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Future-Amazon: Delhi high court stays arbitration proceedings in Singapore Tribunal till February 1

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future amazon dispute
Future amazon dispute doesn’t seem to settle. This has been made clear through a recent turn of events where a two-judge bench of the Delhi High Court, in a significant move has stayed the arbitration proceedings between Amazon and the Future group.

It is to be noted that the proceedings were being conducted before the Singapore Arbitration Tribunal, which has been halted until further orders.

The appeal by the Future group was being heard by the two-judge bench headed by high court’s Chief Justice DN Patel. The appeal was strategically and effectively made after a serious setback had been born by the Kishore Biyani-led companies before a single-judge bench.

It is worthy of mention here that the larger bench of the high court has emphatically observed that the prima facie case is effectively in favor of the Future group.

Here the high court has noted that there is a prima facie case that has been made out in the favor of appellants. Moreover, if the case is to be scrutinized, it can be stated that the balance of convenience is tipping heavily in favor of the appellants.

future retail supreme court hearing
This aforementioned reason and rationality have led the high court to effectively agree to hear the appeal. Thus, on serious merits, the Delhi high court has stayed the proceedings till February 1. While the government has acted on the Singapore front, the Delhi high court has also emphatically stayed the single judge’s order that had dismissed the Future group’s idea.

To talk about the rationale which has been quoted by the high court, “interest of justice” has been cited as the main reason for such a stay. It has been empathically observed that it would be blatantly butchering the interest of justice, if a stay was not granted as aforementioned the balance of convenience also tends to lean in favor of the Future group.

One can highly admire the swiftness and conviction with which the Future group is moving to file its appeal before the courts. This shows a sense of urgency and importance in the actions of the Future group that is going the last mile to defeat Amazon’s stubbornness or rather a solemn pledge to destroy its functioning and chances of survival.

This fact can be corroborated by the fact that the appeal before a larger bench of the Delhi High Court was filed by the future group within a day from a single-judge dismissing.

It is to be noted that the single bench had dismissed the Future’s plea seeking a direction for the Singapore tribunal to hear the conglomerate’s application for arbitration termination on priority.

future amazon proceedings
The drama surrounding the Future- Amazon dispute dates to the issue of Future Retail Ltd entering into a strategic asset sale deal with the Reliance Industries led by Ambani. This was vehemently contested by Amazon which has led to an odious and crippling stay on the asset sale deal, which remains in place to date.

The main factor that had led the future group to contest against Amazon was brought about by the stay that was put in place by the competition commission of India that had suspended its earlier approval to the investment deal between Amazon and the Future Coupons Pvt Ltd.

This has led the Future, time and again, during the course of its hearing, to seek a direction for the tribunal to at least hear its case on arbitration termination first.

This has been countered by Amazon yet again which has argued on the grounds that despite CCI’s approval, the arbitration clause and agreements survive and proceedings cannot effectively and emphatically be terminated.

The main reason for the same is that it has been recognized by the CCI as well that the proceedings of arbitration are effectively independent and different from each other.

On top of this, Amazon has issued a clarification that the Singapore tribunal has not strategically or blatantly refused to hear the termination application. In fact, it has been agreed to accommodate the same after the scheduled agenda that has been set out for January 5 to 7 is categorically over.

reliance future amazon dispute
The odious history: revisited.

As aforementioned, the legal battle that is long drawn is due to the asset scale discrepancy between Future and Reliance that was contested by Amazon. But what effectively was the main factor that empowers Amazon to contest the deal?

It is to be noted that it was claimed by Amazon that its deal with Future Coupons effectively prevents Future Retail too, in the capacity of being a related party, from effectively and strategically entering into any agreements with certain entities that are competitive in nature to Amazon.

This also included the Mukesh Dhirubhai Ambani group which was involved in the asset sale with the future group. Thus, Future Retail claimed that it was not bound by the deal between Amazon and Future Retail’s promoter firm.

This had led to the halt in the asset sale deal between India’s two leading retailers which was stayed by the emergency arbitrator in October 2020. But is there any end to this corporate legal drama any soon? Guess, we’ll have to wait and watch.

