ArchiveMarch 2014

Rajat Gupta Insider Trading Case: Appellate Decision

Last week, the United States Court of Appeals for the Second Circuit issued its opinion in United States of America v. Rajat K. Gupta, in which it upheld all the findings of the district court convicting Rajat Gupta on various counts of securities fraud. Although several questions were raised in the appeal relating to the robustness of the evidence in support of the conviction, the appellate...

Scope of a “Debenture”

The England and Wales Court of Appeal recently had occasion to consider the meaning and scope of the expression “debenture” in the context of a charge document. Consistent with some previous rulings of English Courts, the Court of Appeal provided a somewhat expansive definition of the expression “debenture” so as include within its fold a shareholder loan agreement. In Fons Hf v. Corporate Ltd...

Guest Post: Regulations by SEBI under the Companies Act, 2013 for Promoter Acquisitions

[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] In terms of section 13(8) of the Companies Act, 2013 (Act), a company, which has raised money from public through prospectus and has any unutilised amount out of the money so raised, is not permitted to change its objects for which it...

Further Provisions of Companies Act, 2013 Notified

The Ministry of Corporate Affairs today issued a notification that brings into effect several provisions of the Companies Act, 2013 with effect from April 1, 2014. These include several substantive provisions that would affect the manner in which companies are managed. A quick review of the notification suggests that the key provisions yet to be brought into force involve the National Company Law...

Section 55 of the Indian Sale of Goods Act: Exhaustive or Illustrative?

There are often practical advantages in being able to sue for an agreed sum instead of damages, because the amount the claimant recovers in an action for the sum is usually not reduced by the application of legal rules such as mitigation and remoteness. For example, suppose an advertiser signs a contract with a television company to advertise its products for a fee of Rs. 1 crore, provides the...

The Aliakmon and Title to Sue: a recent Bombay decision

In a recent judgment, Dreymoor Fertilizers v. mvTheoforos-1, the Bombay High Court (Sriram J.) has held that a claimant, suing in tort for economic loss, must establish either legal ownership or possessory title over the relevant property at the time of loss. Without going into the correctness of the decision in the specific facts before the Court, it is respectfully submitted that some of the...

Vexed issue of allowability/quantification/timing of expenditure on ESOPs

A troublesome issue for companies is the deductibility of ESOPs expenditure under the Income-tax Act, 1961. ESOPs (employees stock options/shares) are often given at a discount at their fair value. A share having a fair value of Rs. 100 is given, say, at Rs. 80. This is one extreme of a simple example. In practice, ESOPs are even more complicated with different features such as of vesting...

Arbitrability of fraud in India – a postscript

Following a post last month regarding the Supreme Court’s decision in World Sport, it is interesting to note that the question of the arbitrability of fraud has also been considered in great detail by the Bombay High Court in HSBC v Avitel Post Studios, in a judgement delivered just two days before the Supreme Court’s judgment in World Sport. In the previous post, we argued that the...

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