India updates

Arbitration & ADR

Contributed by Khaitan & Co
Enforcement of foreign awards: does violation of legal provision equate to contravention of fundamental policy?
  • India
  • 18 April 2019

In 2013 the Supreme Court held that the enforcement of a foreign arbitral award can be refused only if it is contrary to, among other things, the 'fundamental policy of Indian law'. This article focuses on the Indian courts' interpretation of this term and looks at a common question that arises in relation to this area of law – namely, whether a foreign arbitral award which is a mere violation of an Indian legal provision qualifies as a contravention of the fundamental policy of Indian law.

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.


Banking

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 grants first-ever 100% penalty reduction
  • India
  • 02 May 2019

The Competition Commission of India (CCI) recently awarded Panasonic Energy India Co Ltd the first-ever 100% penalty reduction in a leniency decision. In making its decision, the CCI observed that the investigation had been initiated based on information provided by Panasonic and that its cooperation had been essential for establishing a contravention of the Competition Act. Thus, the information provided by Panasonic was deemed to have added significant value to the investigation.

CCI issues third-ever leniency decision
  • India
  • 25 April 2019

In its third-ever leniency decision, the Competition Commission of India (CCI) granted a penalty reduction to four of the six leniency applicants. The allegations in the case concerned bid rigging in five tenders floated by the Pune Municipal Corporation in 2014 for the establishment of solid waste processing plants. The CCI found that all six of the opposing parties had participated in bid rigging or collusive bidding in contravention of the Competition Act.

Supreme Court clears air on determination of relevant market in Section 3 cases
  • India
  • 18 April 2019

The Supreme Court recently clarified that the determination of the relevant market is not a mandatory pre-condition for assessing an alleged violation of Section 3 of the Competition Act. In its application, the Competition Commission of India argued that the Supreme Court had previously given the impression that the relevant market must be determined in all cases concerning Section 3 of the act.

Supreme Court limits NCLAT's appellate jurisdiction
  • India
  • 11 April 2019

The Supreme Court recently set aside a National Company Law Tribunal order and restored the appeal which had been dismissed thereby. The appeal concerned a stay order which the Competition Commission of India had granted subject to the appellant paying a sum equal to 10% of the total penalty. In its landmark ruling, the court confirmed that the right to appeal envisioned by the Competition Act cannot be restricted by the requirement that a pre-deposit be paid.

CCI closes investigation into Kerala Cement Dealers' Association and Ramco
  • India
  • 04 April 2019

The Competition Commission of India (CCI) recently closed its investigation into the Kerala Cement Dealers' Association (KCDA) and Ramco Cements Ltd. The director general had initiated an investigation based on allegations that Ramco had been prevented from supplying cement after refusing to follow the KCDA's instructions to do so at an unfair price. However, the CCI held that the evidence collected by the director general was insufficient to prove a contravention of the Competition Act.


Corporate Tax

Contributed by BDO LLP
CBDT and GSTN to sign MoU on exchange of taxpayer information
  • India
  • 14 June 2019

The Central Board of Direct Taxes (CBDT) has authorised the principal director general of income tax (systems) to share taxpayer information with the Goods and Service Tax Network (GSTN). The CBDT also confirmed that in order to facilitate the provision of information, it will enter into a memorandum of understanding with the GSTN, which will set out, among other things, the nature of data exchanges, the ways in which confidentiality will be maintained and mechanisms for the safe preservation of data.

CBDT issues draft report on attribution of profits by permanent establishments
  • India
  • 07 June 2019

Due to the uncertainty and unpredictability resulting from the application of Rule 10 of the Income Tax Rules, the Central Board of Direct Taxes formed a committee to examine the existing profit attribution scheme. The committee recently issued a report on this issue and is seeking comments from stakeholders. Broadly speaking, the report suggests amending Rule 10 to adopt a three-factor method to attribute profits with equal weight to sales (a demand-side factor) and manpower and assets (supply-side factors).

Notable case law: private share placements, slump sales and transfer pricing
  • India
  • 10 May 2019

This article looks at notable tax decisions from the Indian courts, including a Supreme Court decision concerning the receipt of share capital in case of private share placements. It also examines the Bombay High Court's decision regarding the sale of an entire unit as a going concern and a recent case involving transfer pricing adjustments.

India signs agreement with United States on exchange of country-by-country reports
  • India
  • 03 May 2019

India and the United States recently signed an inter-governmental agreement on the exchange of country-by-country reports. As a result of this agreement, Indian constituent entities of international groups which are headquartered in the United States and have already filed country-by-country reports in that jurisdiction do not have to file such reports in India.

Hedging loss is not international transaction
  • India
  • 12 April 2019

In a recent case before the tax tribunal, a taxpayer gave an unsecured loan to its associated enterprises for which it had charged interest equal to LIBOR plus 250 basis points based on the rate at which it had borrowed funds from a foreign bank. The tax tribunal upheld the taxpayer's benchmarking and rejected the lower tax authority's contention that had the taxpayer advanced the loan to a third party, it would have charged a mark-up for its administrative expenses and the risk borne therein.


Employment & Benefits

Contributed by Shardul Amarchand Mangaldas & Co
Supreme Court rules on whether special allowances constitute basic wages for purposes of PF contributions
  • India
  • 24 April 2019

The Supreme Court recently examined whether certain components of an employee's overall salary are subject to provident fund (PF) contributions. As the Supreme Court has clarified that special allowances paid to employees must be included in the calculation of PF contributions, employers should review and analyse their current salary structures to determine any increase in PF liabilities.

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.