LEGAL MEDIA GROUP

www.legaleraonline.com | January 2021 | Vol. XI | Issue VII | Pages 116 `100 | US﹩ 30| £ 20

Personal Data
Protection Bill
A step in the

Neera Sharma
CEO/CLO, Sistema Smart Technologies Limited
Right
Direction
Industry
Experts’ Dev Bajpai
Executive Director Legal & Corporate Affairs

VIEWPOINT Hindustan Unilever Limited, and

Vice President -Legal, South Asia, Unilever

on Proposed Bill
Pg. 62

Pavan Duggal
Advocate, Supreme Court of India and
President, CYBERLAWS.NET

Anubhav Kapoor
Group Vice President -Legal & Group Rajeev Chopra Vineet Vij
Company Secretary, Cummins India Managing Director - Legal, Accenture Global General Counsel, Tech Mahindra

LEAVING BEHIND 2020
With 2020 in the rearview mirror and 2021 raring to go, we can
finally look forward to some positive actions in the New Year.
In a sign of the times to come, the January edition of Legal Era
Magazine is choc-a-bloc with news and views on some of the
latest happenings and concerns from around the world.
To begin with, the passage of the contentious farm bills that
our farmers have been protesting for quite some time now. It
is felt that the government will have to invite a more holistic
approach with measures to prevent losses to the farming
industry and its subjects while ensuring that they work in
harmony with the states to maintain the revered federal
structure and future precedents attached to the same.
Further, the Personal Data Protection Bill 2019 which the
government now proposes to enact and which has been
referred to a Joint Parliamentary Committee. It is a welcome
step but a regulation that deals with the privacy of individuals
should take effect only after there is enough awareness
and understanding created about it otherwise it could
lead to avoidable consequences. However, given the rapid
external developments including the current controversy
over WHATSAPP’s data-sharing procedures with FACEBOOK,
wherein personal data may be at a higher risk of being
compromised, the need of the hour is to have a workable
regulation in place. Check out our feature on the PDP Bill,
replete with viewpoints from a posse of industry experts.
Another area of discussion is the government’s move to
bring over-the-top (OTT), news and social media platforms
and current affairs available online under the purview of the
Ministry of Information and Broadcasting. While it is imperative
to take steps to regulate the kind of explicit content accessible
online, the matter requires a balanced and comprehensive set
of regulations that fix accountability on these platforms and at
the same time provide sufficient room for creative expression.
Editor’s Note LE
Also read about the International Arbitration Tribunal ruling
that India’s retrospective tax demand breaches the UK-
India bilateral investment protection treaty, with the Indian
government asked to pay `8,000 CRORE in damages to UK
oil giant, CAIRN. Additionally, Legal Era’s first edition of 2021
includes among other interesting reads a wish list for the
Insolvency and Bankruptcy Code (IBC) for 2021; the need for
organizational and employee privacy in the time of work-
from-home; and product liability in Asia given the ASEAN’s
development as a potential trading bloc.
Meanwhile, we’ve already started inviting submissions at
awards@legalera.in for the 10th Edition Indian Legal Awards
2020-21 to be held on 8 March 2021 in Mumbai, India. This year
too, the Awards will Recognize Legal Finesse, Innovation and
Accomplishments during 2020-21 except that the selection
criteria will now include COVID-easing behaviors such as
avoiding layoffs and forced pay cuts, encouraging work
flexibility and team spirit, going beyond the call of duty and
adapting to technology and newer operational models.
The Awards will be preceded by the 10th Annual GENNEXT
Business and Congress 2021 to be held on 6 and 7 March 2021
in Mumbai, India. The two-day congregation will see thought
leaders and policy makers discuss the impact of geopolitics on
business and how organizations can tide over threats and cash
in on opportunities especially against the COVID backdrop.
Last but not the least, with India readying for the first round
of its mega vaccination drive which is expected to cover
300 million citizens by August this year, all eyes are on the
NARENDRA MODI government and how it handles the
immense challenge of producing and distributing the right
quantities of vaccine to immunize such a populous nation from
the COVID menace.
Aakriti Raizada
www.legaleraonline.com | LEGAL | December 2020 3
ERA
 CreditsChairman & Editor-in-Chief
Ashok Kumar Raizada
Founder & Managing Editor Newsletter & Website
Aakriti Raizada Make our newsletter your daily dose of national
Director and international legal news. Our website keeps
Vishal Sharma abreast with all the latest updates you need to
Honorary & Advisory Board know about the legal fraternity.

Justice Dipak Misra Justice Arjan Kumar Dr. Lalit Bhasin Amarjit Singh
Former Chief Justice Sikri President, Chandhiok
Of India Former Judge Society Of Indian Law Firms President Elect
Supreme Court of India Former President of Bar Bar Association Of India
Association Of India

Rafique Dada Janak Dwarkadas Darius Khambata

Senior Advocate Senior Advocate Senior Advocate
Bombay High Court Bombay High Court Bombay High Court

Consulting Editors
Robert Wyld
Partner, Johnson Winter & Slattery, Sydney, Australia
Geoffrey D. Creighton www.legaleraonline.com
Chief Executive Officer, In-House Counsel Worldwide, BlackRock Canada IRC
Assistant Editor
Madhavi Gokhlay "Legal Era aims at Initiating, Integrating
& Innovating ways and means to establish
Editorial Team
Aditi Shrivastava, Jeffrey Christopher, Bobby Anthony, Kavita Krishnan
thought-provoking seminars with a vision
to proliferate knowledge and optimize
Design Desk
business opportunities."
Urmila S More, Swapna P Jadhav
-Aakriti Raizada
Advertising & Sales Founder & Managing Editor
Santosh Chauhan, Shruti Singh, Krishna Kumar Jaiswal
Circulation & Subscription
+91 8879635575 | subscription@legalera.in Subscription Service
Printed & Published By
Aakriti Raizada on behalf of ARAYANNA TECHNO-LEGAL SOLUTIONS PVT. LTD. Subscribe to Legal Era Magazine
E-mail: info@legalera.in
Published At Tel: +91 22 2600 3300
301-302, 3rd Floor, Om Palace, Dr Ambedkar Road Junction,
Bandra West, Mumbai - 400 050, India Post: Legal Era
301-302, 3rd Floor, Om Palace,
Managing Editor: Aakriti Raizada
Dr. Ambedkar Road Junction, Bandra West,
Printed At
Mumbai - 400 050, India
Mumbai, Maharashtra, India
All India Distributors Subscription for 2 yrs (24 issues)
CNA Distributors
USD 720
4-E/15, Jhandewalan Extn. (2nd Floor), New Delhi - 110 055
A. H. Wheelers & Co Pvt. Ltd. INR 2832
23, Lal Bahadur Shastri Marg, Allahabad - 211 001, UP Pound 480

For Advertisement Queries, Contact

E-mail: info@legalera.in, marcom@legalera.in
+91 9967255222, +91 8879694922, +91 -22 -2600 3300
Corp. Office
301-302, 3rd Floor, Om Palace, Dr. Ambedkar Road Junction,
Bandra West, Mumbai - 400 050, India LEGAL MEDIA GROUP
BY THE PEOPLE. FOR THE PEOPLE. OF THE PEOPLE.

Printed & Published by Aakriti Raizada for and on behalf of ARAYANNA Techno-legal Solutions Pvt. Ltd. Legal Media Group
Printed at Repro India Limited, 11th Floor, Sun Paradise Business Plaza, B Wing, Senapati Bapat Marg,
Lower Parel, Mumbai - 400 013, Maharashtra, India. Editor Aakriti Raizada. The Publisher regrets that he/ January 2021 | Volume XI | Issue VII
she cannot accept liability for errors & omissions contained in this publication, howsoever caused. The
opinion & views contained in this publication are not necessarily of the publisher. Readers are advised First published in March 2010
to seek specialist advise before acting on the information contained in the publication which is provided Legal Era aims to provide “in the trenches” editorial
for general use & may not be appropriate for the readers’ particular circumstances. The ownership that gives Common Man, Law Students, Lawyers,
of trademarks is acknowledged. No part of this publication or any part of the contents thereof may Business Leaders and Corporate Managements a
be reproduced, stored in a retrieval system or transmitted in any form without the permission of the detailed outlook of the current legal scenario.
publisher in writing.
Title Registration No. MAHE NG129 82/13/1/2011-TC RNI No. MAHENG/2011/46887

4 January 2021 | | www.legaleraonline.com

10th ANNUAL

BUSINESS & LAW CONGRESS

2021
2021 DRIVES US INTO THE WORLD OF
Artificial Intelligence, Machine Learning, Innovation & Technology

Meet The World’s Most Elite Business Lawyers To

Understand How To Drive
BUSINESS GROWTH
In A New Challenging World

Post Pandemic How To Keep Business Moving?

What Are The Regulatory Challenges?
Rise Of Virtual Courts
Understand The Cost Effective Method Of Resolving Disputes

FOR MORE ENQUIRIES, PLEASE CALL:

+91 8879694922 | +91 9321889459 | Email: marcom@legalera.in
QUICK GLANCE
Vodafone
and India’s Offshore
Indirect Transfer Tax
The saga continues

46

62 Personal Data
Protection Bill
ITO
54
DECLINE

ANSWER

A step in the

Right
Direction

International
Financial Services Centre 74
Opportunities
for
Aviation
Financing
6 January 2021 | | www.legaleraonline.com
 QUICK GLANCE
Product
Liability Agricultural
in ASIA POLITICS
by Politicians
80 BUT WHAT’S THE LAW?

