Discretion Of NCLT In Section 7 Of IBC Is Beyond The Parameters Of Debt And Default

"It is certainly not the object of the IBC to penalize solvent companies, temporarily defaulting in repayment of its financial debts, by initiation of CIRP. - Ms. Indira Banerjee & Mr. J.K. Maheshwari, JJ of Supreme Court The Apex Court in its recent reported judgment[1] in the matter of Vidarbha Industries Power Limited Vs. Axis Bank Limited[2] has set aside Order(s) of the Adjudicating Authority[3] and Appellate Authority[4]. The Adjudicating Authority had held that in...

Vijay Madanlal Chaudhry V. Union Of India - A Case Fit For Review?

Recently, a constitution bench of the Supreme Court passed a detailed judgment upholding the constitutionality of various provisions of the Prevention of Money Laundering Act, 2002 titled "Vijay Madanlal Choudhary v. Union of India'. The judgment has attracted critique from various stakeholders and a review petition has also been filed against the judgment. The purpose of this article is to trace these developments, examine the potential grounds for review, and map their tenability ...

Valuation Of Companies: A legal Analysis

The issue or transfer of equity shares or other securities invariably involves the valuation of the underlying company. The principles and rules for valuing companies lie at the intersection of law and accounting. Various statutes and regulators are involved in this crucial activity. Company law seeks to ensure that companies do not shortchange their existing shareholders by issuing securities below their fair market value. The Reserve Bank of India has issued a number of rules and...

Electric Vehicle Industry In India: A Regulatory Overview

To reduce its carbon emissions and give a much-needed boost to the manufacturing and adoption of Electric Vehicles ("EV"), the Government of India, in March 2011, launched the National Mission of Electric Mobility ("Mission") to promote electric mobility in the country. India also made a firm commitment at the United Nations Climate Change Conference held in Paris on December 12, 2015, to reduce its carbon footprints and revamp the existing energy infrastructure to make it more sustainable...

Revamped Overseas Investment Rules: A Critical Insight

With an aim to improve the 'ease of doing business' and simplifying/ liberalising the investment regime, the Government of India in consultation with the Reserve Bank of India ("RBI"), amongst others, has been progressively revamping and liberalizing the foreign exchange regime in India. In view of the foregoing, the Government of India vide Notification No. G.S.R 646(E), dated August 22, 2022, issued the Foreign Exchange Management (Overseas Investment) Rules, 2022 ("OI Rules") and the...

Benami Transactions And Arbitrary Confiscation - First Chink In The Armour Of Supreme Court's Landmark PMLA Judgment?

A 3 judge bench of the Hon'ble Supreme Court comprising of the Hon'ble Chief Justice N.V. Ramana, Hon'ble Justice Krishna Murari and Hon'ble Justice Hima Kohli in Union of India vs M/s Ganpati Dealcom Pvt. Ltd, Civil Appeal No. 5783 of 2022 while dealing with a legal question whether the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 has a prospective effect or not, has also touched upon the judgement...

NCLT's Discretion To Not Admit Financial Creditor's CIRP Application

The Supreme Court in a recent Judgement of Vidarbha Industries Power Ltd. vs Axis Bank Limited (2022 SCC Online SC 841), observed that the Adjudicating Authority while exercising power under Section 7 of the Insolvency and Bankruptcy Code 2016 inter alia admitting the application to initiate Corporate Insolvency Resolution Process ("CIRP"), such power should be on a discretionary basis and cannot be exercised in an arbitrary manner. FACTS Axis Bank Limited, the Financial Creditor...

Special Purpose Acquisition Companies (SPACs) - Indian Context

Concept relating to Special Purpose Acquisition Companies (SPACs) have been in news lately in India. Popularly referred to as "Blank Cheque Companies", these piqued the interest of markets around the globe especially in view of the performance of the US markets during the COVID-19 pandemic. Also, the recent listing of Renew Power Private Limited, an Indian renewable energy company, on NASDAQ (an American stock exchange) through an internationally incorporated SPAC in August 2021, speaks...

Recommendations Of The Working Group On Digital Lending – Implementation: FLDG

The regulatory framework issued by the Reserve Bank of India ("RBI") on implementation of the Recommendations of the Working Group on Digital Lending on 10.08.2022 ("Implementation Framework")[1] has resulted in much discussion on permissibility of first loss default guarantee ("FLDG"). While interpreting the regulatory framework feels like looking at an Escher painting, in our view, the Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 dated...

Legally Privileged Information: What can and cannot be disclosed

Legal privilege refers to the legal protection given to communications, documents and advice exchanged between a party and his / her legal professional adviser from being disclosed to the court or other persons. This article seeks to shed some more light on the concept of legally privileged information, the compulsion to disclose such information and the admissibility of such information in courts. Law governing privilege: Privilege of communication, documents and advice is covered...

Declaring NPA And Wilful Defaulter: A Banker's Obligation

Banks are evaluated on their standard of assets as well as their number of branches and deposit volume. Today, one of the major concerns for Indian banks are Non-Performing Assets ('NPAs'), as NPAs have detrimental impact on the bank's earnings, liquidity, and solvency. Failure in the banking industry could have a negative effect on several other industries. Certainly, NPAs have sickened the Indian economy for many years now, however, as a remedy, economic policies in India from time to...

NCLT Cannot Coerce Allottees Into Settlements

The jurisdiction of the National Company Law Tribunal ("NCLT") and the National Company Law Appellate Tribunal ("NCLAT") and the courses of action available to these authorities under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") has been defined and limited by the Hon'ble Supreme Court ("the Court") through its recent judgment in E. S. Krishnamurthy & Others ["Appellants"] v. Bharath Hi Tech Builders Pvt. Ltd...