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Recently, the Mumbai Bench of the Income Tax Appellate Tribunal (Tribunal) delivered an interesting ruling in the case of Unnikrishnan V S v ITO [ITA Nos. 1200 and 1201/Mum/2018] on taxation of perquisites arising out of equity incentives to a non-resident which were granted in India. The Tribunal held that if shares are allotted under an equity incentive scheme to a non-resident individual in connection with the services rendered by him in India, then regardless of the residential status of the individual, such perquisite will be taxable in India.

We need to understand that FDI is not just a capital injection but package of technology and expertise, which is required to steer the Indian economy

The Government of India in May 2020 made a series of announcements as a part of the Atmanirbhar Bharat Abhiyan to provide stimulus to the economy to beat the repercussions of Covid-19 and lockdown restrictions.

Indian Union Budget 2021-22: The government must rationalise GST rates for inputs and input services with the corresponding output supplies to avoid accumulation of tax credits

The new normal social interaction pattern of social distancing, quarantines and lockdowns has unsurprisingly not only resulted in an increased demand for digital content but has also acted as a catalyst in reforming content development

In yet another case involving the real estate sector, the Competition Commission of India (CCI) dismissed allegations of abuse of dominant position by Haryana Urban Development Authority. (HUDA), a statutory urban planning agency.

The Competition Commission of India (CCI) took suo moto cognisance of alleged cartelisation between Romsons Scientific & Surgical Industrial Private Limited (Romsons / OP-1) and BSN Medical Private Limited (now known as Essity India Private Limited) (BSN / Essity / OP-2; along with Romsons, referred to as the OPs) in an open tender for surgical tapes invited by All India Institute of Medical Sciences (AIIMS).

Venkata Ramana, Vice President, Legal Tata Projects
Martin Hunter, Managing Director, Yendall Hunter Ltd
Paul Giles, Partner, DLA Piper
Richard Edwards, Partner, DLA Piper
Raj Panchmatia, Partner, Khaitan & Co
Sudip Mullick, Partner, Khaitan & Co
Gitanjali Bajaj, Partner, DLA Piper (Moderator)
Sanjna Pramod, Associate, DLA Piper (Moderator)

A three-judge bench of the Hon’ble Supreme Court in the case of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unique Flame Ltd. & Ors by judgment dated 11.01.2021 expressed a differing view on the issue of invalidity and unenforceability of an arbitration agreement in an unstamped underlying contract and referred the issue to a Constitution Bench in light of the conflicting view it expressed on a well-settled issue. The Supreme Court had previously held the view that the court will not act on an arbitration clause in an unstamped agreement unless the stamp duty was paid and passed detailed directions as to the procedure to be adopted where the agreement /instrument was not properly stamped, including impounding of the unstamped agreement / instrument. The present three-judge Bench did not agree with this position and overruled the previous precedent on the issue.

The Securities and Exchange Board of India (SEBI) vide various circulars in October and November 2020 had substantially streamlined the process of issuance and listing of debt securities. SEBI through its circular dated 03 November 2020 had specified comprehensive guidelines for creation of security and due diligence to be carried out by the debenture trustee (s) in relation to issuance of listed debt securities (Circular).

Adam Smith’s free-market economy pivots around minimal government intervention so that markets can self-regulate and operate optimally. Unfortunately, in many cases, such environments allow the rise of monopolies through organic or inorganic growth. While true monopolies are rare in a free market economy, lack of government intervention often allows the rise of a single large player with many minor players with limited competitive ability. In these situations, the large firm is considered to have “monopoly power”.

In the past we have discussed at length the role played by proxy advisors and the regulatory framework set up by the Securities and Exchange Board of India which can be found here. This update discusses the latest SEBI Circular dated 31 December 2020, which amends the SEBI Circular titled ‘Procedural Guidelines for Proxy Advisors’ dated 3 August 2020.

By way of a notification dated 2 January 2021 (Notification), the Labour Department, Government of Karnataka, has permitted all shops and commercial establishments employing 10 or more persons to remain open for all days of the week throughout the year for a period of 3 years from the date of publication of the Notification in the Official Gazette*. The move comes after the state government’s imposition of night curfew in view of the spread of the new variant of SARS-CoV-2 and its subsequent withdrawal in the wake of widespread criticism.

To facilitate uniform, Know Your Customer (KYC) compliance requirements for all legal entities, the Reserve Bank of India (RBI) on 18 December 2020, amended the Master Direction - Know Your Customer Direction dated 25 February 2016 (Master Directions) (Amendment). This Amendment seeks to mandate all legal entities whose accounts are opened prior to 1 April 2021, to upload their KYC data onto the Central KYC Records Registry (CKYCR), pursuant to Rule 9 (1A) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules). The Amendment comes into force with immediate effect.

On 8 December 2020, the Ministry of Finance, Government of India notified the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2020 (NDI Amendment Rules). The NDI Amendment Rules (i) notified increase in the sectoral cap for foreign direct investment (FDI) in the defence sector to 74%; and (ii) issued certain clarifications on the present policy on investments from countries sharing land borders with India.

Keeping in line with its focus to streamline the debt public issue process, across the gamut of securities, SEBI issued a circular on 23 November 2020 (Circular), introducing the Unified Payments Interface (UPI) mechanism as an additional mode for making online applications for public issues of various debt securities such as debentures, non-convertible redeemable preference shares, securitised debt instruments and municipal debt securities. The Circular mandates the adding on of the UPI mechanism as an optional application feature for those debt public issues which open for subscription on or after 1 January 2021.

A 'proxy adviser' is any person who provides advice, through any means, to institutional investors or shareholders of a company, in relation to the exercise of their rights in the company, including recommendations on public offerings or voting recommendations on agenda items. Since the implementation of the Companies Act 2013 (the 'Act') and enhanced corporate governance standards under Securities and Exchange Board of India (SEBI)(Listing Obligations and Disclosure Requirements) Regulations 2015, the role of proxy advisers has become more prominent. Over the last few years, proxy advisers have been at the forefront of advocating compliance with stringent corporate governance norms. Their recommendations have been responsible for shaping increased disclosures, transparency and compliance with the best corporate governance practices by many listed companies in India.

On 3 November 2020 a single-judge bench of the High Court of Gujarat determined the scope and applicability of Sections 9 and 47 of the Arbitration and Conciliation Act 1996 in GE Power Conversion India Private Limited v PASL Wind Solutions Private Limited (R/PETN under Arbitration Act 131/2019 with R/PETN under Arbitration Act 134/2019). Importantly, while dealing with the objections raised under Section 48 of the act, the court also delved into the highly debated question of whether two Indian parties can agree to choose a seat of arbitration outside India. This issue is now ripe to be finally decided by the Supreme Court, provided that this matter reaches the apex court.

Alternate dispute resolution systems such as arbitration, stand on a different footing than litigation in the judicial system. Procedural flexibility and party autonomy, being the key factors as to why parties opt for arbitration, in fact aid the arbitration process to better adapt to the “new normal” in this pandemic. The widespread use of information technology presents a real advantage over traditional litigation.

The International Financial Services Centre Authority, vide its circular dated 9 December 2020, titled “Alternative Investment Funds (AIFs) in International Financial Services Centres (IFSC)” (Circular) seems to have uplifted the spirits of fund managers and investors, both in India and globally. The Circular has introduced some far-reaching amendments to SEBI (International Financial Services Centres) Guidelines 2015 and the operating guidelines for alternative investment funds (AIF) operating in an International Financial Services Centre (IFSC). Notably, these amendments are being welcomed as a panacea to some of the long-term issues that were being faced by the fund management industry in India. In order to ensure that the IFSC regime compares well with its peer global financial services regimes, the following amendments have been introduced by the Circular, in relation to the AIF regime in IFSCs

It is not uncommon for joint venture partners to face impasses on operational matters during the lifecycle of a JV. These differences could be wide ranging, from day-to-day business issues to high-level strategic decisions such as capital expenditure, business expansion, entering into a new line of business, raising of funds, changing the business plan and sale or disposal of business or assets

In a positive development, the Competition Commission of India (CCI) has removed the Non-Compete Covenants (NCCs) disclosure requirement from merger filings. To that effect, the CCI amended the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 on 26 November 2020 (Amendment).

Following the footsteps of Telangana and Andhra Pradesh (refer to our Ergo), the state of Tamil Nadu has also amended its laws to restrict online gaming within its territory. The Honourable Governor of Tamil Nadu promulgated the Tamil Nadu Gaming and Police Laws (Amendment) Ordinance 2020 on 20 November 2020 (Ref: Tamil Nadu Ordinance Number 11 of 2020) (Ordinance). The Ordinance amends the Tamil Nadu Gaming Act, 1930 (TN Gaming Act) and extends its territorial scope to cover the entire state of Tamil Nadu. Gaming related provisions of the Chennai City Police Act, 1888 and the Tamil Nadu District Police Act, 1859 are no more applicable in the State of Tamil Nadu.

The Department for Promotion of Industry and Internal Trade (DPIIT) vide its circular dated 9 November 2020 has introduced revised standard operating procedures (Revised SOP) to process foreign direct investment (FDI) proposals.

Compounding of contraventions under the Foreign Exchange Management Act, 1999 (FEMA) is governed by the Foreign Exchange (Compounding Proceedings) Rules, 2000 and the Reserve Bank of India’s (RBI) Master Direction on Compounding of Contraventions under FEMA, 1999 dated 1 January 2016 (Compounding Direction). On 17 November 2020, the RBI issued a circular (RBI Circular) revising the Compounding Direction with the aim of inter alia aligning its provisions with the latest applicable laws, simplifying the regulatory framework, and regulating dissemination of information in the public domain.

The increased defaults by a few financial institutions and the complications faced by debenture trustees in expeditious enforcement of collateral for debt securities has prompted the securities market regulator, Securities Exchange Board of India (SEBI) to review its regulatory framework for listed / “to be” listed debt securities and public issue of debt securities and debenture trustees to plug certain loopholes. In furtherance of this objective, and pursuant to the observations made in the SEBI Consultation Paper on review of the regulatory framework for corporate bonds and debenture trustees dated 25 February 2020 (SEBI Consultation Paper) , a slew of amendments (collectively, SEBI Amendments) have been notified recently to the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations), SEBI (Debenture Trustees) Regulations, 1993 (DT Regulations) and the SEBI (Listing Obligations and Disclosure Requirements), 2015 (LODR Regulations) to ensure adequate disclosures and strengthen the role of trustees for effective discharge of their role.

The Insolvency and Bankruptcy Board of India (IBBI) on 13 November 2020 issued the Insolvency and Bankruptcy Board of India (Liquidation Process) (Fourth Amendment) Regulations, 2020 (Amendment) which introduced seminal changes to the liquidation regime under the Insolvency and Bankruptcy Code, 2016 (IBC). The Amendment has been introduced on the back of the discussion paper issued by IBBI on 26 August 2020 on Corporate Liquidation Process (Discussion Paper). This Amendment proposes solutions to resolve 2 major issues which plagued the efficacious and expeditious completion of a corporate liquidation process under the IBC, (a) assignment by a creditor of its claims / interest during liquidation; and (ii) disposal / assignment of non-readily realisable / illiquid assets. In this paper we are analysing these two issues, the manner in which the Amendments modify the corporate liquidation framework vis-à-vis these issues and their impact on the corporate liquidation process.

The senior partner at Khaitan & Co, a dealmaker, and institution builder talks about how leaders of corporate India never had to step out of their homes to do big deals, his journey from Kolkata to building Khaitan & Co into one of the largest law firms in India, the changes that the Covid-19 pandemic brought about to corporate India, the art of deal making, and the future of the legal industry

'Compared to the 2008 global financial crisis, access to capital will not be a problem as the US PE and strategic investors alone are sitting on almost $ 5 trillion of dry powder which needs to be deployed in some form'

In Bennett Coleman & Co Ltd (Times Now) v ARG Outlier Media Pvt Ltd (Republic TV) (IA No 7306/2017 in CS [COMM] 434/2017), the Delhi High Court has issued an interim order restraining Republic TV from using the mark NEWSHOUR, but has not intervened with regard to its use of the tagline “nation wants to know”.

The Central government has, with effect from 9 November 2020, brought under the jurisdiction and control of the Ministry of Information and Broadcasting (MIB): (a) films and audio-visual programmes made available by online content providers; and (b) news and current affairs content on online platforms. This change in the regulatory landscape for Over-The-Top (OTT) platforms and digital media news aggregators have been introduced through the notification of the Government of India (Allocation of Business) Three Hundred and Fifty Seventh Amendment Rules, 2020 (Amendment Rules).

MIC Redwood 1 RSC Limited, Abu Dhabi, United Arab Emirates (Fund) was recently conferred the tax exemption intended for a sovereign wealth fund (SWF) under the Income-tax Act, 1961 (Tax Act).

The Karnataka High Court (HC) in the case of Padmini Products Private Limited vs DCI (ITA No 154 of 2014) allowed depreciation on intangible assets acquired by Padmini Products Private Limited (Taxpayer or Company) upon conversion from a firm into a company.

The year 2020 has given many jolts to businesses. As companies across sectors continue to grapple with the ongoing COVID-19 pandemic, those located in Haryana may now have to gear up for localism-driven recruitment as envisaged under the Haryana State Employment of Local Candidates Bill, 2020 (Bill). The Bill, when implemented, would reserve 75% of the jobs in specified private sector posts for local candidates. This update attempts to bring out the salient features of the Bill and briefly critiques the same from legal and practical standpoints.

If there is one thing that COVID-19 has reminded us, it is that we cannot predict everything. In its fullblown shape, the pandemic disrupted businesses, and several entrepreneurs made attempts to resort to force majeure clauses in their commercial arrangements with third parties to get some respite from their obligations.

The New OSP Guidelines supersede the ‘terms and conditions – Other Service Provider Category’ dated 5 August 2008 along with all its amendments (“Old OSP Guidelines”).

Last month on 20 October 2020, the Patent (Amendment) Rules 2020 (Revised Rules 2020) came into force whereby the provisions pertaining to filing of priority document and filing of statement of commercial working were amended. Our Ergo on the Revised Rules 2020 can be accessed here. Now, the Patent (2nd Amendment) Rules, 2020 (2nd Revised Rules 2020) have been issued on 4 November 2020 with immediate effect.  The key highlights of the 2nd Revised Rules 2020 are broadly set out below

The Securities and Exchange Board of India (SEBI) has issued a circular dated 03 November 2020 (Ref: SEBI/HO/CFD/DIL1/CIR/P/2020/215) (2020 Amendment Circular), amending certain provisions of the SEBI Circular dated 10 March 2017 (Ref: CFD/DIL3/CIR/2017/21)  as amended and modified from time to time (2017 Circular). The 2020 Amendment Circular specifies detailed requirements that listed entities need to comply with while undertaking schemes of arrangement or while being involved in schemes of arrangement.