86
Privacy
CHALLENGES Litigation
funding
IN THE NEW NORMAL

90
2.0
94
DID CORRUPTION CAUSE THE
COVID-19 98
OUTBREAK? A NEW YEAR’S

102 WISHLIST
FOR THE IBC

DDE - DIGITAL FUTURE

FOR LOAN DOCUMENTATION 108
www.legaleraonline.com | | January 2021 7
 CONTENTS
46 ZOOM IN
VODAFONE AND INDIA’S OFFSHORE
INDIRECT TRANSFER TAX
THE SAGA CONTINUES

Mukesh Bhutani
Founder & Managing Partner
BMR Legal Advocates

54 ZOOM IN
I DECLINE TO ANSWER

Vinod Chauhan
Associate
Singh and Singh Law Firm LLP

62 COVER STORY PERSONAL DATA PROTECTION BILL A STEP IN THE RIGHT DIRECTION

Dev Bajpai Rajeev Chopra B. Murli Neera Sharma Vineet Vij

Executive Director Legal & Managing Director - General Counsel & CEO/CLO Global General Counsel
Corporate Affairs Legal Company Secretary SISTEMA SMART TECH MAHINDRA
HINDUSTAN UNILEVER ACCENTURE NESTLE INDIA TECHNOLOGIES
LIMITED LIMITED LIMITED
and Vice President -Legal,
South Asia, UNILEVER

Dr. Pavan Duggal Anubhav Kapoor Dhwani Rao Salman Waris Na. Vijayashankar
Advocate, Supreme Group Vice President Head Legal Counsel- IP, Partner and Head TMT Executive Chairman
Court of India and -Legal & Group Company Digital and HR Legal and IP Practice Groups FOUNDATION OF DATA
President Secretary NESTLE INDIA PROTECTION PROFESSIONALS,
TECH LEGIS
CYBERLAWS.NET CUMMINS INDIA LIMITED AND DATA PROTECTION
AND DATA GOVERNANCE
CONSULTANT
8 January 2021 | | www.legaleraonline.com
 74 IN FOCUS
INTERNATIONAL FINANCIAL
SERVICES CENTRE OPPORTUNITIES
FOR AVIATION FINANCING
Anand Shah Rishiraj Baruah
Senior Partner Senior Associate
AZB & Partners Advocates & Solicitors

80 IN FOCUS
PRODUCT LIABILITY
IN ASIA

DAVID GOH BINDU JANARDHANAN

Partner Registered Foreign Lawyer
SQUIRE PATTON BOGGS

86 TAKE ON BOARD
AGRICULTURAL POLITICS BY POLITICIANS
BUT WHAT’S THE LAW?

RAJIV DUTTA
Senior Advocate
The Supreme Court of India

90 LAW & POLICY

PRIVACY CHALLENGES IN THE NEW NORMAL

FERNANDO VICTORIA PEÑA

Chief Legal and Compliance Officer
Teleperformance

www.legaleraonline.com | | January 2021 9

 94 VIEWPOINT
LITIGATION FUNDING 2.0

MICHAEL HARRINGTON IAN CASEWELL

Managing Director and Head, Mumbai Partner and Head, London
MINTZ GROUP

98 VIEWPOINT
DID CORRUPTION CAUSE THE
COVID-19 OUTBREAK?

RONAK D. DESAI
Associate
PAUL HASTINGS LLP

102 INSIGHTS
DDE - DIGITAL FUTURE FOR
LOAN DOCUMENTATION

SIVA S. RAMANN
MD & CEO
NATIONAL E-GOVERNANCE SERVICES LTD.

108 INSIGHTS
A NEW YEAR’S WISHLIST FOR
THE IBC

AASHIT SHAH
Partner
JSA ADVOCATES & SOLICITORS

REGULARS
03 EDITOR’S NOTE 14 TOP STORIES 36 WITHIN THE CIRCLE
12 READERS’ NOTES 20 NATION@GLANCE 114 FUN ‘N’ FROLIC
26 WORLD@GLANCE

10 January 2021 | | www.legaleraonline.com

 “Recognition of Legal Finesse,
Innovation & Accomplishments”
Indian Legal Awards
8th March 2021
2020-21
www.legaleraawards.com

Award Categories
• Up & Rising Law Firm of the Year
• Most Promising Law Firm of the Year
• Aviation Law Firm of the Year
• Private Equity Law Firm of the Year
• Competition & Anti-Trust Law Firm of
the Year
Law Firms’ Best • Shipping & Maritime Law Firm of the
Work in 2020-21 Year
• Banking & Finance Law Firm of the Year
• Tax Law Firm of the Year
• Dispute Resolution Law Firm of the Year
• Media & Entertainment Law Firm of the
Year
• Capital Market Law Firm of the Year
• Corporate Law Firm of the Year
• Intellectual Property Law Firm of the Year
• Litigation Law Firm of the Year
• IT & TMT Law Firm of the Year
• Merger & Acquisition Law Firm of the
Year
• Policy & Regulatory Law Firm of the Year
• Employment Law Firm of the Year
• White Collar Crime Law Firm of the Year
• Mid Size Law Firm of the Year
• Regional Law Firm of the Year
• Law Firm Award for Innovation,
Strategies & Continuous Growth
• Best Indian Law Firm of the Year

Premier League International

• Lifetime Achievement Award • Dispute Resolution Law Firm of the Year
• Legal Excellence Award • International Capital Markets Law Firm of the Year
• Policy of the Year • International Corporate Law Firm of the Year
• Legal Innovation & Legislative Drafting • Banking & Finance Law Firm of the Year
• Legal Icon of the Year • International Law Firm of the Year

• Banking In-House Team of the Year • Insolvency & Restructuring Team of

• Project Finance In-House Team of the
Year
• FMCG In-House Team of the Year
• Pharmaceutical In-House Team of the
Year
• IT In-House Team of the Year
• Telecommunication In-House Team of
the Year
• Compliance In-House Team of the Year
• Insurance In-House Team of the Year
the Year
• Media & Entertainment In-House
Team of the Year
• Asset Management In-House Legal
Team of the Year
• Ecommerce Legal Team of the Year In-House
• Small Size Legal Team of the Year
• Mid Size Legal Team of the Year
• Legal Team of the Year - PSU
• In-House Legal Team for Innovation,
Strategies & Continuous Growth

For Award Submissions, Please Contact:

+91-8879634922 | +91 9321889459 | Email: awards@legalera.in
READERS’NOTES BY THE PEOPLE
FOR THE PEOPLE

Legal Era is a comprehensive legal journal that tracks important legal

developments, educates its readers on contemporary legal subjects which
helps the legal fraternity generally and young lawyers in particular. Legal Era
has been at the forefront of legal journalism and has also been instrumental
in recognizsing the legal fraternity and legal talent. It is a source of
inspiration to young lawyers to excel at what they do.
Dev Bajpai
Executive Director - Legal and Corporate Affairs & Company Secretary
Hindustan Unilever

Legal Era serves a niche audience through its professionally curated

knowledge exchange platform. As a regular contributor to the
magazine, we enjoy reading and sharing the diverse range of topics
the magazine offers. The content is engaging, enriching and makes one
want to learn more.
Manisha Singh
Co-Founder & Partner, LexOrbis

Legal Era is a trusted resource in staying current with market trends, jurisdiction-
specific insight and the latest commentary on today’s headline legal and business
issues. Written in an easily digestible manner, Legal Era’s content is invaluable
to both legal and business professionals. The contributors always include pre-
eminent thought leaders, and the Legal Era editors do a fine job in curating
all content to be relevant, punchy, and thorough. King & Spalding sincerely
appreciates the opportunity to continue to be a part of Legal Era’s success.
Mark Davies
Partner, King & Spalding

Our team found your magazine and its content to be relevant and very
interesting. Congratulations on curating an impressive team of contributors
and providing content that is relevant to today’s practitioners.
I. Bobby Majumder
Esq., Partner, ReedSmith LLP

Legal Era magazine is informative and a useful business tool for those
operating in or with interests in the Indian market. We thoroughly enjoyed
writing an article for the December issue on confidentiality in arbitration in
Singapore and found the process to be timely and straightforward.
Germaine Chia
Senior Associate, Stephenson Harwood LLP

Legal Era provides valuable insights into the Indian legal market.
It highlights the legal topics and developments relevant for Indian
companies to ensure compliance and growth also in the international
markets. It has the right balance between compact information and
ease, which keeps you reading on.
Dr. Timo Karsten
Partner, Osborne Clarke
 LE Top Stories
SUPREME COURT RULES OUT CARTELIZATION BY OLA AND UBER DRIVERS
The Supreme Court has disposed of an Appeal at
the instance of an Informant (Appellant) without
interfering with the observation of the Competition
Commission of India (CCI) and the National Company
Law Appellate Tribunal (NCLAT), wherein it has been
found that Ola and Uber do not facilitate cartelization
or anti-competitive practices between drivers, who are
independent individuals and act independently of each
other, so as to attract the application of section 3 of the
Competition Act, 2002 (Act).
In this case, the Appellant/Informant, by an Information
filed on 13 August 2018, sought that the CCI initiate
an inquiry, under section 26(2) into the alleged anti-
competitive conduct of ANI Technologies Pvt. Ltd.
[Ola], and Uber India Systems Pvt. Ltd., Uber B.V. and
Uber Technologies Inc. (together referred to as Uber),
alleging that they entered into price-fixing agreements
in contravention of section 3(1) read with section 3(3)
(a) of the Act, and engaged in resale price maintenance
in contravention of section 3(1) read with section 3(4)
(e) of the Act.
According to the Informant, the pricing algorithm
used by Ola and Uber artificially manipulates supply
and demand, guaranteeing higher fares to drivers who
would otherwise compete against one another. Co-
operation between drivers, through the Ola and Uber
apps, results in concerted action under section 3(3)(a)
read with section 3(1) of the Act.
Thus, the Informant submitted that the Ola and Uber
apps function akin to a trade association, facilitating the
operation of a cartel. Various other averments,quaprice,
discrimination resale, price maintenance, etc. were also
made, alleging a contravention of section 3(4)(e) of the
Act.
14 January 2021 | | www.legaleraonline.com
The CCI opined that Ola and Uber are not an association
of drivers, rather they act as separate entities from
their respective drivers. In the present situation, a rider
books his/her ride at any given time which is accepted
by an anonymous driver available in the area, and there
is no opportunity for such driver to coordinate its action
with other drivers. This cannot be termed as a cartel
activity/conduct through the Ola/Uber platform and
no case of contravention of the provisions of Section
3 was made out and the matter was accordingly closed
herewith under Section 26(2) of the Act.The Appeal was
also dismissed bythe NCLAT.
The Supreme Court bench of Justices R.F. Nariman, K.M.
Joseph and Krishna Murari observed that when the
CCI performs inquisitorial, as opposed to adjudicatory
functions, the doors of approaching the CCI and the
appellate authority, i.e., the NCLAT, must be kept wide
open in public interest, so as to subserve the high public
purpose of the Act.
The Court stated that the CCI may inquire into any
alleged contravention of the provisions of the Act on
its own motion, as laid down in section 19(1) of the Act.
Further, even while exercising suomotu powers, the
CCI may receive information from any person and not
merely from a person who is aggrieved by the conduct
that is alleged to have occurred.
This also follows from a reading of section 35 of the
Act, in which the earlier expression complainant or
defendant has been substituted by the expression,
person or an enterprise, setting out that the informant
may appear either in person or through one or more
agents, before the CCI to present the information that
he has gathered.It was also held that it was difficult to
agree with the impugned judgment of the NCLAT in
its narrow construction of section 19 of the Act, which
therefore was set aside.
The Court observed that given the context of the Act in
which the CCI and the NCLAT deal with practices which
have an adverse effect on competition in derogation of
the interest of consumers, it is clear that the Act vests
powers in the CCI and enables it to act in the public
interest. This would make it clear that a person aggrieved
must, in the context of the Act, be understood widely
and not be constructed narrowly.
According to the Court, “Further, it is not without
significance that the expressions used in sections 53B
and 53T of the Act are any person, thereby signifying

