Photo of Indranil Deshmukh

Partner in the Dispute Resolution Practice Area at the Mumbai office of Cyril Amarchand Mangaldas. Indranil has extensive experience in a wide range of disputes, both of a general commercial litigation nature as well as public and regulatory disputes. His experience is diversified across numerous sectors including financial regulation, health, sports, local government, planning and environment and public sector projects. Indranil also routinely advises the Board of Control for Cricket in India (BCCI) in relation to their contracts and tenders. He can be reached at indranil.deshmukh@cyrilshroff.com

Takeover regulations Companies Act

Background 

The Central Government recently notified Sections 230(11) and 230(12) of the Companies Act, 2013 (“Act”), which deal with takeover offers in unlisted companies. Section 230 of the Act provides for arrangements between a company and its creditors or members or any class of them, specifying the procedure to be followed to make such a compromise or arrangement. The newly-notified Section 230(11) states that in the case of unlisted companies any compromise or arrangement may include a takeover offer made in the prescribed manner, while Section 230(12) permits a party aggrieved by the takeover offer to make an application, bringing its grievance before the National Company Law Tribunal (“NCLT”). The Ministry of Corporate Affairs has also amended the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”) and the NCLT Rules, 2016, corresponding to the above provisions. Sub-rules 5 and 6 have been added to Rule 3 of the CAA Rules, and Rule 80A has been inserted in the NCLT Rules, detailing the manner in which the applications may be made under Sections 230(11) and 230(12), respectively. However, these rules are not applicable to any transfer or transmission of shares through a contract, arrangement or succession, as the case may be, or any transfer made in pursuance of any statutory or regulatory requirement.
Continue Reading

Exclusion of Time Spent in Pre-arbitration Negotiations

Complex commercial transactions and arrangements often contemplate a requirement to engage in good faith negotiations/discussions or mediation in order to resolve the dispute amicably before the parties can resort to arbitration[1]. It is also common in these arrangements that the parties are required to spell out their claim in writing and provide the other party with an opportunity to respond before good faith negotiations can commence. Given the complex nature of arrangements, stakes involved and multitude of relationships between the parties, often a considerable amount of time is spent in exploring ways to amicably resolve matters instead of “washing dirty linen in public”. It has been a matter of considerable debate whether the time spent in good faith negotiations/discussions/mediation can be excluded for the purpose of computing the period of limitation for reference to arbitration.

The recent Supreme Court judgement in the case of Geo Miller & Co. Pvt. Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd.[2] (Geo Miller Case) has explained the legal position on this aspect and paved the way for making a carve out for time spent in exhausting pre-arbitration procedures for the purpose of computing the period of limitation for reference to arbitration.
Continue Reading

Good Faith Negotiations and Mediation 

It has become increasingly common for parties to adopt multi-tiered dispute resolution clauses in agreements. A typical multi-tiered dispute-resolution clause requires parties to first attempt to resolve a dispute amicably – for instance, by engaging in friendly discussions, submitting to mediation or undertaking good faith negotiations – before the commencement of arbitration proceedings. There has been much ado about the enforceability of such clauses and whether they should be considered void due to vagueness: how does one engage in “friendly discussions”, and what exactly are “good faith negotiations”, when a presumably acrimonious dispute has already arisen between parties?

Despite this ambiguity, courts have increasingly found tiered dispute-resolution clauses to be enforceable. In fact, with a view to combat rising pendency in courts, these principles have been extended to the initiation of litigation as well. The Commercial Courts Act, 2015 (CCA) was amended last year to state that any suit that does not contemplate urgent interim relief cannot be instituted without the plaintiff having exhausted the remedy of pre-institution mediation and settlement.[1] A similar model is also followed in a number of other countries, including the UK, Italy, Greece and Turkey, where it has been successful in encouraging dispute resolution through mediation.[2]
Continue Reading

