There are several ways in which parties can discharge their contractual obligations – for example, the doctrine of accord and satisfaction. The jurisprudence surrounding this doctrine encompasses contract law, tort law and, more recently, arbitration law, bringing to the fore the issues of whether an arbitration clause in an original contract survives in the substituted settlement and whether an arbitrable dispute exists for the purposes of the appointment of an arbitrator by the courts.
A recent high court judgment has determined the scope and applicability of Sections 9 and 47 of the Arbitration and Conciliation Act 1996. The court also delved into the highly debated question as to whether two Indian parties can agree to choose a seat of arbitration outside India. The judgment is a welcome step in the development of Indian arbitration law as it eases the way for enforcement of a foreign award where the parties have consciously chosen a seat outside India.
The Supreme Court, exercising jurisdiction under Section 11 of the Arbitration and Conciliation Act 1996, recently refused to refer disputes to arbitration under a domestic arbitration clause on the basis of prior invocation of a parallel international arbitration clause. This judgment is notable given the balancing act that the Supreme Court carried out between the narrow contours of Section 11 of the act and the practical realities of trade and commerce.
Arbitration evolved as an expeditious, cost-effective, simple and fair alternative to litigation. However, over time, it became costly. Coupled with largely ineffective provisions regarding costs allocation and recoverability, this was considered a roadblock to the development of arbitration in India. Section 31A of the Arbitration and Conciliation Act, which was introduced in 2015, was thus a welcome step towards costs recoverability being based on rational and realistic criteria.
The topic of judicial interference in arbitration is diverse, primarily because arbitration continues to evolve rapidly in India. It is an area in which provocative ideas abound, with respect to which legal scholars and stakeholders tend to have more questions than answers. A key question in this regard concerns the acceptable level of judicial interference in arbitral awards (being a reflection of the minds of the arbitrators) and where the judiciary should draw the line.
In June 2020 the Ministry of Corporate Affairs issued the Companies (Share Capital and Debentures) Amendment Rules 2020, doing away with the non-convertible debentures (NCD) deposit requirement for all listed companies (including non-banking financial companies and home finance companies) in the context of their issuance of privately placed debentures. This article examines the genesis of the NCD deposit requirement and whether there is a case for further relaxations, among other things.
With the enactment of the Factoring Regulation Act 2011, for the first time a consolidated legal framework governing all aspects of and codifying the law applicable to factoring transactions was introduced in India. While the act's introduction was important, its Achilles heel has always been the limitations that it places on the types of entity which can engage in the factoring business – in particular, its peculiar treatment of non-banking financial companies, an important class of lenders in India.
Securitisation as a structured finance mechanism has several commercial advantages, including balance sheet and risk management, increased liquidity, cost-efficient financing, the marketability of the resulting securities and the opportunity for portfolio diversification. With the continuing need for liquidity by non-banking financial companies, the growing appetite of investors and the developments on the regulatory front, securitisation is likely to remain on the upward curve in the near future.
The Reserve Bank of India recently issued a circular introducing changes to the regulatory framework for housing finance companies (HFCs). Among other things, the circular defines what constitutes an HFC, sets out the minimum net owned funds required by HFCs and sets out the requirements for non-banking financial company-investment and credit companies. This article examines the recent changes.
The Reserve Bank of India recently announced a resolution framework for COVID-19-related stress to address borrower default pursuant to the stress caused by the pandemic without necessitating a change of ownership and without an asset classification downgrade modifying the existing framework. This article focuses on the key changes introduced for corporate loan accounts (ie, exposures other than personal loans).
The Competition Commission of India (CCI) recently imposed a Rs80,185 fine on the Jalgaon District Medicine Dealers Association for collecting product information service (PIS) charges from pharma product manufacturers, thereby restricting medicine supplies in the market. Although this order is one in a series imposed by the CCI on chemist and druggist associations, it is the first to impose fines solely for the collection of PIS charges.
In April 2019 the Delhi High Court disposed of 12 writ petitions filed by 10 car manufacturers and India's largest music label and movie studio. The writ petitions had challenged the main provisions of the Competition Act 2002 and were filed against a common order passed by the Competition Commission of India, which had found that 14 car manufacturers had been dominant in their respective markets and abused this dominance by preventing the establishment of an aftermarket in India.