The Securities and Exchange Board of India (SEBI) has issued Guidelines for rights issues of units by unlisted Infrastructure Investment Trusts (InvIT) (Guidelines) through its circular dated 4 November 2020. SEBI introduced the framework for private unlisted InvITs in April 2019, however, the mechanism for further issues of units by unlisted InvITs under the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) remained restricted to private placements through the issuance of a placement memorandum. The Guidelines are expected to ease the fund-raising process for unlisted InvITs and supplement the increasing market interest in unlisted InvITs.

The Government of India has been paying special attention to the law relating to arbitrations in India and has amended the Arbitration and Conciliation Act, 1996 (Act) in 2015 and thereafter again in 2019. These amendments have generally been pro-arbitration, however, some proposed amendments were criticized by the international and domestic arbitration community.

On 5 November 2020, the Department of Telecommunications (DoT) released ‘New Guidelines for Other Service Providers’ (New OSP Guidelines). The New OSP Guidelines supersede the ‘terms and conditions – Other Service Provider Category’ dated 5 August 2008 along with all its amendments (Old OSP Guidelines). With the New OSP Guidelines, the DoT has made significant alterations to the preceding regime that are expected to have far-reaching benefits for the outsourcing industry in India.

The Department for Promotion of Industry and Internal Trade (DPIIT) on 28 October 2020, has issued the consolidated Foreign Direct Investment (FDI) policy circular of 2020 (Revised Policy). The DPIIT has released an updated consolidated FDI policy after a long gap of 3 years since the last one was which was issued on 28 August 2017.

The app ban is part of an wider effort by the Indian government to curtail Chinese involvement in the country's businesses.

The Income Tax Appellate Tribunal (Tribunal), Delhi bench in the case of Augustus Capital Pte Ltd [2020] (120 taxmann.com 325) (Taxpayer) ruled that the capital gain arising on transfer of shares of a Singapore company holding Indian assets is not taxable in India on the basis that the small shareholder exemption claimed by the taxpayer applies retrospectively from 1 April 1961.

In the context of GST, there is a rampant increase in the number of arrests made by the enforcement agencies drawing powers from Section 69 of the Central Goods and Services Tax (CGST) Act.

The Reserve Bank of India (RBI) has, in exercise of its powers under the Payment and Settlement Systems Act 2007, notified the Framework for Recognition of a Self-Regulatory Organisation for Payment System Operators (SRO Framework) on 22 October 2020. The SRO Framework can be described as a regulatory nudge which aims to encourage banks and non-bank Payment System Operators (PSOs) to establish a self-regulatory body, whose agenda would be to proactively frame and enforce rules and standards relating to the conduct of its member entities. 

On 14 October 2020, the Ministry of New and Renewable Energy, Government of India (MNRE) issued Guidelines for Tariff Based Competitive Bidding for Procurement of Power from Grid Connected Wind Solar Hybrid Projects (Guidelines) under Section 63 of the Electricity Act, 2003 (Electricity Act) which was notified on its website on 21.10.2020. The Guidelines have been issued in pursuance of the National Wind-Solar Hybrid Policy, 2018 (Policy) to provide a framework for procurement of electricity from the Inter-State Transmission System (ISTS) grid connected wind-solar hybrid power projects (Hybrid Projects) through a transparent process of bidding.

Following the footsteps of its neighbouring state Telangana, effective 25 September 2020, the Andhra Pradesh Government has banned all forms of real money games in the State. This comes as a serious blow to one of the fastest growing industries in India. On 23 September 2020, the Honourable Governor of Andhra Pradesh promulgated the Andhra Pradesh Gaming (Amendment) Ordinance 2020 [Andhra Pradesh Ordinance #13 of 2020] (Ordinance) amending the Andhra Pradesh Gaming Act 1974 (AP Gaming Act). The Ordinance has made significant amendments to the AP Gaming Act and has extended its application to online gaming activities. The Ordinance prohibits all forms of real money gaming from being conducted in the state of Andhra Pradesh with immediate effect. These amendments to the AP Gaming Act have been made by promulgation of the Ordinance pursuant to the extraordinary legislative powers of the Governor under Article 213 of the Constitution of India since the AP State Legislature is currently not in session. The Ordinance will have to be tabled before both the houses of the AP State Legislature once in session and will have to be approved with or without changes within six weeks of reassembling, else it will cease to operate.

The Securities and Exchange Board of India (SEBI) vide the SEBI (Alternative Investment Funds) (Amendment) Regulations 2020 (Amendment Regulations), which were notified on 19 October 2020, have amended the SEBI (Alternative Investment Funds) Regulations 2012 (AIF Regulations) to clarify the position with respect to: (I) conditions to be met by the key investment team of the Manager of the Alternative Investment Fund (AIF), and (II) composition and responsibility of the body taking the investment decisions of the AIF other than the Manager (referred to as the Investment Committee or otherwise). The Amendment Regulations do, to some extent, clear the air around the subjectivity with which these issues were being dealt with by SEBI until now on a case by case basis. However, it also appears to raise some concerns, amongst alternate asset manager, around the increasingly prescriptive nature that the AIF Regulations are taking.

E-commerce websites play a limited but complicated role in the functioning of their platforms. Indian law recognises this and accounts for it with a combination of legislation and judicial precedents and draws a fine line for placing liability for the sale of such illegal products on e-commerce websites.

The Patent (Amendment) Rules 2020 (Revised Rules 2020) have come into force from 20 October 2020. The key highlights of the Revised Rules 2020 are broadly set out below

In a landmark ruling, the Delhi bench of the Income Tax Appellate Tribunal (Tribunal) in the case of Giesecke & Devrient Pvt Ltd (Taxpayer) v. The Additional CIT (ITA No. 7075/DEL/2017), held that the Dividend Distribution Tax (DDT) payable by an Indian company should not exceed the rate specified in the applicable tax treaty between India and the country of tax residence of the shareholder.

On the heels of the Madras High Court verdict in D Siluvai Venance v State which sought to address the regulatory void in the online and virtual gaming space (refer to our Ergo), the Gujarat High Court has pursuant to its judgment in the case of Amit Nair v State of Gujarat pronounced on 29 September 2020, reiterated the need for regulation of online gambling. The division bench of the Gujarat High Court has directed the state government to look into the issue of online gambling and take action in accordance with the law in larger public interest before it is too late.

Recently, the Hon’ble National Company Law Appellate Tribunal has passed an order reiterating that once a resolution plan is approved by the Committee of Creditors (CoC), the successful resolution applicant cannot be permitted to be withdraw its plan.

The Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry, Government of India (DPIIT) had, through the Press Note 4 of 2019 dated 18 September 2019 (PN4), introduced a foreign direct investment (FDI) regime for entities engaged in the news digital media sector.

The Foreign Contribution (Regulation) Amendment Act 2020 (Amendment Act) has been notified by the Central Government (Government) on 29 September 2020, to amend certain provisions of the Foreign Contribution (Regulation) Act 2010 (Act / FCRA). Our earlier updates on the Amendment Act are available here and here.

A contentious issue in the interplay between the Insolvency and Bankruptcy Code, 2016 (IBC) and the Limitation Act, 1963 (Limitation Act) has been the applicability of Section 18 of the Limitation Act (Section 18), which stipulates that a fresh period of limitation shall be computed from the time of the acknowledgement of liability in writing before the expiration of the prescribed period of limitation. In the context of IBC, the question is whether such an acknowledgement of debt in entries in a balance sheet would extend the limitation period for the purposes of filing an application for the initiation of corporate insolvency resolution process (CIRP) under Section 7 of the IBC (Section 7 Application).

The Foreign Contribution (Regulation) Amendment Act 2020 (Amendment Act) has been notified by the Central Government (Government) on 29 September 2020, to amend certain provisions of the Foreign Contribution (Regulation) Act 2010 (Act / FCRA). Our detailed update on the changes introduced vide the Amendment Act is available here.

The Securities and Exchange Board of India (SEBI) has notified the fourth amendment to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations) on 28 September 2020 (Amendment) with the intention of permitting listed companies to undertake rights issues with brevity. The Amendment eases the eligibility requirements, significantly truncates the disclosure regime and introduces supportive changes to existing legal norms, applicable to rights issues. 

The Foreign Contribution (Regulation) Amendment Act 2020 (Amendment Act) has been notified by the Central Government (Government) on 29 September 2020, to amend certain provisions of the Foreign Contribution (Regulation) Act 2010 (Act / FCRA).

Telecom giant Vodafone has won a contentious tax dispute with the Republic of India in international arbitration, invoking India’s investment protection treaty with the Netherlands, in a decision announced September 25. 

Recently, the Permanent Court of Arbitration at the Hague passed an award in favour of the telecom giant Vodafone, in an international arbitration initiated by Vodafone International Holdings BV (Vodafone) against the Republic of India under the  ‘Agreement for the Promotion and Protection of Investments’ that India had entered into with the Kingdom of Netherlands (Agreement).

Over the recent years, cashless payments have become one of the preferred modes of retail transaction in India – particularly in urban markets. For instance, UPI, a real time fund transfer interface, has significantly scaled-up since its launch, growing from 0.09 million transactions worth 30.9 million in the month of August 2016 (when it launched) to clocking 56 billion transactions worth INR 2.85 trillion in the month of August 2020. While the impetus on cashless payments was fuelled in part by focussed government campaigns, the current challenges stemming from the Covid-19 pandemic have perhaps made cashless modes of payment the most dependable option for consumers and retailers across most cities in India – the implication being that the cashless payment industry is poised to double to $135.2 billion by 2023.

In line with Government’s widely promoted objective of ensuring efficiency and transparency in tax administration, the Government has notified the much-awaited Faceless Appeal Scheme, 2020 (Scheme) vide Notification No. 76/2020 dated 25 September 2020 to provide a framework for disposal of appeals by Commissioner of Income tax (Appeals) (CIT(A)) by

On 18 September 2020, the Telecom Regulatory Authority of India (TRAI) issued two directions (Directions) dealing with publication and advertisement of tariffs by telecom service providers (TSP) with an aim to increase transparency in tariff plans. 

After the clearance of the Industrial Relations Code, 2020 (IRC 2020) by the Lok Sabha, the Rajya Sabha also passed the IRC 2020 on 23 September 2020. It is noteworthy that prior to this swift approval, the Industrial Relations Code, 2019 (IRC 2019) was introduced in November 2019 and thereafter was referred to the Standing Committee on Labour 2019-2020 (Standing Committee) for comments.

On 19 September 2020, the Government of India introduced the Occupational Health, Safety and Working Conditions Code, 2020 (Code 2020) in the Lok Sabha. The bill has since received clearance from both houses of Parliament, although it awaits the assent of the President of India and subsequent notification(s) of the government to be brought into effect.

On 23 September 2020, Parliament passed the Code on Social Security, 2020 (Code 2020). The introduction of the bill in the Lok Sabha on 19 September 2020 and its subsequent clearance by both houses of Parliament come after the Code on Social Security, 2019 (Code 2019) was introduced in Parliament last year and subsequently sent to the Standing Committee on Labour 2019-2020 for evaluation.

On 16 May 2020, the government had announced raising the Foreign Direct Investment (FDI) limit in defence manufacturing, under the automatic route, from 49% to 74%.

The Telecom Regulatory Authority of India (TRAI) issued its ‘Recommendations on Cloud Services’ on 14 September 2020 (Recommendations). The Recommendations are a culmination of an extensive consultation process that has virtually spanned over the last 8 years.

The Reserve Bank of India (RBI) on 04 September 2020 released the revised Master Direction – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions 2020 (Revised PSL Guidelines).

On 3 September 2020, the Central Drugs Standard Control Organization (CDSCO), the national regulatory body for Indian pharmaceuticals and medical devices released draft classifications for newly notified devices. This is a significant development. As covered in an earlier ERGO from our firm available here, in February 2020, the Ministry of Health and Family Welfare (MoHFW) had: (a) adopted a “catch-all” definition of medical devices bringing all devices which were previously excluded (New Notified Devices) within the scope of the Medical Device Rules, 2017; and (b) required all importers and manufacturers to provisionally register these New Notified Devices with the CDSCO, effective from 1 April 2020. Upon registration, such New Notified Devices would enjoy exemptions from the remaining provisions of the Medical Device Rules, 2017 for a period 30 – 42 months (based on the Class of medical device).

The Telecom Regulatory Authority of India (TRAI) issued its recommendations on regulatory framework for ‘over-the-top’ (OTT) communications services on 14 September 2020 (Recommendations). The Recommendations have been issued pursuant to a reference letter from Department of Telecommunications (DoT) dated 3 March 2016 by way of which DoT had sought recommendations of TRAI on net neutrality and other related aspects such as economic, security and privacy issues, and regulatory framework for OTT services, etc. Over the course of the last 4 years, TRAI has issued different sets of recommendations addressing these aspects and the present Recommendations lay emphasis on regulation of OTT communication services.

Depending on the extent of financial distress, some companies are considering laying off some of their existing workforce. But the question remains, can financial distress be a ground for initiating layoffs in the wake of a pandemic?

In our previous post (Previous Post), we analysed the Reserve Bank of India’s (RBI) circular on Resolution Framework for Covid-19 Related Stress dated 6 August 2020 (August 6 Circular) that provided for a limited time window for resolution of stress of certain categories of borrowers affected by the Covid-19 pandemic (Pandemic) while permitting the eligible borrower accounts to retain their status as ‘standard’. The August 6 Circular proposed constitution of an expert committee headed by Shri K. V. Kamath (Expert Committee) to make recommendations to the RBI on the required financial parameters, along with the sector-specific benchmark ranges for such parameters, to be factored into the resolution plans prepared for eligible corporates, under the August 6 Circular.

The launch of the National Digital Health Mission (NDHM) was announced by Sri Narendra Modi, India’s Prime Minister on the 74th Independence Day on 15 August 2020. In this regard, the National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW), Government of India, released the Draft Health Data Management Policy (Draft Policy) on 26 August 2020 as a part of the NDHM for feedback and stakeholder comments to be submitted by 21 September 2020.

