COMMUNIQUE JANUARY, 2021

COURTS THIS MONTH 

  • On 19.01.2021, Supreme Court upheld the constitutional validity of Section 3, 4 and 10 of the Insolvency and Bankruptcy Code (Amendment Act), 2020 in respect to the threshold limit of initiating a Corporate Insolvency Resolution Process (“CIRP”) by homebuyers.
     
  • The amendments made to the Insolvency and Bankruptcy Code (IBC) in 2020 were with respect to limitation, court fees and a mandate that a minimum of 100 (One Hundred) home buyers had to come together to file an insolvency application. The judgement was delivered in Manish Kumar Vs UOI (W.P No. 26 of 2020) along with other connected matters.
     
  • The Supreme Court Bench comprising of Justice AM Khanwilkar and BR Gavai has held that while punishing a person for disobedience of decision of a Court it should be fully ascertained that such disobedience was wilful and intentional. The judgement was delivered by the court in the matter of Rama Narang v. Ramesh Narang ((2006) 11 SCC 114).
     
  • In the matter of State of Uttrakhand Vs. Sureshwati (Civil Appeal No. 142 of 2021), the Apex Court held that they do not intend to interfere in the dismissal of an employee by his employer only on the grounds that a disciplinary enquiry was not conducted by the former, if reasons for the same could be justified by the employer before the jurisdictional Labour Court.
     
  • In an appeal filed by a Developer against an order of the National Consumer Dispute Resolution Commission, New Delhi, the Supreme Court held that one sided and unreasonable clauses in Apartment Buyer’s Agreement amounts to Unfair Trade Practice under the Consumer Protection Act, 2019.
     
  • The Supreme Court on 27.01.2021, stayed the controversial Bombay HC judgement on acquittal of accused under Section 8 of the Protection of Children from Sexual Offences Act, 2012 stating that skin-to-skin contact is necessary for establishing that a victim has been sexually assaulted. The Supreme Court further issued notice to the accused which is returnable within 2 (Two) weeks and directed the AG to file a petition challenging the said judgment.
     
  • The Supreme Court vide its judgement dated 29.01.2021 in the matter of Himanshu Kumar Shah v. Himanshu Kumar Pravinchandra Shah (TP Civil No. 2344 of 2019) held that a transfer petition cannot be dismissed on the grounds that a prior transfer petition was dismissed 3(Three) years ago, especially when there has been a significant change in circumstances since the aforesaid dismissal. The Hon’ble Court rejected the submission made by the Respondent that the former transfer petition shall operate as a res judicata in such circumstances.
     
  • SC issued Notice in an Appeal, Promila Taneja Vs. Surendri Design Pvt Ltd. (Civil Appeal No(s).4237/2020), filed against the order of the National Company Law Appellate Tribunal (“NCLAT”) on the issue regarding whether non payment of Rent would qualify as an Operational Debt under the Section 5(21) of Insolvency and Bankruptcy Code, 2016 (“IBC”). The NCLAT had upheld the order of the Adjudicating authority which stated that dues in nature of rent of immovable property are not Operational Debt and cannot result in initiation of CIRP.
     
  • The Andhra Pradesh High Court while quashing a batch of FIRs in the Amravati ‘Insider Trading Case’ held that essence of insider trading was not applicable in the present case. The Court observed that private sale transactions will not have criminal implications on the basis of the State alleging that the Petitioner had prior knowledge from the then government that the area was being developed as a State capital pursuant to bifurcation of the state of Andhra Pradesh in 2014.
     
  • A division bench of Bombay HC while entertaining a Public Interest Litigation, Nilesh Navalakha & Ors. Vs. UOI (PIL (ST) No. 92252 of 2020) held that media trial during an on-going investigation interferes with the administration of justice and amounts to contempt of court. The court also stated that such reporting does not fall under fair reporting. The Court also ordered directions to regulate media reporting is such scenarios.
     
  • A single judge bench of Justice Sanjeev Sachdeva of Delhi HC held back from issuing notice to Whatsapp in relation to a challenge to a change in its user policy, stating that the Hon’ble Court will do so only once it understands the concerns and stakes involved. The HC also observed that it is a private app and permissions granted by the users are voluntary.
     
  • A Bench comprising of Justice Vivek Chaudhary of Allahabad HC in Pawan Kumar Yadav And Anr. v. State Of U.P & Anr. (Criminal Misc Anticipatory Bail Application U/S 438 CR.P.C. No. – 9304 of 2020) directed the State that matters relating to Anticipatory Bail concerning liberty of citizens should be given priority. Subsequent observations regarding Investigating Officers/Circle Officers not affording due seriousness in such matters were also made.
     
  • The Petitioner in Rajendra v. UOI and others (Criminal Writ Petition No. 469 Of 2015) approached the Bombay HC regarding a misleading advertisement on TV channels that showed miraculous and supernatural properties/ qualities of a product called Hanuman Chalisa Yantra being sold by the advertiser. The HC held that such sale through advertisements is illegal and any TV channels found telecasting the same shall be held legally liable under the Maharashtra Prevention and Eradication of Human Sacrifice and other Inhuman, Evil and Aghori Practices and Black Magic Act, 2013.
     
