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VOLUME 12 ISSUE I
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The author is an Assistant Professor of Law at NLU Jodhpur.
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Schemes of compromises and arrangements as operative under Section 230 of the Companies Act, 2013 can prove to be an effective means of resolving the insolvency of a stressed entity, which allows the entity to emerge financially stronger from a corporate insolvency process, rather than an undesirable commercial death. The importance of schemes of compromise and arrangement under the Indian insolvency mechanism is further bolstered by the inclusion of Regulation 2B of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. On the other hand, while the comprehensive Insolvency and Bankruptcy Code [“the Code or IBC”], introduced in 2016, has solved a major policy issue that had been tormenting the Indian commercial setting until the Code’s adoption – i.e., the multiplicity of laws that would apply to insolvency matters – recent data released by the statutory regulator has painted a picture indicating that the Code has not been as successful in achieving the primary commercial objective – i.e., ensuring maximization of the value of the assets of the stressed entity, as well as the recoveries made by the creditors of such stressed entity. As is indicated by the data released, a large chunk of insolvency proceedings end up in liquidation (following either a lack of interest by Committee of Creditors in accepting the Resolution Plan presented before it, or due to lack of interest on part of the public to submit a plan for the resolution of the entity based on valuation concerns), leading to minimal recoveries being made by the creditors. Now, this situation, in the opinion of the author, can be resolved aptly if persons from the previous management of the company are allowed to submit a ‘bona fide revival plan’ at the juncture of the Corporate Insolvency Resolution Process [“CIRP”] failing, and liquidation being initiated. However, with the blanket ban put on the participation of previous promoters through the operation of Section 29A of the IBC and the ruling of the Supreme Court of India on this matter, this approach is not permitted under Indian law. Accordingly, through this article, the author aims to bring to light certain fallacies in the position as it exists, through a critical examination of the data as made available by the statutory authority, weighing the benefits and disadvantages that pertain to lifting this blanket ban, and an analysis of the shortfalls in the pronouncement given by the Supreme Court of India through the case of Arun Kumar Jagatramka v. Jindal Steel and Power Limited.
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Sanjana M & Dharshini Sugumaran
The authors are Principal Associates and Associate at Keystone Partners respectively.
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This paper examines the jurisprudence of Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (‘Code’) and the powers of the National Company Law Tribunal (‘NCLT’) to decide disputes over assets in insolvency. While the Supreme Court has held that the NCLT, administering specific functions under the Code through summary proceedings, cannot adjudicate disputes arising outside of the Code, we find that NCLTs often travel beyond their jurisdiction and decide such disputes where the asset is crucial to the revival of the Corporate Debtor. The Code and the jurisprudence on the issue do not clarify when and how such disputes are to be adjudicated, given the moratorium on suits against the Corporate Debtor during insolvency and the “Clean Slate Doctrine” that prevents any fresh proceedings against the Corporate Debtor post-insolvency. We propose statutory amendments to the Code to allow for disputes over assets in insolvency to be adjudicated by the civil court or other appropriate authority even after the conclusion of insolvency. The civil court’s jurisdiction to so adjudicate the dispute may be made contingent on the NCLT prima facie finding that we propose statutory amendments to the Code to allow for disputes over assets in insolvency to be adjudicated by the civil court or other appropriate authority even after the conclusion of insolvency the dispute is valid. The inclusion of the asset in question in the CIRP and Resolution Plan may be made subject to the outcome of such adjudication. While not being without its own limitations, such an approach limits the jurisdiction of the NCLT and balances the needs of effective resolution of the Corporate Debtor with the right of third-party claimants to have their disputes adjudicated.
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The authors are third-year students at Rajiv Gandhi National University of Law, Punjab.
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Insolvency and Bankruptcy Code (IBC) and Real Estate (Regulation and Development) Act (RERA), both of which were introduced in 2016, are at odds with one another, and this conflict affects India's real estate industry. While the IBC concentrates on monetary recovery for creditors, RERA seeks to safeguard homeowners by guaranteeing responsibility and transparency in real estate transactions. Conflicts have arisen because Section 238 of the IBC, which gives it superintendence, has occasionally disregarded RERA's safeguards for homebuyers in bankruptcy proceedings. By enabling project-specific resolutions and enhancing financial transparency, recent judicial and regulatory initiatives, such as Project-wise Corporate Insolvency Resolution Processes and CIRP regulation modifications, aim to resolve these problems. Through a more integrated approach to real estate insolvencies and proper attention to project completion and financial recovery, these developments seek to strike a balance between the interests of creditors and homebuyers.