The National Company Law Appellate Tribunal, Delhi (NCLAT) in the case of Sh. Sushil Ansal Vs Ashok Tripathi and Ors, has reiterated that a decree-holder though covered under the definition of creditor under Section 3(10) of the Insolvency and Bankruptcy Code (IBC) would not fall within the class of financial creditors and therefore, a decree holder cannot initiate a corporate insolvency resolution process (CIRP) against a corporate debtor with an object to execute a decree.

The Delhi High Court (HC) in CIT v. Nalwa Investment Ltd ITA 822, 853, 935, and 961 of 2005 has held that transfer of shares held as stock-in-trade, in the scheme of amalgamation constitutes a taxable event under the head ‘profits and gains from business and profession’.

India’s competition authority – the Competition Commission of India (CCI) has dismissed two cases of similar nature involving allegations of collusive bidding by several manufacturers of 14.2 kg LPG cylinders. In 2009 and 2010, LPG cylinder manufacturers had quoted identical or near identical prices in two tenders floated by the State-Owned Enterprise (SOE), Bharat Petroleum Corporation Limited (BPCL) for supply of 14.2 kg LPG cylinders  which had prompted the CCI to direct an investigation. However, considering the nature of the LPG cylinder market in India, confirmed by the Supreme Court of India (Supreme Court) in the Rajasthan Cylinder case,  the CCI closed both cases without delving into the individual conduct of the cylinder manufacturers.

Section 50 of the Central Goods and Services Tax Act 2017 (CGST Act) was amended1 to provide that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the relevant period furnished after the due date, except after commencement of any proceedings under section 73 or section 74 of the CGST Act in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger. The amendment ensured that the taxpayers are not saddled with unnecessary interest liability on the amount paid through electronic credit ledger. After a gap of one year, the Government has now notified2 the said amendment to be effective from 1 September 2020.

On 13 August 2020, the Reserve Bank of India (RBI) issued the “Review of Guidelines for Core Investment Companies” (Review Guidelines) incorporating majority of the recommendations from the report of the Working Group to Review the Regulatory and Supervisory Framework for Core Investment Companies (CICs) published on 6 November 2019 (Report).

On 5 August 2020, the Kerala High Court (High Court), in its decision in MP Varghese v Annamma Yacob & Ors (MFA No 47/2020) (MP Varghese Case), explained with considerable clarity the procedural mechanism to lift an encumbrance from an immovable property under Section 57 of the Transfer of Property Act 1882 (TPA), which provision has till date been rarely espoused in reported judgments in India.

In the ongoing dispute between the Oswal family in relation to nomination of the shares of Oswal Agro Mills Limited, the Supreme Court has set aside the order of the National Company Law Appellate Tribunal (NCLAT).

Global trends towards a stakeholder-centric governance model have resulted in a structured movement towards responsible business conduct. Companies are expected to be driven not only by profitability but also the increasingly relevant non-financial parameters measured through impact on society and the environment, popularly referred to as the ‘triple bottom line’.

In continuation of Reserve Bank of India’s (RBI) efforts to ease financial stress caused by the Covid-19 pandemic, the RBI issued the circular on the Resolution Framework for Covid-19 Related Stress dated 6 August 2020 (August 6 Circular). The August 6 Circular creates a limited time window for certain categories of borrowers affected by Covid-19 pandemic related business disruption to be allowed resolution plans in the nature of restructuring while permitting the borrower accounts to retain their status as ‘standard’. This effectively would be a carve out from the RBI’s circular on Prudential Framework for Resolution of Stressed Assets dated 7 June 2019 (June 7 Circular) which requires status downgrade of borrower accounts which are restructured under the same management until satisfactory performance threshold is met. This dispensation is intended to facilitate revival of real sectors and avoid impairment of the recovery process as well as the consequent risk on the financial stability in general.

Ministry of Power, Government of India, vide its order dated 5 August 2020 has waived inter-state transmission (ISTS) charges and losses on transmission of electricity generated from solar and wind projects, for sale to entities, till 30 June 2023. This waiver is applicable to power plants using solar and wind sources of energy, including solar-wind hybrid power plants.

Hon’ble Prime Minister (PM) Mr Narendra Modi launched a ‘Transparent Taxation’ platform on 13 August 2020 comprising faceless assessments, faceless appeals and a taxpayer’s charter (Charter) enumerating responsibilities of the income-tax department towards taxpayers and also listing down duties of the taxpayers towards the income-tax department. The reforms are part of the Government’s attempt to honour ‘honest’ taxpayers of the country and to make the tax system ‘seamless, faceless and painless’. The Hon’ble PM, however, expressed that while there has been a decrease in complexity, tax rates, tax litigation and increase in transparency, compliance and trust; the number of taxpayers in the country is still very low in relation to the nation’s population. While faceless assessments and the Charter are effective immediately, faceless appeals will be effective from 25 September 2020. In addition to this, the Central Board of Direct Taxes (CBDT) passed two separate orders on 13 August 2020 to introduce some additional measures.

A three-judge bench of the Supreme Court delivered a landmark ruling which has put to rest a long-standing debate on the applicability of the amendment to the Hindu Succession Act 1956 (HSA) in respect of  the rights of a female Hindu in joint family property.

A three-judge bench of the Supreme Court in the case of Vineeta Sharma v. Rakesh Sharma & Ors. [Diary No.32601 of 2018] and a batch of similar appeals tagged together has finally settled  the issue of  applicability and scope of Sec.6 of the Hindu Succession Act, 1956 (1956 Act) as  amended by the Hindu Succession (Amendment) Act, 2005 (2005 Amendment). There was lack of clarity regarding the amended section which deals with devolution of interest in coparcenary property due to conflicting judgments of the Supreme Court in Prakash & Ors. v. Phulavati & Ors. [(2016)2SCC36] (Phulavati) and Danamma@ Suman Surpur & Anr. v. Amar & Ors. [(2018) 3 SCC 343] (Danamma).

On 22 July 2020, the Ministry of Power (MoP) rolled out Guidelines for Tariff Based Competitive Bidding Process for Procurement of Round-The Clock Power from Grid Connected Renewable Energy Power Projects, complemented with Power from Coal Based Thermal Power Projects (Guidelines).

It is conventional wisdom that the Indian state enjoys the power of ‘eminent domain’, which refers to the power of the sovereign to acquire private immovable property for public use, provided the public nature of the usage can be demonstrated beyond doubt, by following a procedure established by law and upon payment of just compensation to the owner of such property. Payment of fair compensation to land owners in exchange of expropriation of their land by the state for public use, forms the most significant component of jurisprudence around land acquisition in India.

On 6 August 2020, the Reserve Bank of India (RBI) issued its statement on developmental and regulatory policies inter alia setting out measures to deepen digital payments. The RBI acknowledged the significant increase in the number of disputes and grievances in the digital payments space, and recognised the need for technology-driven redressal mechanisms (which are rule-based and automated) to resolve such disputes effectively and expeditiously. The RBI now proposes to mandate adoption of online dispute resolution (ODR) systems by the payment system operators (PSOs) in a phased manner for addressing all forms of disputes arising in the digital payments ecosystem.

I don’t believe in micromanaging," quips Haigreve Khaitan, ace corporate lawyer and co-founder of the Mumbai office at one of India’s oldest law firms, the 108-year old Khaitan & Co.

Trends show that a number of businesses are facing challenges related to cash flows and investors are looking for assets at attractive valuations.

The Consumer Protection (Ecommerce) Rules 2020 attempts to combine the teeth of the Consumer Protection Act 2019, Indian exchange control laws (IEC Regulations) and the Information Technology Act 2000, to ensure fair play in technology and data-driven ecommerce environment.

Just as the Non-Banking Financial Companies (NBFC) sector was emerging out of the recent Infrastructure Leasing & Financial Services (IL&FS) and the Dewan Housing Finance Limited (DHFL) crisis, COVID 19 hit the global markets. 

The Ministry of Electronics & Information Technology (MeitY) have constituted a committee of experts to deliberate a data governance framework along with issuing an Office Memorandum No. 24(4)/2019-CLES dated 13 September 2019  to create an 8 member committee (NPD Committee) to study issues and make suggestions pertaining to the regulation of non-personal data (NPD). The NPD Committee has published a report titled ‘Report by the Committee of Experts on Non-Personal Data Governance Framework’ on 12 July 2020 (NPD Report).

The Central Board of Direct Taxes (CBDT) has granted a much-awaited wish of investors and fund managers mulling over at starting operations in International Financial Services Centre (IFSC) at Gujarat International Finance Tec-City (GIFT City). The newly inserted Rule 114AAB, notified vide the Income-tax (19th Amendment) Rules 2020 (Rules) exempts all (i) non-residents (except for a company) and (ii) foreign companies (together referred to as ‘Non-Resident’) from the mandatory requirement of obtaining the permanent account number (PAN).

Cartels are one of the most pernicious offences and deserve serious penalties for deterrence, the Competition Commission of India (CCI) has said in several decisions.

On 24 July 2020, the National Company Law Appellate Tribunal (NCLAT), in its decision in GRIDCO Limited v Surya Kanta Sathapathy and Others [C.A. (AT) (Insolvency) 1271 of 2019] (GRIDCO judgement), held that the termination of a Power Purchase Agreement (PPA) during the subsistence of a moratorium would be in violation of Section 14(1) of the Insolvency and Bankruptcy Code 2016 (IBC).

The conflicted interpretation of Section 65B of the Indian Evidence Act, 1872 (Act) by two judgments of the Supreme Court was referred to a three judge Bench of the Supreme Court in the case of Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal And Ors.[2020SCCOnLineSC571]. The two Judge Bench decision in Shafhi Mohammad v. State of Himachal Pradesh [(2018)2SCC801] (Shafhi) required reconsideration in view of the three Judge Bench judgment in Anvar P.V. v. P.K. Basheer & Ors. [(2014)10SCC473] (Anvar).

The concept of ‘proxy advisor’ is of western import and despite the nascency has slowly and steadily gained importance in the Indian market as a critical intermediary and a rather persuasive influencer of a company’s decision making and policies through the shareholders.

In 2019 a three-judge bench (full bench) of the Bombay High Court had to decide whether the courts can exercise their power to grant interim or ad interim reliefs under Section 9 of the Arbitration and Conciliation Act 1996 where the arbitration clause is contained in an agreement that is insufficiently stamped (Gautam Landscapes v Shailesh Shah).

The Central Government, vide notification dated 17 October 2019 had notified the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules) in supersession of the Foreign Exchange Management (Transfer  and Issue of Security by a Person Resident outside India) Regulations, 2017 and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018. This change had led to a shift in rule making power so far as foreign investment in India is concerned.

The Supreme Court of India (SC) in Director of Income Tax-II (International Taxation) v M/S Samsung Heavy Industries Co. Ltd. (Civil Appeal No. 12183 of 2016) has held that the Project Office (PO) set up by Samsung Heavy Industries Co. Ltd. (Taxpayer) in India did not constitute its permanent establishment (PE) in India.

Globally, the COVID-19 pandemic and the consequent lockdowns have increased people’s interest in exploring and participating in online games. Discretionary consumer spending which was otherwise used in vacations, dining out and other entertainment options, has been freed up. The digital and online gaming sector is less sensitive to recessionary pressures. The S&P 500 Index has declined by more than 9% since the beginning of this year whereas an index of western digital gaming companies has increased by more than 22% during the same time period. Historically (ie, in both 2001 and 2008), the digital gaming sector enjoyed healthy overall growth in both software and hardware sales despite a negative economic environment. (Source: BITKRAFT Esports Ventures Management LLC)

The Insurance Regulatory and Development Authority of India (IRDAI) on 22 July 2020, issued a circular to all insurance companies, in relation to the transfer of shares of insurance companies (Circular). The Circular has been issued to bring greater clarity to the existing provisions governing the transfer of shares of insurers, being: (a) section 6A of the Insurance Act 1938 (Insurance Act); (b) IRDAI (Transfer of Equity Shares of Insurance Companies) Regulations 2015 (Transfer Regulations); and (c) IRDAI (Listed Indian Insurance Companies) Guidelines dated 5 August 2016 (ListCo Guidelines).

Just as the Non-Banking Financial Companies (NBFC) sector was emerging out of the recent Infrastructure Leasing & Financial Services (IL&FS) and the Dewan Housing Finance Limited (DHFL) crisis, COVID 19 hit the global markets.

The Ministry of Consumer Affairs, Food, and Public Distribution, Government of India notified and made effective the provisions of the Consumer Protection (E-Commerce) Rules, 2020 (E-Commerce Rules) under the Consumer Protection Act, 2019 (Act) from 23 July 2020.

Recently the Supreme Court in Kunjumuhammed and Anr. v Mariyumma (Civil Appeal No. 2771 of 2020), held that while hearing a second appeal, the High Court must frame the substantial question of law.

In the arbitration regime, party autonomy has gained much recognition. When drafting an arbitration agreement, parties are free to choose ad hoc or institutional arbitration, governing law, seat and venue of arbitration, number of arbitrators (odd number), their qualifications and other matters relevant to the procedure to be followed. The ability of parties to determine the procedure to be followed in appointing an arbitrator is a key manifestation of party autonomy. The UNCITRAL Model Law (Model Law) has adopted this principle of party autonomy in as much as it provides that parties are free to agree on the procedure to be followed in conducting the proceedings. Arbitrations in India are governed by the Arbitration and Conciliation Act, 1996 (based on the Model Law) which also envisages party autonomy.

Keeping in mind the times that we are in, there might come a situation where the principles behind the protection of intellectual property rights would have to be balanced with the public welfare. One such mechanism for balancing the rights of the intellectual property holder and the general public is compulsory licensing.

The Karnataka Land Reforms Act, 1961 (Act) was enacted with an objective to consolidate and make uniform laws relating to purchase and holding of agricultural land, conferment of ownership on tenants, vesting of occupancy rights, and ceiling on land holdings of the agricultural land in the State of Karnataka.

On the basis of clinching evidence such as emails and WhatsApp communications, the Competition Commission of India (CCI) found ten manufacturers and suppliers of brake blocks to Indian Railways (Railways) guilty of collusive bidding. However, given the economic downturn due to the pandemic faced by Micro Small and Medium Enterprises (MSMEs) in India, and other public interest considerations, the CCI imposed no penalty and directed the parties to cease and desist from indulging in such activities in the future.

The Ministry of Corporate Affairs should adopt a liberal and pragmatic approach to allow companies to use their own products and services to provide COVID-19 related relief as part of their CSR activities under the Companies Act.

The amendments to the Indian Stamp Act 1899 (Act) have come into effect from 1 July 2020. These amendments were first proposed under the Finance Act of 2019 and the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 (Rules).