that all persons who bring to the CCI information of
practices that are contrary to the provisions of the Act,
could be said to be aggrieved by an adverse order of
the CCI in case it refuses to act upon the information
supplied. By way of contrast, section 53N(3) speaks of
making payment to an applicant as compensation for
the loss or damage caused to the applicant as a result of
any contravention of the provisions of Chapter II of the
Act, having been committed by an enterprise.”
The Court further added, “By this sub-section, clearly,
therefore, any person who makes an application for
compensation, under sub-section (1) of section 53N of
the Act, would refer only to persons who have suffered
loss or damage, thereby, qualifying the expression
SC OVERRULES ITS EARLIER ORDER REGARDING ARBITRABILITY IN
LANDLORD-TENANT DISPUTES
The Supreme Court of India has passed an order that
the dispute between the landlord and the tenant under
the Transfer of Property Act, 1882, (TP Act) is arbitrable
except those covered by Rent Control Laws.
An appeal was filed before the Supreme Court of India
(SC) by Vidya Drolia & Ors. (appellants) against Durga
Trading Corporation (respondent) challenging the legal
ratio of the earlier Himangi Enterprises judgment of the
SC.
In Himangi Enterprises vs Kamaljeet Singh Ahluwalia, a
two-Judge bench of the Supreme Court had held that
the dispute between the landlord and the tenant that
is governed by the provisions of the TP Act was not
arbitrable in nature as this would violate public policy.
The SC stated that “Such rights and obligations can only
be adjudicated and enforced by the specified court/
forum, and not through arbitration.”
The appeal filed by Vidya Drolia was referred to a three-
judge Bench of Justices NV Ramana, Sanjiv Khanna and
Krishna Murari. After hearing the parties at length,
the Bench decided that judgment given in Himangi
Enterprises needed a relook.
The Bench relooked two issues - one related to non-
arbitrability of the dispute between the tenant and the
landlord while another was regarding the competent
authority who would decide the dispute between the
two, whether it would be the Court or an arbitrator.
It stated that the first deciding and competent authority
would be the arbitral tribunal who would look into the
Top Stories
any person as being a person who has suffered loss or
damage. Thus, the preliminary objections against the
Informant/Appellant filing Information before the CCI
and filing an appeal before the NCLAT was rejected.”
The judgment of the Supreme Court in the Competition
Commission of India v. Steel Authority of India was
also referred to wherein it was held that the powers
conferred by the legislature upon the Commission
under Sections 27(d) and 31(3) are of a wide magnitude
and of serious ramifications. The Court concluded that
the Commission has the jurisdiction even to direct that
an agreement entered into between the parties shall
stand modified to the extent and in the manner, as may
be specified.
matter and determine the arbitrability of a matter. The
Court would have the power to relook into the decision
of the arbitrator. The SC stated, “The principle of
severability and competence is that the arbitral tribunal
is the preferred first authority to determine and decide
all questions of non-arbitrability. The court has been
conferred the power of “second look” on aspects of
the non-arbitrability post the award in terms of sub-
clauses (i) (ii) or (iv) of Section 34(2)(a) or sub-clause (i)
of Section 34(2)(b) of the Arbitration Act.”
It was concluded that the landlord-tenant disputes
governed by the TP Act are arbitrable in nature. It
further clarified that it is not an action in rem (against
the world) but contains rights in personam (personal
rights) of the particular parties.
The Court passed an award wherein it overruled its
previous judgment given in the matter of Himangi
www.legaleraonline.com | | January 2021 15
 Top Stories
Enterprises and held that the dispute between the
landlord and the tenant is arbitrable in nature. It stated
that the dispute could be executed and enforced as a
decree of a civil court, and there is no bar on arbitration
to decide such disputes.
The court observed that the respondent/defendant has
to establish a prima facie case of non­existence of valid
arbitration agreement, wherein it is to be summarily
portrayed that a party is entitled to such a finding. If a
party cannot satisfy the Court of the same on the basis of
documents produced, and rather requires extensive
examination of oral and documentary production, then
SUPREME COURT GRANTS RELIEF TO BHARTI AIRTEL IN GSTR-3B ISSUE
The Supreme Court of India (SC) put a stay on the
judgment of the Delhi High Court (HC) and granted
relief to Bharti Airtel in the GSTR-3B issue
M/s Bharti Airtel Limited (Company) is engaged in the
business of providing telecommunication services in
India through the license granted by the Department
of Telecommunication, Government of India
(Department).
Based on the implementation of the provisions of the
Goods & Services Tax Act (GST Act), the Company took
registration in every State and Union Territory of India.
It has approximately 50 registrations under GST laws
for making payment related to GST.
To bring it in conformity with the new laws, the
Company modified its system from the centralized
registration to multiple registrations under GST. Certain
technical changes were also made to enable filing of the
statutory Forms GSTR-1, 2, and 3.
However, the department failed to operationalize
the Forms GSTR-2 and 3 and a summary scheme was
introduced for filing Form GSTR-3B. The department
disapproved of the step taken by the company and
stated that its action is the core reason behind the
failure of the system whereby it cannot detect the
errors.
The Company made averments that during July-
September 2017, the monthly GSTR-3B recorded the
Income Tax Credit (ITC) based on its estimate. Hence, it
had to discharge the GST liability for the relevant period,
however, the details of ITC available were not known.
The exact ITC available was discovered in October 2018,
when the Government operationalized Form GSTR-2A
for the past periods.
16 January 2021 | | www.legaleraonline.com
the matter has to be necessarily referred to
the Tribunal for full trial. Such limited jurisdiction vested
with the Court, is necessary at the pre­reference
stage to appropriately balance the power of the
Tribunal with judicial interference.
The Court concluded, “The Court, under Sections 8 and
11, has to refer a matter to arbitration or to appoint an
arbitrator, as the case may be, unless a party has
established a prima facie (summary findings) case
of non­existence of valid arbitration agreement, by
summarily portraying a strong case that he is entitled to
such a finding.’
The Company wished to rectify its returns but was
prevented by the department from doing so. Hence,
a writ petition was filed by M/s Bharti Airtel Limited
before the HC under Article 226 of the Constitution of
India. The writ was filed by the company for rectification
of GSTR-3B.
The HC stated,“The failure of the Government to
operationalize the statutory returns, GSTR-2, 2A and 3
prescribed under the CGST Act, cannot prejudice the
assessee. The GSTR-3B which was merely a summary
return as an alternative did not have the statutory
features of the returns prescribed under the Act.”
The HC read down the circular no. 26/26/2017-GST
dated 29 December 2019 and concluded that said the
rectification of the return was imperative in nature.
It further said that any restriction related to the
rectification of the return was ultra vires the provisions
of the Central Goods and Services Tax Act, 2017 (CGST
Act) and in contravention to Articles 14, 19, and 265 of
the Constitution of India.
Petition for special leave to appeal (SLP) was filed by

the department before the SC to challenge the order
of the HC. The matter was listed before a three-judge
bench comprising Justice A.M. Khanwilkar, Justice B.R.
Gavai, and Justice Krishna Murari.
INDIAN GOVT DIRECTED TO PAY `8000 CRORES TO CAIRN BY ARBITRATION
TRIBUNAL
The Indian government has lost arbitration to oil giant
Cairn under the retrospective tax amendment to the
law in a case pertaining to a `24,500 crore tax demand
on capital gains made by the oil major in reorganization
of its India business in 2006-07.
India has been asked to pay damages worth `8,000
crore to the UK oil major. The judges of the international
Arbitration Tribunal ruled that India’s retrospective tax
demand breached the U.K.-India bilateral investment
protection treaty.
The tribunal ruled that the tax claim was not a valid
demand and asked the government to repay the funds
along with interest to Cairn. India had seized dividend,
tax refund and shares to partly recover the dues.
The International Court of Justice (ICJ) at The Hague
has maintained that the Cairn tax issue is not a tax
dispute, but a tax-related investment dispute. It has
ruled that India’s demand in past taxes was in breach of
fair treatment under a bilateral investment protection
pact.
The Indian government has been asked to pay Cairn
`8,000 crore in damages, which includes the shares
attached by the Income Tax Department in January
2014 and sold in 2018 to partially recover the tax dues.
Cairn Energy held 4.95% stake in mining major Vedanta
Ltd which the Income Tax Department attached after
Top Stories
The SC granted interim relief to the department and
put a stay on the judgment of the HC. The SC allowed
the rectification of the Form GSTR-3B for the period to
which the error relates.
issuing a tax demand to the British firm in 2014. The
government has been asked to pay damages at the
share value of `330 in 2014 instead of the `220-240 per
share price on which it was actually sold by the Income-
Tax Department in 2018, in tranches.
The damages also include `1,590 crore of tax refund
due to the British company besides the legal fees.
Cairn had lost case at the Income tax appellate tribunal
(ITAT) and the matter is before the High Court over the
valuation of capital gains and not the constitutionality
of the tax demand.
The tax demand by India was in respect of Cairn UK
transferring shares of Cairn India Holdings to Cairn India,
as part of an internal group reorganization in 2006-07.
This gave rise to different interpretations on whether
the UK-based company made capital gains, preceding
an initial public offering (IPO) of shares by Cairn India.
The Income Tax department had contended that Cairn
UK made a capital gain of `24,503.5 crore. Before the
Cairn India IPO, the India operations of Cairn Energy
were owned by a company called Cairn India Holdings-
Cayman Island and its subsidiaries.
Cairn India Holdings was a fully-owned subsidiary of
Cairn UK Holdings, in turn a fully-owned subsidiary of
Cairn Energy.
According to the Cairn Energy website, the oil major
received the tax claim from Indian authorities in March
2015 over the restructuring carried out in 2006 while
preparing for the IPO of Cairn India. The tax authorities
had seized 10% of Cairn India’s shares, then valued at
about $1 billion.
Later, in 2011, Cairn Energy sold Cairn India to mining
Anil Agarwal’s Vedanta Group, barring a minor stake of
9.8%. It wanted to sell the residual stake as well but was
barred by theIncome Tax department from doing so.
The government also froze payment of the dividend by
Cairn India to Cairn Energy but it recently agreed to lift
that freeze.
www.legaleraonline.com | | January 2021 17
 Top Stories
SUPREME COURT: GRATUITY MONEY CAN BE WITHHELD FOR RECOVERY
OF DUES
The Supreme Court of India (SC) has held that gratuity
money of an employee can be withheld and forfeited
for recovery of dues such as overstaying in official
accommodation.
M/s Steel Authority of India (petitioner) filed a Special
Leave Petition (SLP) before the SC against Raghbendra
Singh and others (respondents) against the order of
the High Court (HC). It was claimed that the employee
had the right to retain the quarter and he did not vacate
the quarter that resulted in proceedings under the
Public Premise (Eviction of Unauthorized Occupants)
Act, 1971 which culminated against the employee and
had attained finality.
The petitioner raised the plea that the employee
occupied the quarter beyond the specified period and
hence the penal rent would be the natural consequence
that can be adjusted against the dues payable, including
gratuity.
18 January 2021 | | www.legaleraonline.com
The matter was listed before a Division Bench of the
HC in 2017 that ruled against confiscating the gratuity
of an employee on account of overstaying in official
quarters after his retirement. The Bench had ordered
the immediate release of his gratuity and held only
normal and not penal rent should be charged for the
period overstayed.
The SLP was filed against the said order and it was listed
before the bench comprising Justice Sanjay K Kaul,
Justice Dinesh Maheshwari, and Justice Hrishikesh Roy.
The judgment was delivered on 15 December 2020.
The SC has observed, “The principles of penal rent
being charged as we are of the view that if an employee
occupies a quarter beyond the specified period, the
penal rent would be the natural consequence and such
penal rent can be adjusted against the dues payable
including gratuity. This is so given of the judgment in
Secretary, ONGC Ltd. v. V.U. Warrier - (2005) 5 SCC
245 and the reliance placed by the HC in the impugned
judgment on the case of Ram Naresh Singh v. Bokaro
Steel Plant [Civil Appeal No.4740/2007] dated 31.03.2017
is misplaced as is not even a judgment but an order in
the given facts of the case”.
The SC concluded, “There is no prohibition against
recovering dues including penal rent, the rent with the
penalty for overstaying in official accommodation from
an employee’s gratuity.”
The SC has set aside the order of the HC partly and
held that the gratuity money of an employee can be
withheld and forfeited in case of recovery of dues such
as overstaying in official accommodation. However, the
SC did not interfere with the monetary aspect of the
order passed by the HC.
 LE Nation @ Glance
HIGH COURT & TRIBUNAL NEWS AROUND THE NATION