DHFL loss to lenders

Probe Former DHFL Brass for Causing Rs. 40,000 Crore Loss to Lenders: Union bank

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Probe former DHFL Loss to Lenders: Union Bank

CBI has been receiving requests from the Union Bank of India has written to it to effectively probe the promoters of Dewan Housing Finance Corporations. Other than the promoters, the Union bank has called from a probe in the management of the Dewan Housing Finance Corporation Ltd. The ultimate reason for calling such a probe is the fact that Dewan Housing Finance has caused a total loss of Rs 40,623.36 crores. What makes this debacle all the more concerning and debilitating is the fact that the loss was caused to the consortium of the bank, which is led by the Union Bank of India.

The basis of inquiry
The appeal to scrutinize dewan housing finance is based on the ultimate findings by the KPMG, the esteemed audit firm, that deviation of laid down norms and procedures have been committed seriously through manipulation of accounts and concealments. Dewan housing finance has been primarily accused of clandestine activities that were committed by it in terms of undisclosed bank accounts and misrepresentation.

dhfl lossgiven the seriousness of the claim at hand, the CBI has been actively probing the promoters namely Kapil and Dheeraj Wadhawan in the Yes Bank scam. According to the reports, given the pieces of evidence, there is a heavy case of fraud or loss of public money.

But even though the claims of the consortium of banks seem legitimate, the federal agency effectively and emphatically cannot register a fresh FIR. This is merely due to the fact that there is a need or a want of general consent which needs to be accorded by the Maharashtra government.

Last year, in the month of August, in the aftermath of the infamous probe into the Dewan Housing Finance debacle, attempts were made for the manipulation of television rating points (TRP), the state government had effetely withdrawn consent that had been accorded to the CBI.

This was done under Section 6 of the Delhi Special Police Establishment Act. Thus, given the turn of events that had taken place in the case last year, it was made mandatory that general consent is a must for the federal agency, namely CBI, to register an offense in the state, in its absence. Thus, in totality due to the events of the past, the federal agency now has to effectively approach the state government. This will help them get access to permission to conduct the investigation on a case-to-case basis.

union bank net banking

but is Maharashtra the only state to withdraw its consent? Apparently, many non-NDA governments, claiming serious vendetta by the center, have withdrawn their consent. These states mainly include Kerala, West Bengal, Rajasthan, Chhattisgarh, and Punjab.

The woes of the CBI have been aggravated as even after the portrayal, communication, and representation that has been effectively presented to the state government, consent hasn’t been still accorded. This brings to the forefront, the dreadfully awful state of the politics that tend to delay the process of recognition and effective addressal of the inconsistencies and corporate felonies at hand.

What makes this political deadlock all the more debilitating is the fact that the loss due to mismanagement and clandestine, illegal activities caused a loss of public money of over Rs 40,000 crores. Given the threat to social and public welfare, effective and immediate investigation is needed, which cannot go through due to the political deadlock.

To analyze the fraud, it is to be noted that the illegal tampering was found to have been conducted on a large scale as it was found that DHFL disbursed loans and advances totaling a total of Rs19,754 crores to 35 entities with commonalities to DHFL promoter. In fact, what made the whole process surreptitious and unnoticeable was due to DHFL promoters’ tight control of multiple entities. The control was so extensive that even the appointment of directors and auditors was carried out by the DHFL promoters.

It is no news that much of the debacle in the lending business is due to noncredit-worthy disbursement by the lender. The same was the case in the DHFL lending debacle, where it was found that humongous loans and advances to the tune of Rs 25,595 crores were disbursed to 65 entities that effectively and efficiently had various deficiencies.

These discrepancies and deficiencies included inadequate loan documentation and inadequate mortgage security valuation which form the very basis of the debacle. Similarly, to corroborate this claim, various loans can be found missing in the DHFL finance sheet that never made it back to the bank.

union bank of india net banking

in fact to cover up the surreptitious activities of the corporations, the “Bandra Book entity” had been created which effectively and wrongly maintained the details of non-existing retail loans. This was created using dummy names which were maintained in a separate accounting system.

Thus, in totality, it can be argued that the DHFL debacle brings to the forefront the fact that a strong regulatory environment is needed to end clandestine activities that are conducted craft fully under the authorities’ eyes.

