Applicability of 2015 Amendments

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SEBI report on RPTs – Deeper Reflections

SEBI had implemented the Kotak Committee recommendations on Related Party Transactions (RPTs) by making amendments to the Listing Obligations and Disclosure Requirements Regulations, 2015 (“LODR”) on May 9, 2018. In less than two years, in November 2019, SEBI constituted a Working Group (WG) to re-examine the RPT provisions of the LODR, against the backdrop of new corporate scandals, which surfaced, where certain abusive RPTs were undertaken by the listed entity at a subsidiary level, which were not captured by the LODR provisions. The WG Report addressed this loophole and made several recommendations, which were examined by the author in his blog article titled “SEBI Working Group on Related Party Transactions: Will the net be cast too wide?” published on February 5, 2020.

In this Blog, the author wants to share his deeper reflections on some of the recommendation made in the WG report. The author argues that this WG report requires a more detailed scrutiny by the SEBI, before it is enacted into a law, by amendments to the LODR. Both these blogs should be read together to get a complete picture of the changes proposed in the WG report.
Continue Reading SEBI report on RPTs – Deeper Reflections

BCCI v. Kochi Cricket Supreme Court’s Much Needed Third Umpire Decision

The Arbitration and Conciliation (Amendment) Act, 2015 (2015 Amendment) came into force with effect from October 23, 2015. Although this amendment was enacted to remove controversies and iron out wrinkles in the Arbitration and Conciliation Act, 1996, (Parent Act), it has in fact, given rise to its own set of controversies. One of the burning issues was the applicability of the 2015 Amendment. Section 26 of the 2015 Amendment provides for its applicability, and reads as follows:

  1. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.

One would believe that the above provision would have settled any issue of applicability of the 2015 Amendment. It has instead given rise to more litigation,[i] which has now been partially addressed by the Supreme Court.[ii]

The controversy in all the litigation that came up before the High Courts, and which also saw conflicting points of view, was around the applicability of the amended Section 36 of the Parent Act. In the pre-amendment era, when an award debtor challenged an award under Section 34, the award creditor was prevented from enforcing the award until a determination had been made by a court on the challenge, because of an ‘automatic stay’ on the operation of the award.

In order to overcome this, and for the benefit of award creditors, Section 36 of the Parent Act, was amended to do away with this ‘automatic stay’. It required the challenging party to separately apply for a stay and also required the court to direct the award debtor to deposit the award amount, so as to avoid frivolous challenges. The question for the courts has been the applicability of the amended Section 36 to Section 34 applications that were filed before and after the 2015 Amendment came into force.Continue Reading BCCI v. Kochi Cricket: Supreme Court’s Much Needed Third Umpire Decision