2020

FRUSTRATION (OF CONTRACT) IN THE TIME OF SARS-CoV-2

Overview

On March 11, 2020, the World Health Organization (WHO) declared the novel coronavirus disease a pandemic. On the same day, the Government of India imposed visa and other travel restrictions. Soon thereafter, many states in India declared a ‘lockdown’, an emergency measure [under the Epidemic Diseases Act, 1897 and the Disaster Management Act, 2005 (“Disaster Management Act”)] to prevent and contain the spread of SARS-CoV-2, and also issued prohibitory order(s) under Section 144 of the Code of Criminal Procedure, 1973. A stricter lockdown was then imposed by the Central Government, which will presently remain in effect till May 3, 2020. During the lockdown, whilst certain commercial activities have been classified as essential and are permitted to continue operations, subject to following preventive measures (including social distancing), several others remain stalled and suspended.
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Vote from Home – A Positive Move for Shareholder Meetings

The Companies Act, 2013 does not contemplate shareholder meetings being held electronically. However, as social distancing becomes de rigueur and the temporary lockdown has been extended to May 3, 2020, due to the COVID-19 pandemic, it has become difficult, impractical and illegal in many cases for companies to hold shareholder meetings physically. At the same time, companies need to plough through these difficult times, and crucial decisions on matters such as fund raising and restructuring, all of which require shareholders’ approval, cannot be suspended. Responding to this dilemma, the Ministry of Corporate Affairs (MCA) has issued circulars[1] relaxing the requirement to hold physical general meetings and permitting meetings to be held remotely through electronic means.

The MCA has requested companies to hold general meetings to take decisions of urgent nature (other than for items of ordinary business[2] and items where any person has a right to be heard) through electronic voting or postal ballot, according to the procedure under Section 110 of the Companies Act, 2013 (Companies Act) and Rule 20 of the Companies (Management and Administration) Rules, 2014, and the additional measures prescribed under the circulars.
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Current Issues in the Mutual Funds Industry

Things indeed have been less than perfect for the mutual funds industry as a result of economic slowdown as well as specific events, key among which is the value deterioration across a number of industries and asset classes. The onset of COVID-19 has served to exponentially compound these problems. The most recent victim of the current situation is Franklin Templeton India, which announced its decision to wind-up six debt schemes, citing this as the only viable option to preserve value for unitholders and enable an orderly and equitable exit for all investors.

AMFI, the mutual fund industry body, has tried to assure investors that majority of fixed income AUM is invested in superior credit quality securities and schemes have appropriate liquidity to ensure normal operations. Mutual funds are not one homogenous mass and separate schemes have different investment strategy and underlying assets, but the supervening effect of the ongoing pandemic has created such redemption pressures and corresponding lack of cash flows, that the mutual fund industry has been dealt a body blow by the ensuing demand-supply liquidity mismatch.
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PRIVATE EQUITY IN A COVID-19 WORLD - ASSESSING THE IMPACT OF THE PANDEMIC ON PE INVESTMENTS IN INDIA Blog

As the global tally of COVID-19 cases rises steadily, the pandemic has proven to be an unprecedented public health emergency of our time. With nations enforcing social distancing, lockdowns and travel restrictions, the global economy has witnessed a drastic downturn. Closer to home, in India, RBI has warned of a growth slowdown, and the capital markets have slumped. Private equity investments in the country have taken a hit, and the pandemic has caused investors to reassess new and existing investments.

Given the likely economic aftermath of COVID-19, key issues that have come to the forefront are: (a) whether COVID-19 constitutes ‘material adverse effect’ or ‘material adverse change’ (hereinafter, referred to as “MAE”) under existing agreements; and (b) with the economic uncertainty in the backdrop, the manner in which price or value of new deals can be accurately determined, going forward. This post sheds light on the abovementioned issues and chalks out ways to redress the same.
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Enforcement of Foreign Awards in India – Have the brakes been applied

In NAFED v. Alimenta S.A.,[1] the Supreme Court held a foreign award to be unenforceable, on the basis that the transaction contemplated would have violated Indian law, and was therefore contrary to the public policy of India. 

