India updates

Arbitration & ADR

Contributed by Khaitan & Co
Arbitrability of consumer disputes: loophole in Booz Allen framework?
  • India
  • 14 March 2019

The Supreme Court recently ruled that consumer disputes are incapable of being submitted to arbitration, placing them in the infamous category of 'non-arbitrable' subjects in India. However, the court also stated that where an elected consumer fails to file a consumer complaint, the parties are not barred from submitting the dispute to arbitration. This article analyses whether such a statement could have far-reaching implications for arbitrability as a ground for challenging an award.

Clarity in arbitral proceedings – legislation post-pronouncement of arbitral award
  • India
  • 07 February 2019

The focus of India's rapidly evolving arbitration regime appears to be concentrated on factors such as ensuring that arbitrations are completed in a timely manner and appointed arbitrators are impartial. While these factors are significant, the importance of substantive and procedural clarity in terms of what happens after an award is passed is also crucial.

Revisiting Supreme Court Centrotrade decision and utility of two-tier arbitration clauses
  • India
  • 13 December 2018

Two-tier arbitration clauses or appellate arbitration mechanisms were upheld by a three-judge bench of the Supreme Court in Centrotrade Minerals and Metal Inc v Hindustan Copper Limited. This article discusses the evolution of the jurisprudence surrounding two-tier arbitration in India and analyses both the utility of such a mechanism for the parties and its usefulness in certain situations.

Unsigned arbitration agreement does not bar arbitration
  • India
  • 29 November 2018

The Supreme Court recently held that the only prerequisite for an arbitration agreement is that it be in writing. Through this decision, the court has adopted a pro-arbitration approach and, as such, may contribute positively to the existing jurisprudence on the Indian arbitration regime. By relying on the unsigned bill of lading, the court focused on the parties' conduct and intent, both of which indicated that there was an arbitration agreement between them.

Non-signatory to arbitration: right to appeal under Section 37
  • India
  • 18 October 2018

The Bombay High Court recently issued a landmark ruling regarding third parties' right to challenge interim measures granted by an arbitral tribunal under the Arbitration and Conciliation Act. The ruling is a welcome reprieve for non-signatories to arbitration proceedings in situations where disputes between arbitrating parties have a bearing on their rights and interests, as well as a step towards balancing innocent parties' interests.


Changes to merchant discount rate framework: impact on stakeholders
  • India
  • 02 March 2018

The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.

Competition & Antitrust

Contributed by Vaish Associates Advocates
CCI launches investigation against ONGC for abuse of dominant position
  • India
  • 21 March 2019

The Competition Commission of India has launched an investigation under the Competition Act against Oil and Natural Gas Limited (ONGC) for abuse of its dominant position in the relevant market. The investigation stemmed from allegations made by the informant that ONGC had imposed one-sided and onerous terms in its charter hire agreements with suppliers of offshore support vehicles.

CCI approves Bayer's acquisition of Monsanto subject to structural modifications
  • India
  • 14 March 2019

The Competition Commission of India has approved Bayer Aktiengesellschaft's proposed acquisition of Monsanto Company, subject to certain remedies. For example, the combined entity must give the government access to Indian agro-climatic data free of charge and cannot directly or indirectly impose commercial dealings capable of causing exclusivity in the sales channel for the supply of agricultural products.

CCI imposes penalty on SALPG for denying market access
  • India
  • 21 February 2019

The Competition Commission of India (CCI) has penalised South Asia LPG Company Ltd for abusing its dominant position on the market for upstream terminaling services at the Visakhapatnam port. The CCI held that SALPG had denied market access at the port to a private terminal operator. This landmark case is a good example of a dominant enterprise denying an essential facility to a competitor without any objective justification.

CCI issues fourth order under leniency provisions
  • India
  • 31 January 2019

The Competition Commission of India (CCI) has imposed a penalty of Rs223.6 million on Essel Shyam Communication Limited (ESCL) for bid rigging in tenders floated by sports broadcasters, including those for the 2012 Indian Premier League. The CCI ultimately reduced the fine imposed on ESCL and its officials under the leniency provisions contained in the Competition Act. This is the fourth order that the CCI has issued under these provisions.

