[Tanmay Purohit and Mayank Sen are 4th year B.A., LL.B. (Hons.) students at School of Law, Raffles University, Neemrana (Rajasthan)] The Securities Appellate Tribunal (“SAT”) on 28 May 2018, while deciding on appeals against several orders of the Securities and Exchange Board of India (“SEBI”) in Tarun Jiwarajka v. Securities and Exchange Board of India, undertook a comprehensive interpretation...
Protecting the Interests of First Charge Holders under the Insolvency and Bankruptcy Code
[Shivam Ahuja is a Final year B.A.,LL.B. at Jindal Global Law School, Sonepat] Introduction A charge as defined in section 2(16) of the Companies Act, 2013 is created over an asset to secure the repayment of a debt. The terms and conditions of the charge are governed by the contract between the parties. Some contracts allow for creation of a subsequent charge while some do not, while some warrant...
Corporate Insolvency: Fraudulent Transactions and Look-Back Period
[Richa Saraf is a Legal Advisor at Vinod Kothari Consultants Pvt Ltd] A combination of sections 45, 49, 66 and 69 of the Insolvency and Bankruptcy Code, 2016 (the Code) requires and empowers the liquidator to apply to the National Company Law Tribunal (NCLT) for appropriate orders in case the Liquidator comes across any vulnerable transactions during the process of liquidation. Such transactions...
Section 29A of the Insolvency and Bankruptcy Code, 2016: The Ambit Narrows
[Rudresh Mandal is a 4thyear student at NALSAR University of Law and Mallika Sen is a 3rdyear student at National Law School] Section 29A of the Insolvency and Bankruptcy Code, 2016, (‘IBC’) has been heavily criticised for casting a net exceedingly wide for preventing maximisation of pay-outs to creditors merely because the bidder is the promoter of the corporate debtor, or for ignoring the...
Validity of Employment Bonds in India
[Apoorv Madan is a 4th year law student at Jindal Global Law School in Sonipat] Background Corporations often invest huge amounts of time and money in imparting training to their employees so as to gain competitive advantage. Regardless, the attrition rate continues to be significant. Several employees, after acquiring valuable skills, leave the organization for diverse reasons. Therefore, the...
NCLT Order Facilitates Cross-Breeding of Entities
[Pammy Jaiswal is a Partner at Vinod Kothari and Company] Background Earlier under the Companies Act, 1956 (the ‘Act, 1956’), sections 391 to 394 dealt with provisions relating to compromises, arrangements, amalgamation and reconstruction. The said provisions were re-cast under the Companies Act, 2013 (the ‘Act, 2013’) under sections 230 to 234. The statutory provisions under the Act, 2013 suffer...
Subordination of Operational Creditors under IBC: Whether Equitable?
[Vinod Kothari and Sikha Bansal are at Vinod Kothari & Company and can be reached at [email protected]] Introduction Section 53 of the Insolvency and Bankruptcy Code, 2016 (IBC) puts unsecured financial creditors above the claims of the governments. These unsecured financial creditors may actually be even related parties and, therefore, the underlying financial transaction may be...
Doctrine of ‘Reverse’ Piercing and the Jurisprudence of Indian Courts
[Debarshi Chakraborty is a 3rd year B.A., LL.B. student at National Law University Odisha.] The doctrine of ‘reverse’ piercing, although relatively new, is a controversial area of corporate law. This doctrine could be problematic given the situations where a body corporate has multiple shareholders. Conversely, there have been times even in relation to companies with one shareholder where it has...
Territorial Scope under General Data Protection Regulation
[Kunal Garg is an associate at Alaya Legal Advocates, New Delhi] After years of discussion and debate, the European Union (“Union”/“EU”) adopted the General Data Protection Regulation (“Regulation”) on April 8, 2016 for personal data protection of natural persons. This Regulation came into effect on May 25, 2018 replacing the old Directive 95/46/EC (“Directive”) on data protection. All the...
The Battle against Non-Performing Assets
[Pranjal Doshi is an MCL Candidate, University of Cambridge] The foundation of an enduring banking industry lies in robustly crafted recovery mechanisms. It promotes the stable existence of the borrower-lender relationship. Incongruously, non-performing assets (“NPAs”) have grown substantially in India from 9.2% (September 2016) to 10.2% (September 2017)[1], amounting to ₹8,36,782 crores (October...
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