It has been more than a year since the government of Gujarat brought into effect the new Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2019 (S&E Act 2019).

With the amendments to the Indian Stamp Act 1899 (Stamp Act) brought in by the Finance Act 2019 (to be effective from 1 July 2020), there was an ambiguity on the application of such amendments on issuance and transfer of units of alternative investment funds (AIFs). This was followed by the issuance of a circular by SEBI, i.e. circular SEBI/HO/IMD/DF6/CIR/P/2020/113 dated 30 June 2020 (Circular), whereby SEBI has provided clarity on the applicability of stamp duty on issuance and transfer of units by AIFs and its treatment of units of an AIF as a ‘security’ under the Securities Contract (Regulation) Act 1956.

The Securities and Exchange Board of India (SEBI), at its board meeting held on 25 May 2020, approved several significant changes to regulations governing listed companies. The amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations), the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations), and the SEBI (Prohibition of Insider Trading) Regulations, 2015 (Insider Trading Regulations), are discussed in this Ergo.

On 9 June 2020, the Mumbai Bench of the National Company Law Tribunal (NCLT) passed an order admitting a petition for the initiation of the corporate insolvency resolution process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) in the matter of Agrocorp International Private (PTE) Limited v National Steel and Agro Industries Limited (CP(IB) No. 798/MB/C-IV/2019). In doing so, the NCLT held that a foreign-seated arbitral award is adequate proof of a “claim” under Section 9 of the IBC, despite the fact that the foreign award had not undergone enforcement proceedings in India.

On 24 June 2020, the Reserve Bank of India (RBI) issued directions on “Loans Sourced by Banks and NBFCs over Digital Lending Platforms: Adherence to Fair Practices Code and Outsourcing Guidelines” (Directions) to scheduled commercial banks (Banks) and non-banking financial companies (NBFCs) in relation to their engagement with digital lending platforms for disbursement of loans to borrowers.

On 19 June 2020, the Controller General of Patents, Designs and Trade Marks (Respondent) issued a Public Notice (Recent Notice) to the effect that the deadlines for various acts/proceedings, filing of any reply/document, payment of fees, etc relating to any intellectual property matter (IP Filings) falling due after 15 March 2020 shall be the date as decided/ordered by Court (defined hereinafter).

In a significant judgment dated 9 June 2020 titled ‘Indus Biotech Private Limited v. Kotak India Venture Fund-I’, the National Company Law Tribunal, Mumbai Bench-IV (NCLT) allowed an application filed by the corporate debtor, Indus Biotech Private Limited, (corporate debtor) under Section 8 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) seeking reference to arbitration for settlement of the disputes between the parties, while dismissing the Company Petition filed by the financial creditor, Kotak India Venture Fund-I (financial creditor) under Section 7 of the Insolvency & Bankruptcy Code 2016 (IBC).

The Securities and Exchange Board of India (SEBI) has granted certain significant relaxations with respect to new capital raises / preferential allotments by stressed public listed companies. These are effective 22 June 2020, through appropriate amendments to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations).

A single-judge bench of the Hon’ble High Court of Delhi (High Court), in its judgment, MEP Infrastructure Developers Limited v South Delhi Municipal Corporation & Ors. dated 12 June 2020, held that a force majeure clause instantly comes into effect once it has been acknowledged by the other party. Accordingly, in such circumstances, the need to explicitly invoke the force majeure clause does not arise.

India’s capital markets regulator, the Securities and Exchange Board of India (SEBI) has, on 16 June 2020, notified amendments (Amendments) to the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) and Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 (REIT Regulations). The Amendments, inter alia, allow de-classification of persons and entities as sponsors, induction of new sponsors, introduce whitewash waiver provisions for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) (together, Business Trusts), and ease lock-in requirements in case of REITs.

A three-judge bench of the Supreme Court (SC), vide its judgment dated 5 June 2020 passed in Shakti Bhog Food Industries Limited v The Central Bank of India & Anr (Civil Appeal No. 2514 of 2020) (SC Judgment), held that accrual of right to sue under Article 113 of the Schedule of the Limitation Act, 1963 (the Act) did not necessarily arise when the right to sue first accrued but rather, when there was a clear and unequivocal threat of infringement of rights. Subsequently, the Calcutta High Court (HC), vide a judgement dated 11 June 2020 passed in In the Goods of: Hanuman Prasad Agarwal  AND Suresh Agarwal v Satyanarain Agarwal & Ors (GA No 990 of 2018 with TS No 7 of 2016) (HC Judgment)arrived at the same finding in respect of matters covered under Article 137 of the Schedule of the Act.

The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations) have been amended, effective 16 June 2020, to grant certain significant relaxations to promoters looking to consolidate their holding in Indian listed companies (ListCos). These are:

India’s appeal tribunal for competition matters - the National Company Law Appellate Tribunal (NCLAT) - has dismissed an appeal filed by a natural person - Pankaj Raj (Informant) - against an order of the Competition Commission of India (CCI).  (Maj. Pankaj Rai v Secretary, Competition Commission of India & Ors. (Competition Appeal (AT) No. 01 of 2020), decided on 29 May 2020.).

On 5 June 2020, the Competition Commission of India (CCI) in disposing of Suo Motu Case No 05 of 2017 concluded that National Engineering Industries Limited (NEI), Schaeffler India Limited (Schaeffler), SKF India Limited (SKF) and Tata Steel Limited, Bearing Division (Tata) had  contravened provisions of Section 3(3)(a) read with Section 3(1) of the Competition Act, 2002 (Competition Act).

In order to allow a larger group of listed companies to raise funds from the public, during the testing times brought about by COVID-19, the Securities and Exchange Board of India (SEBI) has issued a circular dated 9 June 2020 (Circular). The Circular has relaxed the eligibility conditions applicable to fast track further public offers by listed companies (Fast Track FPOs). This is in continuation of the regulator’s efforts to aid listed companies access capital during this time - over the last several months, SEBI relaxed several regulations applicable to rights issues by companies, allowed creation of encumbrances by listed REITs (allowing debt funding), relaxed certain procedural matters applicable to takeovers and buybacks and guidelines applicable to initial public offerings, et cetera.

On 4 June 2020, the Reserve Bank of India (RBI) issued a notification (Notification) relaxing the timelines for certain compliances to be undertaken by banks, authorised payment system operators, and system participants. The RBI noted that the relaxations are being introduced in view of the present situation in the country.

The Central Board of Indirect Taxes and Customs (CBIC) has issued a circular dated 10 June 2020 (Circular), clarifying the applicability of goods and services tax (GST) on the remuneration paid to whole time directors and independent directors. Services rendered by an employee to his/her employer in the course of, or in relation to, his/her employment are not exigible to GST, and therefore, the moot issue was whether services provided by directors are in the course of employment or not.

The Intellectual Property Appellate Board (IPAB) vide three office orders dated 11 May 2020, 12 May 2020 and 26 May 2020 has set out the framework for future hearings and filings during the ongoing COVID-19 pandemic. The said orders bring about the much needed clarity regarding the functioning of the IPAB in the present times, especially considering that many urgent matters could not be filed or listed due to the non-functioning of the IPAB.

As part of the Government’s ongoing efforts to combat the economic fallout of the COVID-19 crisis, the Union Finance Minister in a press conference dated 24 March 2020 announced an increase in the threshold for invoking the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). A notification published by the Ministry of Corporate Affairs on the same date (Notification) states that the “Central Government hereby specifies one crore rupees as the minimum amount of default for the purposes of the said section.”

Ever since the Hon’ble Finance Minister of India announced the suspension of initiation of corporate insolvency under the Insolvency and Bankruptcy Code 2016 (IBC) in wake of the COVID-19 pandemic, there have been several market speculations about the nature and extent of the proposed suspension and its implications. With the promulgation of the amendment ordinance to IBC, most of these speculations have been put to rest, however owing to the language of the Ordinance, a new set of issues may have arisen.

The Authority for Advance Rulings (AAR) recently rejected applications made by three Mauritian entities on the taxability of capital gains on indirect transfer of an Indian company’s shares, under the India-Mauritius Double Taxation Avoidance Agreement (Tax Treaty). The AAR held that that the transaction was prima facie designed for tax avoidance and that even otherwise, the benefit of the Tax Treaty cannot be allowed in this case.

On 14 May 2020, the Learned Single Judge of the Hon’ble High Court of Delhi delivered a landmark judgment in the case of Horlicks Limited & Anr. v Zydus Wellness Products Limited (CS(COMM) 464 of 2019). The Learned Single Judge, after a thorough examination of precedents relating to trade mark disparagement, restrained Zydus Wellness Products Limited (Zydus) from telecasting a television commercial (TVC) for its product COMPLAN which was disparaging Horlicks.

The High Court of Delhi, in its judgment, Parsvnath Developers Limited & Anr. v Rail Land Development Authority, dated 19 May 2020, has reiterated the powers of a Court under Section 11 of the Arbitration and Conciliation Act, 1996 (Act). Consequently, it has been held that preliminary issues fall within the domain of the arbitral tribunal and are not to be delved into by a court under Section 11 of the Act.

India with the second largest armed forces and with the fifth largest defence budget in the world aims to achieve self-reliance in defence production.

It is not an everyday instance for the apex court in the country to adopt a pro employer approach, specifically in a matter pertaining to a disciplinary inquiry initiated against an employee. In the case of Chairman-cum-MD, Mahanadi Coalfields Limited v Rabindranath Choubey [Civil Appeal Number 9693 of 2013] (Mahanadi), however, the Supreme Court of India (Supreme Court) did so. Exercising its appellate jurisdiction, the Supreme Court decided on the question whether it is permissible for an employer to continue a disciplinary proceeding, initiated during an employee’s tenure with the employer, even after his retirement. A related question before the court was whether it was tenable for an employer to withhold the payment of an employee’s gratuity, which would have been payable upon his superannuation, on account of pendency of the disciplinary proceedings against him.

A major impact of the lockdown and Covid-19 has been, one that most shy away from admitting, the cash flow crunch.

A three-member bench of the National Company Law Appellate Tribunal (NCLAT), presided over by the Hon’ble Acting Chairperson, vide its judgment dated 22 May 2020 passed in the matter of State Bank of India  v M/s Metenere Limited [Company Appeal (AT) (Insolvency) No. 76 of 2020], declined to interfere with an order passed by the National Company Law Tribunal, Principal Bench (NCLT) refusing to appoint an ex-employee of the Financial Creditor as the Interim Resolution Professional.

The case finds genesis in the Competition Commission of India’s (CCI) order of investigation against Mahyco Monsanto Biotech (India) Private Limited’s (Mahyco Monsanto) conduct in relation to the sub-licensing of a patented gene. The patent, Bt Cotton Technology, is a technology that consists of two genes to make cotton seeds resistant to bollworms. The technology was patented by Monsanto Company under the Patents Act, 1970 (Patents Act) and licensed to Mahyco Monsanto. Mahyco Monsanto, in turn, sub-licensed the technology to various seed manufacturers in India.

In order to ease the impact of the Covid-19 pandemic on the Indian economy, the Reserve Bank of India (RBI) on 27 March 2020 and 17 April 2020  introduced certain regulatory measures to deal with the challenges arising due to the lockdown (together, the Initial Covid Regulatory Packages). The Initial Covid Regulatory Packages issued by the RBI focused on steps to mitigate the debt servicing burden  of the borrowers on term loans and certain fund based working capital facilities for the period from 1 March to 31 May 2020 (Moratorium) and related relief on income recognition to banks and financial institutions. Please read our analysis of the Initial Covid Regulatory Packages

The Supreme Court of India (SC) in its recent case of PILCOM (Civil Appeal No. 5749 of 2012 with Special Leave Petition (Civil) No. 6829 and 7315 of 2019) ruled that the obligation of the payor to withhold tax at a specified rate of 10% under section 194E of Indian Income tax Act, 1961 (IT Act) on payments made to non-residents, is not affected by the tax treaty applicable to such non-resident recipient.

On 18 May 2020, the Controller General of Patents, Designs and Trade Marks (Respondent) issued another Public Notice (New Notice) whereby the deadlines for various acts, proceedings, filing of any reply/document, payment of fees, etc relating to any intellectual property matter (IP Filings) falling due between 15 March 2020 to 17 May 2020 was fixed as 1 June 2020 and no extension was permitted for the deadlines falling beyond 17 May 2020. This New Notice was contested by Intellectual Property Attorneys Association & Anr (Petitioners), by filing an application in their writ petition bearing WP(C) No 3059/2020 (Writ Petition) before the Delhi High Court (Court). The Court passed a further order dated 21 May 2020 (Further Order) staying the operation of New Notice.

A single-judge bench of the Hon’ble High Court of Delhi, comprising Hon’ble Mr Justice Navin Chawla, vide judgment dated 20 May 2020 in the matters of Tripta Kaushik v Sub Registrar VI-A, Delhi & Anr and Ramesh Sharma v Government of N.C.T. of Delhi & Ors., dealt with the distinction between a relinquishment deed and a gift deed. The Court laid down an elaborate test to determine whether an instrument is construed to be a release deed or a gift deed and held that if the relinquishment by the co-owner is only in favour of one of the co-owners and not all the co-owners, that document will be a gift deed and not a relinquishment deed.

The Delhi High Court (Court) passed an order dated 11 May 2020, in the matter of M/s SMS Ltd v Konkan Railway Corporation Ltd (O.M.P. (COMM) 279/2017), wherein it set aside an arbitral award (Award) pertaining to a dispute regarding the construction of a railway line in Jammu and Kashmir (Railway Project). The Award granted M/s SMS Limited (Claimant) compensation amounting to approximately INR 1.73 Crores, as against its aggregate claim of approximately 89 crores. The Court set the Award aside on the grounds that: (a) the Claimant was not at fault for the non-performance and consequent termination of the rate contract between itself and Konkan Railway Corporation Limited (Respondent); and (b) the compensation awarded was egregiously low. It further held that application of the ‘notional proportional loss’ formula by the arbitral tribunal was perverse.

The Delhi High Court (Court), in its judgment dated 12 May 2020 in Spentex Industries Ltd v Quinn Emanuel Urquhart Sullivan LLP, has inter alia held that the legal relationship between a law firm and client is commercial in nature and accordingly covered by Sections 44 and 45 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). Further, the Court, while dismissing the anti-arbitration suit filed by the Plaintiff, has reiterated the principle that courts have to be extremely circumspect and reluctant to interfere in arbitration proceedings and shall refer parties to arbitration unless the arbitration agreement is on the face of it null and void, inoperative or incapable of being performed.