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BEYOND BRSR: CHARTING INDIA'S PATH TO ESG LEADERSHIP​
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The authors are fourth-year students at Hidayatullah National Law University, Raipur
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ESG Reporting in India: Balancing Profit, People, and Planet: Upon exploring the available literature on ESG reporting in India, we observe that the Saraf and Partners article titled as "ESG Reporting in India: Balancing Profit, People, and Planet," gives a comprehensive and informative account of the development of Environmental, Social and Governance regulations and their implications. It successfully differentiates Environmental, Social and Governance from Corporate Social Responsibility, highlighting the increased regulatory focus on sustainability disclosures. While its work is mostly theoretical in nature, there is scant involvement of empirical analysis or sector-specific case studies. Taking that as a basis and using case studies of Indian firms that are actually practicing Environmental, Social and Governance frameworks adds strength to the literature. This contribution provides practical information on the challenges and consequences of such compliance, thus filling the gap between regulatory framework and corporate implementation.Value Chain Reporting in the BRSR: A Critique: The article titled "Value Chain Reporting in the BRSR: A Critique" from IndiaCorpLaw analyses the Securities and Exchange Board of India's modifications to the Business Responsibility and Sustainability Report, which now includes value chain disclosures. The modifications are intended to present a broader picture of a company's Environmental, Social and Governance performance by broadening the reporting requirements to upstream and downstream partners. This piece brings to light the difficulties for industries like FMCG, technology, chemicals, and industrial machinery, where value chain partners could be numerous. The actual implementation of these disclosures poses great difficulties, especially for corporates with lengthy and complicated supply chains. This article seeks to offer that as important as adding value chain disclosure to the BRSR is as a progressive move toward overall ESG reporting, it will be important to think through what this means on the ground level for the companies.
CONUNDRUM OF LIKE PRODUCT ANALYSIS UNDER NON-DISCRIMINATION PRINCIPLES OF GATT
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The author is a Research Scholar (Ph.D) at NLU Jodhpur.
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The non-discrimination principle informs the cornerstone of international trading regime. Non-discrimination principle is enshrined through two prominent principles. The principle of Most Favored Nation (MFN) as well as the National Treatment Principle are the two essential components of non-discrimination principle under GATT regime. The main purpose of the non-discrimination principles is to regulate trade restrictive measures under GATT regime. The overarching principle to maintain competitive relation in market. Most Favored Nation principle seeks to maintain origin neutrality among various member nations. The purpose is to ensure that the products are not differentiated on the basis of the origin that they belong to. It mainly covers border measures for the same purposes. National Treatment ensures a parity between importers as well as domestic players in the market. It is for this purposes that it covers internal measures in the form of fiscal as well as non-fiscal measures. Most Favored Principle as well as the National Treatment principle incorporate like product test to identify the relevant products. The main purpose is to maintain non-discrimination among such products which are similar in nature. Thus, the concept of like products is fundamental in analyzing the general scope of non-discrimination principles of GATT regime. The purpose of the present paper is to scrutinize the general ambit of like products under GATT regime. GATT doesn’t provide for a precise definition for the term “like product” under its text. Moreover, the term “like products” is used under different contexts. There is no authority to differentiate various contexts for the term. This creates a certain amount of ambiguity with respect to the scope of non-discrimination principles. The fundamental question is to identify the precise level of similarity that is demanded by the like product test. The present paper delves over such varied facets of like product analysis. Appellate Body as well as the Panel have devised several approaches to apply like product test. The present paper would also reflect upon the merits and demerits of such varied approaches.
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Dr. Ankit Srivastava & Tamanna Bansal
The authors are Assistant Professor & Ph.D. Scholar at Rajiv Gandhi National University of Law, Patiala respectively.
​The Company Law Board was set up under the Companies Act 1956, and after that, the National Company Law Tribunal was incorporated by virtue of Section 408 of the Companies Act 2013. This tribunal was established after a recommendation from the V. Bala Krishna Eradi Committee, and later, National Company Law Tribunals were constituted on 1 June 2016. The National Company Law Tribunal mainly deals with insolvency, bankruptcy, and company law matters. The laws for mergers and acquisitions are provided under sections 230-232 of the Companies Act, 2013. Further, the Companies (Compromise, Arrangement and Amalgamations) Rules, 2016. The paper shall focus on the jurisdiction and procedure followed by the National Company Law Tribunal in sanctioning the proposed scheme of merger/amalgamation/ demerger /acquisition. Further, the paper shall specify the powers and functions of the National Company Law Tribunal. Lastly, the paper will specify the case studies and their analysis pertaining to the notable judgments passed by the National Company Law Tribunal, Chandigarh bench.
