In 63 Moons Technologies Ltd. v. Union of India (and connected petitions), the Bombay High Court considered important questions of law going to the heart of Indian corporate law. The case involved a challenge to an order of the Central Government under s. 396 of the Companies Act, 1956. Purporting to act under s. 396, the Central Government had amalgamated the National Spot Exchange Ltd. (“NSEL”)...
Proprietary Remedies in Indian Law
We had earlier considered the question of whether there exist proprietary remedies for breaches of directors’ duties. The question of whether a remedy is proprietary or personal makes a difference most importantly in the context of insolvency. If a remedy against the fiduciary is merely personal, the beneficiary will only be able to claim along with other unsecured creditors. If the remedy is...
Supreme Court on Hardship vis-à-vis Frustration and Force Majeure
[This is a guest post contributed by Rishabh Raheja, a third year student at NALSAR University of Law, Hyderabad.] The Supreme Court was presented with the perfect opportunity to clarify the relationship between frustration, force majeure and hardship or commercial impracticability in its decision in Energy Watchdog v. Central Electricity Regulatory Authority. While it has already been...
A Misturning on section 12(5) of the Arbitration Act?
A few days ago we had highlighted a decision of the Bombay High Court in DBM Geotechnics v. BPCL where the High Court had drawn a distinction between the power to nominate an arbitrator and the choice of the nominee. The arbitration clause allowed an employee of a company to nominate another employee as an arbitrator. The Court held that the power to nominate continued to remain valid even if...
The amended Arbitration Act: The Power to Nominate and the Choice of the Nominee
The Bombay High Court in DBM Geotechnics v. Bharat Petroleum Corporation Ltd. recently decided a short but important point arising out of the recent Amendments to the Arbitration & Conciliation Act, 1996. In particular, the Court had to consider how the bar on a party’s employees serving as arbitrators had to be construed. The relevant arbitration clause between the parties...
Frustration in Indian Law
On this blog, we had previously looked at the judgment of the Supreme Court of India in Energy Watchdog v. CERC and connected appeals. An earlier post had examined the decision, and had concluded that the Court “arguably misstated the law when it found that the mere existence of a force majeure clause would prevent the parties from bringing an alternative claim under section 56….” The...
Premium on Buyback: a Deductible Expenditure?
In an earlier post on this blog, Mr. Jayant Thakur had considered certain decisions of the Income Tax Appellate Tribunal (notably, Chemosyn v. ACIT) where the ITAT had held that “… premium paid by the company on buyback of shares of a warring shareholder group is deductible as business expenditure in the hands of the company…” It was pointed out in that post that the Tribunal had...
The Proper Purpose Rule
Eclairs Group v. JKX Oil [2015] UKSC 71 is an important illustration of the power of the Courts to interfere in decisions taken by the Board of a company (even when those decisions are taken in good faith by the Directors). JKX Oil [“JKX”] is a company listed on the London Stock Exchange. Eclairs and Glengary, both incorporated in the British Virgin Islands, owned substantial minority...
The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015
In the Budget Speech 2015, the Finance Minister outlined certain broad themes surrounding the tax proposals. The “first and foremost pillar” was stated to be “to effectively deal with the problem of black money”. To that end, the Government has introduced the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 in the Lok Sabha. A copy of the Bill can be downloaded here...
Oppression/Mismanagement and Arbitration Clauses
We had earlier briefly noted the decision of the learned Single Judge of the Bombay High Court in Malhotra v. Malhotra, where it was held that disputes in a petition properly brought under sections 397-398 of the Companies Act are not capable of being arbitrated. In essence, the learned Single Judge held that considering the nature and source of the oppression/mismanagement remedies and the scope...
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