Shardul Amarchand Mangaldas & Co updates

Increase in gratuity limit
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • November 15 2017

The Payment of Gratuity Act 1972 is a form of social security legislation which prescribes a scheme for the payment of gratuity. For the private sector, gratuity is capped at Rs1 million, whereas central government employees can receive gratuity of up to Rs2 million. There is a proposal to increase the cap for the private sector in order to align it with the central government. Although this is a step forward in ensuring better benefits to eligible employees, it will increase employers' financial burden.

Disabilities Act and role of private employers
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • October 04 2017

The federal government recently enacted a new act in order to empower disabled individuals and ensure their inclusion in the education and employment spheres. Although the government is primarily responsible for ensuring that disabled individuals receive equal treatment under the act, private organisations have also been made accountable for various obligations.

Retrospective application of Prevention of Money Laundering Act
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • July 11 2017

The Karnataka High Court recently issued a judgment which dealt with the retrospective application of the Prevention of Money Laundering Act 2002. The court held that a person cannot be tried for an offence under the act for the period when the offence was not inserted in the schedule of offences under the act. This would deny the writ petitioner the protection offered by Article 20(1) of the Constitution.

Social security obligation for outbound employees
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • June 28 2017

With the growing landscape of global businesses, there is a constant need to deploy employees for international assignments not only for skill development, but also for the business needs of the organisation. In order to abate similar obligations in a host country, India has entered into social security agreements (SSAs) with many countries. SSAs offer various benefits, such as the totalisation of benefits and exemption from dual contributions of social security.

Contractual penalty clauses: Supreme Court weighs in
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • June 27 2017

In 2015 the Supreme Court settled the law on contractual penalty clauses. In essence, the term 'contractual penalty clause' refers to a clause in a contract whereby a party in breach of an obligation under the contract is required to pay the other party an amount which is greater than the reasonable proportion of the damage or loss suffered due to such breach.

Supreme Court rules on special judges' power under Prevention of Corruption Act
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • May 30 2017

The Supreme Court recently dealt with the question of whether a special judge designated to deal with cases under the Prevention of Corruption Act 1988 is empowered to try offences which do not fall within the act. The court held that that there is no prejudice to a trial before a special judge duly appointed to oversee cases that fall under the act if the object of doing so is to try connected cases before the same court.

Right foot forward: 2016 amendments to maternity benefits
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • March 15 2017

The Maternity Benefit (Amendment) Bill 2016 was recently passed by the upper house of Parliament. Key changes include enhanced maternity leave, the introduction of maternity leave for adopting and commissioning mothers and new remote working provisions. The amendments are undoubtedly a positive step towards promoting diversity and the increased participation of women in the workforce in the manufacturing and service industries.

Supreme Court rules on segregation of grounds in detention order
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • March 14 2017

The Supreme Court recently clarified and reaffirmed the legal position surrounding the existence and severability of multiple grounds contained in a detention order passed under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974. The Supreme Court addressed the scope of the definition of 'grounds' in a detention order, holding that grounds are the basic facts on which an order is based in light of subsidiary facts or further particulars.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • December 23 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.

Licences for pre-paid payment instruments temporarily suspended
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • December 23 2016

The Reserve Bank of India (RBI) recently issued a press release stating that given the rapid changes to the payments solutions space, it was in the process of reviewing the regulatory framework governing pre-paid payment instruments. The RBI also stated that it will grant no new licences for the issue of pre-paid payment instruments until the end of February 2017. This temporary suspension will not apply to applications made by new small finance banks and payment banks.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • December 20 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.

Class actions under Companies Act
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • November 15 2016

Although the concept of class action was first introduced into law by way of Section 245 of the Companies Act 2013, it only recently came into force. Specifically, Section 245 has introduced the concept of specialised class action by a company's shareholders and depositors. The enactment of Section 245 is likely to have far-reaching effects on the legal regime as, in addition to empowering shareholders and depositors, it will affect how companies conduct their affairs.

RBI guidelines for at-will licensing of private banks – key features
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • September 30 2016

The Reserve Bank of India recently issued guidelines for the at-will licensing of universal banks in the private sector which, for the first time, will allow applicants to apply for a banking licence at will. The at-will regime will lead to increased transparency, better innovation and more realistic valuations, and is a significant step towards a healthier licensing regime for new private banks.

NCLT: a new beginning
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • September 27 2016

The Ministry of Corporate Affairs recently notified, among other things, the constitution of the National Company Law Tribunal and the National Company Law Appellate Tribunal and the dissolution of the Company Law Board. This marks an important step towards facilitating business in India, as it seeks to consolidate jurisdiction for various aspects of corporate litigation.

Bank employees as public servants: analysis of Ramesh Geli
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • April 22 2016

The Supreme Court recently clarified that all bank employees (including those employed by private sector banks) will be treated as public servants for the purposes of anti-corruption law. This ruling has significant implications, as all employees, officers and key managerial personnel of banking companies (ie, private and public sector banks and branches of foreign banks) will now come under the purview of the Prevention of Corruption Act.

Reserve Bank of India announces new recovery measures for domestic banks
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • September 11 2015

The Reserve Bank of India recently introduced the Strategic Debt Restructuring Scheme, which allows banks to convert outstanding loan payments into equity shares through strategic debt restructuring if defaulting borrowers fail to achieve projected viability milestones set out under the restructuring package. While the success of the scheme remains to be seen, it is a powerful tool for banks to manage their stressed accounts.

Long-term advances against export of goods: still a viable financing option?
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • May 15 2015

A May 2014 circular issued by the Reserve Bank of India gave Indian exporters the opportunity to obtain foreign currency financing against performance of export supply contracts at rates lower than those available under general foreign currency borrowing. However, another circular issued in April 2015 has made lenders and exporters reconsider the viability of the scheme, as most exporters were using this financing option to repay rupee loans.

RBI issues directions heralding new class of NBFC factors
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • May 24 2013

The Factoring Regulation Act aims to regulate factors and lay down a framework for the assignment of receivables. Under the act, a factoring company must register with the Reserve Bank of India (RBI) as a non-banking financial company (NBFC) and comply with the relevant prudential regulations. The RBI has recently introduced a new category of NBFCs, known as NBFC factors, and issued directions for such factors.

Draft guidelines amend regulatory framework for non-banking financial companies
Shardul Amarchand Mangaldas & Co
  • Banking
  • India
  • February 22 2013

Following concerns over the discrepancy in regulation between banks and non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) recently set up a working group to review the regulatory framework for NBFCs. On receipt of the group's report, the RBI released new draft guidelines for NBFCs, which seek to revamp completely the existing regulatory environment.

Court rules on appointment of arbitrator under special circumstances
Shardul Amarchand Mangaldas & Co
  • Litigation
  • India
  • June 26 2012

The Supreme Court recently ruled that, despite an express clause providing for an arbitrator, the court can appoint an independent and impartial arbitrator under special circumstances. Through this ruling, the court struck a balance to the extent that it could not ignore the appointment of an arbitrator whom the parties have chosen under the terms of the contract, unless the arbitration would otherwise be rendered void.

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