[Manaswi Agarwal and Aayush Mitruka graduated from ILS Law College, Pune and are currently working with law firms in Mumbai and Delhi respectively. They can be reached at [email protected] and [email protected]] In a previous post we had analysed the efficacy of the Insolvency and Bankruptcy Code, 2016 (IBC) as compared with the scheme of arrangements mechanism under the...
Corporate Insolvency: Boundaries of Operational Debt: Part 2
[Job Michael Mathew is a V year student at NALSAR University of Law, Hyderabad Part 1 in the series is available here] Following from the issues set out in Part 1, I now discuss the meaning of ‘goods/services’ as used in section 5(21). While the meaning of ‘goods’ is clear and settled on account of definition in Sale of Goods Act, the meaning of ‘service’ does not enjoy the same certainty. The...
Corporate Insolvency: Boundaries of Operational Debt: Part 1
[Job Michael Mathew is V year student at NALSAR University of Law, Hyderabad] The Insolvency and Bankruptcy Code 2016 defines an “operational debt” in section 5(21) as “aclaim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government...
The “Masala” in Rupee Denominated Bonds
[Anirudh Singh is a 4th year B.A LL.B (Hons.) student at NALSAR University, Hyderabad] Background Rupee Denominated Bonds (RDBs),more commonly known as “Masala Bonds”, are debt securities denominated in Indian rupees issued by Indian entities to overseas investors but settled in foreign currency. In other words, they are rupee denominated bonds issued to overseas buyers. Though these bonds are...
Review of Indian Competition Law – Pointers
The Government of India has appointed a committee to review the Competition Act, 2002 to review the law and come up with recommendations to strengthen and re-calibrate the law. The Committee is expected to finish its work within three months of its first meeting. I wrote a column in the Business Standard earlier this week pointing out a few areas of low-hanging fruit that need attention. ...
The IL&FS Crisis: Lessons in Governance
The situation involving the Infrastructure Leasing and Financial Services Limited (IL&FS) has raised a number of questions revolving around corporate governance. Are governance failures to blame for the predicament in which the company finds itself? A lot has been said about the role of independent directors, nominee directors, auditors and credit rating agencies. However, one aspect that is...
Clearing the Air on Bilateral Termination of a Contract Incorporating an Arbitration Clause
[Ankitesh Ojha is a 4th Year B.A., LL.B. (Hons.) student at Hidayatullah National Law University, Raipur] Introduction It is a settled principle in arbitration that the agreement to arbitrate contained in an arbitration clause is viewed as a separate agreement from the rest of the contract. The fate of an arbitration agreement is not decided by the sustainability of the contract incorporating it...
Analysing the Non-obstante Clause of Section 8 of the Arbitration Act
[Rajvansh Singh is a 3rd year student at National Law University Odisha] In Aftab Singh v. Emaar MGF Land Limited, the complainants approached the consumer forum seeking possession of flat/villa and compensation from the builder in lieu of the delay in handing over the possession of the same. The builder contended that builder-buyer agreement contains an arbitration clause by virtue of which...
Call for Papers: The GNLU Law Review
[Announcement on behalf of The GNLU Law Review] About The flagship journal of Gujarat National Law University, The GNLU Law Review (‘TGLR’) was established in 2008, owing to the emergent need for broadening the platform for academicians, professionals, research scholars to share and disseminate both knowledge and scholarship of new and innovative ideas in legal and allied disciplines. TGLR is a...
Section 14 of the IBC: Discontinuance of Arbitral Proceedings
[Ashish Rana is an Advocate on Record in Supreme Court of India. The author thanks Shatakshi Singh for assistance] The Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted by the Parliament with a view to codify the existing framework of insolvency and bankruptcy which comprised of scattered provisions and mechanisms under the different legislation. Section 14 of the IBC provides for the...
Resolving IL&FS: IBC vs Schemes of Arrangement
[Aayush Mitruka and Manaswi Agarwal graduated from ILS Law College, Pune and are currently working with law firms in Delhi and Mumbai respectively. They can be reached at [email protected] and [email protected].] Since August 2018 Infrastructure Leasing and Financial Services Limited (IL&FS) has been in headlines for having missed several debt payments deadlines. The rapid...
Essar Steel Case: Supreme Decodes Section 29A of the IBC
Background In its ruling in ArcelorMittal India Private Limited v. Satish Kumar Gupta, the Supreme Court has laid down the much-needed jurisprudence involving section 29A of the Insolvency and Bankruptcy Code, 2016. Section 29A was inserted in the Code with effect from 23 November 2017 and has been the subject matter of at least two rounds of amendments thereafter. The provision makes ineligible...
Blockchain and Competition Law: New Technology, Old Challenges
[Swasti Gupta is a Research Associate at CUTS International, Jaipur] Overview The rapid emergence of “blockchain” in recent years has caused ripples in the global digital economy and has gripped the world’s attention. For those in search of a non-technical explanation, a blockchain is a decentralized, distributed ledger for transactions executed amongst the participants. It enables real-time...