In our previous ERGO update published on 6 May 2020, we endeavored to guide businesses through the standard operating procedure (SoP) that they should incorporate as part of their resumption plan in COVID-19 times. Since the update, several important developments have taken place, both at the Central and the state levels. The Central Government rolled out revised guidelines for Lockdown 4.0 phase with various relaxations aimed at opening up business activities in a calibrated manner. The state governments followed in tow, with some sticking with the relaxations provided by the Central Government and others introducing some restrictions. In this article, we attempt to share important steps that may be taken by employers in view of government mandate and industry-wide developing practices, as they contemplate resuming operations. 

The Supreme Court of India (SC) in Union of India & Anr v UAE Exchange Centre [Civil Appeal No. 9775 of 2011], held that the liaison office (LO) set up by UAE Exchange Centre LLC (Taxpayer) in India does not constitute its permanent establishment (PE) in India.

The Delhi High Court has vide its order dated 21 May 2020 in the case of Ramanand and ors v. Dr Girish Soni and anr (Rent Control Revision Petition No. 447/2017) analysed whether the present Covid-19 pandemic and resultant lockdown would entitle tenants to claim waiver from payment of rent or suspension of rent and has clarified the legal position in this regard.

As several countries including India remain in lockdown and continue to follow strict social distancing measures, the question on everybody’s mind today is how quickly will we return to “business as usual”, after nearly eight plus weeks of standstill?

On 1 May 2020, the Telangana High Court (Court) passed an order in M/s Pennar Industries Limited & Anr v. The Reserve Bank of India & Anr (IA No 3 of 2020 in WP No 6573 of 2020), granting an interim injunction restraining Yes Bank Limited (Yes Bank), the second respondent from debiting amounts due under letters of credit (LCs) from the account of the Petitioner.

A three-judge bench of the Supreme Court of India (Supreme Court), comprising Hon’ble Justice N.V. Ramana, Hon’ble Justice Mohan M. Shantanagoudar and Hon’ble Justice Ajay Rastogi has, vide its judgment dated 11 May 2020 passed in the matter of South East Asia Marine Engineering and Constructions Ltd (SEAMEC Ltd) v Oil India Limited (Civil Appeal No. 673 of 2012), held that where the interpretation provided by an arbitral tribunal to a contractual provision  in an award was not reasonably possible upon a reading of the contract as a whole, the same was liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).

The division bench of Kerala High Court comprising of Hon’ble Mr Justice Devan Ramachandran and Hon’ble Mr Justice T R Ravi passed an interim order on 24 April 2020 in the matter of Balu Gopalakrishnan & Anr. v. State of Kerala & Ors.  expressing its reservations particularly towards the terms related to data confidentiality under the contract entered into between the Kerala government and Sprinklr Inc., a foreign data analysis company (hereinafter Sprinklr). The High Court also directed that, going forward, the Kerala government should take prior consent from the citizens apprising them that their data is likely to be accessed by third-party service providers.

The division bench of the Supreme Court, comprising of Hon’ble Mr Justice UU Lalit and Hon’ble Mr Justice Vineet Saran, in its decision in Quippo Construction Equipment Ltd v Janardan Nirman Pvt Ltd, on 29 April 2020 has inter alia analyzed the provision under the Arbitration and Conciliation Act, 1996 (Act) regarding waiver of right to object by a party. The Supreme Court set aside an order of the High Court of Calcutta and arrived at the conclusion that if a party does not participate in the arbitral proceedings and does not raise objections regarding the jurisdiction and / or venue of the arbitral tribunal before the arbitral tribunal itself, it can amount to waiver under Section 4 of the Act.

In the matter of Intellectual Property Attorneys Association and Anr v Controller General of Patents, Designs and Trade Marks and Anr, W.P.(C) No 3059/2020 (Writ Petition), the Delhi High Court (Court) passed an order dated 11 May 2020 (Order) extending the limitation period for various acts, proceedings, filing of any reply/document, payment of fees, etc. relating to any intellectual property matter (IP Filings) due on or after 15 March 2020 until further directions to be passed by the Hon’ble Supreme Court.

The division bench of Kerala High Court comprising of Hon’ble Mr Justice Devan Ramachandran and Hon’ble Mr Justice T R Ravi passed an interim order on 24 April 2020 in the matter of Balu Gopalakrishnan & Anr. v. State of Kerala & Ors.  expressing its reservations towards the foreign jurisdiction clause in an information technology contract between the state of Kerala and Sprinklr, a data analysis company. The High Court also directed the Kerala government to take prior consent from the citizens apprising them that their data will be processed by a third-party foreign entity.

Assessing the impact on a target company due to COVID-19, the lung disease caused by the new coronavirus, is one of the critical focus areas of any due diligence as part of a merger and acquisition (M&A) transaction. Even for ongoing transactions, buyers are now looking more closely and re-assessing potentially impacted areas such as the target company’s supply chain, contractual risks and information technology systems.

The Finance Act 2020 has introduced several amendments to the Income-tax Act, 1961 (“IT Act”) such as change in residential criteria for individuals and widening the scope of digital transaction taxation. One significant amendment which has caught the eyes of the corporate investors most is the resurrection of the classical dividend taxation regime to tax dividends in the hands of shareholders, thereby doing away with the Dividend Distribution Tax (“DDT”).

In Part 1 of their 2-Part article series, the authors lucidly analysed the provisions of the Black Money Act. In Part 2 today, the authors briefly discuss a few defences available to the taxpayers and also deliberate on a few court rulings on the same.

A three-judge bench of the Supreme Court of India (Supreme Court), comprising Mr Justice Arun Mishra, Mr Justice Vineet Saran and Mr Justice M R Shah has, vide judgment dated 29 April 2020 passed in the matter of Christian Medical College Vellore Association v. Union of India and Others [Transferred Case (Civil) No 98 of 2012], held that the provisions of the Indian Medical Council Act, 1956 (Act) and regulation cannot be said to be ultra vires or taking away the rights guaranteed under the Constitution of India (Constitution) under Article 30(1) read with Articles 19(1)(g), 14, 25, 26 and 29(1). 

Companies are in urgent need of funds and given the same, necessary clarifications by the governments on bonafide concerns of foreign investors may prove to be a healing balm.

Soaring high-value M&A deals in the digital space that skip antitrust merger review have spurred a global debate on how fitting merger control thresholds really are

Recently there has been a lot of administrative action in the field of offshore assets and related action initiated under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA). This is so especially in view of the constant flow of information concerning offshore assets coming to the notice of the authorities on account of various data leaks as well as from various jurisdictions under information sharing arrangements as well as automatic sharing of information. BMA was introduced in the year 2015 specifically with a view to deal with undisclosed offshore incomes and assets as it was felt that the prevalent laws were inadequate to deal with various aspects of offshore assets.

Under Indian income tax law, an individual’s tax residency is determined by his physical stay in India during a Financial Year (FY) (i.e. 1 April to 31 March) as well as his stay in the preceding years. The residential status then determines whether his global income would be taxable in India or not.

It has been more than a month since the announcement of the lock-down in India by the Central Government, and longer in many other parts of the world. While economists and analysts across the globe are trying to evaluate the impact of the COVID-19 pandemic and devise relief measures, a quick reading of the monetary policy released by the Reserve Bank of India (RBI) on 7 April 2020 suggests that the true economic impact of the pandemic on growth, liquidity and inflation would depend upon the speed with which the outbreak is contained and economic activity across the globe returns to normalcy. Any kind of forecasts are subject to massive revisions depending on the aforementioned factors.

Amidst the prevailing COVID-19 crisis, states are now contemplating taking diverse measures to offset the economic impact and boost investment opportunities. With this goal, the states of Madhya Pradesh and Uttar Pradesh have introduced several relaxations under various labour laws to ease the compliance burden on employers.

In the judgement V. Padmakumar v Stressed Assets Stabilisation Fund (Respondent) & Anr (12 March 2020, Company Appeal (AT) (Insolvency) No 57 of 2020), a four member bench of the National Company Law Appellate Tribunal (NCLAT) has, inter alia, held that entries in the balance sheet of the company do not constitute an acknowledgement of liability in terms of Section 18 of the Limitation Act, 1963 (Limitation Act). This is for the purpose of filing an application for initiation of the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).

With a view to ensure that businesses are not saddled with indirect tax payments and related compliances and to maintain smooth functioning of business activity amidst the COVID-19 outbreak, the Ministry of Finance and Ministry of Commerce and Industry have announced a slew of relaxation measures. We have set out below a broad overview of the key updates in the area of indirect taxes and foreign trade:

The Hon’ble Delhi High Court, in its decision dated 28 April 2020 in Indrajit Power Private Limited v Union of India & Ors, has dismissed a writ petition seeking to refrain the invocation of a bank guarantee by the Union of India (Respondent No 1) inter alia due to the financial distress caused by the national lockdown and that the COVID-19 pandemic was a force majeure under the agreement between the parties.

In an unprecedented decision, the Delhi High Court in the case of Brand Equity Treaties Limited v Union of India and Another (Writ Petition Civil No 11040 of 2018) has held the credit of taxes paid on inputs to be a vested right. In the lead petition (which was argued by us), the Court has concluded that the time limit prescribed under Rule 117 of Central Goods and Services Tax Rules, 2017 (CGST Rules) is directory and not mandatory. In absence of any specific statutory limitation under the Central Goods and Service Tax Act 2017 (CGST Act), the Court has read down the above provision of the CGST Rules and pragmatically declared that the time limit of 3 years under the residuary provisions of the Limitation Act 1963 (Limitation Act) would apply.

On 1 May 2020, the Secretary, Ministry of Home Affairs, Government of India (MHA Secretary) issued an order extending the nation-wide lockdown period for another two weeks beginning 4 May 2020, albeit with revised restrictions and certain relaxations (Revised Guidelines). Set out below is an overview of the Revised Guidelines:

Pursuant to the Supreme Court’s directions dated 6 April 2020, several High Courts have issued directions and guidelines regarding the conduct of hearings via videoconferencing (VC) (VC Hearings) for themselves as well their subordinate courts. Until recently, the preferred platform for conducting court proceedings appeared to be ‘Zoom’. However, following the Union Ministry of Home Affairs’ advisory dated 12 April 2020 declaring ‘Zoom’ as unsafe (MHA Advisory), certain High Courts have opted to discontinue the use of ‘Zoom’.

The Supreme Court of India, in its judgment dated 22 April 2020 in National Agricultural Cooperative Marketing Federation of India v Alimenta S.A., has refused enforcement of a foreign award on the ground of it being contrary to the fundamental public policy of India.

The Ministry of Finance on 17 October 2019 notified the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules)  in supersession of the Foreign Exchange Management (Transfer of Issue of Security by a Person Resident outside India) Regulations, 2017 and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018. On 27 April 2020, the Foreign Exchange Management (Non-Debt Instruments) (Second Amendment) Rules, 2020 (Amendment) were notified by the Ministry of Finance which amended the NDI Rules to give effect to the following changes

The Government of India (GOI) announced a nationwide lock down on account of Covid-19 pandemic with effect from 25 March 2020. This has severely disrupted regular business activities across all sectors of the economy in the country. The quarterly newsletter issued by the Insolvency and Bankruptcy Board of India (IBBI) for the quarter October – December 2019, states that as on 31 December 2019, there are approximately 1,961 entities which were undergoing a corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (Code). It is in respect of the corporate debtors presently undergoing CIRP under the Code, that the lockdown has made it near impossible for all the stakeholders involved in the process, to participate effectively and perform their respective functions within the timelines as stipulated under the Code.

On 27 April 2020, the Ministry of Finance notified the long-awaited Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules 2020 (NDI Amendment) to permit 100% foreign direct investment (FDI) in insurance intermediaries under the automatic route.

The Directorate General of Hydrocarbons (DGH) on 25 April 2020 introduced new measures to simplify the process and procedures associated with Production Sharing Contracts (PSC) of Pre-NELP and NELP oil and gas blocks.

The Hon’ble Supreme Court, vide its judgement dated 22 April 2020, in the case of Union of India and Another v M/s V V F Limited and Another (Civil Appeal Nos 2256-2263 of 2020) and other connected appeals, has upheld the validity of the notifications issued under the Central Excise Act, 1944 (Excise Act), which retrospectively amended the area based exemption schemes notified in relation to certain areas within Gujarat and the North Eastern region.

On 26 February 2020, the Hon'ble Calcutta High Court (High Court) passed a judgment on various civil revisional applications filed under Article 227 of the Constitution of India whereby the High Court held that the pre-acquisition role and intra-acquisition liability of payment of compensation makes a private partner in a township development project under a Public Private Partnership model (PPP) a necessary party or a person interested in the referenced proceedings under Section 18 of the Land Acquisition Act, 1894 (LA Act).

The Covid-19 pandemic has resulted in a near extinction of primary market fundraising by companies in India. While the Indian government and domestic regulators have limited ability to influence resultant flux in valuations, the Securities & Exchange Board of India (SEBI) has arguably met expectations in aiding capital market transactions at such time, predominantly by easing the legal route to accessing public funds. Consistent with such efforts, SEBI has issued two circulars on 21 April 2020 (the Circulars), which have muted the applicability of certain regulations guiding public and rights issues. This article evaluates the Circulars and provides the rationale behind the amendments, which should assist in interpretation.

The Mumbai Bench of the Income Tax Appellate Tribunal (Tribunal) in the case of M/s Anik Industries Limited (Tax Payer) vs DCIT (ITA No. 7189/Mum/2014 & ITA No. 5234/Mum/2016) allowed the appeal by the Tax Payer that the compensation received by the Tax Payer for reduction in profit sharing ratio would not tantamount to capital gains chargeable to tax under Section 45(1) of the Income-tax Act, 1961 (IT Act).

The Competition Act, 2002 (“Competition Act”), which codifies Indian competition law, has now been enforced for over a decade (since May 2009). While we are witnessing the progressive evolution of Indian competition law, consumer claims for compensation for damages for anticompetitive conduct remains uncharted territory. There have been no judgments to date on any compensation claims by the National Company Law Appellate Tribunal (“NCLAT”).

This update is in furtherance of our ERGO coverage on COVID-19 outbreak where attempt to bring forth latest regulatory developments, occasioned by the upsurge in the number of positive cases in the country. We have set out below an overview of regulatory updates for the period between 14 April 2020 to 23 April 2020.

