Introduction

The battle against financial fraud and malpractices has significantly intensified over recent years. Globally, governments are establishing stricter regulatory frameworks and compliance standards to combat fraud in commercial transactions. A manifestation of such heightened awareness and regulatory action in India is evident under the provisions in relation to the Serious Fraud Investigation Office (SFIO) introduced under the Companies Act, 2013 (the Act) and Rules thereunder. These provisions bring with them implications for companies, which need to be fully understood and preventative steps taken to avoid any suspicion of fraud and consequent arrests. In the following paragraphs, we have analysed key aspects of the newly introduced Rules and the steps that must be taken by corporates to avoid any adversity under the same.

Under the provisions of the Act, the SFIO has been established by the Central Government as a multi-disciplinary office consisting of experts from diverse fields. The SFIO has been empowered to investigate serious cases of ‘fraud’, as defined under the Act. Furthermore, under the recently notified Companies (Arrests in Connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 (the SFIO Rules or Rules), the SFIO has been empowered to arrest any person if believed to be guilty of fraud. The legislative intent behind these provisions and the wide-ranging powers granted to the SFIO is certainly clear. The power of investigation coupled with the power to arrest any person ‘believed to be guilty of fraud’ indeed equips the SFIO with potent powers to combat the menace of corporate fraud, which is deeply entrenched into and plagues our economy.

Continue Reading SFIO – Putting Corporate Fraudsters Behind Bars

On 24 August 2017, a nine-judge bench of the Supreme Court of India (Supreme Court) declared privacy as a fundamental right protected under the Indian Constitution (Privacy Judgment)[1]. The Supreme Court while holding the right to privacy as an intrinsic part of the right to life and personal liberty, and informational privacy as a facet of the right to privacy; highlighted the need for government to examine and enforce a robust regime for data protection.

The Supreme Court suggested balance between data regulation and personal privacy as there are legitimate state concerns (like protecting national security, preventing and investigating crime, encouraging innovation and the spread of knowledge, and preventing the dissipation of social welfare benefits)on one hand and individual interests in the protection of privacy on the other. Appreciating the complexity of all these issues, the Supreme Court (upon being informed of the constitution of an expert committee chaired by Hon’ble Shri Justice B.N. Srikrishna, former Judge of Supreme Court), left the matter for determination by the said expert committee (Expert Committee), which was required to give due regard to what the Supreme Court had held in the Privacy Judgment.

Continue Reading Genesis of (True) Data Protection Framework for India

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Published here is Part II of the blog piece on the Indra Sawhney Case, which examines in-depth, the case of Indra Sawhney, the use of ‘caste’ as a factor in determining backwardness for the purpose of reservation, and the delicate balance between the needs of the society and the constitutional vision.  

We hope you enjoy reading this as much as we have enjoyed putting this together.


II.  The Mandal Commission and the case of Indra Sawhney

A. The Mandal Commission and its Recommendations

In the year 1979, the Second Backward Classes Commission (Mandal Commission) was set up which was tasked with, inter alia, determining the criteria for defining the socially and educationally backward classes. After an exhaustive survey, the Mandal Commission identified 52% of the Indian population as “Socially and Economically Backward Classes” (SEBCs). Subsequently, it recommended a 27% reservation for SEBCs in addition to the previously existing 22.5% reservation for SC/STs.

In the year 1990, Prime Minister V.P. Singh announced that his government would implement reservations on the basis of the recommendations of the Mandal Commission.[1] Two office memoranda, O.M. No. 36012/13/90-Estt (SCT) dated August 13, 1990 as amended by O.M. No. 36012/13/90-Estt(SCT) dated September 25, 1990 sought to enforce these recommendations. The decision sparked widespread controversy and led to thousands of students coming out onto the streets to protest against the decision. There was a complete breakdown of law and order and some students even immolated themselves.[2]

Continue Reading Casteism Much? – An Analysis of Indra Sawhney: Part II

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This is the third blog piece in our series entitled “Those Were the Days”, which is published monthly. 

This is a two-part piece which analyses the Indra Sawhney Case – a case that is famous for both settling several issues and unsettling several others in the great Indian backward-class-reservation jurisprudence. Published here is Part I of the piece, which examines the legal history of affirmative action in India.   

We hope you enjoy reading this as much as we have enjoyed putting this together.


The “Mandal Commission Report” and the controversy that followed it, is etched in the memory of every Indian. By upholding the implementation of the Mandal Commission Report, the Apex Court judgment in the case of Indra Sawhney v. Union of India, established a central role for itself in every debate on the sensitive issue of reservations in India.