 


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discoms in india

No Immunity from IBC for State Discoms in India Says Centre

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Understanding IBC Code For State Discoms in India

In a turn of recent events, the Tamil Nadu government’s response to IBC proceedings against the discoms has brought to the forefront the discrepancy prevailing between the electricity act and the Insolvency and bankruptcy code.

The power ministry has released its say and has stated that state-owned discoms also effectively known as the electrical energy distribution corporations, don’t have any immunity from company insolvency lawsuits. The ministry has also cleared the air around the narrative that there is a discrepancy between the electricity act of 2003 and the Insolvency and Bankruptcy Code of 2016 on the solution of economic claims.

These claims were effectively maintained after the Tamil nandu government had stated that the IBC insolvency doesn’t follow to discoms. The rationale behind such a statement was that discoms have immunity since they have been discharging services for public purposes as an extension of the state executive. This had also led to the cropping up of the conspiracy that there is a struggle or discrepancy between the IBC and the Electrical energy Act.

ibc discoms in india

Discoms in India & The Sense of False Safety

It is to be noted that such revelations by the ministry have brought to the forefront the discrepancy that had prevailed amongst the electrical energy distribution corporations that they were immune to the proceedings of the Insolvency and bankruptcy code. Given that such a false sense of immunity persists in government units, it tells us a lot about the mismanagement that prevails in such units due to the nature of it being government.

One can also state that this episode brings to the forefront the rationale that plays out in the public sector units that have the largest number of NPAs, Given the sense of immunity that such units feel due to their governmental nature. With the government’s needless recapitalization, one can also state that it reinstates or fosters the attitude of mismanagement due to a false sense of safety. Such attitude is detrimental to the efficiency of the banking sector and the discoms as well.

thus, the newer clarification that has been released by the ministry maintains to get rid of a false sense of safety in opposition to insolvency lawsuits for discoms. This effectively and emphatically offers borrowers contemporary prison ammunition for improving dues. Given the recent clarification, it can be seen that the government wants to increase accountability and efficiency in the sector.

ibc - insolvency bankruptcy code The Story of India’s Weak Indian Power Sector

It is to be noted that it would be an understatement to argue that the power distribution is the weakest link in the entire value chain of the Indian power sector.

In fact, severely ailing state-owned power distribution companies also known as discoms emphatically continue to severely hamper the efficient functioning of the transmission and generation sectors. Given the fact that by 2020, discoms had accumulated massive overdue payments amounting to Rs116,340 crore, an effective immunity from IBC will only help the government lose efficiency and revenue.

This will also help create an immense liquidity crunch across India’s power sector, given the deplorable state of the discoms.

Though, it is worth mentioning here that various government reforms have been repeatedly initiated in the sector to effectively improve the sector’s commercial and performance but, it cannot the fact that it is yet to make a sizable impact cannot be denied.

On the other hand, as the case unravels, the discoms continue to incur humungous financial losses which is a clear reflection of massive subsidies and ineffective government funds. From time to time, cases of bailout by the governments, to help state-owned discoms to pare their mounting losses have come forward. But what exactly is leading to such humungous losses in the discoms other than the government’s inefficient methods to bail out?

It is to be noted that the absence of economically inefficient tariff setting processes, healthy competition, and unsustainable cross-subsidies, economically inefficient tariff setting processes, infrastructure development, and technology are severely adding to discoms’ losses.

The Case of Discoms in India Being an Extension of The State Executives

  1. In the case of the Tamil Nadu government, the government’s letter used to be precipitated by means of a writ petition for initiation of lawsuits below IBC filed within the Madras top courtroom by means of South India Corporation Pvt. Ltd.
  2. But on November, 8, the ministry had effectively and positively cited that the apex court had in its ruling announced that state-run discoms are arranged below the Corporations Act and are no longer below statute just like the NHAI.
  3. Therefore, they strategically aren’t an extension of the state executive. It was additionally stated, to clear the matter, that the subject has been “settled” by means of the Ideally suited Courtroom. In fact, the dichotomy surrounding the IBC and Electricity Act has been settled. It has been stated that there effectively used to be no dichotomy between the provisions of IBC and the Electrical energy Act, which applies to other operational problems with discoms.