The narrow scope of public policy:

Over the last decade, the judiciary and the legislature have been at pains to change the .existing judicial discourse and legislative intent to make India a regional hub for arbitration. A logical corollary has been a concerted effort to minimise judicial interference. Particularly in the context of foreign awards (where even after a ruling of enforceability, actual recovery may take years), Indian courts have to the most part, refused to interfere.
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Reimagining the Good Times - Start-ups and the Covid-19 Crisis

In recent years, the start-up ecosystem in India has emerged as a reckoning force, largely due to efforts of stakeholders and initiatives implemented by the government to facilitate growth. Investments in start-ups surged from $550 million in 2010 to $14.5 billion in 2019.[1]

The Covid-19 pandemic has now adversely impacted the overall investment climate. While businesses across sectors have felt repercussions of the Covid-19 pandemic, start-ups have been particularly vulnerable and are facing formidable challenges both from a business and operations perspective. Most start-ups have witnessed a decline in supply/demand, except those engaged in supply/delivery of ‘essential services’ and edu-tech/gaming/streaming services. However, despite this increased demand, glitches in the supply chain network have presented challenges. The start-up ecosystem has been striving to adapt to the present situation by focussing on the need to innovate and diversify.
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The idea of Mumbai Metro - Is the world developing or dying?

The Mumbai metro project (“Metro Project”) was conceptualised to develop an efficient and sustainable urban transport system in the financial capital of the country, involving  a significant investment of USD 2,500 million.[1] Every day some 80,00,000 commuters use the city’s suburban rail system, enabled through more than 2,800 trains a day. The network is severely overcrowded during peak hours when the number of passengers exceed the network’s carrying capacity by more than four times, leading to numerous safety hazards.[2]

Last year witnessed a massive protest for saving the Aarey milk colony located in suburban Goregaon (“Aarey’), a green belt with over 5,00,000 trees, a rarity in the concrete city. The construction of a metro car depot on the flood plains of the Mithi river at Aarey for expansion of metro services in the city received much wrath from environment activists, citizens and even courts for cutting down 2,600 trees overnight. While there is a stay on cutting more trees until the matter is sub-judice, the construction work of the Metro Project was not stopped, until the outbreak of a worldwide pandemic, COVID-19 or Coronavirus.
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Innocent Tippee Liability under Insider Laws

The SEBI Insider Trading Regulations prohibit trading in securities whilst in possession of unpublished price sensitive information (UPSI). It also states that when a person holds UPSI and trades in securities, his trades would be ‘presumed’ to have been motivated by the knowledge and awareness of such information in his possession.

Given that the burden of proof is on the insider to establish that his trade was not motivated by awareness of such information, the Regulations to provide statutory defences for the insider to prove his innocence. The stated defences, which are illustrative in nature, however, do not include a circumstance where a person has received UPSI and relied on it to make a trade under the assumption that it is publicly available information. The ‘innocent recipient’ was proposed as a statutory defence in the NK Sodhi High Level Committee Report, but did not find its way into the final form of the amended regulations. This defence was meant to be available if the recipient had no reason to believe that the information in his possession was UPSI or the person who communicated it to him violated any law or confidentiality obligation. As per the report, the insider would need to prove that he did everything reasonably in his power to confirm that the information in his possession was not UPSI (i.e. exercise of diligence expected of a reasonable man) and that he traded bona fide.
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Digital Transformation in Law - People, Process and Technology

Covid-19 has brought the world to a halt but with all the challenges it brings, it has also given the legal industry a rare opportunity to change the way we have been practicing and conducting the business of law.  Over the past few weeks, we have seen the stage being set for making the change, the change that we all have been assessing and contemplating and have yet always resisted and to some extent ignored.  The magnitude of the change requires all stakeholders to contribute and participate towards making this a reality.  It is now time for us to come together to convert Covid – 19 into a positive opportunity for the legal fraternity. The change we need to make is based on the framework of People, Process and Technology. For driving organisational efficiencies, it is the people who work with processes and technology to deliver greatest results. Going forward it will be essential for all three elements to work in sync for a smooth transition.
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COVID-19 TEST KITS. A CHEAT SHEET

The COVID-19 pandemic has literally brought the world to a standstill. Large scale infections have resulted in lockdowns across the globe. At this critical juncture, testing continues to remain the most important step to get a grip over the situation. The situation in India is no different. With an upsurge in the number of COVID-19 cases in India, the need for largesse testing has become paramount. Low availability of test kits remains a cause of great concern to the government and healthcare practitioners. This is compounded by our massive populace, given the quantity that is required in the current scenario. This lack of availability of test kits is primarily because India does not have adequate indigenous manufacturing units of COVID-19 test kits and relies heavily on imported kits.

From a regulatory standpoint, such kits fall under the category of ‘in-vitro diagnostic’ kits under the Drugs and Cosmetics Act, 1940 (D&C Act) read with the Medical Devices Rules, 2017 (MD Rules) and are regulated as ‘medical devices’[1].
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