22 September 2020

Corporate Amicus: July 2020


Arbitrability of disputes post execution of 'unconditional discharge vouchers' – An analysis
By Dinesh Babu Eedi and Manasa Tantravahi

One of the common defenses taken by a party, facing a claim in an arbitration is that the contract has already been discharged by performance, however, it is not uncommon for the claimant to dispute the discharge voucher signed by it and claim that it was executed under fraud, coercion or undue influence. The article in this issue of Corporate Amicus discusses elaborately a recent decision of the Supreme Court where the question before the Court was whether the party had executed the unconditional discharge voucher under coercion, duress or undue influence, thereby, making the dispute arbitrable. According to the authors, the case has re-emphasized the principles and provides some relief to a party that may be compelled to accept a “take it or leave it offer”, particularly, in the current economic situation. If the party is able to demonstrate a prima facie case that the discharge voucher was signed under economic and financial distress, the dispute becomes arbitrable and the party gets an opportunity to raise its claims before the arbitrator...


Notifications and Circulars

  • Government companies – New requirements notified for removal of names
  • Time frame to conduct board meetings through VC/OAVM extended
  • Independent directors – Time limit for inclusion in data bank extended
  • Scheme for relaxation of filing forms related to creation or modification of charges under Companies Act, 2013 introduced
  • Deposit reserve under Section 73(2)(C) of Companies Act, 2013 and Rule 18 of Companies (Share Capital & Debentures) Rules, 2014 – Compliance date extended to 30-09-2020
  • Stamp duty on securities – Collection by specified collecting agents from 01-07-2020
  • Takeover – Acquisition of additional voting rights by promoters – Takeover Regulation amended
  • Pricing guidelines revised for preferential issue of shares – ICDR Regulations amended to provide for optional pricing
  • Operational framework for transactions in defaulted debt securities post maturity date/ redemption date introduced
  • MSMEs – Classification criteria revised

Ratio decidendi

  • Arbitration – Test for amendment to grounds in a petition under Section 34 is whether the proposed grounds would necessitate filing of a fresh application for setting aside of the Award – Calcutta High Court
  • Arbitration - Delhi High Court issues series of directions to avoid multiplicity of arbitration proceedings

News Nuggets

  • Insolvency – Threshold for initiating CIRP – Notification dated 24-03-2020 increasing threshold, held retrospective
  • Passing of ordinary and special resolutions through VC or audio visual means – Framework extended till 30-09-2020
  • Standard Operating Procedure in the cases of Trading Member /Clearing Member leading to default
  • RBI – Oversight Framework for Financial Market Infrastructures and Retail Payment Systems
  • Loans on exorbitant interest rates covered under Extortionate Credit Transactions
  • Liquidation – Relinquishment of security interest – Decision of majority secured creditors binding on dissenting secured creditor
  • CIRP cost when to be borne by Committee of Creditors
  • Insolvency – Contract termination notice by service recipient after initiation of CIRP against service provider, not sustainable
  • Statutory dues cannot be claimed from acquiring company if not presented before approval of resolution plan
  • Reference to arbitration in insolvency petition – NCLT allows interim application
  • Pension and other post-retirement benefits are sacrosanct rights, plea of lack of funds is legally untenable
  • Chairman/Director of company cannot be prosecuted under Section 138/141 of Negotiable Instruments Act, 1881 without impleading the company as accused

July, 2020/Issue-106 July, 2020/Issue-106

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