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resolution applicants

Hard Bargain For Resolution Applicants

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Insolvency Resolution Plan and Resolution Applicants

 

In the case of Ebix Singapore Pvt vs. Committee of Creditors of Educomp Solutions Ltd., the government has granted its judgment.

The judgment has bargaining provided the much-needed clarity which was highly overdue on the contentious status of resolution applicants that comes under the Insolvency and Bankruptcy Code 2016.

The judgment has been provided for the series of events after the resolution plan has been approved by the Committee of Creditors. This is the time between the approval by the COC and the pending approval of the National Company Law Tribunal.

The apex court took a solemn view of the case and emphatically maintained that once a plan is effectively approved by the COC, it significantly becomes binding on the resolution applicant.

This means to say that the judgment and the approval of COC are all binding and it is little or no scope left for withdrawal, even while the plan is underway for approval from NCLT. Thus, it can be rightly stated that this effectively gives more executive powers to the Coc.

resolution planThough it is no news that the process is fraught with many inefficiencies and delays, the similarities have emphatically been acknowledged by the supreme court too. In fact, various reasons for such odious delays have been projected.

These include late bids that do not offer potential valuation or price or perhaps there can be various detestable bottlenecks in the corporation itself which can lead to delay in acknowledgment of the Corporate Insolvency Resolution.

If the delays are to be scrutinized in the light of the legal framework, it can be noted that multiplicity of litigation too fraught with the effectiveness of a case. Additionally, tenacity to grant approvals in light of the spirit of the Code too is an emphatic re3asons that adds to the arduous list of factors that delay the time crucial resolutions.

corporate insolvency resolution processHowever, even though these reasons were acknowledged by the supreme court, it still emphatically maintained that these do not serve a purpose for the applicant to break free or effectively seek an exit from an approved resolution plan by COC.

The case that ushered the change.

According to the reports, the Supreme court was effectively dealing with a batch of 3 appeals. These were significantly filed by successful resolution applicants.

If the nature of the applications is to be scrutinized, the successful resolution applicant had sought emphatically beseeched for the withdrawal or at least modification of their resolution plans.

This appeal was being made for a plethora of reasons which effectively included reasons like an empathic impact of such investigations on the mighty resolution plan and financial hardship.

Additionally, the appeal was also based on the delay in the approval of the resolution plan. It was during this particular case when the apex court had held the demand of the applicant as inadmissible so as to be withdrawn or modified when Coc had already approved it.

T5his gives rise to a pertinent question given the intricacies of the resolution plan, what does this emphatically means for the stakeholders? It is to be noted that stakeholders are an important force that is invested in the resolution scheme.

With a wrong judgment and step, it is the stakeholders that have the most to lose. Thus, with the latest judgment, it can be stated that the Supreme court has bonded the faith and the destiny of the stakeholders to the resolution plan devised by the COC. This emphatically distinguishes the resolution plan from the bilateral contract.

Is modification allowed if circumstances are altered?

insolvency resolution processTaking a stern stance, the apex court has maintained that the framework would not allow withdrawals or modifications of resolution plans, even if the applicant applies for the same.

Thus, absolute power to discretion to the COC has been granted. However, under section 12A, withdrawal of insolvency proceedings is allowed.

This can be effectively carried out by following the procedure that is mentioned in detail under the section. Though there is a catch in this breather that has been provided under the procedure. ‘

A resolution applicant cannot unilaterally withdraw or modify the resolution plan. It would require successful negotiations between the applicant and the COC for the application of modification to the resolution plan.

Additionally, it is noteworthy to mention here that the COC should be willing to opt for a re-negotiation.

Thus, overall, immense power has been accorded to the COC to draft a well-suited resolution plan, keeping in mind the valuation and interests of the shareholders.

Also, another characteristic of the judgment that needs to be highlighted is that the judgment has provided much need clarity in the process.

Until now there was significant ambiguity in withdrawal and modification rights in terms of the resolution plan it was waiting for NCXLT approval.

But with the recent judgment, more clarity has been provided during the intervening period when a plan is effectively pending its approval from the NCLT.

However, have all the doors been closed for successful withdrawal and modification? It is to be noted that if the latest judgment is to be scrutinized, the apex court has emphatically left one door open.

