Supreme Court Approves Foreign-Seated Arbitrations between Indian Parties and the Right to Seek Interim Relief before Indian Courts

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.


PNB Housing Finance: The (Missing?) Registered Valuer Report

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.


Karnataka High Court’s Dismissal of Amazon and Flipkart’s Petitions – An Opportunity Missed?

The Karnataka High Court has, on 11 June 2021, dismissed the writ petitions filed by Amazon and Flipkart challenging the Competition Commission of India’s order issued under Section 26(1) of the Competition Act, 2002, directing the Director General to investigate certain alleged anti-competitive practices. While the Karnataka High Court’s judgment appears to follow well-established legal principles laid down by the Supreme Court of India, a closer examination reveals that some of the key arguments raised by Amazon and Flipkart have only been given a cursory consideration by the Karnataka High Court. Amazon and Flipkart have preferred an appeal against this judgment before a division bench of the Karnataka High Court.  This note analyzes the judgment passed by the single judge bench of the Karnataka High Court.


Corporate Governance

Corporate Governance and the case of PNB Housing Finance

Recently PNB Housing Finance announced a “preferential issue” of shares, through which the Carlyle Group will acquire a controlling interest in the company. A proxy advisor has issued a report asking public shareholders to vote against the proposed investment. The report argues that the price at which Carlyle will be investing in the company belies the company’s true value. As an alternative to a preferential issue, the report suggests that the company should have considered a “rights issue” in which all shareholders will be entitled to participate. In this context, it is important to consider whether a preferential issue and a rights issue are, in fact, comparable options for fundraising and accordingly, if there is merit in the allegation of poor corporate governance that has been levelled against the target company’s board of directors.


FDI in India

Treatment of ‘Inter-Connected’ Transactions under Indian Competition Law

Under the Competition Act, 2002, transactions that qualify as a ‘combination’, are required to be notified to, and approved by, the Competition Commission of India (the “CCI”) prior to completion, unless any exemptions apply. If addition, all transactions that are ‘inter-connected’ with such ‘combination’, are also required to be notified to the CCI in a single application along with the combination. This applies irrespective of the inter-connected transaction being exempt from notification requirement on a standalone basis, and the inter-connected transaction may not be completed prior to receipt of the CCI’s approval. However, the identification and treatment of such ‘inter-connected’ transactions is fraught with uncertainty. This note aims to provide an overview of the existing Indian merger control framework and identify certain issues often faced by stakeholders in this regard.


Sharing of Unpublished Price Sensitive Information on WhatsApp and “Innocent Tippee” Liability

In 2020, a set of orders were issued by the SEBI in which the SEBI imposed penalties on certain individuals for forwarding WhatsApp messages with details of companies’ earnings ahead of formal announcements. These individuals received such messages on WhatsApp groups that they were a part of, and forwarded such messages as they had received them. The SEBI refused to accept the defense that the information shared was simply market chatter that was “heard on the street” and was not unpublished price sensitive information (“UPSI”). The SEBI’s orders were recently overruled by the Securities Appellate Tribunal (“SAT”). The SAT ruled that information could be considered UPSI only when a person in receipt of such information had knowledge that it was UPSI.


Does the Prevention of Money Laundering Act, 2002 Safeguard Third-party Rights in the Course of Attachment of Properties?

A key feature of the Prevention of Money Laundering Act, 2002 (the “Act”) is the power of the investigating agency under the Act, i.e., the Directorate of Enforcement (the “ED”), to provisionally attach any property believed to be involved in money laundering for an initial period up to 180 days from the date of such attachment. This provision ensures that proceeds that are obtained directly or indirectly from the offences noted under the Act (“scheduled offences”) are not dealt with in any manner so as to frustrate proceedings relating to the confiscation of such proceeds under the Act. Ex facie, this provision appears to be in direct conflict with the rights of bona fide third-parties such as banks, mortgagees, transferee, and lessee etc. who may otherwise have a lawful interest in a property alleged to be involved in money laundering and had no knowledge of such involvement at the time of acquisition of interest in such property. In light of this apparent conflict, does the Act adequately safeguard the rights of such third-parties who have a lawful interest in a property provisionally attached by the ED?


national company law tribunal

Residuary Jurisdiction of the National Company Law Tribunal under Section 60(5) of the Insolvency and Bankruptcy Code, 2016: A Brief Analysis

Pursuant to Section 60(5) of the Insolvency and Bankruptcy Code, 2016 the National Company Law Tribunal is bestowed with wide jurisdiction to decide: (i) ‘any’ application or proceeding against a corporate debtor; (ii) ‘any’ claim made by or against a corporate debtor including claims by or against its subsidiaries; and (iii) ‘any’ questions of priority or ‘any’ question of law or facts, arising out of or in relation to insolvency resolution or liquidation proceedings of the corporate debtor.  Are there any limits to such jurisdiction of the National Company Law Tribunal?


Regulating Big Data: Contextualising CCI Probe into WhatsApp’s Privacy Policy

The CCI’s recent order directing an investigation into WhatsApp’s privacy policy provides us with the opportunity to look at how competition regulators, both in India and abroad, have sought to regulate data collection and sharing. There are multiple concerns to be balanced in this process – the ability of businesses with large data sets to better serve customers, entry barriers to new business with access to comparatively smaller data sets, and increased consumer dependency on a limited set of players. The CCI’s recent order could be indicative of its recognition of these concerns and its intention to take a more interventionist approach where it believes that user data is being exploited in a manner that creates entry barriers or otherwise adversely impacts competition or consumers’ interests.


Cases analysis

Case Note: Judgement of the Supreme Court in the Essar Steel Case

By a judgment dated November 15, 2019, the Supreme Court of India in the case of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Others delivered its final verdict on the acquisition of Essar Steel India Limited under the Insolvency and Bankruptcy Code, 2016. The proceedings under the IBC in relation to the acquisition of Essar Steel lasted for more than two years and laid down precedents on several questions arising out of the then newly introduced insolvency legislation in India. This paper is a comment on this judgment. It critically analyses the decision of the Supreme Court and the impact of the judgment on insolvency law in India.