On 17 April 2020, Ministry of New & Renewable Energy, Government of India (MNRE) issued an office memorandum (Memorandum II) requiring all renewable energy implementing agencies to treat lockdown due to COVID-19 as ‘force majeure’.

The COVID-19 pandemic has forced governments to take exceptional measures such as implementing mandatory lockdowns and restricting travel. This unprecedented situation is raising significant tax issues, especially where there are cross-border elements in the equation. Individuals have been forced to stay for long in a country where they do not ordinarily reside, thereby triggering residency rules in that country. Many cross-border workers are unable to physically perform their duties in their country of employment and may have to stay at home and telework.

The Reserve Bank of India (RBI) on 17 April 2020 introduced additional regulatory measures to alleviate the impact of COVID-19 pandemic on the Indian economy with a focus primarily on the lending institutions. The additional measures are consistent with the global coordinated action committed to by the Basel Committee on Banking Supervision. RBI’s earlier COVID-19 – Regulatory Package dated 27 March 2020 (Regulatory Package) was focused on steps to mitigate the burden of debt servicing on the borrowers and to ensure business continuity for viable enterprises. Please read our analysis of the COVID-19 – Regulatory Package circular

Recently, in the case of Sesa Goa Limited v The Joint Commissioner of Income-Tax (ITA No. 17/2013), the High Court of Bombay at Goa allowed a deduction in respect of cess (education cess and higher and secondary education cess) from the business income of the taxpayer.

On April 1, India ushered in a new era of taxation in the digital age. In a significant move to widen its tax net on the digital economy, India announced that an equalisation levy at the rate of 2% will apply to e-commerce sales and services by non-resident operators to Indian customers, among others.

India’s Union Budget for the fiscal 2020-21 was announced in February 2020 and the tax proposals, after undergoing some important changes, were approved by the Indian Parliament and received Presidential assent on March 27, 2020.

Half - Yearly Newsletter

The coming decades of antitrust markedly belong to e-commerce, leaving the antitrust regulators across the globe grappling with novel issues. Concerns like monopoly and duopoly, self-preferencing and leveraging, big data and network effects, dual pricing and deep discounting dominate their list. The unique characteristics of e-commerce mean the development of antitrust jurisprudence will remain in flux, and the recent spate of antitrust cases globally as well as in India evidences that.

On April 18, 2020, the Department for Promotion of Industry and Internal Trade (DPIIT), by way of press note 3 of 2020 (PN 3 of 2020), announced a critical change to the Consolidated Foreign Direct Investment Policy (FDI Policy).

The Securities and Exchange Board of India (SEBI) vide notification dated 7 April 2020 (Amendment Notification), notified an amendment to the SEBI (Foreign Portfolio Investors) Regulations 2019 (FPI Regulations), expanding the criteria for being categorised as a Category I Foreign Portfolio Investor (Category I FPI), which set the stage for permitting Mauritius-based funds, the second largest contributor to FPI investments in India, to be registered as Category I FPIs. Putting the speculations to rest, the Ministry of Finance, Department of Economic Affairs, notified Mauritius as a jurisdiction whose entities will be eligible for registration as a Category I FPI from 13 April 2020 (DEA Order).

There is no denial that the Government of India is taking all efforts to improve the ‘Ease of Doing Business’ in the country, especially for MNCs. In this regard, it has rolled out a direct tax dispute resolution scheme titled ‘Vivad se Vishwas’ scheme (“VSV Scheme”) for taxpayers who have pending tax disputes at any appellate forum in India. The biggest benefit of this scheme is that if the taxpayer pays the disputed tax amount before the prescribed date, then, there is complete waiver from penal interest / penalty and potential prosecution. With such attractive monetary benefits, the VSV Scheme is surely a lucrative option for those litigating taxpayers who are not very strong about either the merits of their case or about the chances of success.

India today announced a new policy for foreign direct investment (FDI) from China by way of Press Note 3 of 2020. All such investment from China will now require prior approval of the Indian Government, and this approval requirement also applies to transactions, where the beneficial owner of the investment, (whether directly or indirectly) is from China.

A single bench of the Bombay High Court has refused ad-interim reliefs to the Petitioners who were seeking to restrain the Respondent bank from negotiating / encashing the letters of credit, on the ground that the contracts with the Respondent seller were terminated as unenforceable on account of frustration, impossibility and impracticability caused due to the coronavirus disease (COVID-19) and the government lockdown.

The past week saw a flurry of activity in connection with the adoption and implementation of the virtual system of functioning by the Indian judicial machinery.

In a recent ruling in New Delhi Television Limited v DCIT (Civil Appeal No. 1008 Of 2020) (Ruling), the Hon’ble Supreme Court (Supreme Court) has quashed the reassessment proceedings initiated on New Delhi Television Limited (Taxpayer). The reopening was initiated beyond 4 years for alleged INR 405.09 crore ‘unaccounted money’ case introduced to the Taxpayer’s subsidiary based in United Kingdom (UK) named NDTV Network Plc. (UK Sub) by way of issuance of step-up coupon bonds during financial year (FY) 2007-08 [relevant for assessment year (AY) 2008-09], for which the Taxpayer agreed to furnish a corporate guarantee. In doing so, the Supreme Court ruled that there was no failure on the part of the Taxpayer to disclose all material facts necessary for the purpose of making assessment and thus, the reassessment proceedings were in excess of jurisdiction.

As the situation in view of COVID-19 is evolving, the Government of India has been announcing quite a few relaxations with respect to various income tax related provisions and compliances. In furtherance to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (please see our ERGO dated 03 April 2020), some of the key relief measures provided for income taxes include: 

The draft Defence Procurement Procedure 2020 (DPP) released by the Ministry of Defence proposes a plethora of vital amendments with the objective of growing domestic capability and achieving national security objectives. One of the significant overhauls in the draft DPP 2020 is in the offset guidelines, which is a key concern for foreign OEMs supplying under previous and current DPPs.

To curb the outbreak of COVID-19 in India, the Government of India had imposed a lockdown on 24 March 2020 for a period of 21 days till 14 April 2020. The said lockdown has now been further extended till 3 May 2020 by the Prime Minister and the Ministry of Home Affairs (MHA). They released an order dated 14 April 2020, inter alia, formalising the extension and stating that the MHA guidelines issued previously on 24 March 2020 along with subsequent amendments will continue to remain in force till 3 May 2020. The MHA further released an order dated 15 April 2020, detailing additional activities which will be allowed to operate albeit with certain restrictions (Guidelines).

Welcome to the fourth edition of the E-Bulletin (Volume II) brought to you by the Employment, Labour and Benefits (ELB) practice group of Khaitan & Co. This e-Bulletin covers regulatory developments, case law updates and insights into industry practices that would impact businesses from a sector agnostic standpoint.

The Hon’ble High Court of Rajasthan (Rajasthan HC) delivered its judgment in the matter of Ultra Tech Nathdwara Cement Ltd v Union of India through the Joint Secretary, Department of Revenue, Ministry of Finance and Ors D.B. Civil Writ Petition No. 9480/2019 in terms of which the Hon’ble Rajasthan HC reaffirmed the primacy of the Insolvency and Bankruptcy Code, 2016 (IBC) over any other law for the time being in force and categorically observed that the provisions of a resolution plan which has been approved by the adjudicating authority (Approved Resolution Plan) is binding on all stakeholders of the corporate debtor, including statutory creditors.

The Hon’ble Supreme Court of India (SC) has on 6 March 2020 stayed the operation of the judgment of the Hon’ble Bombay High Court (Bombay HC) in the case of Gurdeep Singh Sachar v Union of India & Ors dated 30 April 2019 (Gurdeep Singh Case) until further notice. The Bombay HC had, in the Gurdeep Singh Case, upheld the legality of online fantasy sports gaming in India as games that are preponderantly games of skill. This casts doubts, for the time being, over legality of online fantasy sports games in India. The growth in this industry, among other things, had stemmed from the various judicial decisions of the High Courts upholding virtual / online fantasy sports games as games involving ‘considerable and substantial degree of skill’ – which are games that are not within the purview of gambling laws in India.

Digitisation is becoming the main stay of commerce and industry in India. The country has entered the cashless phase of economy. The past decade has witnessed emergence of groundbreaking innovations in the retail payment space facilitating electronic transfer of funds at the tip of a finger.

The Securities and Exchange Board of India (SEBI) vide circulars dated 23 March 2020 (Encumbrance Circulars) clarified the position of law with respect to creation of encumbrance on the units held by the Sponsors of infrastructure investment trusts (InvITs) and real estate investment trusts (REITs), collectively referred to as Sponsor Units.

As India enters the last week of the 21-day nation-wide lockdown, there is still uncertainty of what lies ahead. It is possible that the lockdown may only be gradually eased.

As the nation has entered the final week of the 21 day nation-wide lockdown announced by the Indian Prime Minister with effect from 25 March 2020 pursuant to the COVID – 19 outbreak, we take a stock of key regulatory measures taken on Central as well as State levels by authorities which have a direct impact on the power sector. We have set out below an overview of the key regulatory updates impacting the power sector:

The COVID-19 pandemic has disrupted the justice delivery system like never before. The compulsions associated with ‘social distancing’ coupled with lockdown directives have led courts and tribunals to shut their premises to the public. At the same time, recognizing that a complete shut-down of the justice-delivery system is undesirable, judicial administrators have turned to technology to meet the challenges posed by the pandemic. Various judicial and quasi-judicial bodies, led by the Supreme Court, have been conducting hearings online.

The onset of Covid-19 has set in motion a series of events which is bound to test India’s debtor-creditor relationship. Over the years, Indian courts have upheld the bargain struck by debtors and creditors and not allowed excusal of performance on grounds of force majeure or frustration. India’s new bankruptcy code (the “IBC”) played a critical role in re-balancing terms in favour of creditors. Indian courts in recent orders have granted relief to debtors in certain circumstances given the outbreak of Covid-19.  In Rural Fairprice Wholesale Limited v IDBI Trusteeship Services Limited, the Bombay High Court on 3 April 2020 granted temporary relief from pledge invocation. In Anant Raj v Yes Bank Limited, the Delhi High Court on 6 April 2020 granted temporary relief from being classified as a non-performing asset (“NPA”). It is very important for debtors and creditors to understand these decisions as they consider their rights and remedies.

Recently, the Rajasthan Advance Ruling Authority (AAR) in the case of M/s Clay Craft India Private Limited [2020 (4) TMI 228] has held that remuneration paid to Directors would attract Goods and Services Tax (GST).

On 7 April 2020 Singapore passed the COVID-19 (Temporary Measures) Act, 2020 (Act) to provide temporary relief to parties who are unable to perform their contractual obligations due to the COVID-19 pandemic (COVID-19), amongst other measures. It must be noted that the provisions of the Act relating to temporary relief for inability to perform contractual obligations will come into effect from the date that the Minister of Law, Singapore, appoints by notification in their Gazette.

We hope you found our earlier environmental newsletter helpful. In light of the positive feedback received from many of you, we have decided to make our environmental newsletter a quarterly feature. In this light please find attached the first issue for the year 2020. With environment, health and safety issues gaining prominence across the globe, this issue highlights some of the important orders and judgments passed by Indian courts. It also includes some of the key regulatory developments including the provisions for expenditure on environment and sustainability related issues in the Union Budget for 2020-2021.

On 26 March 2020, the Ministry of Health and Family Welfare (Health Ministry) legalised the doorstep delivery of certain drugs which are ordinarily sold by way of prescription only (Notification). These include Schedule H drugs, except narcotics, psychotropics and controlled substances, as defined in the Narcotic Drugs and Psychotropic Substances Act, 1985; Schedule H1 drugs, under the Drugs and Cosmetics Rules, 1945 (Drug Rules); and Schedule X drugs, under the Drugs Rules. While the last mile delivery of drugs has been a commonly prevalent practice, this Notification is unique in being the first instance of this concept being expressly recognised under Indian pharmaceutical law.

The Goods and Services Tax (GST) Council during its 39th meeting, held on 14 March 2020, decided that a special procedure should be prescribed for corporate debtors undergoing the corporate insolvency resolution process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), in order to enable such entities to comply with the provisions of the GST laws.

The amendments dated 11 February 2020 to the Medical Devices Rules, 2017 and the Drugs and Cosmetics Rules, 1945 (Rules) have broadened the scope of medical devices within the purview of the Indian regulatory framework. On the same day, the Government released another notification amending the Rules with an aim to tighten the regulations in relation to marketing of drugs and medical devices (Amendment).

Volume 2 Issue 1 April 2020

In an encouraging move that may deliver a vital thrust into the investment-intensive, yet cash-stripped Indian telecom sector, the Telecom Regulatory Authority of India (TRAI) in its recommendations dated 13 March 2020 (Recommendations) has proposed that ‘passive’ telecom infrastructure providers registered with the Department of Telecommunications (DoT) as Infrastructure Provider Category – I (IP-I), should be allowed to ‘own’ certain active telecom infrastructure, for establishing and providing to ‘eligible service providers’. Presently, IP-I entities are not allowed to own ‘active’ elements.

The steady advance of the novel coronavirus (COVID-19) in India and across the world has seen a concomitant increase in the uncertainties for business on a daily basis. While the elephant in the room is  currently compliance and handling of employees and taking necessary steps as per government policies and relevant employment and labour laws, the impact on corporate entities is also far and wide on other aspects.    One of the biggest gradual fallouts of this business disruption will arise from inability or difficulty in performance of contractual commitments. This will give rise to potential claims against counter parties across the board on account of non-delivery of goods/services, both from a domestic and international perspective. 

Latest Circulars published by MHA for COVID-19 updates

COVID-19 updates by Indian Council of Medical Research

Latest updates by MoHFW on COVID-19

Updates by World Health Organisation on COVID-19

The current Covid-19 pandemic and the imposition of various social distancing and other restrictions in India and elsewhere in the world is likely to cause significant disruption to supply chains and potentially make the performance of contracts challenging. In this note, we outline the position under Indian law with regard to whether performance of obligations can be excused on the grounds of frustration through “force majeure” and “material adverse change” (“MAC”) clauses.

As the government introduces further measures to ensure continuity of business in the midst of the ongoing country wide lock-down pursuant to the COVID – 19 outbreak, we have set out below an overview of the key corporate and commercial regulatory updates for the period between 28 March 2020 and 3 April 2020

Government of India is taking all necessary steps to ensure that we are prepared well to face the challenge and threat posed by the growing pandemic of COVID 19 – the Corona Virus

COVID-19 Updates by Ministry of External Affairs

Indian infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) have drawn investments from some of the largest global institutional investors, sovereign wealth funds and pension funds. According to sources, since their introduction in India, InvITs and REITs have together raised more than $3.6 billion of capital. 

