In an earlier post, I had noted that a Constitution Bench of the Supreme Court has upheld the establishment of the National Company Law Tribunal and the National Company Law Appellate Tribunal, in an appeal filed by the Union of India against a judgment of the Madras High Court. The judgment of the Constitution Bench (Union of India v. R. Gandhi / Madras Bar Association) is...
Nasscom on Corporate Governance
In early 2009, immediately following the accounting fraud at Satyam, several committees and task forces were constituted to review corporate governance norms and practices in India. Some of them issued their recommendations late last year. These include a report by a task force constituted by the Confederation of Indian Industry (CII) and another by the Institute of Company Secretaries of India...
ECB Process for Infrastructure Finance Eased
The Reserve Bank of India has issued a circular bringing external commercial borrowings (ECBs) by designated Infrastructure Finance Companies (IFCs) within the automatic route subject to certain limits. The relevant portion of the circular is extracted below: On a review of the policy, it has been decided to modify the extant ECB policy in respect of the Infrastructure Finance Companies (IFCs) i...
Nomination vs. Succession on Shares
In his column in the Business Standard, guest contributor Somasekhar Sundaresan analyzes a recent judgment of the Bombay High Court that establishes the superiority of the nomination process over succession (whether testamentary or otherwise) in respect of shares of a company. He observes: The law on nomination of shares held in companies has taken a new meaning with perhaps the first...
Supreme Court upholds NCLT
The Business Standard reports that the Supreme Court of India has upheld the validity of the National Company Law Tribunal. A Constitution Bench of the Court delivered the judgment more than a year after hearing arguments on an appeal filed against a decision of the Madras High Court in R. Gandhi v. Union of India. In an earlier post, I had...
The Supreme Court’s Judgment in the Reliance Dispute – Part II
A previous post outlined the issues that arose in the Reliance judgment and summarised the Court’s conclusions. In this post, I discuss two of these in more detail – the doctrine of identification, and the binding nature of an MoU under the Companies Act, 1956. As to the first issue, it was argued by RNRL that the MoU signed by the Ambani brothers was binding on their respective companies, by...
The Supreme Court’s Judgment in the Reliance Dispute – Part I
The Supreme Court’s judgment today in Reliance Natural Resources Ltd. [“RNRL”] v. Reliance Industries Ltd. [“RIL”] turns on several important propositions of corporate and contract law. It has been widely reported that RIL prevailed by a majority of 2:1. This is incorrect, for Justice Sudershan Reddy’s separate opinion concurred with the majority on all but one issue, on which he decided in...
Insurance Companies and Income Tax
The Bombay High Court, in an important case decided last month, clarified the position on the taxation of insurance companies. This was the decision in ICICI Prudential v. ACIT (2010 Bombay High Court). The controversy stemmed from the implications of the Insurance Regulatory and Development Authority (Actuarial Report and Abstract) Regulations, 2000 and the Insurance Regulation and Development...
Vicarious Liability for a Company’s Offences
The Delhi High Court, in Vishnu Prakash Bajpai v. SEBI, seems to have widened the scope of the vicarious liability of persons for offences by companies, under section 27 of the Act. The issue came before the Court by virtue of a petition for quashing of criminal proceedings, under section 482 of the CrPC filed by Mr. Bajpai. The crux of the matter was the level of involvement required to be...
The Meaning of a “Debt”
We have discussed the role of the Debt Recovery Tribunal on this blog, and noted the Supreme Court’s decision in Nahar holding that an “independent suit” filed by a borrower is maintainable in civil court, despite the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDB Act”). This Monday (May 3), the Supreme Court considered another crucial issue in this...
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