Non-Deductibility of CSR Expenditure under the Income Tax Act: Some Concerns
[Priya Garg is a 5th year student at West Bengal National University of Juridical Sciences (WBNUJS), Kolkata] The Income Tax Act, 1961 (“IT Act”) allows various business expenses to be claimed as ‘deductions’ while computing taxable income under the head ‘profit and gains of business or profession’.[1] Section 37 of the IT Act is a residuary provision on deductions. It permits any business...
Pricing Algorithms: How Should India Deal With It?
[Anik Bhaduri is a second-year B.A., LL.B (Hons.) student at NALSAR University of Law, Hyderabad] The rapid development of the digital world often presents issues which could not have been contemplated before, thus presenting new challenges to the existing legal framework, which has to modify itself to deal with the new problems. The development of pricing algorithms presents one such issue. As...
The Quandary of Market Delineation under Section 3 of the Competition Act
[Ahkam Khan & Divyansh Prasad are 3rd Year BA LLB (Hons.) students at Dr Ram Manohar Lohiya National Law University, Lucknow] Antitrust laws aim at protecting and sustaining competition by preventing practices having appreciable adverse effects on competition (or AAEC). This competition necessarily exists in closed economic models or marketplaces. For the purposes of gauging whether a...
Enabling Going Concern Sale in Liquidation
[Vinod Kothari and Sikha Bansal are at Vinod Kothari & Company and can be reached at [email protected]] The amendments to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”), introduced on 28 March 2018 by incorporating a change in regulation 32 of the Liquidation Regulations, made it explicitly possible for the...
Resale Price Maintenance in the Online Retailing Era: Exploring an Alternative
[Divyansh Prasad is a 3rd Year BA LLB (Hons.) student from Dr Ram Manohar Lohiya National Law University, Lucknow] Section 3 of the Competition Act, 2002 proscribes any horizontal or vertical agreements that may have appreciable adverse effects on competition. Section 3(4)(e) specifically prohibits agreements between two or more enterprises operating at different levels of production which...
Calcutta High Court Allows Trial Against Directors of a Mutual Fund Trustee Company
It is well-known that directors of a mutual fund trustee company carry onerous responsibilities, both under the Companies Act, 2013 as well as the SEBI (Mutual Funds) Regulations, 1996. The trustee company of a mutual fund and its directors are responsible for ensuring that transactions carried out by the fund are in accordance with the relevant regulations. This is despite the fact that the day...
Drawing the Line between Corporate Debtors and Personal Guarantors
[Partha N. Mansukhani is a fifth-year B.A. LL. B (Hons.) student at Symbiosis Law School, Pune] The Supreme Court in State Bank of India v. V. Ramakrishnan & Anr. held that an order of moratorium passed under section 14 of the Insolvency & Bankruptcy Code, 2016 (“Code”) will exclusively apply to the corporate debtor against whom an insolvency application has been admitted by the...
Settlements in Antitrust in India: The Right Road Ahead?
[Yash Bajpai is a 5th year B.B.A., LL.B. (Hons.) student at Symbiosis Law School in Hyderabad] Introduction The concept of settlements is not something new to the global anti-trust regime. It is a regulatory mechanism used worldwide for disposing off anti-trust matters; however, this still seems to be a far fetched dream in the Indian competition regime. Several jurisdictions across the world...
The Influence of Foreign Investors and Proxy Advisory Firms on Corporate Governance
Institutional investors have begun taking an active role in companies that have dispersed shareholding. This played out demonstrably in the case of HDFC in July when the chairman Mr. Deepak Parekh retained his position in the company by a narrow margin. This was attributable to a number of foreign institutional investors having voted against his continuation in the company. They did so on the...
Merger of Public Sector Banks and Competition Concerns
[Kruthika Venkatesh is a 4th year B.B.A., LL.B. (Hons.) student at School of Law, Christ (Deemed-to-be) University in Bangalore] Background The media has reported that the Government of India is all set to ask the Reserve Bank of India (“RBI”) to prepare a list of candidates for merger among the 21 government controlled lenders with the primary agenda of overcoming bad debts. It all began two...
The Taxation Predicament of Slump Exchanges
[C. H. Anvita and Anirudh Venkatesh are 4thYear BA LLB (Hons.) students from School of Law, Christ (Deemed to be University, Bengaluru] Background The Mumbai bench of the Income Tax Appellate Tribunal (“ITAT”) has, in two sequential decisions in the months of January and May, 2018[1] (in which, the latter case reiterated the reasoning and decision of the former), reignited discussions on the...
New issue/transfer of securities in unlisted public companies now to be only in demat form – step towards curbing benami holding/convenience of demat
MCA has inserted a new Rule 9A to Companies (Prospectus and Allotment of Securities) Rules, 2014, requiring unlisted public companies from 2nd October 2018 to issue/transfer shares only in demat form. They are also required to register with a depository and give facility to existing shareholders to convert their shares to demat form. In case of a fresh issue or buyback of securities, the...
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