The Delhi High Court recently held that a Section 11 petition under the Arbitration and Conciliation Act 1996 is maintainable for seeking the appointment of an independent arbitrator when the existing arbitrator's appointment under the lease deed differed to the agreed procedure stipulated in the arbitration clause of said lease deed and was undertaken unilaterally by a party. This decision further clarifies the scope of Section 11 of the act.
The Delhi High Court recently granted an anti-arbitration injunction in relation to an arbitration invoked in accordance with the terms of a family trust deed, which provided for arbitration to be governed under the aegis of the International Chamber of Commerce, by holding that disputes in relation to trusts are non-arbitrable. The court ruled that it is the prerogative of the courts (and not arbitral tribunals) to determine the arbitrability of a dispute, notwithstanding the competence-competence principle.
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.
The National Company Law Appellate Tribunal (NCLAT) recently allowed the invocation of a bank guarantee during a moratorium period imposed under Section 14 of the Insolvency and Bankruptcy Code 2016 because of a retrospective amendment made to that section. The NCLAT decision is a welcome clarification of the issue of whether financial bank guarantees can be invoked during a moratorium period.
The Maharashtra governor recently promulgated the Maharashtra Stamp (Amendment and Validation) Ordinance 2021 with immediate effect. The ordinance introduced two key amendments to the Maharashtra Stamp Act 1958 concerning the stamping of documents that encompass multiple transactions and stamp duty rates for agreements that relate to the deposit of title and mortgage deeds.
The Ministry of Corporate Affairs recently brought much-awaited relief to purely debt-listed public and private companies by exempting them from the purview of 'listed companies' (and associated compliances) under the Companies Act 2013 and the rules thereunder. This amendment comes into effect on 1 April 2021. The rationale for the amended definition is to reduce the compliance burden and facilitate business for Indian companies.
The recent downfall of a prominent group helmed by a highly rated core investment company (CIC) brought the relatively lighter-touch regulatory regime for CICs into focus and demonstrated the need to strengthen the same. In this context, the Reserve Bank of India formed a working group to review the regulatory and supervisory framework for CICs and subsequently modified the regulatory regime based on the working group's recommendations.
The Securities and Exchange Board of India recently issued several amendments and clarificatory circulars in respect of debenture issuance in India in order to enhance the transparency of disclosures by issuers, strengthen the role of debenture trustees (DTs) and protect the interests of investors. These changes reflect a paradigm shift with respect to the role envisaged for DTs, while issuers are also now subject to a much stricter regime.
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.
In order to improve limited liability partnership (LLP) compliance and regulate the designated partners of LLPs, the Ministry of Corporate Affairs recently stated that it will extend certain sections of the Companies Act 2013 to the Limited Liability Partnership Act and therefore LLPs. It is surprising that the LLP structure, which was introduced by the government to relax and ease the process of setting up small businesses, is now pushing the same small enterprises towards a stricter compliance regime.
When the Companies Act 2013 entered into force, the concept of 'one-person companies' ('OPCs') was introduced. New amended rules recently entered into force and provide that natural persons who are Indian citizens, whether resident in India or not, can incorporate OPCs in India. This move has been highly welcomed by start-ups and innovators as it will boost the entrepreneurial capabilities of non-resident Indians and overseas citizens of India and help them to enter the Indian market.
In 2020 the central government issued an office memorandum which stated that the hindrances that have occurred within supply chains due to COVID-19 should fall within the purview of natural calamity and thus force majeure clauses may be invoked in situations where deemed appropriate. The crux of the issue is: when can force majeure be invoked due to breaches that have occurred in contracts between parties due to COVID-19?
The central government recently notified the Foreign Contribution (Regulation) Amendment Act. The amendment act aims to strengthen organisations' compliance mechanisms, enhance transparency and accountability in the use of foreign contributions and prevent the misuse of funds received from foreign contributions by certain organisations and instead promote the use of such funds by genuine non-governmental organisations which are working to improve the welfare of society.
The Companies (Amendment) Act recently entered into force and aims to decriminalise minor, technical and procedural non-compliance based on the nature and gravity of such offences, thereby facilitating and promoting the ease of doing business and further facilitating the ease of living for law-abiding corporates in India.
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.