This door has been left open for the legislature to successfully introduce a mechanism that will effectively permit the withdrawal of resolution plans. However, this will be opted for only when the committee will find or decipher a legitimate reason.

In a series of events to not make the judgment too red-handed, the supreme court has also immensely reflected on the suggestion to provide a 45 days timeline.

The 45 days timeline will be provided to invite various legitimate comments and claims from regulators or authorities.

This will be provided before a resolution plan is approved by NCLT. According to experts, this will emphatically expedite the approval process and plans of resolution plans.

Thus, one can quite rightly state that with clarity and certainty that has been infused into the proceedings and process, faster resolution and efficient decisions are on the table.

The only question remains will the clarity ease the woes of the industry or will it exacerbate the same? It is something only future resolution strategy can answer.


Tags: insolvency resolution plan, corporate insolvency resolution, insolvency resolution, corporate insolvency resolution process, financial hardship, insolvency resolution process, resolution applicants, fast track insolvency resolution process

google antitrust case

Google Antitrust Case

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What is The Google Antitrust Case?

Another lawsuit awaits Google and its characteristics are quite similar to many that have been enacted against it. According to reports, state attorneys general are emphatically again undertaking the task of going after Google.

Google mainly remains in news for majorly two things. Firstly being the biggest user of user’s data and hence attracting unwanted attention from the legislators and secondly due to its burgeoning power as a search engine which can materialize into something quite unhealthy for its competitors.

Amongst many other times, this time the legislators are behind the search engine with an antitrust lawsuit. This time, legislators argue that the company effectively abused its power over app developers. This has been done through its Play Store on Android.

If the history of antitrust lawsuits against Google is to be scrutinized, the latest case marks the fourth antitrust lawsuit against the giant that has been lodged against the company by the U.S. government enforcers in the period of the past year.

antitrust caseThe latest antitrust case against google mainly focuses on the Play Store, which touches the very essence of Google’s business that is becoming more likely like Apple’s. It is to be noted that the Apple App Store has been battling legal challenges.

It has emphatically drawn lawmakers to question whether Apple unfairly charges its developers for payments. Additionally, allegations have been raised that whether it favors its own apps much moreover those of its rivals.

The case- anticompetitive tactics

Various allegations have been made against Google, the gravest of which states that it has emphatically and effectively used anticompetitive tactics.

According to the charge sheet, anti-competitive tactics have been used to extract almost up to 20 percent commission from consumers. It sits to be noted that these are those customers who particularly purchase digital content and subscriptions on their Android phones.

It has been pointed out that the biggest discrepancy lies in the fact that the app developers are forced to use Google’s software for distribution as they do not have much choice.

lawsuits against google

This has been mainly due to the fact that in part Google has emphatically targeted potentially competing for app stores. Meanwhile, if the story of the consumer’s side is to be scrutinized, it has been stated that consumers have fewer or options as Android is the only operating system that is available on many handsets.

According to the statistics, Google Play Store largely distributes over 90% of Android apps in the U.S. Thus, it can be deciphered that no other Android store has even over 5 percent of the market share.

Such a claim can be corroborated by the fact that even the plaintiffs in the case have alleged it. In fact, in a recent turn of events, Samsung, the largest and the top manufacturer of Android phones too was roped in.

Plaintiffs have maintained that Google has arduously tried to “buy off” the Samsung company by enticingly offering many incentives to turn its Galaxy app store into an effective “white label” for its Play Store.

It is to be noted here that similar cases in the past have occurred too. Alleging, Google had also tried and thwarted past efforts by Amazon to effectively and significantly use its own distribution store on Android.

Thus, given all the aforementioned discrepancies that have been analyzed and have been brought to the table, it can be stated that Google’s durable monopoly power specifically in the markets pertaining to in-app purchases and Android app distribution is not quite based on competition on the merits.

This, consequently means that such monopoly has been maintained or rather has been created through artificial technological conditions. In addition to technological conditions, Google has also made effective use of contractual conditions it has invariably imposed on the Android ecosystem.

google lawsuitGoogle’s defense

In Google’s defense, it has been stated by its representatives that they find it quite incongruous that state attorneys general have particularly chosen to file a lawsuit against a system that actually provides more choice and openness than any other players in the market. Thus, the recent lawsuit has been dismissed on the ground of being considered meritless.