CCI dismisses findings of cartelisation against 37 signalling cable suppliers
  • India
  • 24 January 2019

By way of a 2018 order, the Competition Commission of India (CCI) rejected the director general's findings and closed the case against 37 signalling cable suppliers concerning allegations of bid rigging in eight tenders. The CCI's decision is significant, as although the bidders were found to have presented similar or identical bids, careful scrutiny showed that there was no evidence of any anti-competitive agreement or arrangement among the five subsets, nor any evidence to suggest tacit collusion.

Corporate Tax

Contributed by BDO LLP
GST not applicable on reimbursement of salary on behalf of foreign entity as pure agent
  • India
  • 08 March 2019

The Authority for Advance Rulings recently considered the applicability of goods and services tax (GST) on expense reimbursements in the case of 'pure agents' – a key concept when evaluating taxable services, particularly for tax exemption claims in respect of expense reimbursements and applicable GST. While rulings are binding only on the taxpayer that raises the question, they carry persuasive value in identical situations.

Taxability of profit from sale of shares
  • India
  • 15 February 2019

While the classification of gains arising from a sale of shares has previously been litigated, the Bombay High Court recently dealt with the issue of whether gains arising from such a sale by a private trust would be taxable as capital gains or business income. The ruling examines not only the treatment of shares, but also the use of sales proceeds to conclusively adjudicate on the intentions behind the sale.

Mumbai Tax Tribunal's recent rulings
  • India
  • 08 February 2019

The Mumbai Tax Tribunal recently considered whether the conversion of a company into a limited liability partnership could be considered a transfer even though it had failed to meet all of the conditions set out in Section 47(xiiib) of the Income Tax Act. In another case, the tribunal referred to a Delhi High Court ruling and stated that preference shares are part of a company's share capital and cannot be considered a loan.

Changes to direct tax-related policies and procedures
  • India
  • 25 January 2019

Recent changes to direct tax-related policies and procedures include the newly reinstated task force – which was reconstituted in order to review the Income Tax Act and draft a new direct tax law. It is scheduled to submit its report to the government by the end of February 2019. Further, the Indian government has signed a protocol with the Chinese government, amending the India-China tax treaty. The protocol incorporates changes pursuant to Base Erosion and Profit Shifting Action Plan reports.

Taxability of back-office support services provided to overseas companies
  • India
  • 21 December 2018

A recent advanced ruling examined the applicability of goods and services tax (GST) to back-office support services provided by an Indian company to a foreign client. The Advance Ruling Authority held that the back-office support services in question should be treated as intermediary services, which are not eligible to be exempt from the GST applicable to an export of services since, as per GST law, intermediary services provided by Indian companies are treated as services supplied in India.

Employment & Benefits

Contributed by Shardul Amarchand Mangaldas & Co
Reducing minimum period of unemployment to withdraw provident fund accumulations
  • India
  • 22 August 2018

The Central Board of Trustees of the Employees' Provident Fund Organisation recently approved a proposal to permit provident fund members to withdraw 75% of their accumulations after a period of one month of continuous unemployment instead of two months. The proposal would come into effect when the Employees' Provident Funds and Miscellaneous Provisions Act and the Employees' Provident Funds Scheme are amended.

Code on Wages soon to be introduced
  • India
  • 28 March 2018

The new Code on Wages 2017 was recently introduced in Lok Sabha and is currently pending approval. The code seeks to integrate, amend and simplify the four central labour laws in order to reduce the multiplicity of definitions given under various labour legislation and foster a conducive labour environment by facilitating ease of compliance, thereby promoting the establishment of more organisations and creating more employment opportunities.

Increase in gratuity limit
  • India
  • 15 November 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
  • India
  • 04 October 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.

Social security obligation for outbound employees
  • India
  • 28 June 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.