On 24 March 2020, the Hon’ble Finance Minister announced several compliance related relaxations to ease the compliance burden on business community which was followed by a press release (Press Release). To give effect to the Press Release, the Government on 31 March 2020 passed the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (“Ordinance”). Key takeaways of income-tax related provisions in the Ordinance are as follows.

The Income tax Appellate Tribunal, Mumbai in its recent judgment in the case of Volkswagen Finance Pvt Ltd (Taxpayer), ITA No. 2915/2017, ruled that payment made to a non-resident celebrity for an appearance made by him at a product launch event in Dubai  was taxable in India as the same was made in connection with Taxpayer’s India business, resulting into an intangible business connection.

To tackle the various logistical challenges and hardships faced by various corporate entities in ensuring continuity of business in the midst of the various restrictions imposed pursuant to the COVID – 19 outbreak, regulators have announced various relaxations for such entities in relation to compliance with certain legal requirements.

Recently, the Finance Act, 2020 (FA 2020) has made changes to determination of tax residence of individuals under the Indian Income-tax Act, 1961 (IT Act), especially for Indian citizens and persons of Indian origin (PIO).

As part of its consistent efforts to boost the product, the Securities and Exchange Board of India (SEBI) had permitted listed real estate investment trusts (REIT) to raise funds from the primary market through follow on public offerings, preferential issues, institutional placements and rights issues. The legal framework supporting such fund raising routes have been notified by SEBI from time to time. On 13 March 2020, SEBI issued a circular (Circular), amending and clarifying codified provisions guiding fund raising by listed REITs – this newsletter discusses and analyses the Circular.

Striking a bargain for an exit with an unwilling minority shareholder is usually a challenge and does turn out to be a painstakingly arduous task if litigated by a reluctant minority stakeholder. In unlisted companies, the majority shareholder may be driven by a variety of reasons to squeeze-out the minority such as for obtaining greater operational flexibility (and smoother decision-making) or to limit information flow to a minority shareholder.

The magnitude of this pandemic warrants setting-up quarantine centres in India. The Government may consider announcing some tax sops for taxpayers who (i) set up, operate and maintain such quarantine centres or (ii) are desirous of contributing their CSR funds to help the community at large to come out of this pandemic. 

On 25 March 2020, the Board of Governors (in supersession of the Medical Council of India) have framed the Telemedicine Practice Guidelines (Guidelines) which are added as Appendix 5 of the Indian Medical Council (Professional Conduct, Etiquette and Ethics Regulation 2002 (Ethics Regulations). It may be noted that the body of the Ethics Regulations do not seem to have been amended to include a reference to the new Appendix 5.

In August 2019, the Competition Commission of India (CCI) amended the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations) to: (i) introduce an automatic approval route for transactions where there is absence of any horizontal, vertical or complementary overlaps between businesses of the parties (Green Channel Route or GCR); and (ii) provide a substantially revised Form I format with incremental queries (Revised Form I).

The Government released notifications on February 11, 2020 expanding the scope of regulation pertaining to ‘medical devices’. Historically, India has not had regulations on all ‘medical devices’ – certain categories of devices were regulated under the Drugs and Cosmetics Act, 1940 like ‘drugs’.  

On 24 March 2020, the Ministry of Home Affairs issued an order imposing a 21-day lockdown of the entire country as a preventive measure to stop the spread of COVID -19. The lockdown announced by the Government mandates that while all commercial operations shut down, the Government left out a silver lining for “Essential Services.”

Rabindra Jhunjhunwala, Sameer Sah, Aditya Cheriyan, Supratim Chakraborty & Manavendra Mishra

The Reserve Bank of India (RBI) as part of its Statement of Development and Regulatory Policies released on 27 March 2020 announced a slew of measures to safeguard the Indian economy from the shocks of the COVID-19 pandemic. As part of these measures, the RBI released a circular (Ref: RBI/2019-20/ 186 DOR.No.BP.BC.47/21.04.048/2019-20) on COVID-19 – Regulatory Package (COVID Regulatory Package) to, inter alia, mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure business continuity for viable enterprises.

In the wake of the novel coronavirus (COVID-19), the Government of India and the local authorities have been continuously issuing measures to contain the pandemic such as prohibition on large gatherings, imposition of a ban on travel, closure of certain outlets with large foot falls and requirement to permit work from home for employees. In fact, with the outbreak of coronavirus, the Indian stock market has also been plummeting. The global markets and the business operations are in a state of turmoil.

On 11 March 2020, the World Health Organization (WHO) declared COVID-19 as a pandemic and a public health emergency of international concern. While the first confirmed case of COVID-19 in India was reported on 30 January 2020, it was not until March 2020 that the public and government began taking cognizance of it. The number of confirmed cases in India has crossed 600 as of 26 March 2020, and several State Governments have resorted to stringent measures to control the outbreak and promote maximum social distancing.

To tackle the various logistical challenges and hardships faced by various corporate entities in ensuring continuity of business in the midst of the various restrictions imposed pursuant to the COVID – 19 outbreak, regulators have announced various relaxations for such entities in relation to compliance with certain legal requirements.

Anshul Prakash

The Finance Bill 2020 was presented in the Indian Parliament on 1 February 2020 (Finance Bill) as part of the Budget proposals (see our Ergo on direct tax related budget proposals here). On 23 March 2020, it was passed by the Indian Parliament with certain amendments – some of which are significant including widening the scope of equalisation levy (popularly referred to as Google tax). After receiving the Presidential assent earlier today, it is now in force (Finance Act).

Further to our Ergo Updates in 5 March 2020, 12 March 2020, 13 March 2020, 16 March 2020 and 20 March 2020, we set out below latest regulatory updates in respect of COVID-19 outbreak.

As COVID-19 continues to induce turbulence in our lives, infrastructure and economies, India continues to show its resilience, strength and unity. However, despite best efforts, our daily lives, working patterns, regulatory and legal structures are constantly facing renewed challenges. However, competition rules continue to apply and thus far, the Competition Commission of India (CCI) has not issued any relaxation in any spheres unlike some of its international counterparts.

The Hon’ble Finance Minister has announced a host of relaxations in the compliance timelines for small taxpayers and various other relief measures. The major announcements from the standpoint of Indirect Taxes included:

COVID-19 has posed unprecedented challenges and in many cases business continuity plans are being put to test for the first time. The scenario is deteriorating in India with more than 560 positive cases being officially reported. The ‘lockdown’ has been extended to all districts in India till the 14th of April 2020. The restrictions on construction activities, decreased workforce and supply chain disruptions will have a cascading impact on contractual obligations relating to infrastructure projects. Complex contractual arrangements with (i) back-to-back contracts between numerous, unconnected parties, or (ii) multiple independent contracts between related parties as part of a composite transaction are typical of the infrastructure sector in India.

Earlier today, i.e., 23 March 2020, the Supreme Court of India (SC), in Writ Petition (Civil) No. 3/2020, took suo motu cognisance of the difficulties faced by litigants due to the rapidly escalating corona virus outbreak (COVID-19).

Our earlier Ergo COVID 19 - Conducting Board Meetings Virtually, provided an overview on how Indian companies can conduct board meetings through Audio Visual Means (AV Means) during this time, to ensure statutory compliance.

Amidst the outbreak of COVID 19, the Securities and Exchange Board of India (SEBI) had previously extended the compliance timelines prescribed under Regulations 7(3) ( Submission of compliance certificate signed by share transfer agent), 13(3) (Grievance Redressal Mechanism), 24A (Secretarial Audit), 27(2) (Corporate Governance Compliance Report), 31 (Shareholding pattern disclosure) and 33 (Financial Results) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations) on 19 March 2020 (SEBI LODR Circular).

The Ministry of Corporate Affairs (MCA) on 23 March 2020 has issued a clarification that any expenditure towards various activities related to COVID-19 shall be considered an eligible corporate social responsibility (CSR) expenditure (MCA Circular).

The World Health Organisation has declared COVID-19 to be a pandemic. All spheres of life have been affected alike and the judicial system is no exception to this. There are various challenges that are being faced by Courts, lawyers and litigants alike which are unprecedented in nature. It would be useful to look at some of the issues that the system is grappling with and what is being done to deal with them in a manner that balances the litigants’ interests while taking precautions against the pandemic.

With the outbreak of the novel coronavirus (COVID-19), the world is facing unprecedented challenges. The World Health Organisation (WHO) has already declared the spread of COVID-19 a pandemic and called it a ‘global health and societal emergency’ requiring coordinated, swift and untrammelled efforts of States and their people to contain it.

Three decades ago, India’s economic liberalisation led to a drastic change in its social and economic landscape, with the country consistently being one of the fastest growing economies in the world. The turn of the century saw telecom infrastructure in India grow exponentially, resulting in faster networks and increased accessibility to internet and data to the public. This set the platform for the development of e-commerce in India and resulted in an increased adoption of digital payments by buyers and sellers alike, requiring payment service providers to innovate and offer solutions designed to enable online merchants to seamlessly accept digital payments. Such service providers were subject to the supervision of the Reserve Bank of India (RBI) pursuant to a notification dated 24 November 2009 issued by the RBI (Intermediaries Directions), under which payment intermediaries were required to pool the funds collected from customers in separate ‘nodal’ accounts, and transfer such funds to the relevant beneficiaries within a specified timeframe in accordance with specified process.

The Securities Appellate Tribunal, Mumbai (SAT) passed an order in Ravikiran Realty India Ltd & Ors v SEBI, Misc App. Nos. 90 & 382 of 2019 with Appeal No. 231 of 2018 (Order) on 6 March 2020 attaching stridhan of a female director in recovery proceedings against the appellant company.

Earlier today, i.e., 23 March 2020, the Supreme Court of India (SC), in Writ Petition (Civil) No. 3/2020, took suo motu cognisance of the difficulties faced by litigants due to the rapidly escalating corona virus outbreak (COVID-19).

With COVID-19 being declared a pandemic, various companies have found themselves facing challenges in complying with the Companies Act compliances due to disruptions in their operations. The rampant spread of the virus in the world and more specifically in India now, has called for relaxations in corporate compliance requirements and introduction of strategic policy decisions to limit the spread of the virus. In light of the same, the Ministry of Corporate Affairs (MCA) vide its circular no. D.O.NO.Secy (MCA)/COVID-19/1/2020 DATED 19 March 2020 has released an advisory on preventive measures to curb the spread of COVID-19 (Advisory).

COVID-19 Preparedness

The Department of Telecom (DoT) has issued a notification dated 13 March 2020 (Notification) which temporarily liberalises conditions stipulated under the ‘Terms and Conditions – Other Service Provider (OSP) Category’ (OSP Guidelines) with respect to ‘Work From Home’ (WFH) for a period up to 30 April 2020 (Exemption Period).

The global outbreak of COVID-19 has led everyone, from promoters to investment bankers to transactional lawyers to fund managers, to change the way in which business is done. One of the biggest challenges for any live transaction or commercial negotiation will be signing of documents. While remote execution is being adopted in the Indian market, parties are cautious about this approach and prefer physical signing of the documents. However, due to ongoing travel restrictions and the possibility of lockdowns, physical execution becomes next to impossible. One possible solution to overcome this challenge is by adopting electronic contracts and electronic signing of the documents.

With the continuing spread of the Coronavirus Disease 2019 (Covid-19 or “coronavirus), various businesses across the globe are facing an increasing number of challenges and issues that need to be addressed and mitigated. Retail sector is no exception to this. This article attempts to summarise issues that are being faced by retail companies and the mitigating steps they should be taking to remain complaint in challenging times, to avoid business and reputational disruptions:

In this webinar, organized by Khaitan & Co in collaboration with the Indo-German Chamber of Commerce (IGCC), Germany Trade and Invest (GTAI), and the Consulate General of the Federal Republic of Germany, the panellists highlighted the likely impact of COVID-19 on business environment in India, and also impact on Indo-German business relations.

With the continuing spread of the Coronavirus Disease 2019 (Covid-19 or “coronavirus), various businesses across the globe are facing an increasing number of challenges and issues that need to be addressed and mitigated. Retail sector is no exception to this. This article attempts to summarise issues that are being faced by retail companies and the mitigating steps they should be taking to remain complaint in challenging times, to avoid business and reputational disruptions 

This webinar was jointly organized by Khaitan & Co and the Indo French Chambers of Commerce and Industry (IFCCI). It addressed pertinent issues related to employers' responsibilities, employees obligations, and business challenges. It also provided best practices of work management to ensure business continuity during the COVID-19 crisis.

Further to our Ergo Updates in5 March 2020, 12 March 2020, 13 March 2020 and 16 March 2020, we set out below latest regulatory updates in respect of COVID-19 outbreak.

The Hon’ble Supreme Court of India in Bank of Baroda v Kotak Mahindra Bank Limited, Civil Appeal No. 2175 of 2020 (judgment rendered on 17 March 2020), has clarified that the period of limitation for executing a decree, under Section 44A of the Code of Civil Procedure, 1908 (CPC), passed by a superior court of a reciprocating territory (Cause Country) will be the limitation prescribed under the laws of the Cause Country. Once the period of limitation prescribed in the Cause Country is over, no execution proceedings could be filed in India. Where the execution proceedings are initiated in India pursuant to the decree passed in the Cause Country, the limitation period for such proceedings shall be governed by Article 137 of the Limitation Act, 1963 (Act).

In recent years there have been legislative reforms in India aimed at further simplifying inbound and outbound mergers and acquisitions (M&As). This article aims to summarise key aspects of M&As, including an overview of the main laws governing M&As, pricing guidelines, sectoral restrictions on investments, reporting requirements, and the key hurdles that potential Chinese investors should be aware of if they plan M&As in India.

Travel restrictions and quarantine: The Government of India has categorized passengers into 3 categories for the purpose of quarantine. These are Category A (high risk – symptomatic persons with a history of travel / contact with a COVID-19 case, who shall be segregated from other passengers and sent for isolation), Category B (moderate risk – elderly, hypertensive, diabetic or asthmatic but asymptomatic persons coming from severely affected countries, who will be shifted to a dedicated quarantine facility for monitoring) and Category C (asymptomatic persons coming from any COVID-19 affected country, who will be kept under home quarantine).

The rapid and unprecedented spread of the novel coronavirus (Coronavirus) which started in December last year and soon became every economy’s waking nightmare has dealt a severe blow to businesses worldwide and posed a serious challenge to asset managers across the globe. Funds and their managers are battling various obstacles including accelerating fund outflows, substantial share price falls and operational challenges to their client-facing work as both international and domestic travel becomes increasingly difficult.