But is the latest lawsuit the only one being carried out against google at the moment? No. it is to be noted that Google is fighting the battle on two fronts. The other battleground consists of the lawsuit from the Department of Justice and several states.

In the other lawsuit, it has been alleged that Google has exclusionary contracts to effectively ensure the prominent default status for its apps on various devices. These exclusionary contracts have been drawn from manufacturers that have particularly used its Android mobile operating system.

In fact, it may come as a surprise to many, but another lawsuit, this time by a group of Republican attorneys, has been ongoing that effectively focuses on Google’s advertising technology business.

This has also alleged that Google has entered an anticompetitive agreement with another social media giant namely Facebook.

But what makes the latest lawsuit quite striking for the plaintiffs to go after Google? It is to be noted that great harm is being inflicted on the consumers due to a lack of innovation.

Given the monopoly status that Google is enjoying, it has absolutely no incentive to offer a better service to its customers.

It is no news that healthy competition fosters great innovation that is needed for the welfare of the customers, but in the current scenario, Google is sacrificing both at the altar of the monopoly that it is relishing. It is also mainly due to the fact that no other app stores and developers particularly have channels available to reach the public.

Thus, with the latest lawsuit, will the competition be restored in the domain, and can will the plaintiffs be able to prevent Google from engaging in similar conduct in the future? Perhaps we’ll have to wait and watch.


Tags: antitrust case, google antitrust, lawsuits against google, antitrust lawsuits against google, antitrust lawsuit, antitrust case against google, google lawsuit, google antitrust lawsuit, google antitrust suit

competition commission of india

Competition Commission of India – CCI Penalization of Carlsberg

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Competition Commission of India Penalization of Carlsberg

In a recent turn of dramatic events, the Competition Commission of India has effectively imposed humongous penalties on Carlsberg India Pvt Ltd (CIPL), United Breweries Ltd, and all the other India Brewers Association.

In addition to the aforementioned names, additionally, 11 more individuals have been penalized for the cartelization in the supply and sale of beer.

If the enormity of the penalty is to be analyzed it can be conjured from the amount of penalty that stands effectively at Rs. 873 crores.

Quite interestingly, the Anheuser Busch InBev India was also found guilty to be part of the cartel fixing in which other associations were busted.

Though InBev was found to be involved in cartel fixing for beer prices it was exempted from the imposition of a fine on it. Why was this? This was mainly due to the fact that it was the company that was the first company to effectively and emphatically provide key evidence in the investigation against the detestable mechanism.

functions of competition commission of indiaThe reasons for penalization by CCI

It is no news that CCI is the upholder of competition norms in India. With proofs and pieces of evidence about cartel fixing, the involvement of CCI in the agenda was quite necessary and crucial.

According to the reports, thorough searches and seizures were carried out by the Director-General of the CCI. During investigations, it was found that regular communications used to take place between the three companies.

These conversations indulged in topics pertaining to the coordination of price hikes that were immediately submitted to state authorities for their approval.

It is to be noted that consumer welfare was being compromised given the cartel formation that had taken place between the competitors.

Taking into consideration normal laws of economics, healthy competition in the market sustains consumers’ welfare and leads to innovation and fair prices that are calculated using the demand and supply forces in the market.

But with investigations, it was revealed that the various basics and prerequisite of consumer welfare was being compromised for higher profits.

The investigation conducted showed that key managerial personnel used to email the competitors about the price hikes they were planning well in advance.

This was done to effectively coordinate and propose to the state authorities in various states for coordinated price hikes.

The whole agenda consisted of discussions about price strategy before hitting the market coupled with holding discussions about prospective quotes and the way forward.

This exercise was significantly carried out to rehearse for appearing before state excise departments.

In fact, another strategy effectively included the agenda to particularly meet with excise authority under the umbrella of the AIBA. This was done for convenience and so that better chances can be conjured for getting proposed price increases approved.

This involvement of AIBA also covered it under the ambit of CCI’s wrath. This led AIBA to be fined for its detestable role in arranging discussions between the various beer companies on price discrepancy.

Talking about the evidence that was thoroughly scrutinized after the revelation, it was noted that in the case of Maharashtra, odious price revisions by the UBL and AB InBev since 2011 were unchangingly close in timing with Carlsberg India.

