India updates

Arbitration & ADR

Contributed by Khaitan & Co
Patent illegality: Supreme Court travels a long road to tame a herd of unruly horses
  • India
  • 16 July 2020

The patent illegality ground was formally introduced to the Arbitration and Conciliation Act 1996 by way of the Arbitration and Conciliation (Amendment) Act 2015. Prior to 2015, the scope of this ground of challenge was set out in various Supreme Court decisions stemming from Oil & Natural Gas Corporation Ltd v Saw Pipes Ltd. This article examines the genesis of patent illegality and tracks its trajectory from Oil & Natural Gas Corporation.

Arbitration under special statutes with regard to contractual stipulations
  • India
  • 09 July 2020

The freedom to contract principle forms the basis of the Contract Act, and a similar principle is also provided for in the Arbitration and Conciliation Act. However, the question often arises as to what happens when one party – despite a contractual agreement setting out the scope and ambit of arbitration – seeks recourse to remedies provided for under a special statute. This article examines this issue in view of the Micro, Small and Medium Enterprises Development Act.

Enforcement of foreign arbitral awards and scope of judicial intervention: a minimalist approach
  • India
  • 02 July 2020

The enforcement of a foreign arbitral award in India is founded on the fundamental principle of minimal judicial intervention in order to further India's pro-arbitration and consequently pro-foreign investment climate. However, the Delhi High Court recently refused to enforce a foreign arbitral award under the Arbitration and Conciliation Act. This article analyses the court's decision, its reasons for refusing the enforcement of the award and whether this judgment is a step back for Indian arbitration law.

Foreign arbitral award allows exit based on put option? "No worries" says Bombay High Court
  • India
  • 25 June 2020

The Bombay High Court recently passed an order in favour of the enforcement of a foreign arbitral award which had been rendered by an arbitral tribunal constituted under the Singapore International Arbitration Centre Arbitration Rules. The award upheld the validity and performance of a put option created pursuant to a share subscription agreement and a put option deed, which provided a foreign investor with an exit from its investment in an Indian company on agreed terms and conditions.

Anti-arbitration injunctions: use and controversy
  • India
  • 04 June 2020

While anti-suit injunctions are typical court-ordered injunction orders which restrain the parties from initiating or continuing legal action in foreign courts, anti-arbitration injunctions are specific orders which prohibit parties from initiating or continuing arbitration proceedings. As the Indian courts may assume jurisdiction and grant anti-arbitration injunctions even though they seem to weaken the competence-competence principle, these injunctions are highly controversial.


Banking & Financial Services

Union Budget 2019: key capital markets highlights
  • India
  • 06 August 2019

On the back of its new electoral mandate, the Modi Sarkar 2.0 government recently presented its first budget. The budget focuses primarily on infrastructure spending and boosting investment from private and foreign investors, with the government forecasting that the Indian economy will grow to $5 trillion by 2025. Following the budget announcement, a slew of reforms and policies are expected in the coming months. This article highlights some of the key capital market-related amendments.


Competition & Antitrust

CCI fines JDMDA for imposing PIS charges on pharma companies
  • India
  • 28 November 2019

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.

High court settles constitutional challenges to Competition Act
  • India
  • 26 September 2019

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.

Supreme Court permits material seized during dawn raid to be used as evidence
  • India
  • 19 September 2019

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.

CCI finds no evidence of resale price maintenance in sale of Kaff appliances on Snapdeal
  • India
  • 12 September 2019

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.

CCI penalises Godrej for role in bilateral ancillary cartel
  • India
  • 05 September 2019

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.


Corporate & Commercial

Contributed by Clasis Law
Reclassification of micro, small and medium enterprises provides stimulus to enterprises in light of COVID-19
  • India
  • 03 August 2020

The Ministry of Micro, Small and Medium Enterprises recently notified certain criteria for classifying enterprises as micro, small and medium enterprises (MSMEs) and specified the form and procedure for filing the applicable memorandum. The change in the classification of MSMEs is a part of the relief package offered to the MSME sector amid the COVID-19 outbreak. This reclassification has been well received across sectors as it will help MSMEs to increase in size without losing their entitled benefits.

MCA temporarily allows certain restricted corporate actions to occur at virtual board meetings
  • India
  • 13 July 2020

The COVID-19 pandemic has affected businesses' ability to comply with various statutory rules and regulations due to lockdowns and other social distancing measures. The government – particularly the Ministry of Corporate Affairs (MCA) – has proactively introduced various measures to support companies in their ability to comply with the Companies Act 2013. Most notably, the MCA has relaxed the restrictions around which corporate actions can occur at virtual board meetings until 30 September 2020.

Laws governing companies: overview
  • India
  • 22 June 2020

When setting up a business in India, attention must be paid to the laws which govern companies. Of particular note is the Companies Act, which encompasses a wide range of provisions relating to governance, including with regard to incorporation, capital infusion, management and administration, audits and accountability.

Setting up a business in India
  • India
  • 15 June 2020

When setting up a business, it is crucial to determine the appropriate legal entity in view of the business's exact needs. The entity should be relevant from a fundraising and taxation perspective and with respect to the foreign direct investment norms in light of the nature of the business and the activities that it proposes to conduct. For instance, certain relaxations are offered to limited liability partnerships which are not offered to companies and vice versa.


Corporate Tax

Taxation (Amendment) Ordinance 2019: what you need to know
  • India
  • 04 October 2019

Over the years, India has witnessed a number of notable tax reforms. Now – in yet another attempt to enhance the country's attractiveness as a business destination, boost investment and encourage manufacturing – the government has introduced the Taxation Laws (Amendment) Ordinance 2019, which has amended the Income Tax Act 1961 and the Finance (No 2) Act 2019. In so doing, India has tried to bring its tax rate in line with other countries and has given domestic companies a level playing field.

General Anti-avoidance Rule – a pivotal development
  • India
  • 13 September 2019

In an attempt to curb tax evasion and avoid tax leakage, the government introduced the General Anti-avoidance Rule (GAAR), which took effect from April 2017. Following the introduction of the GAAR, businesses have had to revisit and revalidate their transactions. Further, as there are a number of potential issues that may be faced by taxpayers, they must observe the types of transaction that are likely to be affected.

CBDT clarifies assessment procedure for start-ups
  • India
  • 23 August 2019

The Central Board of Direct Tax (CBDT) recently issued a circular clarifying the applicability of Section 56(2)(viib) of the Income Tax Act and the procedure that must be followed by tax officers in assessment proceedings. Although an attempt has been made to end the confusion created in the start-up community, uncertainty surrounding the legal basis for the Department for Promotion of Industry and Internal Trade and CBDT notifications regarding the applicability of Section 56(2)(viib) remains.

Union Budget 2019: key tax highlights
  • India
  • 02 August 2019

On the back of its new electoral mandate, the Modi Sarkar 2.0 government recently presented its first budget. The budget focuses primarily on infrastructure spending and boosting investment from private and foreign investors, with the government forecasting that the Indian economy will grow to $5 trillion by 2025. Following the budget announcement, a slew of reforms and policies are expected in the coming months, including a draft of the much-awaited Direct Tax Code.

Does Section 195 of Income Tax Act apply to salaries of employees seconded by foreign entities?
  • India
  • 05 July 2019

The Bombay High Court recently considered whether a taxpayer, which was resident in India and the sole owner of a business that provided personnel on an as-needed basis to foreign companies, had been required to deduct tax under Section 195 of the Income Tax Act when paying an employee who it had loaned to a Kuwait-based company. Section 195 of the act requires taxpayers to deduct tax on any payment (other than salary payments) made to non-residents.