Put-option Holders - Financial Creditors Under the IBC

In its recent judgment in the case of Jignesh Shah v. Union of India[1] (Jignesh Shah), a three-judge bench of the Supreme Court set aside the NCLAT judgment in the case of Pushpa Shah v. IL&FS Financial Services Limited[2] (NCLAT Judgment) along with the original judgment of the NCLT[3] (NCLT Judgment and, together, La-Fin Judgments). The NCLT Judgment and the NCLAT Judgment had rejected the corporate debtor’s objection in relation to the claim being time barred and initiated corporate insolvency resolution process on the basis that a put option holder may be treated as a “financial creditor” under the Insolvency & Bankruptcy Code, 2016 (IBC).
Continue Reading

Arbitrator Fees in India

The Law Commission of India, in its 246th report, noted that one of the problems associated with arbitration in India (especially ad hoc arbitrations) is the high quantum of fees charged by arbitrators.[1] The Report went so far as to call the fees “arbitrary, unilateral and disproportionate”. The Commission recommended the adoption of a model schedule of fees for Courts to consider while framing rules for fixing of the fees of arbitrators appointed in accordance with Section 11 of the Arbitration and Conciliation Act, 1996 (the Act). The Commission restricted its suggestions to ad hoc domestic arbitrations, noting that different standards may apply in institutional arbitrations and in international commercial arbitrations (where the Commission recommended greater deference to party autonomy).
Continue Reading

The Specific Relief (Amendment) Act, 2018 (Amendment Act) was recently passed by both Houses of Parliament and subsequently received Presidential assent on 1 August 2018. Notification of the coming into force of the different provisions introduced by the Amendment Act is presently awaited.

The Specific Relief Act, 1963 (Act) codifies the law in relation to grant of the relief of specific performance[1] including injunctions.
Continue Reading

On April 21, 2018 the Fugitive Economic Offenders Ordinance, 2018 (FEO Ordinance) was promulgated to immediately bring into effect the provisions contained in the Fugitive Economic Offenders Bill, 2018 (FEO Bill)[1]. The Union Finance Minister Mr. Arun Jaitley, in his Budget speech, had announced that Central Government was considering the introduction of legislative changes to confiscate the assets of ‘big time offenders’, including economic offenders, who flee the country to escape the Indian legal system.

As the process of extradition has often been challenging and ineffective, the Ordinance seeks to compel the fugitive offender to face trial in India through severe deterrents. Care will need to be taken, however, to ensure that the Ordinance does not adversely impact creditor rights. The deterrents and their impact on insolvency resolution are discussed below.


Continue Reading

On August 31st 2017, the Supreme Court of India in the case of Innoventive Industries Limited v. ICICI Bank Limited* delivered its first extensive ruling on the operation and functioning of the Insolvency and Bankruptcy Code, 2016 (Insolvency Code). The Court said that it is pronouncing its detailed judgment in the very first application under the Insolvency Code, so that all Courts and Tribunals may take notice of a paradigm shift in the law.

The Supreme Court dismissed the appeal filed on behalf of Innoventive Industries Limited and confirmed the decision of the National Company Law Appellate Tribunal (NCLAT), which in turn had affirmed the order passed by the National Company Law Tribunal Mumbai (NCLT) admitting the insolvency petition filed by ICICI Bank Limited against Innoventive Industries Limited.
Continue Reading

In a landmark judgment recently delivered by the National Company Law Appellate Tribunal (NCLAT) in the case of Innoventive Industries Limited v. ICICI Bank Limited, the NCLAT has held that the National Company Law Tribunal (NCLT) is bound to issue only a limited notice to the corporate debtor before admitting a case under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Insolvency Code).

Whilst dismissing the appeal filed by Innoventive Industries Limited against an order passed by NCLT, Mumbai admitting the insolvency petition filed by ICICI Bank Limited, the NCLAT has clarified that adherence to principles of natural justice would not mean that in every situation the NCLT is required to afford reasonable opportunity of hearing to the corporate debtor before passing its order.


Continue Reading