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Allahabad Bank v. Poonam Resorts: NCLAT’s Primer on Section 7

[Soham is an Associate at Vashi and Vashi Advocates and Solicitors, Mumbai.] There is no gainsaying in the fact that whilst an insolvency application filed by an operational creditor can be denied admission on the grounds of a ‘pre-existing dispute’, the Insolvency and Bankruptcy Code 2016 (IBC) does not envisage entertaining similar objections in relation to an application filed with respect to financial debt, especially at the stage of admission. In cases of applications filed under Section 7 of the IBC (Section 7 Application), the National Company Law Tribunal (NCLT) merely has to ascertain the following: whether there exists a default; whether the application is complete in all respects;

NAFED v. Alimenta: Whether 'Fundamental Policy of India' Was Falsely Relied Upon for Setting

[Deeksha and Bodhisattwa are students at Maharashtra National Law University, Mumbai.] The Hon’ble Supreme Court of India has seemingly put an end to an enforcement battle in National Agricultural Cooperative Marketing Federation of India (NAFED) v. Alimenta S. A. (Alimenta) which had been ongoing for almost 40 years now. In its decision dated 22 April 2020, the court set aside a foreign arbitral award on the ground that the agreement which the parties had entered into was void under Section 32 of the Indian Contract Act 1872 (Contract Act), its enforcement thus being against the public policy of India. The authors in this article argue that the court has erroneously relied upon the ground o

IBC (Amendment) Ordinance 2020: A Shot in the Uncharted Territory?

[Sumit is a student at West Bengal National University of Juridical Sciences, Kolkata.] Unprecedented lockdowns have severely impacted businesses and financial markets and ravaged the foundations of the economy in the country as the corporate defaults have been on the rise. Amid this chaos, resolution applicants seeking to rescue defaulters are becoming difficult to come by. The concept of creditor-in-possession emanating from Insolvency and Bankruptcy Code 2016 (IBC) blended with continuous lockdowns have further imperiled the standing of corporate debtors. The government, in a bid to uplift the economy, has been coming up with several reforms and relaxations in the economic arena. As a res

Leaving IBC in the Lurch: Issues Unattended by NCLAT in JSW-BPSL Case

[Devansh is a student at Ram Manohar Lohia National Law University.] The unification of insolvency laws in the form of the Insolvency Bankruptcy Code 2016 (Code) has been a colossal respite to the withering economy replacing the erstwhile Sick Industrial Companies Act (SICA) regime. Not only has it put the cases on an accelerated track, but it has also witnessed a paradigm shift from a ‘debtor in possession’ model to a ‘creditor in control’ one. Nevertheless, at times, the purpose of the Code becomes uncertain , such as when it was witnessed to be at loggerheads with the Prevention of Money Laundering Act 2002 (PMLA). In numerous instances, PMLA prevailed over the Code despite the founding p

COVID-19 as Force Majeure under RERA: A Tool to Limit Statutory Right?

[Rishabh and Rakesh are students at National University of Study and Research in Law, Ranchi.] The nation-wide lockdown has led to the halting of ongoing real estate projects around the country. The Ministry of Housing and Urban Affairs (MOHUA) in its Office Memorandum dated 13 May 2020 (Advisory) has declared the current pandemic as a force majeure event for the purposes of Real Estate (Regulation and Development) Act 2016 (RERA) and extended the timelines for registration and completion of real estate projects. Primarily, the Advisory provides extension of registration of real estate projects due to the force majeure under Section 6 of RERA. Although Section 6 provides only for extension o

The Missing Power of NCLT: Prospect of Contempt Proceedings under IBC

[Preksha and Anchit are students at Gujarat National Law University.] Under Part II of the Insolvency and Bankruptcy Code 2016 (IBC), the adjudicating authority, which is the National Company Law Tribunal (NCLT), has been given wide and extensive powers with respect to the resolution and liquidation proceedings of the corporate debtor. While the provisions of the IBC confer multiple powers upon the NCLT, there are many provisions applicable to the proceedings before the NCLT, which are found outside the IBC, such as in the Companies Act 2013. These provisions apply in proceedings under the IBC through Section 5(1) of the IBC, which defines the adjudicating authority as the NCLT as constitute

The Superon Case: Delhi High Court Reopens the Debate on Scope of Proviso to Section 13(1A) of the C

[Pinak Parikh is an Associate at Singhi & Co.] In D&H India Limited v. Superon Schweisstechnik India Limited (Superon), the commercial appellate division of the Delhi High Court observed that Section 13(1A) of the Commercial Courts Act 2015 (Act) allows appeals to be preferred against all judgments and orders of the commercial division of the High Court to the commercial appellate division of the High Court. The proviso to the said sub-section merely clarifies that appeal shall lie against orders specified under Order XLIII of the Code of Civil Procedure 1908 (CPC). Concomitantly, the court observed that appeal under Section 13(1A) of the Act should lie against the order passed by the single

Corporate Board Diversity: A Critical Examination of Mandatory Inclusion of Women Directors

[Tanvi Apte and Nishtha Goyal are students at NALSAR University of Law.] In the last decade, there has been a global push towards mandating or encouraging reservations for women on boards of companies.[1] India is no alien to this push. Specifically, under Section 149 of the Companies Act 2013, all listed and certain specified public companies must appoint at least one woman director. Further, the Securities and Exchange Board of India has also made it mandatory for certain companies to have at least one woman independent director by April 2020 at the latest. The Rationale Behind Quotas – Corporate Board Diversity The broader rationale behind such quotas is the latest buzzword – “corporate b

