The Supreme Court was recently confronted with a question as to whether a company that had entered into a derivatives transaction with a bank could be categorized as a “willful defaulter” under the Reserve Bank of India’s Master Circular on Willful Defaulters on account of non-performance of payment obligations. More specifically, the question was whether a bank could be treated as a “lender” in...
Companies Bill as Approved by the Lok Sabha
The new companies legislation took a major step yesterday by receiving the approval of the Lok Sabha (India’s lower house of Parliament), and it appears to be inching closer to reality. The version of the Bill as approved by the Lok Sabha and a set of corrigenda are available on the website of the Ministry of Corporate Affairs (here and here) respectively. Another development is the passage of...
Contract Drafting: Indian Style
Ken Adams at the Koncision Blog provides a commentary about the continued use of the somewhat archaic language in contracts involving Indian parties. The examples he cites include “unless repugnant to the context or meaning thereof” and “NOW THIS MEMORANDUM WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:” The simple question being posed is whether this usage aids...
Short Sellers, Short-Termism and Corporate Governance
I have been following a corporate battle that erupted last month in Singapore. Muddy Waters, a financial research firm based in the US, released a 133-page report on Olam International, a Singapore-based company, alleging several accounting flaws in the company’s financial statements that did not represent the true state of its financial health. Upon this announcement, the price of Olam’s shares...
RBI proposes far reaching changes for NBFCs
It may be recollected that the Working Group constituted by Reserve Bank of India gave a report in August 2011 (discussed here) making recommendations on changes to the regulation of non-banking financial companies (NBFCs). As a next major step towards implementation several of these recommendations, though in a modified form, are proposed to be implemented. Reserve Bank of India has issued a set...
Long term contracts and dispute resolution clauses – Part II
(Part I outlined the facts of Interserve v Katowice, and discussed its findings on variation). After holding that the side/supplemental agreement in this case did not form part of the sub-contract, the High Court movies on to consider the alternative argument based on the implication of terms. Without referring to A-G Belize or any other cases on the implication of contractual terms, the Court...
Long term contracts and dispute resolution clauses – Part I
Dispute resolution under long-running contracts with continuing obligations can often pose issues which do not commonly surface in other scenarios. Often when disputes arise under a long-running contract, it is in the interest of both parties to not terminate the ongoing relationship, but settle the dispute either by themselves or by using some form of ADR. Such a settlement may take the form of...
Event Announcement: NLSIR Public Law Symposium
(The following announcement comes to us from the National Law School of India Review) The National Law School of India Review, the flagship journal of National Law School of India University, Bangalore is pleased to present the second NLSIR Public Law Symposium to be held on 22 December, 2012 at the National Law School campus...
Strict Liability and the Nature of the Rule in Rylands v Fletcher
It is perhaps not surprising that counsel could not find a reported case since the second world war in which anyone had succeeded in a claim under the rule. It is hard to escape the conclusion that the intellectual effort devoted to the rule by judges and writers over many years has brought forth a mouse This was Lord Hoffmann’s description in Transco v Stockport MBC of the rule in Rylands...
RTI Act and SEBI Investigations
This is a bit dated (academic duties prevented regular blogging over the last few weeks), but on November 6, 2012, the Chief Information Commissioner (CIC) passed an order requiring SEBI to provide information regarding its investigation “into allegations of insider trading and short sale of shares pertaining to the shares of Reliance Petroleum in 2007”. The order was passed in response to an...
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