Into the Web - AML Risks of Virtual Assets - Part 1

Nothing is permanent but change.

                                                                            – Heraclitus

Part I of this article explores the anti-money laundering risks associated with virtual assets and provides a glance at the current international regulatory and legal framework governing the virtual asset industry.

Technology has evolved to a point where we have to redefine what we assume would be easy to legally categorise. The evolution of virtual assets is such an example — with a dynamic categorisation of virtual assets, as also securities such as NFTs (a Non-Fungible Token, which is a unit of data stored on a digital ledger called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. Examples include: photos, videos, audio, and other types of digital files) and DeFi (Decentralised Finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilises smart contracts on blockchains, example: Ethereum).
Continue Reading Into the Web: AML Risks of Virtual Assets? – Part I

Lease and Rentals - Are these Operational Debt under the IBC

INTRODUCTION

The Insolvency and Bankruptcy Code, 2016 (‘Code’) recognises two types of debts — financial and operational– to enable the creditors to make an application for initiating insolvency proceedings against a corporate debtor. A financial creditor and an operational creditor can initiate a Corporate Insolvency Resolution Process (‘CIRP’) under Section 7 and Section 9 of the Code, respectively. If there is a debt, other than a financial debt or an operational debt, the creditor will not qualify to apply under Sections 7 or 9 of the Code, as the case may be. Therefore, it becomes important to determine the nature of debt/claim while considering the application of an admission under the Code.
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Withdrawal of resignation valid, until effected - Delhi High Court rules

The High Court of Delhi (“Delhi HC”) in its recent judgment in the case of Arjun Ahluwalia and Ors v Air India Limited[1] (“Arjun v Air India”) gave a ruling in favour of Air India’s pilots, who were seeking withdrawal of resignations and reinstatement of terminated employees. The Delhi HC passed a common judgment (“Judgment”) in the distinct writ petitions filed by pilots who are permanent employees (“PE”) and pilots working as full-time equivalent (“FTEs”)  under fixed term contracts  (collectively, “Employees” or “Petitioners”) as their petitions dealt with several common issues. The Judgment distils the principles applicable to resignations under service law and opines on the validity of financial constraint as a ground for termination of employees in State operated companies.
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Karnataka High Court’s Judgment in Dreamz Infra India Limited v. Competent Authority - Yet another manifestation of primacy of the IBC

Since the introduction of the Insolvency and Bankruptcy Code, 2016 (“Code/IBC”), the courts and tribunals in India have had to constantly assess the application of the Code vis-à-vis other central and state legislations in light of the non-obstante clause under Section 238 of the Code.  The courts have time and again reiterated that the Code would have an overriding effect over other legislations to the extent of being repugnant  to the matters exhaustively dealt with under the Code. The courts have re-affirmed the primacy of the Code based on the premise that the IBC is a ‘complete and consolidated code in itself.’ For example, in Innoventive Industries Ltd. vs. ICICI Bank and Ors. (“Innoventive”), the Hon’ble Supreme Court upheld the primacy of the Code over the Maharashtra Relief Undertakings (Special Provisions) Act, 1958 and in Directorate of Enforcement vs. Manoj Kumar Agarwal & Ors (“Manoj Kumar Agarwal case”), the Hon’ble National Company Law Appellate Tribunal  (“NCLAT”) noted that the  provisions of the Code shall override the attachment of the properties of the Corporate Debtor under Sections 5 and 8 of the Prevention of Money Laundering Act, 2002.[1]
Continue Reading Karnataka High Court’s Judgment in Dreamz Infra India Limited v. Competent Authority: Yet another manifestation of primacy of the IBC

Supreme court reiterates that courts DO not sit in appeal over an award passed by an arbitrator

INTRODUCTION:

Recently, in NTPC v. M/s Deconar Services Pvt. Ltd.[1], a three judge bench of the Supreme Court has, in line with the settled principle of minimum interference in arbitral awards, inter alia reiterated that in order to succeed in a challenge against an arbitral award, the party challenging the award must show that the arbitrator’s award suffered from perversity; or an error of law; or that the arbitrator had otherwise misconducted himself. The Court highlighted that merely showing that there is another reasonable interpretation or possible view on the basis of the material on record is insufficient to allow interference by the Court.
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Technicality or Trivialisation - SAT’s Attempt to Balance Interests of Justice

