LetsComply

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Momota Bhattacharya

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Ashish Kumar

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Tejaswinee Roychowdhury

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Geetanjali Singh

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Heena Jain

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Heena Taneja

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Divya Kathuria

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Nikita Panesar

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Siddharth Gosain

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Guncha Sharma

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Shreyan Acharya

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

J. Priyadarshini

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Sangram Jai Singh

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Annuk Ramesh

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Onkar Johar

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Himanshu Chandra

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Jahnavi K. Laungani

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Vanya Chhabra

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Aman Vashisth

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Pallavi Tiwari

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Payal Kalhan

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Kanchan Yadav

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Pragati Dwivedi

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

M. Tanvi

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Anusua Bose

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Shreyasi Bhattacharya

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Haramrit Kaur Rao

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Sucharita Ghosh

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Afzal Badr Khan

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Anindita Bhattacharjee

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Ashish Mishra

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Sanam Hayat

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Mahvish Fatma

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

C. Ramya

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Chandan Kumar

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Aakriti Saxena

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Swatilekha Chakraborty

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Akash Vijay Wargiya

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

HemRaj Singh

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Neha Sawal

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Ayush Sariyar

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Unnati Vijay

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Abhinav Gaur

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Suparno Saha

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Arohi badsha

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Tarun Paul Singh

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Priyasha Gour

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Divyaish Srivastava

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Vivek Jain

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Sarthak Malhotra

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Sudhanshu Chandra

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Gunjan Bhagchandani

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Ayush Sariyar

Designation: Author at LetsComply Date of Joining: June 01 , 2016 Alma Mater : Institute of Law, Nirma University Location: Ahmedabad Contact info: pragati@letscomply.com Website: www.letscomply.com What She says~ I am a final year law student. I will like to see myself working around Banking and Finance and Corporate Commercial related matters by the year 2017. I believe that writing on current affairs helps me to stay updated, develop an edge over my peers and enhances my research skills.

Subject Matter: Enforcement of the regulatory framework in relation to Collective Investment Scheme (CIS).

Facts of the case: The Respondents in the instant matter, Mr. Gaurav Varshney and Vinod Kumar Varshney incorporated a company, i.e. M/s. Gaurav Agrigenetics Ltd., a company registered under the provisions of the Companies Act. The two respondents are the directors of the M/s. Gaurav Agrigenetics Ltd. The company was operating collective investment schemes and had raised an amount of Rs.14,63,279/- (Rupees fourteen lakhs sixty-three thousand two hundred seventy-nine only) from the general public. Collective Investment Scheme or CIS is a mechanism where investors invest their funds to derive some return on investment. The funds in turn are used for purposes of the scheme. The arrangement is regulated by the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (“CIS Regulations”) and Securities and Exchange Board of India Act, 1992 (“SEBI Act”).

The matter in dispute in the instant case is in the context of section 12(1B) of the Securities and Exchange Board of India Act, 1992 (the “SEBI Act”). The provision states that no person shall carry out a CIS unless he or she obtains a certificate of registration from the Securities and Exchange Board of India (“SEBI”) as provided in the regulations. The regulations which were provided as a method of obtaining the registration certificate came into effect from October 15, 1999 in the form of the SEBI (Collective Investment Schemes) Regulations, 1999 (the “CIS Regulations”).

Issue Involved:  The legal issue involved was whether by carrying out CIS activity during the period when section 12(1B) which restrains such activity without registration was in existence but not the CIS Regulations that deals with the procedure to obtain the registration certificate, the directors can be held liable for breach and can be subjected to criminal action or not.

Contention of the Appellant: The primary contention of SEBI, i.e. the appellant was that the High Court, while quashing the criminal complaint against the Varshneys’ erred in interpreting the bar created by Section 12(1B) of the SEBI Act. It was submitted on behalf of the appellant, that the bar is in existence from the date the main provision, i.e. the date section 12(1B) came into effect (25.1.1995). It was contended, that the bar put a restriction on everyone, from sponsoring or carrying on any collective investment activity, without a certificate of registration from ‘the Board’ and any such act which is done in violation of the provision stands forbidden. The appellant submitted that the collective investment schemes without the registration certificate were permissible to be conducted by only those who started it prior to the commencement of the Securities Law (Amendment) Act, 1995. Only such schemes can be allowed to operate under the proviso of section 12(1B).

