Journal Volume 1
1 NLIU J. B. Law (2019)
THE INSOLVENCY AND BANKRUPTCY CODE, 2016 INTERPRETED AND CONSTRUCTED BY THE SUPREME COURT OF INDIA.
Ghayur Alam, Abhinav Pradhan and Sayed Aqa Raza
This article seeks to analyze judgments of the Supreme Court of India interpreting-constructing the Insolvency and Bankruptcy Code, 2016. The Insolvency and Bankruptcy Code, 2016 several amendments have been introduced to the Code so far and the law declared by the Supreme Court of India has been swiftly incorporated in the Code by the Parliament. The objective of this article is two-fold: (i) to find out whether the Supreme Court has merely interpreted the text of the Code or it has also constructed the ambiguous and vague provisions of the Code and (ii) to cull out the principles of law from the decisions of the Supreme Court.
This article has been divided into three parts. Part I identify the holdings of the Court which have been incorporated in the Insolvency and Bankruptcy Code, 2016 through amendments. Part II analyses the judgments in thirteen broad categories. Part III concludes.
NATIONAL GUIDELINES FOR RESPONSIBLE BUSINESS CONDUCT AND THEIR IMPORTANCE IN REMODELING BUSINESS RESPONSIBILITY AND ACCOUNTABILITY
Bhumesh Verma, Anoushka Ishwar and Sana Sarosh
Abstract-
The Government of India released a set of principle guidelines called the National Guidelines on Responsible Business Conduct (NGRBC) in 2018 with an aim to assist businesses to perform their regulatory compliances. Broadly, these guidelines comprise of nine thematic pillars of business responsibility. They have been formulated in a manner so that all businesses, irrespective of their ownership, sector, structure or location are required to abide by these guidelines. In this article, the authors explore the origin of these principles and its subsequent development. The aim is to analyse the nature of these guidelines and assess their applicability in the Indian scenario. In order to achieve this, authors analyze the features of these guidelines in comparison with international business conduct standards and make propositions in order to determine whether they can be considered truly binding or merely persuasive on the conduct of Indian businesses. The article also tries to highlight the situation of corporate social responsibility and its diverging fields in the Indian market.
INCLUSION OF WOMEN IN THE BOARDROOM – A REALITY OR A MIRAGE?
Annapurna Sinharay
Abstract-
Gender bias by discrimination against women is a problem which haunts our society till date. In a commendable move, the company legislation in India was overhauled and a provision was made for appointment of at least one woman director in certain class of companies. However, the issue of gender diversity is yet to be foregone. Various incidents have revealed that women are still struggling to make an impact; their inclusion in the boardroom has been reduced to a mere box ticking exercise. This article aims to review the provisions regarding the inclusion of women directors in the Companies Act, 2013 and discusses the multitude of challenges faced by women in the boardroom. To level the playing field, this article strongly advocates appointment of women as independent directors and invites appropriate legislative amendments to that effect
DEFINING CONTOURS OF ENFORCEABILITY IN NON-COMPETE CLAUSES IN EMPLOYMENT CONTRACTS
Purbasha Panda and Shambhavi Srivastava
ABSTRACT-
In the contemporary business matrix, non-compete clauses are a significant part of employment contracts. The scope and extent of non-compete clauses is always defined with respect to the doctrine of restraint of trade. This article attempts at analyzing judicial trends on enforceability of non-compete clauses, especially posttermination restrictive clauses across jurisdictions. It further attempts to highlight the difference between the approaches of English courts and Indian courts in terms of outlining the exceptions to the doctrine of restraint of trade. It revisits applicability of the “test of reasonableness” often discussed in judicial precedents and raises questions about the settled Indian legal position with respect to its applicability. In the article, we have argued about the inadequacies of Section 27 of Indian Contract Act, 1872, especially with reference to the statutory exception mentioned in the section. We further argue that an unbending jurisprudence of Indian courts also creates inconsistencies especially with reference to enforceability of garden leave clauses in employment contracts.
