Bank Guarantee

A move that may prove to be a game-changer but the proof lies in the pudding

A government procurement contract (GPC) for goods and/ or services usually requires the elected counterparty (Contractor) to furnish a bank guarantee (BG) of upto 5-10% of the contract value as performance security, as per General Financial Rules 2017. Rising non-performing assets, in recent years, have prompted banks to exercise greater caution while issuing BGs, due to which, the cost of procuring a BG has gone up from 20-40 basis points to 50-130 basis points and the cash margin required for securing a BG has also increased from 15-20% to 40-100% of the amount of the BG. Owing to these factors, the procurement of a BG has become increasingly cumbersome for Contractors and they have been long-advocating the need for an alternative to BGs.

Continue Reading Replacement of bank guarantees with surety bonds in government procurement: A welcome relief?

Invesco v Zee

In a recent judgment pronounced in Invesco Developing Markets Fund v. Zee Entertainment Enterprises Limited[1] (“Judgment”), on March 22, 2022, a Division Bench of the Bombay High Court (“BHC”) allowed Invesco’s appeal against a judgment dated October 26, 2021[2]. The October 26 judgment was passed by a Single Judge of the BHC (referred to hereinafter as the “Impugned Order”), which had granted an injunction restraining Invesco from calling for and holding an extraordinary general meeting (“EGM”) of Zee.

Continue Reading Bombay High Court’s Judgment in Invesco v Zee– A major boost for shareholders’ rights in India

Fintech Hubs in IFSC

The International Financial Services Centres Authority (IFSCA) had notified its Fintech Incentive Scheme on February 2, 2022 (Scheme), setting up a framework to provide six grants to eligible applicants. The six grants, thematically, are for ESG financing (Green FinTech Grant), meant to provide early-stage capital for scaling up (FinTech Start-up Grant, Proof-of-Concept Grant, Sandbox Grant, Listing Support Grant), and aimed at supporting third-party incubation (Accelerator Grant), with the common thread among all being an intent to facilitate market access.

Continue Reading Policy support for fintech hubs in IFSCs

Information Rights of a Company Director

Background

The fiduciary duties of the directors of a company under the Companies Act, 2013 (“Act”) have been well-recognised in multiple landmark judgments, and in Section 166 of the Act.  Under Section 166(3), a director is required to exercise his duties with reasonable care, skill and diligence, and exercise “independent judgement”.

Continue Reading Information Rights of a Company Director- Does our company law need a relook in the post-pandemic world?

Metaverse

The metaverse and its use-cases

There are many ways to describe the ‘metaverse’: a post-reality universe that allows several users to participate in a shared virtual environment, an immersive 3-D extension of the internet itself, or even as the next frontier of the digital economy. In due course, the metaverse may align itself with its initial usage, as described in Neal Stephenson’s 1992 sci-fi novel Snow Crash, as a vast digital environment where users could interact with each other. While the Metaverse may escape the contours of a universally accepted definition (for some time at least), it will, by present trends, continue to capture popular culture, imagination and increasingly, various aspects of life. As early as 2005, the metaverse had begun to be considered as something more than simply being centered around MMORPGs (or massively multiplayer online role-playing games). Today, the Indian market already bears witness to the proliferation of augmented reality, virtual reality, and elements of the ‘metaverse’ across several B2B, B2C and C2C applications. Indian tech firms and start-ups have been quick to respond.

Continue Reading FIG Papers (No. 11: Series-1) Into the Metaverse: Legal and regulatory considerations in India

Arbitral Award

I. Introduction

One of the quintessential features of an arbitration friendly jurisdiction is a robust award enforcement mechanism. Often such enforcement mechanisms are determined by the interpretation of ‘public policy’ of each jurisdiction. In India, the trajectory of public policy has witnessed dramatic advancements, resulting in a much narrower scope and ambit of interpretation. Consequently, Indian courts have adopted a pro-enforcement stance and this pattern can be observed even in the arbitral awards that have been passed in disputes relating to exchange control laws and securities regulations.

Continue Reading Enforcement of a Foreign Arbitral Award: Calcutta High Court Contextualises Fundamental Policy of Indian Law

Overseas Direct Investment

Background

Outbound investments in India have witnessed a significant decline from its peak in the golden period of 2005-08. As per the data collated by the Reserve Bank of India (“RBI”), in July 2011, the total outbound financial commitment was at USD 5,478.15 million. This figure has declined over the decade to USD 2,047.79 million in December 2021.

Continue Reading RBI’s proposed regulatory architecture for the ODI Regime – Does it meet India Inc’s expectations?

Arbitration

An arbitrator is a creature of a contract and is, therefore, equally bound by it. The Supreme Court, in the recent judgement of Union of India vs. Manraj Enterprises[i], set aside an arbitral award wherein the arbitrator had awarded pendente lite and future interest on the amount awarded, inspite of a contractual bar. The Court, relying upon a catena of judgments dealing with the inherent powers of an arbitrator to award pendente lite and future interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 (the 1996 Act), held that such powers are exercisable only in the absence of an agreement to the contrary.

Continue Reading The Power to Grant Interest Pendente Lite – Arbitrator Bound by the Agreement Between the Parties: The Supreme Court Reiterates

Multi Modal Logistics Parks

BACKGROUND

A systematic logistics network is crucial to economic growth. To develop this sector, the Cabinet Committee on Economic Affairs, in October 2017, under the ‘Bharatmala Pariyojana’, mandated the Ministry of Roads Transport and Highways (MoRTH) to develop Multi Model Logistics Parks (MMLP) across the country[1].

Continue Reading Multi Modal Logistics Parks – Logistics Future of India

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claim for refund of advance amount

Introduction

Since the enactment of the Insolvency and Bankruptcy Code, 2016, (“IBC”), the Indian judiciary has been facing numerous interpretational challenges on various provisions of the IBC. While certain challenges have been put to rest by introducing amendments to the legislation, a larger bunch of the issues have been settled by interpretations adopted by the judiciary. The Courts and Tribunals, in interpreting the provisions of the IBC, have aspired to achieve the objective of the IBC, i.e. maximising the value of assets of the corporate debtor.

Continue Reading Is Claim for Refund of Advance an ‘Operational Debt’? SC Comes to Rescue