Contention of the Respondents: The simple contention advanced at the hands of the Respondents was that the bar of obtaining a registration certificate for the purposes of collective investment schemes that operate post January 25, 1995 could come into existence only after the Collective Investment Regulations are brought into force, i.e. from October 15, 1999. It was also submitted on their behalf that both the directors severed their relationship from the companies in 1998 by submitting Form-32 with the Registrar of Companies. Hence, they cannot be subjected to the criminal complaint initiated by SEBI.

Judgement: The Supreme Court interpreted section 12(1B) of the SEBI Act, which reads as:

“No person shall sponsor or cause to be sponsored or carry on or cause to be carried on any venture capital funds or collective investment scheme including mutual funds, unless he obtains a certificate of registration from the Board in accordance with the regulations.

Provided that any person sponsoring or cause to be sponsored, carrying or causing to be carried on any venture capital funds or collective investment scheme operating in the securities market immediately before the commencement of the Securities Laws (Amendment) Act, 1995 for which no certificate of registration was required prior to such commencement, may continue to operate till such time regulations are made under clause (d) of sub-section (2) of section 30.”

The Supreme Court while analysing the provision bifurcated the provision into two parts. Firstly, the main provision that deals with the non-proviso category of persons who did not commence their activity before January 25, 1995. The provision mandated the presence of registration certificate if any activity pertaining to CIS is started after January 25, 1995. The second part of the provision that is the proviso deal with the persons who started the CIS activity before January 25, 1995 and hence, it establishes the regulations for any kind of existing activity.

While deciding on the legal question about the bar imposed by section 12(1B), the court held that the bar against commencing CIS activity without registration would operate with effect from the date that the statutory provision, i.e. section 12(1B) came into force and not only when the regulations were notified. The Court observed that operating any kind of CIS activity after January 25, 1995 without the registration certification is completely forbidden by virtue of section 12(1B).

Therefore, the legal question was answered in favour of the appellant; but the Supreme Court upheld the decision of the High Court of quashing the criminal complaint against the Varshneys’ on procedural grounds. This is because of the fact that SEBI’s complaint was made under the proviso category which deals with the persons who are already operating a CIS activity prior to 25.01.1995. However, the case of the Varshneys’ falls under the purview of the main provision because they commenced the CIS activity after 25.01.1995. The procedural question was therefore held in favour of the Respondents because SEBI prosecuted the Respondents under the wrong category.

Analysis : The Way Forward

With regard to the substantive question of law involved, the decision affects the class of persons on whom a restriction is imposed in the perusal of any kind of commercial activity by virtue of licensing or registration requirements. Since these licensing and registration requirements are also to be provided by the regulatory bodies, it was incumbent on them to enact the procedural requirements because conducting any kind of commercial activity stands forbidden by the prescribed legislation even in the absence of the requirements. Like in the instant matter, it took three years for SEBI to come up with the procedure of obtaining the registration certificate; in such scenarios the parties are at gross disadvantage because they are required to abstain from engaging in any kind of CIS activity in the interim period. In the context of the procedural requirement, it mandates the regulators to be specific and correct with the category under which they file a case and against which they allege the violation to have taken place. The entire case of the prosecution can be subjected to dismissal on account of proceeding against the wrong legal provision.

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When a company starts incurring losses, the company becomes overcapitalized because of the presence of useless intangible assets and remaining debit balance in the profit and loss account. This brings the need of reconstruction that stands for reorganisation of the assets of the company. What usually done in a reconstruction process is that the liabilities are reassessed and the value of the paid-up shares is brought down by altering/varying the various rights that are attached to each of the classes of the paid-up capital shareholders. The entire capital of the company is internally re-organised, and this internal reconstruction is done without liquidating the company and forming a new one.

internal-reconstruction_letscomplyTherefore, in the process of internal reconstruction, only the rights of the shareholders and creditors are changed with certain reduction of capital and the rights/claims of the debenture-holders are kept outside the purview of the procedure of internal reconstruction. The process of external reconstruction is governed by the process of ‘amalgamation in the nature of merger’ under the Companies Act, 2013. In the process of external reconstruction, a new company is formed to take over the liquidated company and the newly formed company gets a fresh share capital without any reduction in the share capital.

