The vexed question of whether two Indian parties can validly choose a foreign seat of arbitration under Indian law and the applicability of interim relief, in the event of such a choice, remained a long-standing debate. It is relevant to note that there was never an express statutory bar on Indian parties’ choice to select a foreign seat of arbitration under the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”). However, the complex interplay of the party-centric definition of “international commercial arbitration” with certain other provisions of the Arbitration Act, in the context of a fundamental principle of Indian law that no Indian party can exclude the application of Indian law to itself, led to conflicting decisions on this issue. The uncertainty forced Indian parties to actively avoid a foreign seat of arbitration to circumvent a potential challenge to the validity of the arbitration agreement at the time of enforcement of the award. Recently, the Supreme Court of India revisited this question in PASL Wind Solutions Private Limited v. GE Power Conversion India Private Limited, 2021 SCCOnLine SC 331 and affirmed that two Indian parties can not only validly select a foreign seat of arbitration but can equally apply to Indian courts for interim relief under Section 9 of the Arbitration Act.
On June 15, we had written about a proposed preferential issue by PNB Housing Finance, in respect of which a proxy advisor issued a report asking public shareholders to vote against the proposed investment. As an alternative to a preferential issue, the report suggested that the company should have considered a “rights issue”. In our previous article, we considered a “rights issue” and a “preferential issue” from the perspective of certainty in funding, disclosure obligations, approvals and timelines and pricing.
The debate has since focused on whether the proposed preferential issue required a report of a registered valuer and whether such a report was in fact procured. In this article, we consider the legal framework around which the debate turns, comprising the SEBI ICDR Regulations, the Companies Act and PNB Housing Finance’s articles of association.