Thus, this emphatically points towards the fact that Carlsberg had joined these two companies in making price revisions uncannily around the same time since 2014.

role of competition commission of indiaBut was the price the only characteristic that characterized such cartel fixing? Perhaps no. even the supply was a characteristic that was used to incur profits and carry out fraudulent activities.

According to sleuthing by the CCI, pieces of evidence were found that beer companies had also coordinated cuts in the supply of beer in various states like Maharashtra, Odisha, and West Bengal.

This was effectively done to strongly and adamantly oppose the welfare moves by the state governments which tried to hike the excise duties or had tried to reduce the price of beer.

Quite interestingly, it was found that in pursuit to cut costs, the companies namely UBL and AB InBev had entered into any agreements.

The agreement pertained to the price at which they would procure used bottles from various bottle collectors so that these can be effectively reused at their breweries.

But this gives rise to a pertinent question what rationale was derived from these companies to commit such odious activities?

It is to be noted that the reason cited for the same by key managerial personnel who had been fined was the excessive need to seek approvals from state authorities.

This was regularly done for any price revisions. Thus, according to the defaulters, the excess authorities policy of the state led to the need for the formation of coordination among the competitors.

In fact, the executives have pointed out to a greater degree the government’s redhandedness stating that price changes can only be permitted on three specific dates in a year in a state like Karnataka, which is quite nonaccommodative and crippling.

To quote the submission that was made to the CCI, it was stated by UBL that “draconian laws and practices adopted by the states make it impossible for Beer companies to compete in the ordinary course of business,”.

the competition commission of indiaWhy was AB Inv let go easy?

Though all the three defaulting companies have applied for the reduction of the penalty, AB InBev strategically was given a 100 percent reduction in penalty.

This was mainly due to the fact that the company had effectively and emphatically explained the nature of the cartel and had systematically submitted evidence of email communications.

Breaking down the structure of the penalty, it is to be noted that a fine of Rs. 751.8 crore was imposed on UBL and additionally, Rs 120.6 crore fine was imposed on CIPL.

This was after reductions were included in penalties of 40 percent and 20 percent respectively. These were offered for cooperation that was shown with the investigation by the CCI.


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k sera sera ltd

SEBI Fines Rs 1 Cr Fine On K Sera Sera’s Director for GDR Fraud

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K Sera Sera Ltd – SEBI Fines Rs 1 Cr Fine On GDR Fraud

(SEBI) India’s capital market regulator Securities and Exchange Board of India has penalized the major media and entertainment, business group. Such as K Sera Sera Ltd, also known as KSS Ltd for having defrauded Indian investors under Section 12A(a), (b), (c) of SEBI Act read with Regulations 3(b), (c), (d), and Regulations 4(2)(c), (f), (k) and (r) of PFUTP Regulations over the issuance of Global Depository Receipts in the year 2007 and 2009. 

It has made the company liable for Rs. 12.1 crore while Hussain  Sattaf, the director, and managing director Rajesh Pavithran, the managing director have been asked to pay Rs. 1 crore each.

Following a thorough examination by the authorities, it was discovered that KSS had issued GDR issues on March 30, 2007, and May 15, 2009, respectively, with Pan Asia Advisors Ltd serving as the book-running lead manager for each of these companies. Further, Arun Panchariya was the company’s founder, director, and only shareholder of Pan Asia. 

According to the order copy, the investigation report (IR) alleges that Mr. Panchariya designed and arranged the whole process of KSS GDR issuances to the detriment of Indian investors, whereby loans were secured for the subscription of KSS GDRs on both occasions.

Mr. Panchariya was also reported to be the Managing Director, a 100% shareholder, and an authorized signatory of Vintage, the company with whom KSS had a loan and pledging agreement for both of its GDR issuance. He used certain domestic businesses connected to him to convert the GDRs into underlying shares, which he then sold on the Indian securities market with the aid of some Foreign Institutional Investors (FIIs).

KSS is also accused of violating Sections 11C(3) and 11C(6) of the SEBI Act by neglecting to submit some information required by SEBI and supplying false information.