Madras High court

FRAUDULENTLY REGISTERED SETTLEMENT PROPERTY DEED DECLARED
VOID BY MADRAS HC
The Madras High Court passed a first-of-its-kind order
by declaring a fraudulently registered settlement deed
of a property as void. The Court also directed the sub-
registrar office to register the court order so that such
fraud entries in the future are reversed automatically.
Currently there are no provisions in the Registration Act
that enable authorities to cancel entries made in the
property record.
The court was hearing a batch of petitions moved by
owners of 3.11 acres of land falling under the Alandur
sub-registrar office.
The petitioners sought a court direction to the sub-
registrar office to remove the fraudulent entry made Justice AnandVenkatesh observed that there are no
in the property record. The counsel for the petitioners provisions in the Registration Act that enable officials
submitted that they had been fighting various civil suits to cancel fraudulent documents. “Usually, in such
for the ownership of the said property since 1979 and situations, expecting the parties to go before the civil
succeeded in every suit. court every time an illegal document is registered
makes it almost impossible for the real owner to deal
The petitioners challenged the settlement deed
with his own property.”
registered in connection with the property owned
by them, by a third party. The third party executed a “It is a known fact that proceedings initiated before the
settlement deed in their favor defying the lower courts’ civil court do not come to an end that quickly... it’s a
orders. long-drawn journey,” the judge added.

delhi high court

DELHI HIGH COURT DIRECTS WEBSITE TO REMOVE ARTICLES DEFAMING
NFL FOOTBALL TEAM OWNER DANIEL SNYDER
The Delhi High Court has ordered the website ‘meaww.
com’ to remove defamatory articles from its website as
well as the internet entirely as those articles allegedly
defamed NFL Football team owner Daniel Snyder.
A single judge bench of Justice Mukta Gupta was
hearing the plea and passed an order in favor of the
plaintiff (Daniel Snyder)allowing the interim relief.
Daniel Snyder who is the owner of NFL’s Washington
Football Team filed the petition seeking prosecution
against the website meaww.com that had published
defamatory articles against him.
The counsel appearing for the plaintiff submitted
before the Court that although the impugned articles
have been removed from the website, however, the
same are still available over the internet and may be
found by a simple search leading to a continuation of
defamation.
Snyder’s counsel urged the court to issue directions
asking the website to release the information with
respect to the persons who had uploaded the

20 January 2021 | | www.legaleraonline.com


DUTY OF IT DEPARTMENT TO ENSURE THAT THE AOs FOLLOW THE MANDATE
OF LAW: DELHI HC
The Delhi High Court (HC) held that the Assessing
Officer (AO) had wrongfully assumed the jurisdiction
and passed the final assessment order without passing
a draft assessment order.
M/s Headstrong Services India Pvt. Ltd. (respondent/
assessee), is a wholly-owned subsidiary of Headstrong
Services LLC, USA. The respondent had filed its return
of income declaring an income of `30,64,480 for the
relevant assessment year.
On 30 January 2009, the respondent had filed the
revised return of income that was processed under
Section 143(1) of the Income Tax Act, 1961 (IT Act). The
respondent was selected for scrutiny assessment and
notice under Section 143(2) of the IT Act was issued.
The AO during the scrutiny assessment made a reference
to the office of Transfer Pricing Officer (TPO) regarding
the international transaction between the respondent
and its Associated Enterprise (AE). On 31 December
2010, a draft assessment order under Section 144C(1) of
the IT Act was passed.
An objection was filed by the respondent before
the Dispute Resolution Panel (DRP). Under Section
143(3)/144C of the IT Act, an assessment was completed
and directions were issued by the DRP. Under the said
assessment, an addition was made on account of an
National
impugned articles/posts on the platform and disclose
the sources from where the information forming part
of the impugned articles/posts has been procured by
the defendants.
The Plaintiff asserted that he has gained preliminary
knowledge that the defendants were acting in collusion
and connivance with certain entities that solicit clients
on social media by promoting the services of the
defendants, and the defendants place stories on their
website in exchange for monetary benefits.
It was further claimed that the defendants have
therefore adopted the said mode of operation in the
instant case, by floating the impugned articles on the
internet with a view to malign and tarnish the reputation
and image of the Plaintiff across the globe.
excess claim of deduction under Section 10A of the IT
Act and transfer pricing adjustment made by the TPO.
An appeal was filed by the respondent before the
Income Tax Appellate Tribunal (ITAT). The ITAT had
set aside the additions on account transfer pricing and
deduction under Section l0A of the IT Act. The ITAT also
directed the AO to frame the assessment afresh.
An appeal was filed by the Commissioner of Income
Tax before the Delhi High Court (HC) against the order
of the ITAT. The matter was listed before the division
bench of Justices Manmohan and SanjeevNarula.
www.legaleraonline.com | | January 2021 21
 Nation @ Glance
It was held by the HC that the AO had wrongfully assumed
the jurisdiction and passed the final assessment order
without passing a draft assessment order and without
allowing the respondent to raise objections before the
Dispute Resolution Panel.
The HC concluded, “Till the Income Tax Department
ensures that the Assessing Officers follow the mandate
of law, in particular, binding provisions like Section 144C
orissa high court
INDUSTRIALIZATION SHOULD NOT HAMPER HUMAN LIVES BY DESTROYING
THE ECOSYSTEM: ORISSA HC
The Orissa High Court (HC) disposed of a public
interest litigation petition (PIL) stating that there is a
need for an equilibrium between the ecosystem and
industrialization.
A PIL was filed by members of the New Light
YubakSangha, a club (petitioner), before the Orissa
HC. The petition had assailed the allotment of 8 acres
of forest land in Sodamal to a Waste Management Firm
by the Odisha Industrial Infrastructure Development
Corporation (IDCO). IDCO was allotted the land to lease
it out for the establishment of industry in the area.
The allotment of land to IDCO was challenged by the
petitioner as it was done without giving an opportunity
of being heard to the villagers and other stakeholders.
22 January 2021 | | www.legaleraonline.com
and eschew the filing of unnecessary appeals rather
than in nearly all matters where the Assessing Officer
has taken a view against the Assessee, the assessments
will not achieve finality for a number of years like in the
present case where the case of assessment year 2007-
08 stands remanded and restored to the file of the
Assessing Officer.”The HC confirmed the order of the
ITAT and imposed a cost of `11,000 that is to be paid to
the Delhi High Court Legal Services Committee.
It was submitted by the petitioner that they had created
new forest cover over the land with the help of the state
forest department under the afforestation program.
The petitioner also contended that the lease of land to
IDCO for the establishment of the industry had been
strongly opposed by the villagers and by the club.
That the establishment of the industry was cleared the
District Single Window Clearance System without an
opportunity for hearing being granted to the villagers
however they opposed the same vigorously.
Hence, being aggrieved from the said decision, the
petitioner filed a PIL before the HC. The matter was
listed before a Bench of Chief Justice Mohammad Rafiq
and Justice Dr. BR Sarangi.
The HC observed that since the earlier proposals to
lease land had been opposed, there was no justifiable
reason to set up the industry on the land. It also said
that if an industrial unit would be set up, then it would
destroy the eco-system. All the more, the local people
were not given an opportunity of being heard and they
objected to the establishment of the industry.
The HC said, “No doubt industrialization is required for
enhancement of revenue, but that does not mean at
the cost of the lives of the human being by destroying
eco-system.”
The HC stated that as the petitioner’s representation
opposing the land allotment was pending with the
District Collector (DC) concerned, the HC directed the
DC to consider the representation and “pass a reasoned
and speaking order by affording an opportunity of
hearing to the petitioner vis-à-vis the private party and
other affected persons if any”. The PIL was disposed of
by the HC.