SECURITIES AND REGULATORS IN THE DIGITAL AGE: RESOLVING THE ‘RIPPLE’ EFFECT OF CRYPTO-ASSETS
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Vinish Maheshwari & Pranay Agarwal
The authors are fifth-year students at Gujarat National Law University, Gandhinagar.
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In this technology-driven market, crypto-assets have gained much popularity globally in recent years. Crypto-assets in India are popularly recognised as ‘cryptocurrencies ICOs and VDAs owing to their nature and the legal treatment under various statutes. While the high volatility has been questioned by several investors, the high return factor is indeed successful in appealing to household investors. However, the recent crypto crashes and the priority to investor safety have led the regulators to adopt a broader approach to enhance the scope of their jurisdictional powers. The battle that began between the crypto exchanges/companies and regulators culminated in the recent judgment of the US Supreme Court in the Ripple case where the narrow interpretation by the judiciary took over the basic objective of investor protection. It will be contended in this paper that the judicial interpretations in the US including the Howey test have majorly failed to broaden the horizon of ‘securities’ and enhance the level of regulator protection. Rather, the rules of literal interpretations are unsuitable in the present case for accommodating technological advancement. Therefore, a different approach by the combined efforts of legislature and judiciary should be adopted. This is particularly essential in light of blanket bans on the assets by the regulators and government. Nevertheless, it will be argued at the same time that lack of judicial consensus among the market's recourse can either be found in the principles adopted in India and the EU which are comparatively more liberal or the legislature can step up to draft new regulations for the crypto-assets. This approach will give them both inclusive and differential treatment and therefore will be more effective in the coming times as well.
BEYOND BRSR: CHARTING INDIA'S PATH TO ESG LEADERSHIP​
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The authors are fourth-year students at Hidayatullah National Law University, Raipur
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ESG Reporting in India: Balancing Profit, People, and Planet: Upon exploring the available literature on ESG reporting in India, we observe that the Saraf and Partners article titled as "ESG Reporting in India: Balancing Profit, People, and Planet," gives a comprehensive and informative account of the development of Environmental, Social and Governance regulations and their implications. It successfully differentiates Environmental, Social and Governance from Corporate Social Responsibility, highlighting the increased regulatory focus on sustainability disclosures. While its work is mostly theoretical in nature, there is scant involvement of empirical analysis or sector-specific case studies. Taking that as a basis and using case studies of Indian firms that are actually practicing Environmental, Social and Governance frameworks adds strength to the literature. This contribution provides practical information on the challenges and consequences of such compliance, thus filling the gap between regulatory framework and corporate implementation. Value Chain Reporting in the BRSR: A Critique: The article titled "Value Chain Reporting in the BRSR: A Critique" from IndiaCorpLaw analyses the Securities and Exchange Board of India's modifications to the Business Responsibility and Sustainability Report, which now includes value chain disclosures. The modifications are intended to present a broader picture of a company's Environmental, Social and Governance performance by broadening the reporting requirements to upstream and downstream partners. This piece brings to light the difficulties for industries like FMCG, technology, chemicals, and industrial machinery, where value chain partners could be numerous. The actual implementation of these disclosures poses great difficulties, especially for corporates with lengthy and complicated supply chains. This article seeks to offer that as important as adding value chain disclosure to the BRSR is as a progressive move toward overall ESG reporting, it will be important to think through what this means on the ground level for the companies.