  • A single judge bench of Karnataka High Court held that the website Snapdeal which is merely an Intermediary under the Information & Technology Act, 2000 will not be held liable for sale of any item not complying with the requirements under the Drugs and Cosmetics Act, 1949 on its platform.
     
  • Justice Naveen P Rao, Telangana High Court in Guguloth Santosh Naik vs. State of Telengana (W.P 20381 of 2020) refused to direct the police to arrest a MLA who had allegedly threatened a journalist. The journalist of a vernacular daily had reported about the land grabbing by the said MLA which led to a threatening call made by the MLA to the journalist. The journalist filed a complaint against the MLA under Section 109 IPC and Section 3(2) (va) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (“SC-ST Act”) on 08.12.2020. It was observed that merely because a crime is reported under the SC-ST Act the accused having to be arrested straightaway was not a necessity.

 
NOTIFICATIONS/AMENDMENTS INSIGHTS 

  • The NCLAT Chennai bench commenced its functioning virtually on 25.01.2021. The notification bearing No. 025/2021 dated 23.01.2021 also stated that Fresh Appeals against the orders of the Benches of the National Company Law Tribunal having jurisdiction in States of Karnataka, Tamil Nadu, Kerala, Andhra Pradesh and Telangana and Union Territories of Lakshadweep and Puducherry shall have to be made before the said Bench w.e.f. 25.01.2021.
     
  • Vide Notification bearing S.O 324 (E), the Central Government brought into force Section 21 of the Companies (Amendment) Act 2020. In light of Section 21 of the said Amendment Act, Section 105 (5) of the Companies Act, 2013 stands amended thereby reducing the punishment for issuing invitations at the company’s expense to proxy persons for the purposes of voting from INR. 1,00,000/- to INR 50,000/- respectively.
     
  • The Central Government vide Notification bearing S.O 325 (E), brought into force 11 (Eleven) provisions of the Companies (Amendment) Act, 2020. Some of the key highlights of the said Amendment Act states that the Central Government is now empowered to exempt any class of Non Banking Financial Companies or Housing Finance Companies from filing resolutions passed to grant loans or give guarantees or provide security with respect to loans in the ordinary course of business. The Central Government is also now empowered to make rules for class or classes of unlisted companies regarding preparation of periodical financial results of said the said companies, audit and limited review of the same and file the result with the Registrar of Company within 30 days from the end of that period as specified.
     
  • The RBI vide its Circular No. DoS.Co.PPG./SEC.04/11.01.005/20 20-21 has issued certain guidelines on Risk Based Internal Audit to supplement circular.
     
  • DBS.CO.PP.BC.10/11.01.005/2002 03 dated December 27, 2002 titled “Guidance Note on Risk-Based Internal Audit”. The relevant excerpts of the Notification states that the Head of the Internal Audit must have sufficient authority, stature and independence.
     
  • He/She must also possess requisite professional competence, knowledge and experience. The Boards of Banks should prescribe a minimum period of service in the Internal Audit function. Additionally, unlike other banking staff the tenure of the HIA must be for a minimum period of 3 (Three) years etc.
     
  • In a much needed reprieve for pensioners, RBI recalled Circular no DGBA. GAD. No. 2960/ 45.01.001/2015-16 dated March 17, 2016, Circular no CO.DGBA (NBS) No.44/GA.64 (11-CVL) 90/91 dated April 18, 1991 and Circular no CO DGBA (NBS) No.50/GA.64 (11-CVL) 90/91 dated May 6, 1991 whereby excessive/wrongful recovery of pensions were carried out by nationalized banks.

 
DEALS THIS MONTH 

  • Punjab National Bank has raised investment to the tune INR 3,788.04 Crs through a qualified institutions placement of 1,06,70,52,910 equity shares of INR 2 each, at a price of INR 35.50 per equity share, including a premium of INR 33.50 on each such equity share.
     
  • Merchant commerce platform Pine Labs was recently funded by Lone Pine Capital. Pine Labs presently stands valued at over USD $2 billion pursuant to the aforesaid funding. The deal was valued at USD 100 million.
     
  • Ecom Express has invested USD 11 million (about INR 80.6 crore) in Bangladesh’s third-party e commerce logistics (3PL) firm, Paperfly. The deal is valued to the tune of INR 800 Mn.
     
  • Reliance Infrastructure Limited has concluded the sale of its entire equity stake in Parbati Koldam Transmission Company Limited to India Grid Trust at the value of INR 900 Crs. The deal commenced in November 2020 after a definitive agreement was signed between the parties, RInfra and IndiGrid and has now been successfully convened with the transfer of shares of PKTCL as well as the receipt of sale consideration by RInfra.

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