punjab & haryana high court
BANK IS FREE TO RECOVER DEBT IF THE TERMS AND CONDITIONS OF
ONE-TIME SETTLEMENT ARE BREACHED: PUNJAB & HARYANA HIGH COURT
The Punjab and Haryana High Court (HC) has held that
if the terms of the One Time Settlement (OTS) entered
into with the bank are violated by a borrower wherein
the amount is not paid within the agreed timeframe,
then Court orders are not needed for extending the
time period of payment under the One Time Settlement
(OTS).
M/s. Milkhi Ram BhagwanDass (petitioner) is a
partnership firm and it availed a loan limit of `1.55 crore
from the HDFC Bank (Respondent No. 2). Later, the
petitioner defaulted in repaying the loan and its loan
account was declared as a Non-Performing Asset (NPA)
by respondent No.2 on 6 October 2018.
The proceedings under Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act), were initiated
by respondent No.2 Bank against the petitioner, and a
notice was sent under Section 13(2) of the SARFAESI
Act. An application was also filed before the District
Magistrate (Respondent No.1) by Respondent No.2 to
take possession of the secured assets.
Respondent No. 1 issued notice and subsequently
the petitioner affected OTS dated 31 May 2019, with
respondent No.2. According to the terms and conditions
of the said OTS, the petitioner had to pay `1.29 Crores
to respondent No.2 by 30 November 2019.
The petitioner had filed a writ petition before the HC
National
for seeking a writ of mandamus directing respondent
No.2 to grant six months’ time period for making the
remaining payment. It also requested the HC to give
directions to the respondents from restraining them to
take physical possession of the mortgaged property of
the petitioner.
The matter was listed before a Division bench of the
HC of Justice Rajan Gupta and Justice Karamjit Singh.
It stated that the Bank becomes free to recover the
outstanding amount as per the law, irrespective of the
OTS.
The HC also observed, “The borrower affected OTS for
`1.29 Crores and made payment of `51 lakhs only when
it defaulted. So, in the present case, the amount paid
was just 40% of the settled amount. Also, in this case,
reasons put forth by the petitioner for failure to pay the
balance amount, are not plausible.”
The HC relied on the judgment of the Allahabad High
Court in the case of Union Bank of India &Anr. v. Anil
Kumar Wadhera&Ors., wherein the Court held that
once a borrower fails to comply with the conditions of
OTS within the time specified and there being no order
of the Bank to extend the time for the deposit, the OTS
would fall automatically and it will not be open to the
borrower to insist upon the enforcement of such an
OTS.
The Division Bench concluded, “No separate orders are
required to be passed in the matter of the OTS having
become defunct for non-compliance of its conditions by
the borrowers and the logical consequence in case of
breach of terms and conditions of the OTS is that the
Bank becomes free to recover the money outstanding
in accordance with the law irrespective of the OTS.”
The HC held that already sufficient time period had
been given by respondent no. 2 to the petitioner for
repayment of the loan. But the petitioner had failed to
repay the loan within the defined timeline and it had
also failed to convince the HC that there was some
reason beyond control for delaying the payment of the
balance amount within the stipulated period.
Hence, the petitioner could not show his bona fide
intent to make the payment of the balance amount.
The petition was dismissed by the HC being devoid of
merits.
www.legaleraonline.com | | January 2021 23
 Nation @ Glance
national company law appellate tribunal
PETITION IN BOMBAY HC FOR ESTABLISHMENT OF NCLAT
BENCH AT MUMBAI
Mumbai-based lawyer, advocate Nicky Pokar has filed a
petition before the Bombay High Court urging the Court
to issue directions for establishment of benches of the
National Company Law Appellate Tribunal (NCLAT) at
various locations including Mumbai.
The petitioner has relied on the submission of Attorney
General KK Venugopal in the Supreme Court in the case
of Swiss Ribbons (P) Ltd. v. Union of India. During the
hearing in that case, the Court noted the submission
of the AG who assured the Court that the directions
in another judgment of Madras Bar Association will
be followed, and that circuit Benches of NCLAT will be
established.
The petitioner pointed out what the Supreme Court had
said in the Swiss Ribbons case. The Apex Court had said
Andhra Pradesh high court
CONCEPT OF ORAL POWER OF ATTORNEY DOES NOT EXIST; IT HAS TO
BE IN WRITING ONLY: ANDHRA PRADESH HC
The High Court of Andhra Pradesh (HC) reiterated that
there is nothing as oral power of attorney (POA) and it
has to be in writing always.
In this case, a suit for specific performance of the
agreement of sale was instituted before the District
Court on 12 August 2009.
Subsequently, an application was filed bearing
I.A.No.147 of 2018 in O.S.No.63 of 2013 under Order
24 January 2021 | | www.legaleraonline.com
that, “The learned Attorney General has assured us that
this judgment will be followed and Circuit Benches will
be established as soon as it is practicable. In this view
of the matter, we record this submission and direct the
Union of India to set up circuit benches of the NCLAT
within a period of six months from today.”
While the plea has sought activation of the e-filing tab
of NCLAT including provisions for payment of e-filing
of fees and dispensing with physical filing, it also
pointed out that despite an e-filing training program in
November 2020, the date of e-filing in NCLAT has not
been facilitated yet.
According to the plea, considering the current
pandemic condition and the poor financial health of a
large section of the public coupled with travel and other
restrictions, difficulties are aggravated - seeking speedy
& cost effective justice is the casualty in corollary.
The petitioner has sought the Court’s intervention on
the ground that in light of the present situation, litigants
and advocates were at a distinct disadvantage.
Recently, a petition was filed before the Supreme Court
seeking direction to make the Chennai Bench of NCLAT
functional National Company Law Appellate Tribunal
(NCLAT).
A similar petition is also pending before the Madras
High Court.
13 Rule 10 and Order 16 Rule 6 of the Code of Civil
Procedure (CPC), seeking to send for the original
documents mentioned in the petition for comparing
the signatures of the opposite party in the suit sale
agreement by marking the same in the evidence to the
person filing the petition. The District Court dismissed
the said application.
The contention of the party who filed the petition was
 National

that the opposite party with a mala fide intention made

signatures in different styles on different documents at
different points in times. It was further brought to the
notice that the signature of the opposite party on the
petition was different.

It was averred that the opposite party has a habit to

change signatures with a mala fide intention to defraud.
Hence, a plea of forgery was raised and in the absence of
original signatures of the opposite party, the party filing
the petition could not send the original suit agreement
of sale to a handwriting expert for comparison and
opinion.
On behalf of the opposite party, it was stated that due
to the ill-health of the lady, her husband went to the
office (on her behalf) with her advise and consent. It
was further mentioned that the affidavit filed before the
HC was signed by the husband of the opposite party.
The opposite party had no objection to the recitals in
the documents and it was argued that the consent of
the opposite party that her husband would sign on her
behalf in her absence would amount to oral power of
attorney.
Being aggrieved from the dismissal of the application
by the District Court, a petition was filed before the HC.
The Court relied on the judgment of the HC in Pidikiti
Sasikala v. Kothamasu Lakshmi Mohan Rao @ Mohan
Rao and others, 2009 (6) ALD 519, and Judgment of the
Supreme Court of India (SC) in Lakshmi and another
v. Chinnammal Alias Rayyammal and others, (2009) 13
Supreme Court Cases 25.
The HC quoted the judgment of the SC in Lakshmi’s
case, “If bringing on record a document is essential for
proving the case by a party, ordinarily the same should
not be refused and the Court’s duty being to find out
the truth.”
After a close perusal of the arguments made by the
parties, the HC stated, “It reveals that in the affidavits
filed in the High Court of Andhra Pradesh, her husband
signed her signatures as per her consent and it amounts
to oral power of attorney.
In the eyes of the law, there is no such oral power of
attorney. It is the settled law that the power of attorney
must be in writing only. If the husband of the respondent
signed the affidavits on behalf of the respondent under
valid General Power of Attorney, the situation may be
different.”
The HC rejected the argument of the opposite party
that her husband was given oral POA. It was clarified by
the Court that the POA must always be in writing.
It was further stated that if the husband of the opposite
party had signed the affidavit filed before the HC then it
would amount to the offense of perjury and it shall be
punishable. It held that dismissal of the petition by the
District Court was not proper in the eyes of law.

www.legaleraonline.com | | January 2021 25

 LE World @ Glance
LEGAL UPDATES FROM ACROSS THE GLOBE
UNITED STATES OF AMERICA
US SEC SUES COMPANY FOR SELLING UNREGISTERED SECURITIES
The Securities and Exchange Commission charged
Ripple Labs Inc. of raising over $1.38 billion by offering
unregistered digital security (XRP).
US-based Ripples Labs Inc. along with two of its
executives was charged by the US Securities and
Exchange Commission (SEC) of raising over $1.38 billion
through the unregistered offering of digital security
called XRP.
The SEC filed a lawsuit in this regard before a federal
district court in Manhattan on 22 December 2020.
Ripples Labs Inc. is a leading cryptocurrency and
blockchain firm.
The SEC charged Ripples Labs Inc., Christian Larsen,
the company’s former CEO and the current CEO of the
BIG TECH FACING THESE US ANTITRUST CASES
26 January 2021 | | www.legaleraonline.com
company Bradley Garlinghouse with violations under
Sections 5(a) and 6(c) of the Securities Act, 1933.
The complaint alleged that the company and its two
senior executives raised funds since 2013 through illegal
offerings of XRP to investors in the US and worldwide.
The two senior executives were accused of pocketing
approximately $600 million from their unregistered
sales of XRP by orchestrating unlawful sales.
“Issuers seeking the benefits of a public offering must
comply with the federal securities laws that require
registration of offerings unless an exemption from
registration applies. We allege that Ripples, Larsen and
Garlinghouse failed to register their ongoing offer and
sale of billions of XRP to retail investors, which deprived
potential purchasers of adequate disclosures and XRP
and Ripple’s business and other important long-standing
protections that are fundamental to our robust public
market system,” Stephen Avakian, Director of the SEC’s
Enforcement Division said in a media statement.
In the lawsuit, the SEC said that the company created an
information vacuum by failing to provide the investors
with material information required while soliciting
public investment. Ripple, Larsen and Garlinghouse
sold XRP into a market possessing exclusively the
information they shared about Ripple and XRP.
The SEC has sought injunctive relief, disgorgement with
prejudgment interest and civil penalties in the lawsuit
filed before the Manhattan district court.
With 38 states in the US suing Google, the list of
investigations and major cases against Big Tech has
grown longer.
On October 20, the US Justice Department sued Google
over its anti-competitive ploys to maintain a monopoly
for its leading search engine business.
On December 9, the Federal Trade Commission (FTC)
sued Facebook Inc. over its anti-competitive tactics