INNOVATION AS A YARDSTICK IN MERGER CONTROL ANALYSIS: A STUDY OF AGROCHEMICAL, TELECOMMUNICATION AND PHARMACEUTICAL SECTORS
Manal Shah and Husna Fayaz
Abstract-
Antitrust authorities worldwide, have been increasingly assessing innovation effects in merger control analysis. Innovation, though present in antitrust laws, has seen rare use in past. In the long run, innovation or lack of innovation thereof can have significant impact not only on competition but also on consumer welfare. Using innovation as a yardstick in combination assessments can have a wide impact (positive and negative) depending upon the scope of the assessment. Innovation analysis is pertinent in ensuring that research and development is not hampered. However, the same needs to be analysed within certain boundaries to avoid it from becoming encroaching in nature. The European Commissioner for Competition in her recent speech titled “Competition: the mother of invention”, emphasized the importance of innovation analysis. While this view been concurred, a weighted balance is required and contours need to be set. This article first traces innovation as a yardstick in merger control analysis from antitrust laws of European Union, India and the United States (geographical focus of the article). It then attempts to explain the recent trend that emphasizes on innovation analysis by way of case studies of notable merger decisions in three sectors: agrochemical, telecommunication and pharmaceutical sectors.
GOOD FORUM SHOPPING IN CROSS BORDER INSOLVENCY: HAMPERED BY THREE-MONTH-LOOK-BACK-PERIOD AND GIBBS PRINCIPLE
Nitesh Jindal and Shiphali Patel
Abstract-
Due to the effects of globalisation and relative ease of doing business, a corporate debtor often has a myriad of options to enter into bilateral agreements with different creditors situated in different parts of the world. When a corporate debtor becomes insolvent or to-be-insolvent, stakeholders i.e. debtors and creditors would always wish to initiate proceedings in a jurisdiction which will benefit them. While hunting for such a jurisdiction, stakeholders may end up finding jurisdiction of a country where corporate debtor’s Centre of Main Interest (COMI) does not lie. This will lead debtors and creditors (through mutual agreement) to forum shop to the laws of such country which will have a better ecosystem for such proceedings. This article examines firstly, that whether the three-month-look-back-period which is incorporated under the draft on cross-border insolvency to curb abusive forum shopping will end up hampering good forum shopping. Secondly, the authors analyse the infamous Gibbs principle and its repercussions on good forum shopping as it was recently upheld by the Court of Appeal in England. This highlights that Gibbs principle, which although centuries old, is still in fashion. This article concludes by asking whether Indian courts would recognise a distinction between good and bad forum shopping and whether Gibbs principle would touch the boundaries of the Indian jurisdiction.
THE HOT “SEAT” CONFLICT IN INDIAN DOMESTIC ARBITRATION: EXPLORING THE “PROPER COURT” RULE UNDER S. 2(1) (E) OF THE ARBITRATION ACT
Anubhav Khamroi
Abstract-
Arbitration is the most sought-after dispute resolution mechanism in modern commercial arena. Under “Enforcing Contracts” segment, India currently ranks 163 among 190 countries in the World Bank’s “Ease of Doing Business” rankings. Although, there have been several executive efforts at improving the alternate dispute resolution framework of India, the unpredictability and inconsistency of judicial pronouncements continue to haunt us. This article tries to bring out the inconsistencies in judicial interpretation of the expression- “Court” in Section 2(1)(e)(i) of the Arbitration and Conciliation Act, 1996. There have been divergent opinions on the “proper court” rule under the Act and the issue of competence of courts at the arbitral seat to exercise supervisory jurisdiction. In September 2012, when the Constitution Bench penned the BALCO judgement, it was construed as a significant development, strengthening investor confidence and stabilising judicial behaviour towards arbitration. BALCO adopted a reasonable middle-ground approach and clarified the legislative intent underlying the Act, which is to grant jurisdiction to the court at the arbitral seat along with other competent court(s) clothed with subject-matter jurisdiction. However, within half a decade, there has already been a judgement by the Supreme Court as well as several High Court decisions. This has resulted in resurrection of the extreme positions which existed in the pre-BALCO era. The article critically scrutinizes the correctness of Datawind (Supreme Court) and Debdas Routh (Calcutta High Court), while also highlighting the possible errors and oversights made in those judgements, in light of the provisions and principles underlying the Act as well as the authoritative ruling of BALCO. In conclusion, this article emphasises the need for certainty and predictability in judicial decision making, which is a ‘sine qua non’ of any established legal system, and finally attempts at simplifying the current legal position by using three hypothetical factual scenarios. Finally, the article analyses a sudden “Plot Twist” brought about by the Supreme Court in BGS v. NHPC (Dec, 2019)
TEETH TO THE TRIBUNAL…IS THE CONTROVERSY SETTLED?