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Yash Singh
The authors is a fourth-year student at Chanakya National Law University. ​
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Asset Reconstruction Companies (ARCs) under the SARFAESI Act, 2002 are the fulcrum point in the realization of dues to the secured creditor by Asset Reconstruction or Securitisation. However, a third mechanism can be adopted by the ARCs for the realization of dues by way of the Resolution of the company under the Insolvency and Bankruptcy Code (IBC), and this has a two-fold benefit- Realisation of dues of the secured creditor and the Resolution of an Insolvent company. This confluence between the SARFAESI Act and IBC through the medium of ARCs is possible by the insertion of Section 29A in IBC, coupled with the Proviso to Section 15(4) of the SARFAESI Act. However, these positive confluences between the SARFAESI Act and the IBC by way of ARCs acting as Resolution Applicants are marred with certain lacunas like the recent RBI notification in 2022 requiring the ARCs to have a minimum of Rs. 1000 Crores as the Net Owned Fund (NOF) creating a vacuum for small ARCs in resolution of certain companies, an exception like provision for ARCs to be the Resolution Applicants only upon joint acquisition of property with the secured creditors under Section 15(4), and so on. These vacuums can be filled by amendments to the SARFAESI Act by expanding the function of ARCs from just Realisation to Realisation as well as Resolution of distressed companies, inserting a provision, creating a class of ARCs to be resolution applicants and their approval by RBI, into the IBC regime itself, and so on. By incorporating excerpts from websites, articles, and books, the paper aims to rectify the contemporary landscape of ARCs in the domain of Insolvency and Bankruptcy under the IBC, their role as a Resolution Applicant, the lacunas creating hindrances to ARCs in entering the IBC regime, and the possible solutions to it by paying heed to the foreign practices dealing with Realisation to Banks and Restructuring of Companies simultaneously. This paper aims to showcase the confluence of the SARFAESI Act in the domain of IBC through ARCs.
THE CONTRASTING TRAJECTORIES OF SHADOW BANKING IN INDIA AND CHINA​
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Shantanu Vyas & Anvesha Mishra
The authors are fifth-year students at Bennett University and GGSIPU respectively.
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India and China demonstrate contrasting trajectories in their shadow banking industries. India is currently placing significant attention on the launch of Jio Financial Services Ltd., a separate entity derived from Reliance Industries Ltd. This has generated investor optimism, despite an initial decline in stock prices, as indicated by a valuation of $19 billion. The strong performance of Bajaj Finance Ltd. emphasises the significance of India’s Non-bank lending sector, surpassing even the State Bank of India in terms of total value. China’s shadow banking system emerged as a response to post-financial crisis caution. It involved a complicated network of lending through trusts, focusing on real estate and local governments. Nevertheless, nonbank issuers are currently facing a significant decline in the real estate market, as seen by recent instances of failed payments and apprehensions regarding the potential spread of financial hazards. The shadow banking crisis that occurred in India in 2018 caused a disruption in the availability of credit for the real estate sector. However, the current situation, which is influenced by the increasing digitization of the consumer economy, shows potential for improvement. Jio Financial intends to take advantage of technology in order to benefit from Ambani’s extensive business network and deep understanding of consumer behavior. India’s regulatory framework appears to be more conducive to the development of domestic industry leaders, in contrast to China’s strict regulations. The future of India’s shadow banking sector hinges on the adoption of technical advancements, digitalization of consumer services, and effective regulation to ensure sustainable expansion while avoiding systemic concerns. This might potentially lead to a preference for nonbank lenders with advanced technological capabilities, perhaps overshadowing smaller deposit-taking institutions that are government-controlled.
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Vidushi Jaiswal & Swadha Chandra
The authors are fourth-year students at National Law Institute University, Bhopal
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The remarkable words by the eminent financial advisor and investor Stuart Kirk, “In the finance industry, virtue signalling has no place. As a writer, researcher, and investor, I am also aware of the limitations of language and stock trading.” have an impacting connotation which suggest that investing is hard and so is saving the planet. In February 2024, RBI came up with its draft disclosure norms that were an aftermath of many appalling attempts at by the market participants and the confusion over the existing climate change norms. The lack of a comprehensive and clear regulatory compliance system for climate governance has led to a tussle between the Environment, Social and Governance (“ESG”) enthusiasts and companies, when the priority of the discourse should lie in ensuring a sustainable future for this planet. Undertaking a methodological triangulation coupled with a reform-oriented approach towards research, this paper will discuss and analyse the nuances of climate disclosure norms in the context of Indian banking landscape along with a special reference to the technological aspects of climate related risk monitoring and opportunities. The authors try to trace the background of the climate disclosure norms by delving into the concept of sustainable finance and climate transparency, reiterating the importance of channelling funds towards sustainable projects. Further, authors attempt to decode the novel regulations laid down in the RBI and SEBI climate disclosure norms and BRS Reporting respectively. Analysing the best practices across jurisdictions, the authors attempt to derive a standardised methodology and working model especially suited for the Indian banking infrastructure and for the investors who perform a crucial function as far as ESG reporting standards are concerned. Subsequently, an overview of the investor’s perspective on these disclosures has been provided with specific emphasis on the prevailing instances of Greenwashing. Therefore, the authors assess the climate disclosure norms suggesting key challenges and ultimately endeavour to provide solutions through an open dialogue, responsible leadership, and decision-making.