of buying and freezing out small start-ups. The FTC
demand is that FB undo its WhatsApp and Instagram
acquisitions.
In the latest move, an antitrust suit has been filed
against Google by 10 states led by Texas over an
unlawful monopoly in digital advertising and signing up
rival Facebook for rigging ad auctions.
A group of 46 states, along with the district of Guam
and Columbia, on Dec. 9 sued Facebook over antitrust
concerns akin to those raised by the FTC. Consumers
are being harmed by the absence of competition, the
states alleged.
A Colorado-led state attorneys’ group is expected to file
a separate antitrust case against Google this week.
UKRAINE
CHAIRMAN OF THE CONSTITUTIONAL COURT OF UKRAINE INVESTIGATED
FOR BRIBERY
Ukraine, the East European country, has started investigation
of a bribery case of the Chairman of the Constitutional Court
of Ukraine -OleksandrTupytskyi.
Reports emanating from the Ukrainian capital Kiev
suggest that President VolodymyrZelenskiy has ordered
the probe. Zelenskiy and Tupytskyi are said to be not on
the best of terms since 2018 when Tupytskyi intervened
and termed the President’s request to the parliament to
dissolve the Constitutional Court as a “constitutional coup”.
President Zelenskiy had reportedly threatened dissolution
of the parliament if it did not dissolve the Constitutional
Court. Tupytskyi, who was the deputy chairman of the
Constitutional Court at that time, took over as Chairman in
September 2019.
International
House Democrats after a long investigation recently
concluded that Apple exerts monopoly power through
its App store and Amazon holds monopoly powers over
third-party sellers on its site.
These and other recommendations against Google
and Facebook could result in legislative proposals.
Meanwhile, there is a move by Republican senators to
restrict the Communications Decency Act Section 230
which protects digital platforms from responsibility for
the online activities of their users.
A request by the Trump administration to revisit the
main elements of Section 230 is being reviewed by the
Federal Communications Commission for the same
reasons as given by Senate Republicans.
Prosecution General Venediktova heads the team of
Ukrainian prosecutors currently investigating allegations of
suspected bribery of a witness.
Tupytskyi has since challenged the Prosecution General
Venediktova’s authority, asserting that dismissal of a
Constitutional Court judge would be against the Ukrainian
law.
Tupytskyi has been serving in the Constitutional Court since
2013 when he was nominated by the ousted Ukrainian
President Viktor Yanukovych. Tupytskyi was subsequently
elected as the Deputy Chairman in March 2018 and as
Chairman in September 2019.
The prosecutors have asked for Tupytskyi’s suspension
for two months during their investigation, which is being
resisted by him.
Tupytskyi is accused of acquiring 126 square km of land near
popular Crimea resort town of Yalta in 2018 and hiding the
information in his annual online financial disclosure saying
he could not figure out how to declare the property. Russia
had annexed Crimea from Ukraine in 2014.
Ukraine is under pressure to crackdown on corruption and
resolve the row soon. The international community has
threatened to withhold financial support to the country
if the existing constitutional crisis is not resolved soon.
Suspension of financial support may plummet Ukraine into
deep economic trouble.
www.legaleraonline.com | | January 2021 27
 World @ Glance

INDIA
INTERNATIONAL LITIGATION FINANCERS TO ENTER INDIA SOON
Booming financial activities, India’s expected
amalgamation with the global economy and the
resultant increased exports of Make in India goods are
bound to bring with them some amount of disputes.
And business disputes is what litigation financers like
and cash in on.

They minutely scrutinize the dispute and ascertain

winning chances before entering into an agreement
under which they take care of all litigation-related costs
and charge a percentage of the award.

Even before recovery of the Indian economy, they see

huge scope since several companies have failed to fulfill
their contracted obligations or there are companies
which simply lack funds to go in for litigation as a
direct impact of the Coronavirus pandemic on Indian
businesses.

To start with, litigation financers will focus on

international arbitration cases in which Indian firms are
Although a new concept for India, they finance the total
involved due to quicker redress compared to cases filed
cost of litigation or arbitration and earn from the shares
in Indian courts which at times drag on for years due to
of the monetary awards. To start with, they will target
the huge backlog of cases.
company disputes in India.
Subsequently, they plan to start financing domestic
There is a piece of good news for companies who have
litigation as well simply due to the large volume of
a genuine business dispute but lack finances to seek
disputes.
redress. Some of the leading international litigation
financers are at the advanced state of preparation to Litigation financing is quite popular and prevalent
set shop in India. in western countries like the United States, United
Kingdom, Australia and several other countries.
Australia’s Omni Bridgeway and a unit of the American
insurance broker Marsh Inc. besides the Abu Dhabi- According to reports, Australia’s Omni Bridgeway, which
based Phoenix Advisors are eyeing the Indian market with $1.5 billion funds at its disposal, is ranked as the
and tap into the unchartered territory which holds huge world’s second-largest litigation finance firm, is already
potential. in talks with some prospective Indian clients to ascertain
their caseload while explaining to their potential clients
Litigation financers take care of legal fees and other
about how they can earn a hefty sum without investing
associated costs of commercial lawsuits, arbitration
a single penny by signing an agreement with a litigation
and shareholder disputes and in return charge a pre-
financer.
agreed sum from the settlement awards.
Simply put, all that an aggrieved company does is to
However, they get nothing if the complaining party’s
outsource their litigation and arbitration.
appeal is rejected or they lose the case.
The arrival of international litigation financing firms
Litigation financing is an unheard of concept in India.
may benefit the Indian legal community greatly as
Despite COVID-19 having a direct impact on the growth
these firms are expected to take legal consultants and
of the business, the Indian economy is expected to
legal firms as partners before a full-fledged launch to
grow at a much faster pace once the pandemic-induced
promote their business in India.
situation gets normalized. And therein isits potential.

28 January 2021 | | www.legaleraonline.com

 International

CHINA
ALIBABA GROUP TO BE INVESTIGATED OVER SUSPECTED MONOPOLISTIC
PRACTICES
It has been alleged by the State Administration for
Market Regulation that Alibaba has violated exclusivity
agreements or “choosing one of two” practices that
require vendors to sign agreements for exclusive co-
operation and prohibit them from selling products on
rival platforms and is currently probing the same.

The Chinese Government has been trying to prevent

An investigation has been launched by China’s market
regulator – the State Administration for Market
Regulation on Alibaba Group Holdings for “suspected
monopolistic conduct.”
monopolistic and anti-competitive practices for
improving the socialist market economy system
and fostering development. China’s national market
regulator released guidelines in November to “prevent
and stop monopolistic behaviors” by internet giants
such as collecting unnecessary data from consumers,
colluding to eliminate small rivals, and making it difficult
for users to switch other platforms.
Alibaba Group has said that it will actively co-operate
with the regulators and the company’s business will
operate normally for the time being.

Moreover, in order to ensure financial supervision, fair
competition and protection of consumers’ interests,
the State Administration of Foreign Exchange, China
Banking Regulatory Commission, China Securities
Regulatory Commission and The People’s Bank of China
have called Alibaba’s financial affiliate Ant Group for
supervisory and guidance talks.
Similarly, Ant Group has also agreed to comply with
the requirements and that it will diligently study the
regulatory departments’ requests.
If the regulators find against Alibaba, penalties under
China’s anti-monopoly law can be up to 10% of the
company’s turnover from the previous year.

SAUDI ARABIA
SAUDI ARABIA COOPERATION AGREEMENT ENDED BY ALLEN & OVERY
AND KHOSHAIM & ASSOCIATES
The cooperation agreement has been ended by Allen
& Overy (A&O) and its Saudi Arabian partner Khoshaim
& Associates. Both parties stressed the advantages of
working with a wider range of law firms.

It was in 2012 that the exclusive deal was sealed with

the relationship being marketed by A&O through joint
announcements and its website. On 9 October, the
same was silently dropped but both sides said they
would continue to work closely going forward.

An A&O statement read: “We have seen an increase in

the volume and range of matters for which clients are

www.legaleraonline.com | | January 2021 29

 World @ Glance
seeking support in Saudi Arabia. In order to increase
our capacity to meet this demand, we have taken the
decision to work with a broader range of law firms in
the kingdom.”
“This joint decision serves each firm’s strategic
interests. For K&A, it allows us to be independent
and work with other firms, including US-based
firms. This opens up opportunities to work on
a wider set of matters and service clients from
the US, amongst other jurisdictions with strong ties
to Saudi Arabia,” said K&A managing partner Zeyad
Khoshaim.
Riyadh-based K&A has around 35 lawyers, three
counsel and four partners and is highly rated
in the Chambers and Partners directory with a
Band 1 individual rating given to Khoshaim. Having
originally joined A&O as a partner in 2010, Khoshaim
said it had now evolved into a full-service firm with
an expanded partnership and an office opened in
Jeddah.
IRELAND
AFTER EDPB DECISION UNDER GDPR MECHANISM, TWITTER FINED
€450,000 BY IRISH DPA
The Irish Data Protection Commission (DPC) on
December 15 slapped a fine of €450,000 on Twitter
International Company (Twitter) following its
probe into a breach arising from a bug in Twitter’s
design. The bug was uncovered on December 26,
2018.
Till date, this is the biggest fine imposed under
the European Union (EU) General Data Protection
Regulation (GDPR) by the Irish DPC. It also qualifies
30 January 2021 | | www.legaleraonline.com
A lot of US companies were interested in Vision
2030 to branch out Saudi Arabia’s economy into
areas other than oil. According to Khoshaim, this
“put the firm in a good position to advise US-based
companies like AMC and Johns Hopkins University on
their investments, and collaborate with other firms
with specialized expertise on mega deals like Saudi
Aramco’s acquisition of SABIC, Saudi Aramco’s IPO,
and the SAMBA/NCB merger.”
With regional offices in Abu Dhabi and Dubai, A&O
said, “As one of the law firms with the longest
established presence in the Middle East, we remain
committed to the region and we believe this decision
will best serve our clients in Saudi Arabia and around
the world in the longer term.”
The two firms in August collaborated on two big
deals for the Saudi Electricity Company; a $1.3bn
dual-tranche Green Sukukand a $2.4bn syndicated
Murabaha facility agreement provided by a Saudi
banks’ syndicate.
as the first fine on a US-based organization. The said
bug rendered protected tweets as unprotected,
making them available to the public without the
knowledge of the user. Twitter users on Android
devices who changed the email address connected
to their Twitter accounts were impacted by this
bug. 88,726 Twitter users in Europe were affected
between September 5, 2017 and January 11, 2019
according to Twitter.
In January 2019, the DPC began probing the
breach by Twitter under the Irish Data Protection
Act 2018, Section 110. In May 2020, it submitted
to “Concerned Supervisory Authorities” its draft
decision as necessitated by the GDPR Article 60.
Objections to the size and “insufficiently dissuasive
nature” of the DPC’s proposed fine of €135,000 to
€275,000 were raised by supervisory authorities in
Austria, Italy and Germany. As a result, the dispute
resolution procedure of the GDPR was triggered
and the matter was referred to the European
Data Protection Board (“EDPB”) with reference to
objections that could not be resolved.