The Securities Appellate Tribunal (SAT) passed an order (Order)[1] recently, ruling that it is empowered to hear and decide appeals even in the absence of a Technical Member. The Order was prompted by an objection raised by the Securities and Exchange Board of India (SEBI) regarding the constitution of SAT’s Bench, in light of the earlier technical member of SAT having demitted office on March 31, 2021, and the ensuing vacancy of such office.
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‘FRANDLY’ RELATIONS - INDIAN COURTS CAN GRANT ANTI-ENFORCEMENT INJUNCTIONS WHEN FOREIGN COURTS ISSUE ANTI-SUIT INJUNCTIONS TO DENY ITS COMPETENT JURISDICTION

The Delhi High Court in the Interdigital Technology Corporation & Ors. v. Xiaomi Corporation & Ors. case granted an anti-enforcement injunction against an anti-suit injunction obtained in a foreign jurisdiction. Xiaomi on June 9, 2020, filed an SEP royalty rate-setting suit in the Wuhan Intermediate People’s Court (“Wuhan Court”) to determine global FRAND rates to obtain SEP licences across the world. Thereafter, on September 23, 2020, Xiaomi obtained an anti-suit injunction (“ASI”) from the Wuhan Court, restraining Interdigital from proceeding with their July 2020 suit before the Delhi High Court that sought the following reliefs: a) To injunct Xiaomi from infringing its 3G and 4G Standard Essential Patents (SEPs) and b) Declaration of FRAND (fair, reasonable and non-discriminatory) pricing terms for the six Indian patents in question, provided that Xiaomi should elect to execute a licence in lieu of the aforesaid injunction. Interdigital in this suit sought relief from the Court to not only indemnify it from the costs handed down by the Wuhan Court’s order, but also that it not be enforced.
Continue Reading ‘Frandly’ Relations: Indian Courts Can Grant Anti-Enforcement Injunctions when Foreign Courts Issue Anti-Suit Injunctions to Deny its Competent Jurisdiction (Xiaomi V. Interdigital)

Limitation Act is to be Made Applicable ‘As Far as May Be Possible’ to Insolvency Code

The Supreme Court’s pro-insolvency stance continues. With three recent rulings in a period of one month, the Supreme Court has clearly indicated that, so far as possible within the contours of the Limitation Act, a debt will continue to be alive and an action basis such debt will be maintainable under the Insolvency and Bankruptcy Code, 2016 (“Insolvency Code”) against a defaulting borrower.
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Enforcement of Arbitration Awards via Insolvency Proceedings - A Contrary Perspective

As the Insolvency regime in India builds its new course under the Insolvency and Bankruptcy Code, 2016 (‘Insolvency Code’), numerous issues of application have arisen and will continue to grapple the corridors of the insolvency courts. One of the concerns is the interaction between debt enforcement/ execution procedures and the Insolvency Code. Insolvency Code allows operational creditors to initiate insolvency proceedings against a debtor, with a valid proof of undisputed claim. Form 5 of the IBBI (Application to Adjudication Authority) Rules, 2016, under which an Operational Creditor makes an application for initiation of insolvency process, considers a court decree or an arbitration award adjudicating on the default as a valid evidence of default to support insolvency commencement. The all-encompassing term ‘Arbitration Award’ includes both domestic awards and foreign awards. While the domestic awards are per se enforceable before the civil courts, unless stayed in a challenge before the court, and no distinct process for enforcement needs to be complied with under the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’), foreign awards must follow a procedure of recognition, prior to being considered as enforceable before Indian courts. The Rules, however, shed no light on issues such as, at what stage the arbitration awards are eligible to be presented before the insolvency courts for insolvency commencement.
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LEARNING TO SPRINT SUPREME COURT ISSUES DIRECTIONS TO REDUCE DELAY IN DISPOSING EXECUTION PROCEEDINGS

I. Introduction:

  1. In the past decade, the Indian judiciary has been globally recognized for its historic rulings. However, even such successes, more often than not, are tainted because of the time that goes by, in passing the final ruling in a case. Justice delayed is justice denied, as the adage goes. Delay is so integral to judicial proceedings in India that it not only effects litigants initiating legal proceedings, but also plagues the minds of decree holders who have painstakingly gone through the entire lifecycle of a litigation. Even armed with a decree, a litigant must once again fight an already conquered battle before the executing court.
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