The “Order” can be read hereunder –

https://www.sebi.gov.in/enforcement/orders/jan-2021/adjudication-order-in-the-matter-of-gdr-issue-of-k-sera-sera-limited-now-known-as-kss-limited_48875.html

 


Tags: global depository receipts, global depositary notes, k sera sera limited share price, gdr global depositary receipt, k sera sera ltd, global depositary shares, international depository receipt

dhfl insolvency case

Analyzing DHFL Insolvency Case

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DHFL Insolvency Case

On May 25, 2021, a panel of the National Company Law Appellate Tribunal (NCLAT) comprised of Justice A.I.S. Cheema and Mr. V.P. Singh stayed an order from the NCLT’s Mumbai bench. The order directed the creditors of Dewan Housing Finance Corp, to consider a  settlement offer from its promoter Mr. Kapil Wadhawan in the DHFL insolvency case which is considered to be one of the largest failures of any Non- Banking Finance Company(NBFC) and Corporate governance failure.

Brief Facts of the DHFL Insolvency Case

The key facts of the case are that SEBI launched an investigation into Dewan Housing Finance Ltd after an accusation was made by an internet portal (DHFL). They hired an outside audit company to look into and evaluate DHFL’s finances.

Due to such probes by multiple credit agencies, the long-term credit ratings of DHFL were downgraded. On 30th May 2019, DHFL conveyed to the stock exchange its inability to publish its 4rth Quarterly report. It also delayed the payment of commercial papers of Rs 950 crores. 

As of 6th July 2019, DHFL had public deposits of only Rs 6,188 crores which fell from a staggering amount of Rs 10,166 crores in 2018. The consortium of banks and credit agencies led by SBI formulated a Debt Resolution plan, but the plan failed, thus RBI moved DHFL to NCLT for insolvency proceedings. On 29th November 2019 RBI filed an application for  Initiation of Corporate Insolvency Resolution Process against DHFL under IBC, 2016.

On 19th May 2021 NCLT’s Mumbai Bench had directed that the settlement offer of Rs 91,158 crore from DHFL’s former promoter should be placed for consideration and voting before the Committee of Creditors(COC). The COC also filed a separate appeal with NCLAT against the Mumbai Bench’s order.

Contentions by the Counsels

On behalf of the COC, Solicitor General Tushar Mehta argued against the NCLT judgment of May 19th, 2019. He added that neither the NCLT nor the COC has the authority to issue such an order.

Section 29A of IBC, 2016 states that “A person shall not be eligible to submit a resolution plan if such person, or any other person acting jointly or in concert with such person” Section 29A also prohibits a promoter who is classified as a non-performing asset in the Company. Dr. Abhishek Manu Singhvi, Sr. 

Advocate for the Resolution applicant also contended that the proposal by  Piramal Capital and Housing Finance Ltd. was approved by CoC and RBI also showed no objection. The counsel for Wadhawan informed the court that the underlying goal of Wadhawan’s settlement offer was to maximize the value that creditors would get.

Judgment

The NCLAT decided that the case needed to be heard and stayed the NCLT ruling, but added that the appellant’s pending status would not prevent the NCLT from ruling on Piramal Capital’s offer for DHFL. The Case next will be taken on 25th June 2020.

 Analysis

  • A promoter cannot make a settlement offer in an insolvency case, according to Section 29A of the IBC. So the settlement offer presented by Mr. Wadhawan even though to maximize profits is against Section 29A. But in the past NCLAT has turned over the decision of NCLT involving section 29A in the case of Sterling Biotech’s case.
  • In the said case a settlement offer by promoters was accepted by the COC and Insolvency proceedings can be withdrawn at any stage as long as 90 percent of the COC gives its approval to voters. This was introduced in the newly added section 12A of IBC, 2016.
  • The Court also directed the NCLT to decide “at the earliest” the application filed by the administrator.
  • The NCLAT also highlighted that the creditors should be given more time and they did not appreciate the hurry imposed on the Administrator and the COC to accept the 2nd settlement offer.

 


Tags: corporate governance failure, dhfl, dewan housing finance corporation, dhfl housing finance, dewan housing, dhfl insolvency case, dewan housing finance corporation ltd, dewan housing finance dhfl, dhfl insolvency, national company law appellate tribunal, dewan housing finance

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