The dispute resolution procedure under GDPR
Article 65 was used for the first time. After weighing
the matter, the EDPB on November 9, 2020 issued
its binding decision that the DPC “re-assess the
elements it relies upon to calculate the amount of
the fixed fine to be imposed on [Twitter], and to
amend its Draft Decision by increasing the level of
the fine in order to ensure it fulfills its purpose as a
corrective measure and meets the requirements of
effectiveness, dissuasiveness and proportionality.”
The DPC should have stressed more on the nature
of and processing involved in the breach while
calculating its fine, the EDPB felt. The DPC in
its final decision adjusted the fine, noting that it
particularly considered Twitter users’ choice to
limit their tweets’ audience.
The DPC found that Twitter had infringed Articles
33(1) and (5) of the GDPR that pertain to data breach
notification and documentation, respectively.
Twitter did not inform the DPC about the breach
within 72 hours and failed to detail the breach
sufficiently.Twitter claimed that because Twitter
International Company’s processor, Twitter Inc.,
failed to inform Twitter International Company’s
DPO of the potential breach when it came to know
EUROPE
HEFTY FINES STARE AT DIGITAL COMPANIES IN EUROPE
Doubtful credentials of shady dealers and service
providers and failing to regulate harmful content
on social media may spell trouble for digital
companies in the various European countries.
International
about it, there was delay in informing the DPC
about the breach within the stipulated timeframe.
However, the controller is expected to have
constructive knowledge of a breach through its
processor, the DPC said. The DPC also said that
Twitter’s record of the breach was insufficient to
allow it to prove whether or not it fulfilled GDPR
Article 33. The DPC said that while the delay in
informing about the breach was a one-off rather
than universal issue, the infringement of GDPR
Article 33(5) was ongoing.
Still, the DPC considered Twitter’s infringement
of Articles 33(1) and 33(5) neglectful rather than
purposeful. “An action, taken by a controller
where it is mandated to do so on foot of a statutory
obligation cannot be viewed as a mitigating factor,”
the DPC said. In deciding the fine amount, the DPC
also considered the inexact nature of information
originally provided to it regarding the breach.
Following the DPC’s announcement, Twitter
tweeted, “We appreciate the clarity this decision
brings for companies and the public around the
GDPR’s breach notification requirements. As
always, our approach to these incidents will remain
one of committed transparency and openness.”
Europe has started to tighten the noose around big
tech companies by proposing hefty fines ranging
between 6 and 10 per cent of their annual revenue
for unfair treatment of rivals and failure to protect
their users on their platforms under the next phase
of technology regulations.
The European Union’s draft outline for a new set of
rules proposes fines up to 10 per cent of a company’s
global revenue if they continue to impose unfair
conditions like blocking businesses from accessing
their own data or locking consumers into services
and limiting their options for switching.
The new EU rules term the tech companies as
“digital gatekeepers” in the sweeping overhaul
of their existing rules under the proposed Digital
Service Act.
www.legaleraonline.com | | January 2021 31
 World @ Glance
The new set of rules also aims at updating the
outdated rules governing e-commerce. The EU
wants e-commerce companies to take more
responsibility for goods and services being sold on
their platforms, including identifying and throwing
out shady traders.
It also wants digital gatekeepers to swiftly take
down illegal contests like hate speech from
their platforms in order to maintain free speech
requirements. Users will be given the option to
lodge complaints against any such post with such
platforms. Any violation of the proposed new rules
in this segment would attract up to 6 per cent of
the company’s annual turnover.
Britain which has walked out of the EU has come out
with its own plans to step up vigil on harmful online
material. Under the proposed new British rules, a
penalty up to 1.8 million pounds ($24 million) or 10
per cent of their annual global revenue, whichever
is higher, for failure to comply with the rules; can
be imposed on social media platforms and other
internet companies for their failure to promptly
remove and limit the spread of harmful material
like child sexual abuse or terrorist content. Social
media giants such as Facebook, Twitter, Instagram
and TikTok will be under strict observation and
ISRAEL
HUMAN RIGHTS GROUPS, WHATSAPP DRAGS ISRAELI SPYWARE
VENDOR TO COURT
Attorney Kyle McLorg representing NGOs says
the surveillance technology should not be used to
justify government’s intrusion since it threatens
free expression and privacy.
32 January 2021 | | www.legaleraonline.com
expected to comply with the new rules likely to
come into force in the first half of 2021. The new
rules will apply to all social media and digital
platforms accessible in the United Kingdom. Those
failing to abide by it also risk being blocked besides
being forced to pay hefty fines. Besides, criminal
cases against executives of such companies who
fail to comply with the new set of rules are also
under consideration. Executives of companies
who fail to take the new rules seriously or delay
in responding to the information requested from
regulatory bodies could be in for trouble.
Britain also expects social media platforms to take
extra measures to protect children using their
platforms.
Micro social media platform Twitter recently got
a bitter taste of what could be in store for it and
other companies in Europe when the Data Privacy
Commission of Ireland imposed a fine of 450,000
Euro (5.4 lakh US dollars) for a security breach.
Twitter had failed to remove a harmful post due to
shortage of staff between Christmas Day and New
Year Day in 2018.
Twitter accepted its mistake and has promised to
remain fully committed to protecting the privacy
and data of its customers.
A group of NGOs and human rights groups have
joined WhatsApp’s lawsuit against Israeli spyware
vendor NSO Group. The NSO Group has been
accused of selling Pegasus surveillance software
to government agencies to target human rights
activists under the pretext of terrorism laws.
Attorney Kyle McLorg, who is representing the
NGOs, has said in his brief that the surveillance
technology threatens rights of free expression
and privacy, recognized as foundational by
international law.
WhatsApp along with its parent company Facebook
had sued NSO group last year in the Northern
California District Court for hacking the WhatsApp
server and plantingsurveillance software on 1,400
devices of users across the world in violation of

the US Computer Fraud and Abuse Act (CFAA) and
California Comprehensive Data Access and Fraud
Act. WhatsApp had revealed that the Pegasus
spyware was installed in the devices belonging to
journalists, lawyers, religious leaders and political
dissidents in various parts of the globe.
“Justifications should be limited to situations in
which the interest of the whole nation is at stake,
rather than the interests of the government, a
regime or a power group alone,” Attorney Kyle
McLorg noted in his brief, arguing that states
should not adopt counterterrorism measures to
justify government intrusions. The human rights
groups have filed an amicus brief before the US
Court of Appeals for the Ninth Circuit.
The rights groups include Amnesty International,
Committee to Protect Journalists, Internet
Freedom Foundation, Paradigm Initiative,
Privacy International, Red en Defensa de los
KNOW
THELAW
KNOW THE LAWYERS
For Subscription Related Enquiries
email us at: info@legalera.in OR Contact: +91 22 2600 3300 | +91 8879635574
International
DerechasDigitales and Reporters Without Borders.
The accused, NSO Group, has so far not responded
to these allegations. However, in the past, the
Israeli software vendor had argued that it is not
liable to respond since it is protected under the
sovereign immunity doctrine that shields foreign
governments from lawsuits when national security
issues get impacted. It had further stated that it
supplies government and spy agencies with digital
break-in tools which are necessary for public safety.
The claim, however, met with disapproval from
Courtney Radsch, Advocacy Director at the
Committee to Protect Journalists.
According to Radsch, the repeated and extensive
use of Pegasus spyware to target journalists and
their networks is in contradiction to the NSO
Group’s claim that Pegasus is only used to combat
terrorism and criminal activities.
LEGAL
ERA
www.legaleraonline.com
www.legaleraonline.com | | January 2021 33
 LE Within the Circle
S&R ASSOCIATES WIN ARBITRATION FOR CAIRN ENERGY AGAINST INDIA
AT THE PERMANENT COURT OF ARBITRATION
S&R Associates represented Cairn Energy PLC and Cairn
UK Holdings Limited (“Cairn Energy”) in successful
arbitration against the Republic of India (“India”) under
the UK-India Bilateral Investment Treaty (the “UK-India
Treaty”), for claims arising out of retrospective tax
measures taken by India. The arbitral tribunal held India
to be in breach of its obligations to Cairn Energy under
DSK LEGAL HELMS THE SHAREHOLDERS OF CITIZEN INDUSTRIES
LIMITED SELLS ITS BENGALURU FACILITY TO DAIKIN
Helmed by DSK Legal, shareholders of Citizen Industries
Limited (Citizen), have sealed a lucrative deal with the
Japanese multinational air-conditioning major Daikin
Air- conditioning India Private Limited (Daikin) to sell
their Bengaluru plant.
DSK Legal advised the shareholders of Citizen Industries
Limited Mr. Kamalesh Mehta and Mr. Praful Patel and
their respective family members (Sellers) with respect
to their 100% shareholding in Citizen andsale of the
manufacturing facility situated in Bengaluru to Daikin
for Rs. 125 crore.
36 January 2021 | | www.legaleraonline.com
the UK-India Treaty and awarded damages of USD 1.2
billion, together with interest and costs.
Cairn is one of Europe’s leading independent oil and gas
exploration and development companies.
According to the Cairn Energy website, “Cairn’s claim
was brought under the terms of the UK-India Bilateral
Investment Treaty, the legal seat of the tribunal was
the Netherlands and the proceedings were under the
registry of the Permanent Court of Arbitration. The
tribunal ruled unanimously that India had breached
its obligations to Cairn under the UK-India Bilateral
Investment Treaty and has awarded to Cairn damages
of US$1.2 billion plus interest and costs, which now
becomes payable.”
The S&R team was led by partners Niti Dixit and Uday
Walia (now with Touchstone Partners) and included
counsel Abhishek Tewari and associate Aubert
Sebastian.
The DSK Legal team that advised Citizen comprised
of Mr. Hemang Parekh (Partner), Mr. Jayesh Kothari
(Principal Associate) and Mr. Supallab Chakraborty
(Associate).
Founded in the year 1995, Citizen is engaged in the
business of manufacturing or trading or assembling
or supplying of the following products used in varied
industries: (a) AHUs (including fans, fan coil units
and coils specifically for AHUs); (b) fan coil units and
HVAC coils (whether or not used in AHU); and (c) coils
for AHUs, fan coil units and other HVAC applications
(“Business”). Citizen has state-of-the-art manufacturing
facilities in Ahmedabad and the other in Bengaluru and
employs in excess of 650 employees.
Daikin is one of the leading manufacturers of air-
conditioners (both domestic and commercial) in India.
Through this deal, Daikin proposes to combine the air-
handling and coil manufacturing units of Citizen with its
pan India business of manufacturing air-conditioners.
This deal is aimed to help Daikin in strengthening its
position in the commercial air-conditioning segment.