Amalgamation/Merger under the Companies Act, 2013

Mechanism of Approval

The Companies Act, 2013 deals with the provisions of Compromises, Arrangements and Amalgamations under Chapter XV of the Act. Under the Act, the words “mergers” and “amalgamation” have been used interchangeably. In the process of amalgamation that happens in pursuance of the Companies Act, 2013; the entire undertaking of the company comprising of property, assets and liabilities are transferred/absorbed by an existing or a new company. The Act establishes National Company Law Tribunal which is enshrined with the powers to sanction the scheme of merger. The lenders of both the transferor and transferee must approve the scheme which is followed by an approval of the Board of directors. In case of listed companies, it becomes mandatory on part of the company to take the approval of the stock exchange followed by the issuance of a public notification.

The Companies Act, 1956 mandated the consent of shareholders and creditors, whereas the Companies Act, 2013 requires service of the notice of the merger along with documents inclusive of the scheme and the valuation report not only upon the shareholders and creditors, but also various regulators including the Ministry of Corporate Affairs, Reserve Bank of India, Competition Commission of India, Stock Exchanges, Income Tax authorities and other sector regulators or authorities which are likely to be effected by the merger. The valuation report should be compulsorily sent along with the notice to each of the shareholders for ready access.

Raising Objection to the Proposed Scheme

The stakeholders including persons holding not less than 10% of the shareholding or having outstanding debt not less than 5% of total outstanding debt have been given the right to object the scheme. The Companies Act, 1956 mandated the physical presence of the creditor/shareholder in the meetings or a proxy for the procedure of raising any kind of objection to the scheme. The Companies Act, 2013 however provides the right to pose any kind of objection through postal ballot which gives greater participation rights to the creditors or the shareholders.

Cross-border Mergers and Mergers of Small Companies

The Companies Act, 2013 categorically deals with cross-border mergers and mergers of small companies. Under the 2013 Act, cross border mergers are permissible between an Indian company and any other foreign company which is located within a jurisdiction that is notified by the Central Government in consultation with the Reserve Bank of India (RBI). The scheme of such merger is also subjected to the approval of the RBI. Such mergers also provides for exit mechanism of the shareholders who do not want to be a part of the merged entity, by facilitating the payment in cash or depository receipts.

The small companies have also been provided with a fast track mechanism under the Companies Act, 2013 in which the consent of the shareholders has 90% of the shareholding in the company and creditors having 9/10th of the debt in the company is required to be taken. The scheme also needs to be approved by the Regional Director, Ministry of Corporate Affairs and the tribunal’s approval is not necessary for such mergers. The merging entities in such instances are not required to file documents, serve notice to various authorities, provide auditor’s certificate for compliance, etc. [1] However, if the Regional Director considers that such merger is not in the interest of the shareholder, he may request the tribunal to follow the procedure of normal merger instead of the fast-track procedure. This kind of fast-track procedure is also applicable to a holding company with a wholly owned subsidiary.

Contravention of the Provision

The Companies Act, 2013 introduces stringent and separate penal provisions on the companies that contravene the provision of merger and also makes the officer who is responsible for the merger liable for the violation of the provision of merger. It imposes a minimum fine of Rs. 1,00,000/- which can be extended to Rs. 25,00,000/- on the companies. The officer-in-charge who is responsible for the violation can also be subjected to the fine of Rs. 1,00,000/- that can be extended to Rs. 3,00,000/- and an imprisonment of 1 year. Such penal provisions, however, are not applicable on small companies or holding companies that are merging with the wholly-owned subsidiaries.

Conclusion

The Companies Act, 2013 has introduced necessary procedural requirements for an effective implementation of the scheme of mergers, amalgamation and restructuring. The basic framework as that of Companies Act, 1956 has been retained; however the changes incorporated under the 2013 Act has tried to make the entire process smooth and transparent. While, it takes within its purview a wide range of stakeholders’ interest by ensuring greater participation, it also ensures a mechanism to avoid frivolous objections by giving the right to pose objection only to those who have substantial interest in the company. What is however required is to align such provisions in necessary consonance with other regulatory frameworks like the Income-Tax Act and foreign exchange laws. For example, the Companies Act, 2013 facilitates cross-border mergers but the Income-Tax Act grants exemption only to the Indian Companies and does recognise the right of the foreign transferee company to claim exemptions for the purposes of mergers and restructuring.


