Amazon’s tiff with Future-Reliance Merger-
In the year 2019, Amazon buys 49% stake in the Future Coupon (Promotor Entity of Future Group) for Rs. 1431 crores. Amazon had been granted a call option giving it the option to acquire all or part of the promoters’ shareholding in the Future Group, in 3-10 years.
In the year August 2020, Reliance Retail acquired Retail, Wholesale, Logistics and Warehousing Operations of the Future Group for Rs. 24,713 crores.
To this, Amazon first sent a legal notice explaining how the right to first refusal was not given to the Company and breaches the terms of their contract. This was furthered in the Singapore Court, which passed an interim order on the Future-Reliance Deal.
Future Group then filed a caveat petition in the Delhi High Court in anticipation that Amazon may move to Indian Courts in order to enforce the interim order passed by the Singapore Court and that Future Group should be given the first chance to present the case. This was rejected by the Delhi High Court and the Court held that Amazon cannot be barred from writing to the regulators. Singapore Court’s is valid under India’s arbitration law.
Tata Sons v. Cyrus Mistry-
NCLAT’s order with respect to the dispute was challenged in December 2020 by both the parties which ordered that Cyrus Mistry should be reinstated as the Chairperson of Tata Sons Limited and that removal of Mistry was illegal.
Counsels presenting Mr. Mistry held that the actions taken by the Company were completely arbitrary and that Companies Act and AOA was breached. Mr. Harish Salve representing Tata Sons stated that the arguments made by Mistry are completely fictional and hence false.
On 17th December 2020, the Supreme Court reserved its judgment and asked the parties to file written submissions, if any.
In order to hold a person liable u/s 68 of Foreign Exchange Regulation Act, 1973 dealing with offences by companies, the role of the person is to be taken into consideration and not the status or designation the person holds-
In the case of Shailendra Swarup v. The Deputy Director, Enforcement Directorate (27 July 2020), the Supreme Court of India held that “If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person" the section would have said "every Director, Manager or Secretary in a Company is liable"....etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action”.
The IBC Amendment (Second Amendment) Act 2020-
The Act deemed to have come into force on 05 June 2020. The key changes were insertion of new section 10A and suspension of initiation of corporate insolvency resolution process for any default arising on or after 25th March 2020 (keeping in mind the global pandemic and lockdown) for a period of six months or further period, not exceeding one year.
IBC Threshold raised as Rs. 1 crore-
On 24th March 2020, a notification was issued by the Ministry of Corporate Affairs u/s 4 of the Insolvency and Bankruptcy Code, 2016. The notification specified that one crore rupees shall be the minimum amount of default than the earlier specified amount of one lakh rupees. Which meant that no application can be filed against a borrower for default of any value less than one crore rupees. The reason behind the same was to grant relief to various businesses affected by the coronavirus.
Debts in form of third party security to secure loans are not debts within the meaning of Section 5(8) of IBC-
In the case of Anuj Jain v. Axis Bank Limited Etc.(26 February 2020), the Supreme Court of India while dealing with the case of mortgage by a corporate debtor held that a person carrying security interest may fall within the ambit of ‘secured creditors’, yet they cannot come under the ambit of ‘financial creditors’ or ‘financial debt’ within section 5(8) of IBC.
In a matter related to the case of Gitanjali Gems v. Union of India, the SC held that freezing assets u/s 339 of the Companies Act, 2013 can only be exercised against the company in which acts of mismanagement have been alleged-
In the case of Usha Ananthasubramanian v. Union of India (12 February 2020), the Supreme Court of India set aside the order passed by NCLAT and NCLT which froze the assets of Usha Ananthasubramanian, former MD & CEO of Punjab National Bank in case of mismanagement of Gitanjali Gems Ltd. which was operated and run by Nirav Modi.
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