjee and Molla Hasan The advent of the new Companies Bill, 2012 (“Bill”) which was given assent to by the Lok Sabha on December 18, 2012 will lead to significant changes in the rules and processes for corporate restructuring i.e. compromises, arrangements and amalgamations in India. We have set out in this article some of the key changes proposed in company law with regard to mergers and amalgamations under the Bill vis a vis the Companies Act, 1956 (“Act”). Notice and Voting Under the Act, shareholders and creditors are required to be present and voting either in […]

Bar & Bench brings to you the next article on ‘The Viewpoint’ series with its Knowledge Partner Amarchand Mangaldas. Amarchand Delhi Corporate Partner  Raghubir Menon and Associate Anirban Bhattacharya in this article discuss whether the manufacturing sector is the next big leap for Indian Private Equity. The advent of PE funds over the past couple of decades in India has had an interesting impact on the private sector. While the pre-liberalisation emphasis was on the development of labour intensive manufacturing industries (largely a policy thrust and driven by India’s socialist outlook), subsequent periods saw the dawn of a thriving services sector ripe with capital […]