Endnote

[1] Section 233 of the Companies Act, 2013

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The Goods and Service Tax is the biggest indirect tax reform in India since 1947. The Constitution (One-Hundred and Twenty-Second) Amendment bill, 2014 aims to bring a change in the Constitution to facilitate the introduction of goods and service tax. In the words of the Finance Minister, Mr. Arun Jaitley, the GST bill will lead to the economic integration of the country.[1] The main objective of GST is to transform the country into a uniform market by breaking the current fiscal barriers between states. Thus, the GST is expected to facilitate a uniform tax on goods and services.

The real estate sector accounts for about 5% of India’s Gross Development Product (GDP). The real estate sector in India is subjected to the levy of multiple indirect taxes like VAT, service tax, excise, and stamp duty, etc. The GST will be an effective substitute of all the multiple taxes.

The real estate transactions have been categorized into the following three categories:[2]

The States impose taxes on the value of goods and materials and the Centre imposes taxation on the value of services. This splitting up of the taxation regime between Centre and States often leads to the problem of double taxation. Moreover, the judiciary’s interpretation of several cases related to taxation has also added up to the problems that are faced by the real estate sector. In the case of L&T[3], the Supreme Court held that all building contracts should be treated in the nature of work contracts, and hence, should be subjected to sales tax. Again in the Coastal Gujarat Power Limited case, the Supreme Court held even if a consortium is involved in a series of real estate transactions, each of the individual transactions is subjected to stamp duty. [4] Therefore, when a builder or a developer is involved in the construction of a building, he incurs various costs and a liability to pay several indirect taxes. These taxes collectively have a substantial impact on the prices of flats which the buyers pay.

How the Real Estate sector will benefit from GST?

  • Doing away with the parallel existence of VAT and service tax:

In the case of Imagic Creative Pvt Ltd vs Commissioner of Commercial Taxes[5], the court, while explaining the divide between VAT and service tax, clearly explained that hypothetically if 60% is paid as VAT on a transaction, then the same transaction will be subjected to the levy of 40% of service tax. However, this does not really work in such an easy manner because both the VAT and service tax exist in an unsynchronised manner in the real estate sector, creating the problem of double taxation. However, with the coming of GST in picture; taxes will be imposed on the basis of Revenue Neutral Rate (RNR) as per the Central Goods and Service Tax (CGST) or State Goods and Service Tax. (SGST)

  • It will increase the credit flow

Any real estate transaction is not benefitted in particular by the CENVAT credit flow in the present regime. This is because of the several restrictions that are imposed on a real estate transaction when it comes to the utilisation of CENVAT credit. If GST is successfully implemented and free flow of credit is encouraged; it will significantly reduce the cost for the developer as well as the customer.

Analysing the impact of GST on the stakeholders involved

In this section, we will attempt to analyse the impact of GST on the stakeholders involved in any real estate transaction:

  • Buyer:  

Under the GST bill, any construction activity or work contracts or pre completion sale have been covered under the purview of ‘supply of services’. If this is the case, then the tax will be levied on contractual base, doing away the overlapping of VAT and service tax on a certain portion of such contracts like under the existing regime. This will reduce the tax costs.

As has been discussed before that this system will encourage free flow of credits; several indirect taxes like excise duty, octroi, CST, entry tax, which are paid on the procurement of construction materials, will no longer exist as an additional cost on the developer. It will instead be available as a credit for the contractor and developer at the time of procurement stage. This will also reduce the contract price and the resultant impact will be on the buyers because it will substantially reduce the overall prices.

  •  Contractor/Developer:

Under the present taxation regime, if a developer constructs a housing complex and gives the apartments on rent, then the developer cannot set off the CENVAT credit which is available on the construction against the service tax which the developer is supposed to pay on the rental income. However, in the present GST bill; the CENVAT credit can be availed as GST if free flow of credit has been encouraged.

On the other hand, imposition of high GST rates like 25-27% will substantially reduce the incremental benefits of the free flow of credit. The stamp duty rate will also be levied the way it is there in the current regime, irrespective of the implementation of the GST bill.

