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CAM Disputes Team

The CAM Disputes team can be reached at cam.mumbai@cyrilshroff.com

Image credit: Scroll.in, September 26, 2017

This is the second piece in our series entitled “Those Were the Days”, which is published monthly. We hope you enjoy reading this as much as we have enjoyed putting this together.

This post deals with Securities Exchange Board of India’s (SEBI) interpretation of the term “Unpublished Price Sensitive Information” (UPSI) arising from the alleged insider trading by Hindustan Lever Limited (now Hindustan Unilever Limited) (HLL) in its purchase of shares of Brooke Bond Lipton India Limited (BBLIL).

While the subject SEBI order employed provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992 (1992 Regulations), this post also analyses the relevant provisions of the subsequently notified SEBI (Prohibition of Insider Trading) Regulations, 2015 (2015 Regulations) in relation the subject case.

Case Analysis: Hindustan Lever Limited v. SEBI[1]

The facts of the case concerned the purchase by HLL of 8 lakh shares of BBLIL from the Unit Trust of India (UTI) on March 25, 1996. This purchase was made barely two weeks prior to a public announcement for a proposed merger of HLL with BBLIL.Continue Reading Insider Trading: Hindustan Lever Limited v. SEBI

Diwali Gifts Are You Wrapping Up a Bribe

Diwali is one of the most anticipated and celebrated festivals in India. It is also a festival of giving gifts, which is often a challenge for compliance professionals who struggle with policies and nuances of law around this time, on giving gifts that might seem like bribes.

Under the Prevention of Corruption Act, 1988 (PCA), the principal anti-bribery and anti-corruption statute in India, giving and receiving any form of pecuniary gratification may imply criminal penalties for both the bribe-giver and the public official. Furthermore, according to the conduct rules of various government departments, government servants are obliged to report receipt of gifts that go beyond prescribed monetary limits..

Gifting per se is not an illegal activity under Indian law. Under the PCA, the determining factor that separates a gift from a bribe is whether the gift was made with an expectation of quid pro quo. Furthermore, it must be clarified that the various conduct rules do not prescribe a de minimis or a minimum monetary threshold up to which a gift is seen as unquestionable. The conduct rules (as may be applicable to different public officials) merely provision for reporting obligations on behalf of the government servant, in cases where the pecuniary value of the gift received exceeds a certain limit.Continue Reading Diwali Gifts: Are You Wrapping Up a Bribe?

Kesavananda Bharati Case - Supreme Court of India

Image credit: Scroll.in, September 26, 2017

Sociologists know that the formation and survival of civilization is conditional upon the universal adherence to a framework of acceptable norms and guidelines of human conduct and interaction. Moses therefore set out as God’s message, the directive to love thy neighbor, (so as not to have him for dinner) and also to not covet his wife (so that he may not make a meal out of you either).Continue Reading Kesavananda Bharati v. State of Kerala and The Basic Structure Doctrine

In this day and age of scams, crime by corporate entities throws a lot of challenges at multiple levels. The level of crime may be extraordinary owing to the magnitude, powers and reach of such corporations as opposed to an individual committing any crime. Once it is found that a corporation has committed a crime, the next question is whether corporations can be held guilty of such crimes since they do not have minds of their own.

For a long time, corporations in India were not held liable for criminal offences due to the requirement of mens rea or the intention to commit the offence and inability to award imprisonment or arrest, etc. However, corporations are no longer immune.

Supreme Court on Liability of Corporations and its Officials

The law on this aspect has evolved over time. Now, a corporation can be convicted of offences involving mens rea by applying the doctrine of attribution[1]. Thus, the corporation can be held responsible for offences committed in relation to the business of the corporation by the persons in control of its affairs. The legal position in the US and UK has also crystallised to ensure a corporation can be held liable for crimes of intent. In the UK, the courts have adopted the doctrine of attribution to the corporation liable for acts committed by the directing mind, i.e., the directors and managers.Continue Reading Criminal Liability of Corporate Officials in India

One of the key tenets of effective corporate governance is the ability of a corporation to promote transparency. Transparency and accountability is strengthened not just by efficient management and robust disclosure policies, but also by the creation of systems and processes to detect and address internal instances of fraud and corruption.

Whistleblowing has always played a distinct role in making companies alert to, and mindful of, employee conduct as well as internal processes and procedures. The existence of this class of facilitators is well recognised in the Indian legislative framework. Under section 177(9) of the Companies Act, 2013, it is mandatory for every listed company to establish a vigilant mechanism for directors and employees. Furthermore, the revised clause 49 of the listing agreement mandates that the company must establish a whistleblower mechanism with adequate safeguards against victimisation of whistleblowers.

Whilst immensely beneficial, tipping off/whistleblowing comes with its own set of unique challenges for the company, the alleged wrongdoer as well as whistleblowers themselves. While there is no ‘one size fits all’, certain aspects, as detailed below, should be considered by any company seeking to establish a whistleblower mechanism:
Continue Reading Who Can Hear The Whistle Blow? Whistleblowing And Its Impact On Corporate Governance In India

The power of judicial review enables the judiciary to determine the constitutional validity of legislative and/or executive actions, possibly making them subject to invalidation.

The power of judicial review by Tribunals was examined and decided by the Supreme Court in S.P. Sampath Kumar v. Union of India and in the subsequent case of L. Chandra Kumar v. Union of India. After the decision in Sampath Kumar case divergent views were taken by various benches of the Supreme Court. The matter was therefore referred to a seven judge bench of the Supreme Court in L. Chandra Kumar. Continue Reading Power of Judicial Review by the National Green Tribunal

On July 11, 2016, the President of the Queen’s Bench accorded final approval to the second Deferred Prosecution Agreement (DPA) entered into by the Serious Fraud Office of the UK (SFO). Through this short post, we seek to examine the DPA, what such approval of the DPA means and its significance for UK owned/based companies in India (Indco) that are subject to the provisions of the UK Bribery Act, 2010 (UKBA).
Continue Reading UK SFO’s Second DPA: Implications for Indian Companies

The Law Commission of India’s report of August 2014 on the Indian Arbitration Act mentions that amendments are being suggested to the Arbitration Act to provide a “stable business environment and strong commitment to the rule of law, based on predictable and efficient systems of resolution of disputes.”

Amendments to the Indian Arbitration Act, 1996 were passed by both Houses of Parliament and assented to by the President on December 31, 2015. These amendments apply to all arbitral proceedings commenced on or after October 23, 2015 but parties can agree to even apply these amendments to proceedings commenced before the Amendment Act.Continue Reading India and International Arbitration: Prospects