Rajvansh Singh & Atif Ahmed
Abstract-
Interim relief is an important tool to ensure that interest of the parties is safeguarded and the enforcement of arbitral award remains effective. The regulation and practice of tribunal-ordered interim relief within the field of arbitration has been a subject of debate for many years. The reason for this is the interventionist judicial approach adopted in the field of arbitration in India with regards to interim relief. This is normally in exercise of the power under Section 9 of the Indian Arbitration and Conciliation Act, 1996 (“the 1996 Act”). This article seeks to gain an understanding of the power vested with the arbitral tribunal to grant interim relief and attempts to balance the jurisdiction of the court and arbitral tribunal during the course of arbitration. Initially, as per the Arbitration Act, 1940, the arbitral tribunal had no power to grant interim relief and it solely vested with the courts. Later, in the 1996 Act, the arbitral tribunals had a limited power under Section 17 to grant interim relief. The power to grant interim relief by the arbitral tribunal was limited due to the lack of enforceability of the order of the tribunal and the overlapping jurisdiction of the civil courts. Sections 9 and 17 were amended in 2015 which essentially signalled a paradigm shift to create an arbitration process with minimal intervention from the judiciary. This was done by setting a limitation on the time frame in which a party could approach the court for seeking interim relief along with providing teeth to the interim orders passed by the tribunal. The amendment also provides that courts may only be approached when the interim relief ordered by the tribunal is not efficacious. The ambit of the term “inefficacious” is a source of controversy as the term is vague and expansive. To address this weakness of the term, the authors have attempted to confine its scope by studying the concept of “inefficacious” orders.
NON-PERFORMING ASSETS AND THE INDIAN BANKING INDUSTRY, ADDRESSING CHALLENGES TO NPA REALISATION
Yash Mittal
Abstract-
Mounting Non-Performing Assets (“NPAs”) in the Indian banking sector is a recurring activity which results in lowprofitability for the banks. The impaired balance sheets of the banks pose a myriad of challenges before the government and the Reserve Bank of India (“RBI”) of setting objectives of cleaning out NPAs, recapitalizing banks and modifying current banking practices in order to restore profitability and execute such methods or techniques which result in a drastic reduction in NPAs. For smooth functioning of the Indian banking system, various norms were introduced by the Committee on Financial System set up in 1991, which covered things such as capital adequacy, income recognition, and provisioning for bad debts. These norms were introduced with the objective of improving the productivity, profitability, and efficiency of commercial banks in India. However, fragile economic growth and heightened economic volatility in the market puts severe constraints on the rate of recovery of bad loans while also acting as a termite on the balance sheets of the banks. Over the last two decades, several measures have been adopted by the government and RBI to solve the problem of NPAs like the enactment of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (“SARFAESI”) Act, 2002; establishment of Lok Adalats in the year 1987 and the Debt Recovery Tribunal in 1993, the result of which does not deserve much appreciation. Apart from implementing new instruments to fight against the mounting NPAs there is a considerable need of involving corporate governance in the boards of banks, which must be strengthened through the induction of quality professionals as independent directors and managers so as to effectuate transparency and accountability in decision making. The main focus of this research work is to address; firstly, the draconian nature of the NPA problem; secondly, the challenges faced in its recovery, thirdly, whether new instruments that are applied to curb NPAs would be beneficial and lastly, how sound corporate governance practices provide conducive disposal of NPAs by deliberating structural changes and strengthening bank boards.
CONCURRENT DELAY – A LEGAL PANDEMONIUM
Aakash Laad & Srishti Gupta
Abstract-
The term ‘concurrent delay’ is a boutique term mostly associated with the delay in projects related to construction. In this article, the authors have tried to analyze the real problem as to why concurrent delay in construction contracts has become a legal conundrum and how jurisdictions across the globe have dealt with it. The element of delay may give a right to the sufferer to rescind the contract but also fixes liability on the person who caused the delay, to compensate the sufferer. The difficulty, however, arises when both the parties to the contract have caused the delay and one alleges the other’s acts to be the real cause of delay in the project. In such circumstances, a dominant cause is identified; however, there is an absence of parameters for the decision takers to adjudge and examine a dominant cause and its basic elements. A ‘time delay and extension clause’ is a general clause, which can be found in every construction contract; however, the problems associated with the concurrent delay are not satisfactorily covered by this clause. There is a need to view this problem from a rather different, non-conventional approach, as the view from a conventional approach would show that the current situation is not a problem at all and there are a number of cases, providing clarity over the issue. However, the non-conventional approach shows how different cases have given birth to different approaches which ultimately lead to a chaotic situation. To address this and remove the chaotic element, it is essential to have a wide-ranging approach including all the reasonable constituents of the varied approaches. This article, while analyzing different approaches, has also provided indigenous suggestions after emulsifying the positives of modern and traditional approaches to the problem.