  • Special Economic Zones (SEZs)

Under the present regime, SEZs are given the benefits of duty-free import for the purpose of development and maintenance of SEZ units. [6] They are also exempted from the Minimum Alternate Tax (MAT), central tax, service tax and other taxes levied by the state governments. However, the GST bill is silent on such exemptions and these benefits might not be available as GST will be levied on the procurement of goods. Another interesting feature the GST bill presents is that the amount which is spent on procurement will be eligible for refund; as such it will have a direct influence on the working capital requirements. The bill, however, does not clearly establish if the cost which is spent setting-up the SEZ units, will be eligible for refund or not. The GST structure will also significantly impact the interests of the local suppliers of the SEZs because it is yet to be determined how the suppliers can make representation to avail the benefits of the GST credit.

  • State Governments

The GST, in all probabilities, will be a simple law to administer because under the present taxation regime, the construction which is undertaken by the contractor and the sale of the units before their completion by the developer, are subjected to the treatment of separate taxations. GST will be applicable on these transaction along with free flow of credit. Along with the simple administration of the taxation regime, this will also lead to an increase in revenue from this sector without the sector being subjected to double taxation. Moreover, the revenue from stamp duty and registration charges will continue as the present GST system does not subsume them. The government is likely to benefit because it will incur revenue from the real estate transaction as a whole, be it rent on properties or assignment of rights.

CONCLUSION

The discussion above clearly establishes that the implementation of GST will have a mixed impact on the various stakeholders involved therein. The present GST bill leaves certain issues unattended like the impact of the imposition of high revenue neutral rates of 25-27%. Again, if free flow of credit is not encouraged in the real estate sector, then the benefit of the CENVAT credit cannot be availed by the developer or the contractor, and on the other hand, the high RNR rate will adversely impact the buyers as well. The GST structure does not include in its purview the value of divided/undivided interest in land. Therefore, the process of determination of the ‘valuation of land’ will definitely have a significant impact on the real estate sector.


Endnotes

[1] http://indianexpress.com/article/business/business-others/gst-will-lead-to-economic-integration-of-india-arun-jaitley/ ; Retrieved  on August 19, 2016.

[2] Notification No. 26/2012

[3] 2013-TIOL-46-SC-CT-LB

[4] Chief Controlling Revenue Authority v Coastal Gujarat Power Limited, Civil Appeal No. 6054 of 2015 arising out of S.L.P. (C) No. 32319 of 2013

[5] 2008-TIOL-04-SC-VAT

[6]Under Section 10AA of the Income Tax Act, SEZs are given 100 per cent tax exemption for the first five years, 50 per cent for the next five years and 50 per cent of the ploughed-back export profit for the next five years.

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Introduction: ESOP and Sweat Equity as a means to incentivise employees

Companies, in their business structures, possess certain distinct features like   offering stock options or sweat equity to their employees. These methods serve as novel ways to incentivise and retain employees as they are easier to administer in the case of a company and employees exhibit greater acceptability of such incentives in a company than in other business structures.

The start-ups which are in the early stages of their businesses lack the ability to pay competitive and high salaries to their employees which established businesses or large corporations can afford to pay, although the former requires good share of human capital because of them facing resource constraints,  and unstable cash flow. Start-ups  and other established companies often require motivated employees who can over-perform and exceed their expectations. Therefore, with an aim to retain and incentivise employees, companies come up with rewarding performance bonuses, revenue shares, stock options or a stake in the company.

A revenue or profit-sharing model can either be negotiated or specified in an employment consultancy agreement between employer and employee. .  However, mechanisms like ESOPs, stock purchase schemes and sweat equity schemes are extensively regulated.

Employee Stock Option Plans (ESOPs)

 ESOP is an option which is given to whole-time directors, officers or employees of a company which gives them the right to purchase or subscribe to the securities offered by the company at a predetermined price on a future date.[1] Stock options have developed and become popular as a very well-known method used by the companies, especially in the technology sector, to incentivise and reward the employees to enhance their performance.

Example: Infosys Technologies Ltd., the first company to issue ESOP in India, issued 1,22,200 shares in pursuance of an ESOP scheme in 1994. It discontinued the scheme in 2004 due to several major problems. Recently, in July 2016, Infosys relaunched its employee stock option programme after a gap of 13 years.

Scheme helps both the employer and the employee

As has already been discussed, ESOP is used to incentivise employee to perform better. The structure of ESOP requires the employee to stay over a certain period of time to reap the benefits. This mechanism works in a way that it creates an interest of the employee framework in particular; in the success of the company. The better the company performs; the greater will be the value of his ESOPs. The employees usually work at a lesser salary compared to market rates, especially when they are involved in start-ups; the ESOP scheme encourages employees to share the risk involved in the businesses in the early stage of their development which rewards the former handsomely in the long run.