The rapid and unprecedented spread of the novel coronavirus (Coronavirus) which started in December last year and soon became every economy’s waking nightmare has dealt a severe blow to businesses worldwide and posed a serious challenge to asset managers across the globe. Funds and their managers are battling various obstacles including accelerating fund outflows, substantial share price falls and operational challenges to their client-facing work as both international and domestic travel becomes increasingly difficult.

On 11 March 2020, the World Health Organisation declared the Covid-19 outbreak as a pandemic, thereby calling for more urgent and aggressive action to stifle its spreading. Employers are taking a wide range of actions to deal with this extraordinary situation. However, even now, it is of the utmost importance that employers be mindful of protecting the privacy of data of their employees and business contacts in order to mitigate risk and ensure the smooth continuity of business in such a challenging time.

On 5 March 2020, the Reserve Bank of India (RBI) imposed a moratorium on Yes Bank following unsuccessful attempts to raise additional capital to cover provisions for non-performing assets and a deterioration of its financial position. This was against the backdrop of the downgrading of Yes Bank’s credit rating and concerns over its corporate governance. The RBI has taken over Yes Bank’s board and imposed limits on withdrawals to protect the interests of depositors until 3 April 2020. This was followed by a draft scheme of reconstruction published by the RBI on 6 March 2020 for rehabilitation of Yes Bank (RBI Scheme).

The National Company Law Appellate Tribunal (NCLAT), in its judgment dated 12 March 2020, has set aside the order of the Competition Commission of India (CCI) imposing a penalty of INR 10,000,000 (Indian Rupees Ten million) on Eli Lilly and Company (Eli Lilly) for not notifying the acquisition of Novartis Animal Health business in India (NAH) (a business division of Novartis India Limited) to the CCI or what is popularly known as ‘gun jumping’.

In recent times, the presence of COVID-19 in the business ecosystem is testing contingency plans and business continuity across organizations.  Therefore, like all business functions, teams within organisations pursuing acquisitions and divestments also have to reorganize themselves in an agile manner to respond to this challenge.  The attached document provides some insights around what to expect would change in the deal-making environment in India.

The Constitution Bench of the Supreme Court in New India Assurance Company Limited v Hilli Multipurpose Cold Storage Private Limited (Civil Appeal No 10941-10942 of 2013) has conclusively settled conflicting decisions under the Consumer Protection Act 1986 (Act) pertaining to the limitation period for filing a reply to a complaint under the Act. The Supreme Court has held that the time prescribed for filing a reply to the complaint under Section 13(2)(a) of the Act is mandatory and not merely directory. Supreme Court has further held that such time to file a reply commences from the date of receipt of the notice accompanied with the complaint by the opposite party. The Supreme Court passed this order in light of the main object of the Act, which is the speedy redressal of consumer disputes.

In India, the number of confirmed cases of COVID-19 coronavirus has reached 73 (as of 12 March 2020: 4 PM), and several other cases are being examined for confirmation.

The macabre of the novel coronavirus (also commonly known as “COVID-19”) has engulfed within its fold as many as 112 countries and territories around the world and international conveyance (the Diamond Princess cruise ship harbored in Yokohama, Japan). This virus has found a foothold on every continent except for Antarctica. There are now about 119,223 reported cases and more than 4,299 reported deaths attributed to this new virus and in several countries, the number of cases continues to climb On Monday, 9 March 2020, the WHO said that the threat of a coronavirus pandemic “has become very real” and that the spread has reached “pandemic proportions” The WHO defines a pandemic as the “worldwide spread of a new disease,” and the determination is made based on the geographical spread of the disease, the severity of the illnesses it causes, and its effects on society.

On March 4, the Supreme Court of India pronounced the verdict which was the culmination to two years’ worth of legal battle that ensued after the Reserve Bank of India (RBI), on April 6, 2018, restricted financial entities from providing services to cryptocurrency players. In its decision, the court has held that since the RBI was not able to provide evidence to prove the potential harm that could be suffered by the regulated entities due to the operation of the cryptocurrency players, the RBI’s ban was unjustified.

On 11 February 2020, fresh notifications were released drastically expanding the scope of regulation for medical devices under Indian law.  Traditionally, India has not had expansive regulation on medical devices unlike several western jurisdictions.

A mandatory CSR regime would require investors to ensure that the CSR contributing company has in place adequate avenues for its CSR obligations

In a landmark judgement, the Supreme Court of India (SC) has quashed the circular issued by the Reserve Bank of India (RBI) on 6 April 2018 (Circular) that prohibited banks and financial institutions from dealing in, and providing services for facilitating dealing in, virtual currencies (Cryptocurrencies) such as Bitcoin. A three-judge bench of the SC held the Circular to be a disproportionate regulatory action, in a decision that suggests that Cryptocurrencies should be subject to considered regulation, and not blanket prohibition, under Indian law.

Welcome to the third edition of the E-Bulletin (Volume II) brought to you by the Employment, Labour and Benefits (ELB) practice group of Khaitan & Co. This e-Bulletin covers regulatory developments, case law updates and insights into industry practices that would impact businesses from a sector agnostic standpoint.

M/s Indo Rubber and Plastic Works (Indo Rubber) entered into a non-exclusive distribution agreement with Sunlight Sports, Singapore (Sunlight Sports) for import and sale of branded sports goods in India by the name ‘Li Ning’. In terms of the Agreement, Indo Rubber had to bear all costs of marketing, advertising and promotion of the Li Ning products within India.

A recent un-reported judgment of the Bombay High Court (Fedbank Financial Service Ltd through its AO Zahid Sultan v Narendra H Shelar through his LRs & Ors, Arbitration Application No. 34 of 2020, Order dated 24 February 2020) holds that the express termination of the mandate and denial of an extension, of a previously constituted arbitral tribunal, afford grounds to deny the appointment of a new arbitrator. While this decision is primarily founded on the Claimant’s laxity in pursuing its claim and seeking extension of time, intrinsic in its reasoning is the interplay between provisions relating to the appointment of an arbitrator (Section 11), termination of the mandate of an arbitrator (Section 15) and extension of time for making an arbitral award (Section 29A) in the Arbitration Act 1996 (as amended) (Arbitration Act).

Auditor’s reports are issued by the statutory auditor of the company as an end result of the audit to inter alia consolidate and summarise at the outset the key points emerging therefrom as well as to provide assurance and inspire confidence in the validity of the financial statements as it indicates compliance with applicable accounting standards. The format of auditor’s report is governed by Company (Auditor’s Report) Order. The Company (Auditor’s Report) Order, 2016 (CARO 2016) was notified on 29 March 2016.

On 2 March 2020, the Ministry of Corporate Affairs (MCA) issued a standard operating procedure (SOP) for prosecution of independent directors (IDs) and non-executive directors (NEDs) in respect of non-compliance with the provisions of the Companies Act, 2013 (Act).

India has moved up 14 places in 2019 in the World Bank's 'ease of doing business' rankings and is now 63rd among 190 nations. This reflects the positive impact of the reforms undertaken by the government to attract investment in the country. This has also ensured that India remains among the world's top 10 improvers for the third consecutive year. Balancing growth imperatives with environmental responsibilities remains the key challenge for India.

In yet another landmark decision in relation to the corporate insolvency resolution process (CIRP) of Jaypee Infratech Limited (JIL), the Supreme Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited vs. Axis Bank Limited Etc. Etc. (Civil Appeal Nos. 8512-8527 of 2019)dated 26.02.2020, has laid down the law on two aspects:

Recently, the Supreme Court in the case of Deep Industries Limited v Oil and Natural Gas Corporation Limited and Anr (Civil Appeal 9106 of 2019 decided on 28 November 2019) has clarified the issue of maintainability of writ petitions against orders passed by the relevant jurisdictional court under Section 37 of the Arbitration and Conciliation Act 1996 (Act).

The Authority for Advance Rulings (AAR) in its recent verdict in the matter of Bid Services Division (Mauritius) Ltd, In re ([2020] 114 taxmann.com 434 (AAR – Mumbai)), denied the benefits of the capital gains tax exemption under the India – Mauritius Tax Treaty (Treaty) to the taxpayer on the sale of its Indian investment.

Under the extant Foreign Direct Investment (FDI) policy, 100% FDI is permitted under the automatic route in Single Brand Retail Trading (SBRT) entities, subject to their compliance with the local sourcing requirements, whereby an SBRT entity having FDI of more than 51% must ensure that 30% of the value of goods are procured from India.

About 80% to 90% of India’s requirement of medical devices is met through imports. As the present government pushes for its “make in India” agenda, the medical device industry can play a significant role. A specific law regulating all the medical devices was needed inter alia to ensure minimum standard quality of the medical devices imported, manufactured and sold in India.

On 21 February 2020, the Financial Action Task Force (FATF) issued a list of ‘jurisdictions under increased monitoring’, popularly known as the ‘grey list’ and to the dismay of several foreign portfolio investors (FPIs), Mauritius ended up featuring in this list alongside 17 other jurisdictions, for the first time.

In a controversial ruling released 17 February, India’s Authority for Advance Rulings, a quasi-judicial body which rules on the taxation of non-residents, denied a capital gains tax exemption under the India–Mauritius tax treaty to a Mauritian entity. 

On the heels of the Punjab & Haryana High Court and the Bombay High Court verdicts, the Rajasthan High Court has vide its judgment in the case of Chandresh Sankla v State of Rajasthan & Others pronounced on 14 February 2020, upheld the legality of online fantasy sports gaming in India. It ruled that that such games are preponderantly a game of skill and therefore outside the ambit of gambling / betting legislations.

The Securities and Exchange Board of India (SEBI) by its informal guidance in January 2020 has settled the question of extraterritorial compliance of corporate governance required under Regulation 24(1) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). The informal guidance was sought by KCP Limited (Company), which has a material subsidiary, KCP Vietnam Industries Limited (KPC Vietnam), a limited liability company incorporated under the laws of Republic of Vietnam. The fundamental question was in respect of requirement of appointment of an independent director of the Company to be a director on the board of KPC Vietnam, in accordance with Regulation 24(1) of the Listing Regulations (Reg 24(1)). 

The Income Tax Appellate Tribunal (ITAT) recently held that income from cloud hosting services provided by a company based in the United States of America to its Indian customers was not ‘royalty’ or ‘Fees for Technical Services’ (FTS) under the India - USA Double Taxation Avoidance Agreement (Treaty). The same constituted business income which was not taxable in India in the absence of a Permanent Establishment (PE).

The Directorate General of Trade Remedies (DGTR) has, in January and February 2020 initiated the following investigations:

The Supreme Court has recently in its judgment dated 21 January 2020, in the case of Standard Chartered Bank v MSTC Limited [SLP (C) No 20093 of 2019], provided clarity on the interplay between the provisions of Recovery of Debts and Bankruptcy Act 1993 (RDB Act) and Limitation Act 1963 (Limitation Act). Supreme Court has in doing so refused to condone a delay of 28 days in filing of a review application by the government borrower entity against a decree in favour of the bank.

The Bi-monthly Newsletter of the Nani Palkhivala Arbitration Centre

Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) authorises Provident Fund Commissioners to initiate inquiries in order to determine amounts due from employers under the EPF Act. For the purpose of determining the shortfall in contributions, Section 7A vests Commissioners with the powers of a civil court.

The Ministry of Corporate Affairs has, on 3 February 2020, issued the long pending notification of sub-sections 11 and 12 of Section 230 of the Companies Act, 2013 (Companies Act). These sub-sections provide for the takeover of minority shareholders by majority shareholders in unlisted companies through a scheme of arrangement placed before the National Company Law Tribunal (NCLT) in the same manner as other schemes of arrangement under Section 230, subject to the specific changes below. The procedural aspects of these takeovers have been set out in new rules inserted in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Merger Rules) as well as the National Company Law Tribunal Rules, 2016 (NCLT Rules) on the same day.

The landscape of control transactions is evolving continuously and issues around minority protection rights, liabilities and exits associated with such transactions (highlighted above) are being dealt with through various approaches

The budget promises to take steps to enable sourcing of external commercial borrowings and FDI for the sector. Whether this is an indication of certain relaxations in terms of use for other legal entities to set up educational institutions and ease of repatriation of funds remains to be seen.

Welcome to the second edition of the E-Bulletin (Volume II) brought to you by the Employment, Labour and Benefits (ELB) practice group of Khaitan & Co. This e-Bulletin covers regulatory developments, case law updates and insights into industry practices that would impact businesses from a sector agnostic standpoint.

With a view to streamline the process and timeline involved in issuance of observations on draft offer documents (DOD) filed with the Securities and Exchange Board of India (SEBI), SEBI has issued the “Securities and Exchange Board of India (Issuing Observations on Draft Offer Documents Pending Regulatory Actions) Order 2020” dated 5 February 2020 (General Order), which has come into force with immediate effect. The General Order provides clarity on instances where an investigation, enquiry, adjudication, prosecution, disgorgement, recovery or other regulatory action is pending against an issuer, its director(s), promoter(s) and group companies (Entities).

The biggest direct takeaway for startups from this budget was the deferment of the payment of income taxes payable upon exercise of stock options by their employees.

While the world battles forest fires and virus outbreaks, our economy has been suffering from ailments of its own. India’s GDP growth took a sharp plunge in Q2 of this fiscal to come in at 4.5 per cent, with many experts voicing concerns about a prolonged slowdown period.

The government has taken a pragmatic approach by proactively taking several measures to reduce tax litigations across various tax jurisdictions up to the Supreme Court. In the last budget, the government introduced Sabka Vishwas Litigation Dispute Resolution Scheme, 2019 (SVLDRS) in a bid to reduce litigation in pre-GST central indirect taxes. The scheme was a huge success among assessees.

Under the current regime, dividends distributed by a company are subject to Dividend Distribution Tax (DDT) at an effective rate of 20.56 per cent. Such DDT is levied on the post-tax income of the company i.e. after the company has already suffered corporate tax on its profits. Since DDT is the tax obligation of the distributing company (i.e. it is not in the nature of tax deduction at source), such DDT is not available as a credit to the shareholder.

The Finance Bill, 2020, has made substantial changes to the manner in which dividends are taxed. Presently, dividends distributed by a company are subject to dividend distribution tax (DDT) at an effective rate of 20.56 percent.

The Budget included several announcements across various verticals of infrastructure projects to expedite necessary holistic development including economic turnaround.