November 2024 - S&R Associates

Levelling the Playing Field: Supreme Court Decides on Unilateral Appointment of Arbitrators

Insights | November 26, 2024 | Practice Area: Litigation and Arbitration

State-owned enterprises (“SOEs”) in India have historically stipulated in their commercial contracts that arbitrators must be chosen from a panel pre-determined by the SOEs. These clauses have been challenged as being unfair, but Indian courts have taken differing views in the matter. A five-judge bench of the Supreme Court of India has, however, attempted to put these issues to rest in the case of Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV). The Supreme Court has ruled that unilateral appointments of arbitrators, including in the public-private contracts, are invalid. The Supreme Court has further held that while SOEs are not prohibited from curating a panel of arbitrators, an arbitration clause cannot mandate that the other party selects its arbitrator from such curated panel. In this note, we discuss the key findings of the decision and analyze the challenges which may arise.

From Rescue to Ruin: The Supreme Court’s Judgment in Jet Airways and the Future of Airline Insolvencies

Insights | November 21, 2024 | Practice Area: Banking and Finance, Litigation and Arbitration, Restructuring and Insolvency

In a recent judgment, the Supreme Court of India ordered the liquidation of Jet Airways (India) Limited, bringing an end to the five-year-long saga of efforts to revive the distressed airline. Two years after the airline entered the corporate insolvency resolution process, the National Company Law Tribunal, in June 2021, approved the resolution plan submitted by the Jalan Fritsch Consortium, the successful resolution applicant. However, various challenges arose with implementation of the resolution plan, which led the successful resolution applicant to seek multiple extensions and concessions from the adjudicating authority. Finally, the Supreme Court set aside the March 2024 order of the National Company Law Appellate Tribunal and used its inherent powers under Article 142 of the Constitution to order the airline’s liquidation.

The Supreme Court’s judgment is significant as it underscores the importance of implementing resolution plans within agreed upon timelines and identifies certain gaps and shortcomings in the Insolvency and Bankruptcy Code, 2016 as far as implementation of resolution plans are concerned. This note analyzes the judgment to discuss its implications for the implementation of resolution plans as well as specific challenges in the context of insolvencies in the aviation industry.

Permissibility of Selective Capital Reduction Under the Companies Act, 2013 and the Wider “Take Private” Question

Insights | November 20, 2024 | Practice Area: General Corporate, Mergers and Acquisitions

In a departure from existing precedents, the National Company Law Tribunal, Kolkata bench (NCLT), pursuant to its order dated September 19, 2024, rejected a petition for reduction of capital under Section 66 of the Companies Act, 2013 filed by Philips India Limited, an unlisted company, to cancel and extinguish the equity shares held by the non-promoter shareholders. The rejection was on the basis that the company’s main objective was a buy-back of equity shares from the minority public shareholders and that the reduction of share capital was only incidental to the company’s main objective. This note analyzes the permissibility of selective capital reduction under the Companies Act, 2013 in light of the decision of the NCLT in Philips India and the wider question on ‘take private’ transactions.

Lessons from OpenAI: Boards and the Spin of Corporate Governance

Insights | November 18, 2024 | Practice Area: Corporate Governance and ESG, General Corporate, Private Equity, Technology; Media and Telecommunications

Widely regarded as the most innovative AI organization in the world, OpenAI’s management model presents a unique approach to corporate governance involving a majority-independent board of directors as final decision makers. In 2023, OpenAI’s CEO was fired and immediately reinstated, within a short period of a week. Such events highlight the reality of independent corporate governance models and suggest that truly independent structures may struggle in modern business environments. This note also briefly considers removal of directors from an Indian perspective.

M&A in the Ports Sector in India: Key Regulatory and Contractual Considerations

Insights | November 14, 2024 | Practice Area: Mergers and Acquisitions, Private Equity, Projects; Infrastructure and Energy, Regulatory

The Indian ports sector is witnessing increased private sector participation, particularly by way of Public-Private Partnerships (“PPP”). The government has facilitated private sector participation by adopting investor friendly PPP models and streamlining tender processes and concession agreements for major ports. Due to multiple regulatory authorities and differing practices of port authorities, mergers and acquisitions in the ports sector in India are associated with unique considerations that potential acquirers should bear in mind. This note discusses the key regulatory and contractual considerations relevant to mergers and acquisitions in the ports sector in India.

Clean Energy: Issue 3 of 2024

Quarterly Roundups | November 13, 2024 | Practice Area: Clean Energy, Projects; Infrastructure and Energy, Regulatory

Issue 3 of 2024 of our Quarterly Roundup Series on Clean Energy covers the period between July and September 2024 and tracks key regulatory developments at both central and state levels in solar and wind generation, green hydrogen/ ammonia production, EVs, tariffs, connectivity and other miscellaneous updates.

RERA: Issue 1 of 2024

Quarterly Roundups | November 13, 2024 | Practice Area: Real Estate

This Quarterly Roundup relates to cases arising from Real Estate Regulation Act, 2016 (“Act/RERA”) for the period between July and September 2024. Issue 1 sets out a compilation of selected judgements, orders and circulars for the covered period, highlighting recent legal developments influenced by the continuous changes in the real estate sector. These decisions reflect the perspective of the Real Estate Regulatory Authorities, essential for the interpretation of the Act and shaping the legal framework. This compilation of judgments and orders serves as an essential guide to understanding the implications of RERA’s evolving framework.

Clarification on Exemption from Project Registration and Interpretation of Commencement and Completion Certificate

Legal Updates | November 5, 2024 | Practice Area: Banking and Finance, InvITs; REITs and Business Trusts, Projects; Infrastructure and Energy, Real Estate

Maharashtra Real Estate Regulatory Authority (“MahaRERA”) earlier had already issued clarification regarding projects which are exempted from getting registered under the Real Estate (Regulation and Development) Act, 2016 and what denotes a commencement certificate and completion certificate in plotted real estate projects vide circulars and orders. However, there was still some ambiguity regarding interpretation of these issues. Therefore, in order to ensure ease of reference and harmonious construction as well as to cure the anomaly, MahaRERA decided that these issues covered under various circulars/orders be merged and incorporated in a consolidated order and hence issued the present order i.e. Order No.62/2024.

The New India-UAE BIT: Changing the Model BIT by BIT

Insights | November 5, 2024 | Practice Area: Litigation and Arbitration, Mergers and Acquisitions, Private Equity, Regulatory

The new bilateral investment treaty (“BIT”) signed by India and the United Arab Emirates (“UAE”) earlier this year replaces the 2013 India-UAE BIT and entered into force on August 31, 2024. The 2024 India-UAE BIT seeks to stimulate investment across a broad range of sectors and marks a key policy shift in India’s foreign investment protection regime. Importantly, the new treaty departs from India’s Model BIT in several significant aspects. These include extension of investment protection to portfolio investments, reduction in the timeline for exhaustion of local remedies before commencing arbitration, and a blanket prohibition of third-party funding.
In this note, we analyze some of the key features of the 2024 India-UAE BIT, including the indications, if any, regarding India’s position on its Model BIT and what this may signify for ongoing negotiations on other BITs.