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In the judgment of Union of India and Another vs. Deloitte Haskins and Sells LLP & Another[1], the Supreme Court has enunciated and cleared the law pertaining to the removal and resignation of a statutory auditor vis-à-vis the proceedings initiated under Section 140(5) of the Companies Act, 2013 (“Act”). The Supreme Court upheld the constitutional validity of Section 140(5) of the Act and interpreted it as “neither discriminatory, arbitrary and/or violative of Articles 14, 19(1)(g) of the Constitution of India”. The Supreme Court clarified that the resignation of an auditor after filing an application under Section 140(5) of the Act does not automatically terminate the proceedings initiated under this Section.…

Continue Reading Supreme Court Sets the Bar Too High for the Statutory Auditors

The lack of a fixed time limit for adjudication of applications for proper stamp duty under the provisions of the Indian Stamp Act, 1899 (“Act”) often results in inordinate delays in stamping of instruments. In a judgment that will exponentially expedite the process of adjudication, the Delhi High Court (“Delhi HC”) has now opined that the Collector of Stamps shall communicate to the parties the proper stamp duty within 30 days of the date of the application.…

Continue Reading Application for Payment of Stamp Duty must be Adjudicated within 30 Days: Delhi High Court

Insolvency and Bankruptcy Code

Recently, the Supreme Court, in the case of Gaurav Agarwal vs CA Devang P. Sampat, has issued notice to the parties for adjudicating the crucial question of law pertaining to the ‘Period of Limitation’ for preferring an appeal under Section 61 of Insolvency and Bankruptcy Code, 2016 (“the Code”).…

Continue Reading Limitation under Section 61 of Insolvency and Bankruptcy Code: Too Strict Interpretation of the Law?

Introduction

Ease of doing business also includes the ease with which companies can shut operations and exit the marketplace in a country. Under Indian law, companies (or limited liability partnerships (“LLP”) have various options to wind down operations voluntarily, either under the Companies Act, 2013 (“Companies Act”), (or the Limited Liability Act, 2008, for an LLP) or the Insolvency and Bankruptcy Code, 2016 (“IBC”).…

Continue Reading Ease of closing a Business in India

Introduction

There is no denying that India is one of the most significant players in the global pharmaceuticals space, especially in the generic and affordable vaccines segment. Emerging markets such as India are expected to become further crucial in the foreseeable future, given the global supply chain disruptions and discontinuities. Fifty percent of the global demand for various vaccines is met by the Indian pharmaceuticals industry and as per the Indian Economic Survey 2021, the domestic market is expected to grow 3x in the next decade. It is expected to develop at an annual rate of 11% over the next two years, possibly exceeding $60 billion in value.[1] India’s healthcare market is expected to reach $372 billion, driven by rising income, better health awareness and increasing access to insurance. India’s healthcare public expenditure stood at 2.1% of GDP in 2021-22 against 1.8% in 2020-21. Furthermore, in Union Budget 2022-23, Rs 86,200.65 crore ($11.28 billion) was allocated to the Ministry of Health and Family Welfare (MoHFW).…

Continue Reading Examining the Regulatory and Operational Issues Affecting M&A in Pharmaceuticals and Healthcare Industry

On July 12, 2022, the Supreme Court of India (“Supreme Court”) passed a judgment in Vidarbha Industries Power Limited v. Axis Bank Limited[1] (“Vidarbha”), which considered the question whether Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016 (“Code”), is mandatory or discretionary in nature. Section 7(5)(a) of the Code states that the National Company Law Tribunal (“NCLT”) “may” admit an Application filed under Section 7 of the Code (“Application”), if (a) a default has occurred; (b) the Application is complete; and (c) there is no disciplinary proceeding pending against the proposed resolution professional. The Supreme Court held that Section 7(5)(a) of the Code allows the NCLT to reject an Application even if the financial creditor establishes ‘debt’ and ‘default’ on the part of the corporate debtor.…

Continue Reading The Vidarbha Aftermath

Shareholders Rights

In a corporate democracy, the rule of majority prevails, period! Hence, in most jurisdictions, shareholders’ resolutions may be passed by a simple majority, or, where the decision may be critical to the operations or the future of a company, by a super/ special majority of at least, three-fourths. In this way, the decision of the majority binds all members/ shareholders.…

Continue Reading Protection and Redressal of Minority Shareholder Rights

Interpreting Limitation Provisions

Introduction

The Supreme Court of India, in a recent judgment, reiterated that the limitation period for filing of an appeal against the order of the National Company Law Tribunal (“NCLT”) as laid down under Section 61 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) has to be interpreted strictly.…

Continue Reading Interpreting Limitation Provisions – Supreme Court Rejects the ‘Date of Knowledge’ Argument

Appropriate forum for Insolvency of Personal Guarantors

Introduction

The provisions of the Insolvency and Bankruptcy Code, 2016 (the “Code”) in relation to personal guarantors (“PG”) to corporate debtor (“Corporate Debtor”) have been effective since December 1, 2019. However, whether a corporate insolvency resolution process (“CIRP”) (or even a pending application to initiate such a process) against the Corporate Debtor is a pre-requisite for initiation of insolvency resolution process or bankruptcy process against the PG under the Code (“PG Proceedings”) before the National Company Law Tribunal (“NCLT”) has been a question that continued to vex the judicial for some time, until recently the Honourable Supreme Court, in Mahendra Kumar Jajodia v. SBI Stressed Assets Management Branch (“Mahendra Kumar Case”),[1] upheld the National Company Law Appellate Tribunal (“NCLAT”) order holding that the NCLT has jurisdiction over PG Proceedings, regardless of any CIRP or liquidation proceedings pending against the Corporate Debtor before it.

This blog analyses the background, the developments so far and the position after the Apex Court’s order.…

Continue Reading Appropriate forum for Insolvency of Personal Guarantors – Is the last word out?

Role of IFSC in the Indian SPAC Dream

In part 2 of this series of blogs (Key Features IFSC Lisiting Regulations in Relation to Listing of SPACs), we touched upon the newly-introduced framework for the issuance and listing of special purpose acquisition companies (“SPACs”) at the International Financial Services Centres (“IFSC”) under the International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021 (“IFSC Listing Regulations”). In this part of the blog we are going to look at the IFSC Listing Regulations with a critical eye to detect the gaps that continue to exist despite the framework being put in place and identify areas that can be improved upon to leverage the unique status of entities in IFSC.…

Continue Reading Role of IFSC in the Indian SPAC Dream: An Overview – Part 3