One of the avowed objectives of the Indian Constitution is the creation of an egalitarian society, including, and especially, by way of the eradication of caste and the caste system. In support of this objective, several successive governments have devised various affirmative action policies to eradicate caste and support the social mobility of backward classes. These measures typically include reserving seats in representative and educational institutions or public employment for members of certain classes that have been traditionally and historically marginalised. However, over time, these measures have become a tool for populism and to appease certain communities. Therefore, every time such a measure is introduced, it has resulted in dividing public opinion and caused widespread controversy. On some occasions, this divide has escalated into public demonstrations and even riots, for or against reservation.[1]

When these hotly contested measures have come up for adjudication, the judiciary’s role has not been easy; it has to account for social realities, while simultaneously grounding its decision within the sacred framework of the Constitution. One recurrent controversy that has arisen on multiple occasions before the Apex Court is the criteria for determining backwardness in order to qualify for reservation. There have been several cases that directly deal with this question. Of these, the most significant is the 1992 decision of by the Supreme Court in Indra Sawhney v. Union of India, (1992) Supp. (3) SCC 217 [2] (Indra Sawhney).

Continue Reading Casteism Much? – An Analysis of Indra Sawhney: Part I

Three years ago, India’s Prime Minister Mr. Narendra Modi, had expressed his desire to see India amongst the top 50 nations in terms of ease of doing business.

On October 31st, 2017 with the release of the World Bank’s Doing Business Report 2018 (Report), this dream is now racing towards to becoming a reality. After continuous and vigorous legislative overhauling, coupled with regulatory and infrastructural reforms, India surged up 30 places to the 100th rank among 190 countries. The Report lists India as one of the 10 improvers this year. We briefly explore the key reforms which have led to this historic jump in the rankings.

Leaps Across Sectors

The Report is based on how easy it is for companies to do business, and it also takes into account certain regulations based on 10 parameters, which are listed below. India has improved its standing in 6 out of these 10 indicators. These are as follows:

Continue Reading India Makes it into Top 100 in ‘Ease of Doing Business’ Rankings

Technological innovation is the new normal in the financial services sector. The evolution of every aspect of this industry in the past few years has been truly transformational, whether it is access to funds, demand creation/aggregation or even payment systems. The inception and growth of peer-to-peer (P2P) lending platforms in India is one such example. P2P platforms effectively function as an online marketplace for lenders and borrowers, for a commission. A need for regulatory oversight was considered by the Reserve Bank of India (RBI), given the recent rise in the number of such operators and their integration into the financial services sector.

The RBI outlined its proposal to regulate such platforms in its consultation paper issued last year. Following notification on August 24, 2017 categorising P2P lending platforms as Non-Banking Financial Companies (NBFCs), the RBI has finally issued its widely anticipated master directions on October 04, 2017 (Master Directions).

Continue Reading One Size Fits All? Regulating Peer-To-Peer Lending Platforms

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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

Most frequent fliers would have been familiar with the requirement to power off personal electronic devices (PEDs) for the duration of domestic flights. It was not until 2014, that Indian fliers were permitted to operate mobile phones and other PEDs on “flight mode” (in non-transmitting mode). The rationale for this restriction, as explained by the Directorate General of Civil Aviation (DGCA), is that radio transmitters in most communications devices may, and have in the past, caused harmful interference with crucial on-board flight systems. Therefore, while several Indian carriers such as Jet Airways already provide on-board Wi-Fi services, such services are limited to the provision of locally stored content to airborne PEDs, and do not enable passengers to connect to the internet cloud.

However, recent technological developments have now made it possible for passengers to use transmitting PEDs while airborne, without causing harmful interference to crucial flight operation systems or terrestrial communication networks. Together these technological solutions are labelled In-Flight Connectivity (IFC) services. Typically, IFC solutions are provided by making use of aeronautical mobile satellite services that use a satellite link to provide IFC to onboard PEDs; or by using Mobile Communications on-board Aircraft (MCA) systems, which while typically operating on terrestrial GSM communications bands, use an air-to-ground satellite link to establish connections with terrestrial networks.

Continue Reading In-Flight Connectivity: “VNO” or NO “VNO”?

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?

The RBI has amended the Master Directions on Financial Services provided by Banks. This is a significant move permitting Banks to invest in Category II Alternative Investment Funds.

As of June 30, 2017, Alternative Investment Funds (AIFs) had raised the cumulative figure of Rs. 48, 129 crores, against aggregate capital commitments of Rs 96,000 crores. The AIF industry is thus growing at an exponential rate, raising monies from domestic and offshore investors.

Unfortunately, however, the Indian AIF industry, lags behind its western counterparts in terms of participation by domestic pools of capital. In western countries, long term or patient capital, such as pension funds, contributes nearly 40% of the capital raised by AIFs. In the Indian context, restrictions prescribed by sector regulators have inhibited fund managers from raising capital from the domestic financial services sector.

Hence, it was no surprise that one of the key themes in the 2016 reports of the Alternative Investment Policy Advisory Committee (AIPAC), chaired by Mr Narayan Murthy, was “unlocking domestic pools of capital”. The committee’s recommendation was premised on the argument that the domestic capital pools – pensions, insurance, domestic financial institutions, banks, and charitable institutions – need access to appropriate investment opportunities to earn risk-adjusted returns.

Continue Reading It’s a Yes – for Banks!