ESOP scheme helps in risk sharing

When an employee exercises the option to buy shares under the ESOP scheme; he is required to pay a pre-determined price for the shares to the company. The market value of the shares should exceed the price that is paid by the employee for making profits. Therefore, if the company does not perform well and the market value of the shares is less than the price that has been paid by the employee; the ESOP scheme is of no use then.

Legislative Framework

Grant of stock options in listed companies is governed by the SEBI (Share Based Employees Benefits Regulations, 2014 from October 28, 2014). Earlier the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999 used to govern the grant of stocks in listed companies.

In case of private unlisted companies; there were no specific rules which were used to govern ESOP by private companies and unlisted public companies. The amendment brought to the Companies Act in 2014 exhibited a provision that controls the issuance of employee stock options by private and unlisted public companies.[2]

Sweat Equity Shares

Why?: A way to incentivise employees who contribute know-how or technical expertise particularly in the nature of intellectual property.

Legislative Framework: The issue of sweat equity shares to the employees is governed by section 79-A of the Companies Act, 1956 or Section 54 of the Companies Act, 2013.

Nature: They are issued by the company to the employees or directors (including promoters) for a discount or non-cash consideration.

It is important for us to understand the distinction between ESOPs and Sweat Equity Shares; the objectives of both of which is to act as a means to retain employees.

1) Nature

While sweaty equity shares are issued as a consideration for creation or transfer of IPRs to the company, ESOPs are issued as incentive or retention plan to the employees.

2) Whom are they issued to?

The Sweat equity shares are issued to all kinds of employees who are associated with the Company; however the ESOPs are issued to all class of employees except the promoters or anyone belonging to the promoter group.

3) Lock-in period

While Sweat equity shares have a lock in period of three years which signifies that the sweat equity shares cannot be cashed out before the expiry of three years, ESOP does not have a lock-in period in specific. But the company shall have the freedom to specify the lock-in period for the shares issued pursuant to exercise of option.

4) Issued against:

While sweat equity shares can be issued for non-cash consideration, ESOPs are issued at a pre-determined price with a right of conversion.

5) To what extent?

Only 15% of the existing paid-up equity share capital in a year or shares of the value of 5 crore whichever is higher can be issued as sweat equity shares by the company, however there is no such restriction in case of ESOPs.


Endnotes

[1] Section 2(15A) of the Companies Act ; SEBI (Employee Stock Option Scheme and Employee Stock Purchase     Scheme) Guidelines, 1999 (SEBI Guidelines).

[2] Rule 12 of Companies (Share Capital and Debentures) Rules, 2014

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Introduction:

The International Product Life Cycle Theory that discusses the stages which a product goes through in a market suggests that the life of a product can be circumscribed within the following four stages: Introduction, growth, maturity and decline. A company is a going concern. It is a voluntary association where the individuals sharing common purpose and common goals unite, usually to make profits. Like any product which is introduced in the market, a company is first incorporated; it attains growth and eventually reaches maturity. However, there are times when the going concern stops to flourish because of some or the other reasons. It is then that the business needs to be shut down. This closing down of business is the last stage in the life of a company and is termed as ‘winding up’. It is then that the existence of the company is dissolved and all the assets of the company are utilised for paying off the creditors, debtors and to settle other dues. The Companies Act, 2013 states that the procedure for winding up can either be initiated by the tribunal or can be a voluntary process.[1]

  1. Voluntary Winding up:

The voluntary winding up as the term itself suggests; takes place with the mutual decision of the members of the company with certain conditions[2] attached to it which are:

  • The company passes a special resolution for winding up; or
  • The company in its general meeting passes a resolution after the expiry of the duration specified in its Articles of Association or on the occurrence of any of the events as has been mentioned in the Articles for the purpose of dissolution of the Company.
Voluntary Winding Up

Voluntary Winding Up

The following stages[3] are involved in the voluntary winding up of the Company:

