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Redefining the Contours for Admitting an Application by Financial Creditors

[Kavya Lalchandani is a Master of Corporate Law student at University of Cambridge] In a judgement dated 12 July 2022, in Vidarbha Industries Power Limited v. Axis Bank Limited, the Supreme Court (SC) ruled that admission of the application under section 7(5) of the Insolvency and Bankruptcy Code (IBC or the Code) which is made by a financial creditor is discretionary while admission of an...

The Conundrum of Inter-se Priorities between Secured Creditors in Liquidation

[Arvind Tiwari is a IV year student at the National Law University, Delhi] The recent ruling of the National Company Law Appellate Tribunal (“NCLAT”) in Oriental Bank of Commerce v. Anil Anchalia has rekindled the debate concerning the significance of inter-se priorities among secured creditors in the process of liquidation. In this matter, it was held that once a secured financial...

Analysing the Co-Investment Framework in India

[Dharmvir Brahmbhatt and Devarsh Shah are fifth year students at Gujarat National Law University] Over the last three decades, private equity investments in India and overseas have witnessed phenomenal development. Institutional investors have been attracted to the asset class owing to its persistent outperformance of public market benchmarks. Historically, commingled funds or “blind pools” of...

RBI Bans Loading of Prepaid Payment Instruments From Credit Lines

[Manasi Chandriani Shah is a Solicitor (B.I.L.S)] Fintech entities, wallet providers, and non-banking financial companies have been mandated to pull the chains on all existing arrangements to facilitate or extend loans through prepaid payment instruments (“PPI”), including cards and wallets. Extending a credit line through any PPI has been prohibited by the Reserve Bank of India (“RBI”). This ban...

Utilisation of Accumulated Surplus by Section 8 Companies

[Pammy Jaiswal is a Partner and Shraddha Shivani an Executive at Vinod Kothari and Company] Section 8 of the Companies Act, 2013 provides for the formation of companies with specific objects. The profits earned by such companies necessarily get redeployed to pursue the very same objects for which the company is formed and cannot be distributed to the shareholders. There are several restraints to...

Debunking Special Situation Funds: Is India Ready for the Vultures?

[Aditya Shekhar and Abhishek Choudhary are Vth year B.A., LL.B. (Business Law Hons.) students at National Law University, Jodhpur] The need for inclusion of special situation fund [“SSF”] in the Indian financial market was felt due to India’s bad debt problem. It is evident from the recent trend and eagerness of financial institutions to sell off their non-performing assets [“NPA”], which...

Supreme Court on Pledge of Shares: Insider Trading Regulations May Require Review

[Vinita Nair is a Senior Partner at Vinod Kothari & Co.] Recently, in PTC India Financial Services Limited v. Venkateshwar Kari, the Supreme Court held that ‘beneficial ownership’ in the context of the Depositories Act should not be confused with beneficial ownership under general law as it is merely a procedural precondition to sale by the pledgee. Further, the Court found that there is no...

Supreme Court on Pledge of Shares: Takeover Regulations May Require Review

[Vinita Nair is a Senior Partner at Vinod Kothari & Co.] In PTC India Financial Services Limited v. Venkateshwar Kari, the Supreme Court of India brought out a very important distinction between the meaning of ‘beneficial owner’ under the depository legislation, and the right of the pledgee or security interest holder to cause the sale of goods pledged by pledgor in terms of the rights...

Supreme Court Clarifies Standard of Proof in PMLA Proceedings

[Raghav Bhatia is an Advocate practising at the Supreme Court of India. Hima Prajitha is an Advocate, practising before courts in Andhra Pradesh] Recently, the Supreme Court of India in J. Sekar @ Sekar Reddy v. Directorate of Enforcement, has observed that the standard of proof in proceedings under the Prevention of Money Laundering Act, 2002 (“PMLA”) is beyond reasonable doubt and not...

Termination of the Mandate of the Arbitrator appointed by Mutual Consent

[Megha Shaw is an Incoming Associate at S&A Law Offices and Ashish Kumar is a fourth year student at NMIMS, Bangalore] In the recent case of Swadesh Kumar Agarwal v Dinesh Kumar Agarwal, the Supreme Court of India (“SC”) has explained the scope of section 11(6) vis-à-vis section 14(1)(a) of the Arbitration and Conciliation Act, 1996 (“Act”). Section 14(1)(a) encapsulates the termination of an...

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