Monsanto Judgment: A Step Towards Resolving a Jurisdictional Conundrum

[Yagya and Paridhi are students at Institute of Law, Nirma University, Ahmedabad.] On 20 May 2020, a single-judge bench of the Delhi High Court in the case of Monsanto Holdings Private Limited and Others v. Competition Commission of India and Others (Monsanto) held that the jurisdiction of Competition Commission of India (CCI) is not excluded from the matters that are essentially based on patents, yet raise significant competition concerns. The said judgment is commensurate with Telefonaktiebolaget Lm Ericsson v Competition Commission of India and Another (Ericsson), another Delhi High Court decision, pronounced in 2016. This article, while discussing the High Court’s response to the notewor

Quasi-Unilateral Appointment of Arbitrators: Where Did India Get it Wrong?

[Himanshu and Umang are students at NALSAR University of Law.] In November 2019, the Supreme Court of India (Supreme Court), in Perkins Eastman Architects DPC & Anr. v. HSCC Ltd. (Perkins), called for an end to the practice of a party unilaterally appointing the sole arbitrator. The Apex Court has set the record straight and has synced the Indian Arbitration law with the international norm. While the law is now clear on the validity of the unilateral appointment of a sole arbitrator by a party, there is still uncertainty when it comes to the validity of quasi-unilateral appointments. Quasi-unilateral appointment procedures envisage a situation wherein a fixed number of names will be forwarde

A Corporate Prescription for COVID-19 Pandemic

[Arpit Saini is a student at National Law University, Jodhpur.] The corona virus disease (COVID-19) has unsettled the stock markets. The increased outbreak of the virus has forced the government to impose lockdown and halt several business activities for an unforeseeable time period. The result will be a massive impact on the economy. For corporations, concerns have arisen over adequacy of earnings and successful repayment of debt. Uncertainty of the implications has shaken the confidence of investors. Resultantly, investors have sold their shares and the stock prices of companies have plummeted. In addition to being a serious concern for the economy, the fall in prices has left certain comp

SEAMEC v. Oil India – Was The Award Really Perverse?

[Shebani and Jai are students at Maharashtra National Law University, Mumbai.] In its recent decision, the Supreme Court of India (SC) put an end to a long legal battle between SEAMEC Ltd. (SEAMEC) and Oil India Ltd. (OIL), and in doing so set aside the Arbitral tribunal’s (Tribunal) award. Upholding the decision of the Gauhati High Court (HC), the SC held that the contractual interpretation adopted by the arbitral tribunal could not be a possible interpretation since it was entirely inconsistent with the wording and purpose of the contract. The dispute between SEAMEC and OIL arose out of a contract for drilling oil wells in the State of Assam, and specifically, the ‘change in law’ clause co

Unwrapping the Economic Package for MSMEs and Moral Hazard

[Rohit Maheshwary and Shrutika Lakhotia are students at Christ (Deemed to be University), Bangalore.] The vicious cycle of the financial crisis followed by economic meltdown has been a reality for every country. The term ‘financial crisis’ explodes various other terminologies such as “government intervention” and the “problem of moral hazard” which are inextricably intertwined with each other. However, to address the issue of the financial crisis, there is always a toss to bet on - heads, the government intervenes, or tails, it respects the concerns of moral hazard. This brings us to highlight the recent turmoil in the Indian economy which is a big reason to worry. The pandemic has caused an

Withdrawal Constraints in Hostile Takeovers: An Examination of Voluntary Open Offers During COVID-19

[Pranav Mihir Kandada is a student at NALSAR University of Law.] The economic uncertainty brought about by the present pandemic situation has broadly resulted in two issues with respect to takeovers across the globe. The first is the plunge in the share prices of many public companies. This plunge has presented an opportunity for corporate raiders (particularly foreign investors) to initiate hostile takeovers. Several countries, including India, have tightened their FDI rules to deal with this issue. The second issue is the withdrawal of takeover offers made previously due to the adverse impact of the pandemic on the acquirer’s position. Instances relating to the second issue are gradually s

The NAFED Decision: Conundrum of Enforcing a Foreign Award

[Shreya and Ishani are students at National Law University, Odisha.] In a landmark judgement rendered by the apex court of India in the case of National Agricultural Cooperative Marketing Federation of India v Alimenta S.A, a foreign award dating back to 30 years was rejected on the ground that it was contrary to the 'fundamental policy of Indian law and basic concept of justice.' The ruling essentially deals with the manner in which the foreign awards are to be treated when the content of it is repugnant to the 'public policy' of India, which is a settled principle under Section 48 of the Arbitration and Conciliation Act 1996. The Indian courts have time and again tried to interpret and li

Equalisation Levy in E-commerce Transactions: Analysis and Challenges

[Debayan Gangopadhyay is a student at ILS Law College, Pune.] Equalisation Levy (EL) is a form of tax that was recommended by the OECD in 2015 under its BEPS Action Plan-1 relating to the digital economy. The levy was a possible measure suggested by the OECD for fair taxation of online activities and generation of revenue by organisations in territories where they do not have a physical presence. As the direct tax method of income tax works on the basis of permanent establishments and falls short in taxing activities conducted only digitally, there was a need for a different tax structure to effectively tax such activities. The Indian government was quite prompt in following the recommendati

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