  • A Board Meeting is conducted where the two directors pass a declaration that the companies have no debt and if there is any; that can be paid through the proceeds from the sale of assets of the company and thereby a notice is issued for calling a General Meeting and the notice is accompanied with the proposal for winding up.
  • A General Meeting is then conducted where an ordinary resolution for winding up needs to be passed by ordinary majority and a special resolution needs to be passed by three-fourth majority and a creditor’s meeting is also conducted after passing the resolution. If majority of creditors opine that the winding up is beneficial for all parties, then winding up can be done voluntarily.
  • An application is made for the appointment of official liquidator with the Registrar within ten (10) days of the resolution and the notice of the Resolution needs to be published in the official gazette within 14 days of passing such resolution and advertised in a newspaper.
  • Within 30 days of general meeting, a certified copy of original and special resolution is filed.Thereafter, all the affairs of the company are wound up, and liquidators account are prepared which later and get audited.
  • Next, a general meeting is conducted where the accounts of the company are settled by passing a special resolution, and thereafter, within fifteen (15) days, an application is to be filed in the tribunal for an order of winding up the company.
  • If the tribunal is satisfied that the accounts stand cleared, then an order for dissolution of the company is issued within sixty (60) days of the filing of the application.
  • Next, the liquidator files a copy of the order with the Registrar and a notice of the dissolution of the company is published in the official gazette.
  1. Compulsory Winding Up:

The petition for the compulsory winding up can be presented to the appropriate authority by the company, creditors, any contributor or contributories, Central or State Government or by the registrar or any person authorised by the Central or State Government.[4]

Compulsory Winding Up

Compulsory Winding Up

The stages[5] that are involved in the compulsory winding up are as follows:

  • Statement of affairs of the company needs to be filed with the Registrar and it needs to be certified by a Chartered Accountant.
  • The petition needs to be advertised in both the English and a regional daily newspaper at least 14 days before the date of hearing the petition.
  • The tribunal, after hearing the petition, can either dismiss or pass an interim order or appoint an official liquidator for dealing with the winding up affairs of the company.

Issues in the Existing Framework:

The businesses need speedy and efficient exit so that the creditors can further reinvest in new business endeavours.  However, the process of winding up takes around 8-10 years in India. This is because of the existence of multiple forums like the High Court, Debt Recovery Tribunal and the Board of Industrial and Financial Restructuring; all of which have jurisdiction to take up the matters pertaining to liquidation and winding up of a company. An attempt was made to expedite the process of winding up of companies by setting up the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) by way of the Companies Amendment Act of 2002. It was supposed to replace the multiple forums like the Company Law Board (CLB), the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). However, the same cannot be implemented since the structure faced constitutional challenges and the provisions under the Companies Act, 2013 were not notified.

In Oswal Foods Limited[6], the debtor company had made two references to the BIFR, while a creditor filed a winding up petition in the High Court. In Jeevan Diesels and Electricals v. HSBC[7] the Calcutta High Court considered if a creditor can file a winding up petition in the High Court while another creditor had already initiated an enforcement action in the DRT under the RDDBFI Act. A close reading of the case laws make us understand that the high courts are often caught up in the dilemma of enforcing the rights of the different parties under the conflicting legislations. Moreover, even the creditors lack clarity in the aspect of how and in which order of priority their dues are to be recovered.

Recent Development:

In 2015, the Supreme Court upheld the constitutional validity of the NCLT and NCALT that are in effect  from June 01, 2016, with Hon’ble Justice S.J. Mukhopadhaya, Judge (Retd.), Supreme Court of India as the Chairperson of the NCLAT and Hon’ble Justice M.M.Kumar, Judge (Retd.) as the President of the NCLT. Therefore, the establishment of NCLT and NCLAT might result in an efficient implementation of the winding up provisions. This will definitely reduce the multiplicity in the number of cases in multiple forums. These institutions will work as specialised quasi-judicial bodies and will reduce the pendency of winding-up cases, shorten the winding-up process, and avoid multiplicity and levels of litigation before high courts, the Company Law Board and the Board for Industrial and Financial Reconstruction. An efficient exit and closure mechanism will not only help the creditors in easy recovery of their dues but will encourage them to make new investments resulting in an increase in the flow of capital across the economy.


Endnotes

[1] The Companies Act, 2013; S. 270

[2] The Companies Act, S. 304

[3] The Companies Act, S.306-318

[4] The Companies Act, 2013; S. 272

[5] The Companies Act, S.272-274

[6] In re: Oswal Foods Limited, [2008]145CompCas259(All), decided on 16.11.2006

[7] APO 254 of 2014 and CP 845 of 2013, decided on 02.12.2014

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