On 15 January 2019 the Supreme Court allowed the Competition Commission of India's (CCI's) appeal against a Delhi High Court order which had prohibited the CCI director general from acting on the evidence seized during a dawn raid of 19 September 2014. The dawn raid in question was the first to be conducted by the director general and formed part of the investigation into JCB India Limited's alleged abuse of its dominant position.
The Competition Commission of India (CCI) has dismissed allegations of resale price maintenance against Kaff Appliances (India) Pvt Ltd under Section 26(6) of the Competition Act 2002. The CCI noted that it could not conclusively establish that the evidence (ie, an email, a caution notice and a legal notice) had been used as instruments to impose a resale price maintenance on the informant. Further, the presence of many competing dealers suggested a fair degree of intra-brand competition.
In January 2019 the Competition Commission of India imposed a penalty of Rs85,01,364 on Godrej & Boyce Manufacturing Co Ltd for its role in a bilateral ancillary cartel, which violated Section 3(3) read with Section 3(1) of the Competition Act. Godrej's role in the cartel had been revealed via a leniency application filed by Panasonic Corporation, Japan on behalf of itself and its Indian subsidiary.
The Companies Act 2013 is the exclusive legislation which deals with corporate social responsibility (CSR) provisions in India. In response to the COVID-19 pandemic, the Ministry of Corporate Affairs has issued various amendments to the Companies Act. On the one hand, the amendments propose to provide ease of compliance to companies; however, on the other, they also seek to penalise companies and their officers for non-compliance with CSR provisions.
The Companies (Amendment) Act 2020 and the Foreign Contribution (Regulation) Amendment Act 2020 recently came into force, amending the Companies Act 2013 and the Foreign Contribution (Regulation) Act 2010. This article sets out the salient changes introduced by both amendment acts, including with respect to producer companies, offences and the remuneration of non-executive directors.
In view of the COVID-19 pandemic and continuing restrictions on the movement of individuals, the Ministry of Corporate Affairs (MCA) recently issued a circular allowing companies to convene their annual general meeting (AGM) through videoconferencing or other audiovisual means (ie, electronically). With AGMs around the corner, it will be interesting to see how companies will hold virtual AGMs in practice and whether companies and their members will welcome the MCA's relaxations.
India's company law regime has evolved over the years and become stricter and more penal in nature. There has been a paradigm shift in the legislature's viewpoint with regard to the Companies Act's stringency. There has also been a recent trend to promote foreign investment in India. Accordingly, the legislature has adopted measures in order to decriminalise – or at least liberalise – India's company law regime.
Proxy advisers have gained prominence over recent years in relation to corporate governance matters and have become an integral part of shareholder activism in India. In order to standardise the process across proxy advisory firms, the Securities and Exchange Board of India recently issued its Procedural Guidelines for Proxy Advisers and a circular on grievance resolution between listed entities and proxy advisers.
Owing to market dynamics and in an attempt to clear certain regulatory cobwebs, the Securities and Exchange Board of India recently issued a circular which applies to all mergers, demergers, amalgamations and arrangements filed with a stock exchange after 17 November 2020. While the circular will undoubtedly ensure higher levels of transparency and disclosure with respect to proposed schemes, it has introduced additional responsibilities for listed companies' audit and independent directors' committees.
In the realm of M&A and private equity (PE), pricing a deal is not an exact science. Despite in-depth financial, business and legal due diligence, the buyer can never be certain that they are not overvaluing or undervaluing the target. Add a pandemic to the mix, and this uncertainty as to valuations is further magnified. This article takes a closer look at various post-closing adjustment mechanisms used in PE and M&A deals involving Indian private companies.
In light of the disruption caused by the COVID-19 pandemic, India has adopted a similar approach to the United States and Europe and restricted foreign direct investment from certain jurisdictions. By way of a notification issued by the Department of Economic Affairs, the government has introduced measures to curb opportunistic takeovers (direct or indirect) of Indian companies by persons or entities of any country which shares a land border with India.