DSK Legal assisted Citizen and the Sellers in inter alia: (i)
drafting/reviewing/revising of the share purchase and
share-subscription agreement (“SPSSA”); (ii) drafting/
reviewing/revising of documents ancillary to the SPSSA
such as the disclosure letter, property documents,
employment agreements, etc.
The date of Execution of the Definitive Documents was
on December 15, 2020.
Ms. Pallavi Joshi and Mr. Siddharth Shah assisted in
drafting the sale deed and property related documents
for sale of factory premises situated in Bengaluru.
S&R ASSOCIATES REPRESENTS EMBASSY OFFICE PARKS REIT IN
ACQUIRING EMBASSY TECH VILLAGE
S&R Associates represented the Embassy Office Parks
REIT, India’s first listed real estate investment trust,
and its manager, Embassy Office Parks Management
Services Private Limited, in the acquisition of
approximately 84.05 acres in Embassy Tech Village,
an office park located in Bengaluru along with the
associated business of common area maintenance
services for an aggregate enterprise value of `97,824
million (U.S.$ 1.3 billion).
Embassy Tech Village is a 9.2 msf integrated office park
located on Outer Ring Road Bengaluru, India’s best-
performing office sub-market.
Deal Corner
ICICI Securities are acting as the financial advisor to
Citizen.
Daikin is being represented by Pioneer Legal (legal
advisors) and KPMG (financial advisors).
The deal is expected to further bolster Daikin’s presence
in India particularly in the commercial air-conditioning
segment. 75% of Daikin’s `5000 crore business in India
comes from the domestic market. The deal with Citizen
would enable Daikin to emerge as a complete player
in the air-conditioning market offering a complete
solution.
The acquisition was completed through the purchase
of equity shares by the Embassy Office Parks REIT from
the Embassy sponsor, the Blackstone sponsor group
and third party shareholders for a combination of
cash and issuance of units. This is the first large-scale
acquisition by a listed REIT in India.
In a stock exchange announcement by Embassy REIT,
Mike Holland, Chief Executive Officer of Embassy REIT,
said, “We are delighted to announce the completion
of the Embassy TechVillage acquisition. ETV is a unique
large-scale business park with a marquee multinational
occupier base that is located in one of India’s best-
performing office sub-markets.
Our ability to raise the unit capital required to fund
the acquisition amidst market uncertainties and the
ongoing pandemic is a testament to the confidence
that investors place in our business model and our
team’s execution capabilities.
This acquisition is consistent with our growth
strategy of driving incremental value to unit
holders by integrating high-quality assets which are
complementary to our existing portfolio. We expect
to continue pursuing strategic and accretive growth
opportunities in the market.”
The S&R team was led by partners Sandip Bhagat,
RadhikaIyer and Shivaji Bhattacharya, and included
associates Prateek Sharma, Tarinee Sudan, Pratichi
Mishra, Rachita R. Bhat, Anugya Sahai, Sushmita Sur,
Neethu Roy, Apoorv Chaturvedi, Shwetank Sharma,
Sonal Bhargava and Somya Jena.
www.legaleraonline.com | | January 2021 37
 Within the Circle
DSK LEGAL HELPS SONU SOOD SEAL A DEAL
DSK Legal has helped noted film star turned social
worker Sonu Sood (SS) and his Sood Informatics LLP
(SIL) seal a deal with Spice Money Limited toward their
shared vision of digitally empowering rural India.
DSK Legal represented and advised SS and SIL in
relation to SIL’s investment in and endorsement of
Spice Money Limited (Spice Money), formerly known as
Spice Digital Limited. Spice Digital Limited was originally
incorporated as Cellebrum.com Private Limited, a
subsidiary of Digispice Technologies Limited.
The collaboration between SS, SIL and Spice Money
stems from the shared aspirations of the parties to
digitally and financially empower over one crore rural
entrepreneurs, with an intent to encourage financial
inclusion and bridge the gap between rural and urban
India.
S&R ASSOCIATES REPRESENTS EMBASSY OFFICE PARKS REIT IN
INSTITUTIONAL PLACEMENT
38 January 2021 | | www.legaleraonline.com
Spice Money is predominantly engaged in the business
of operating tech-enabled banking, payments and
financial services network and tech-enabled multi-utility
platform enabling access of multiple products and
services to small businesses and customers.
As a part of the transaction, SS shall be acting as Spice
Money’s brand ambassador and providing endorsement
services to further Spice Money operations and
outreach, in consideration for allotment to 8,69,030
equity shares of Spice Money with differential voting
rights (“Class B Equity Shares”).
DSK Legal assisted in, amongst others: (a) structuring
of the transaction, (b) drafting, review and negotiation
of the: (i) endorsement agreement between SS, SIL and
Spice Money for provision of endorsement services by
SS and allotment of Class B Equity Shares to SIL; and (ii)
shareholder’s agreement between SS, SIL, Digispice and
Spice Money to record their understanding in relation
to SIL’s rights and interests in Spice Money and for the
promotion and operations thereof, and (c) assisting in
execution of the transaction.
The DSK team representing SS and SIL comprised of
Mr. Rishi Anand (Partner), Mr. Jitendra Soni (Principal
Associate), Mr. Chirag Jain (Senior Associate) and Ms.
Palak Sehgal (Associate).
The Digispice and Spice Money team was represented
by S&R Associates.
S&R Associates represented the Embassy Office Parks
REIT, India’s first listed real estate investment trust,
and its manager, Embassy Office Parks Management
Services, in an institutional placement of 111,335,400
units for an amount of `36.85 billion to eligible
institutional investors. This is the first institutional
placement by a listed real estate investment trust in
India.
According to the stock exchange announcement in
relation to the transaction, “The Institutional Placement
launched on December 15, 2020 and witnessed
strong demand from both existing as well as new
institutional investors, including global and domestic

investors, pension funds, insurers, and alternative asset
managers.”
The stock exchange announcement also added,
“Subject to applicable regulations, Embassy REIT
proposes to use the proceeds from this Placement to
fund its proposed acquisition of Embassy TechVillage
(“ETV”) that it announced earlier on November 17,
2020, and for general purposes. Embassy REIT is
L&L PARTNERS LEADS PACK IN INDIA RENEWABLES ADVISING: BNEF
This year, the law firm has advised on 2.1 gigawatts of
clean energy deals.
According to Bloomberg NEF data, clean energy legal
advisory services in India have been dominated by L&L
Partners in 2020. 2.1 Gigawatts worth of deals equivalent
to around 20 per cent of the 2021 annual capacity
forecast of BNEF have been advised by L&L Partners.
BNEF found 27-odd projects adding up to 985 megawatts
refinanced in India this year.
Law firms like L&L Partners and Allen &Overy are relied
upon by banks and other financial institutions to make
sure that all legal procedures are followed and contracts
are watertight even as power producers leverage lower
interest rates to refinance their debts.
Softbank Group Corp-backed SB Energy was advised by
L&L Partners in acquiring debt for its Rajasthan-based
OZ FIRM IGO LTD COMES TO THE RESCUE OF AN UNDER WEATHER
CHINESE FIRM ADVISED BY CLAYTON UTZ AND HERBERT SMITH
FREEHILLS ON $1.4 BILLION JOINT VENTURE
Deal Corner
acquiring ETV from the Embassy Sponsor, members of
the Blackstone group and other selling shareholders,
for a total enterprise valuation of `97,824 million ($1.3
billion), subject to closing adjustments. The transaction
is expected to close by end of December 2020.”
The S&R team was led by partners Sandip Bhagat and
Juhi Singh, and included associates Pratichi Mishra,
SonalBhargava and Somya Jena.
600MW solar project. Also, Petronas Gas Bhd-backed
Amplus Solar was advised by L&L Partners in acquiring
from Acme Solar the 100MW Pavagada plant.
As investment in renewables rises over the next few
years, L&L Partners and other such law firms are
expected to be involved in more such deals.
The debt-ridden Tianqi Lithium, based in Western
Australia, is the world’s largest producer of lithium
chemical used in electric vehicle batteries. A Perth-
based nickel and gold miner, IGO Ltd., has come to
the rescue of the debt-laden Chinese company Tianqi
Lithium by announcing investment worth $1.4 billion.
Tianqi Lithium controls Greenbushes, which is the
world’s biggest hard-rock lithium mine.
Interestingly, an Australian company coming to the
rescue of a Chinese firm has come at a point when inter-
www.legaleraonline.com | | January 2021 39
 Within the Circle
government relations between Australia and China
are witnessing their lowest ebb in the wake of the
Coronavirus pandemic outbreak.
Increased naval activities of China in the South China
sea in which Australia has a big stake and attempts of
some Chinese investors to take over some Australian
companies currently reeling under the economic slump
following the COVID-19 outbreak have strained bilateral
and multilateral ties between the two countries.
Tianqi is one of the world’s largest producers of
lithium chemical used in electric vehicle batteries. The
growing demand for the zero-emission electric vehicles
has opened the doors for an opportunity for all firms
associated with lithium battery production starting from
the mining stage. Tianqi has been under the weather
with its inability to repay loans. It was supposed to
repay a $1.88 billion loan towards the end of November
and had secured a one-month moratorium.
According to the details coming out from Down Under,
IGO Lithium Holdings would take up 49 per cent stake
in Tianqi Lithium Energy Australia (TLEA) valued at
$1.4 billion, while Tianqi would hold 51 per cent stakes
in the firm. IGO Lithium Holdings’ 49 per cent stake in
TLEA would add on to its 24.99 per cent stakes in the
Greenbushes, making it a major player in the lucrative
Lithium mining and processing business.
ASTRA ZENECA BUYS US BIOTECH COMPANY ALEXION FOR $39 BILLION
ADVISED BY FRESHFIELDS, WACHTELL AND MACFARLANES
British pharmaceuticals group Astra Zeneca has
announced that it was buying the Boston-based US
biotech company Alexion. The takeover will enable
the British group to expand its footprint and become a
40 January 2021 | | www.legaleraonline.com
TLEA intends to use the money it will get to repay
the existing $1.2 billion worth principal on loan and
interests. The deal, however, is subject to approval
from Australia’s Foreign Investment Review Board,
which is expected to focus on the issue from January 5,
2021 onwards.
If approved, TLEA plans to extend loan repayment
term by two years to 25 November 2022, which should
give it enough leeway to restructure its finances and
existing business. TLEA may also take up a shareholder
loan offered by its chairman Jiang Weiping worth $117
million which will attract an interest rate of not higher
than five per cent and has to be repaid within five years.
This shareholder loan can be availed from 1 February.
TLEA is confident that the US-based Albemarle Corps
right to first refusal would not come in the way of its
deal with the IGO. Albemarle Corp holds 49 per cent
stake in the Talison Lithium joint venture that operates
Greenbushes. Albemarle Corp had earlier expressed its
interest in taking full control of the Greenbushes.
A clear picture is expected to emerge in this case only
after Australia’s Foreign Investment Review Board
takes a final call on this issue.
The joint venture has been advised by Clayton Utz and
Herbert Smith Freehills.
major global player in the field of immunology.
While awaiting approval to roll out the COVID-19
vaccine, the deal will make the British pharma major a
big player in the lucrative blood disease sector.
The deal was finalized for 39 US dollars, making it the
biggest deal in the pharmaceutical sector. Astra Zeneca
is in the process of finalizing a vaccine against COVID-19
which is expected to become the fulcrum of the British
government’s vaccination drive in its fight against the
Coronavirus pandemic.
“Alexion has established itself as a leader in complement
biology, bringing life-changing benefits to patients
with rare diseases,” Pascal Soriot, chief executive of
AstraZeneca said in a statement.
The cash-and-stock deal that valued Alexion at $175
a share, which is premium of 45 per cent above the

market value of the share, has been approved by
boards of both companies. The deal is expected to
give a boost to Astra Zeneca’s bid to play a big role in
treating blood-related disorders. Since taking over as
the chief executive of AstraZeneca, Soriot has led the
British pharmaceutical group into financially beneficial
like cancer therapies.
“This transaction marks the start of an exciting new
chapter for Alexion,” Ludwig Hantson, chief executive
of Alexion said.
The takeover is expected to close in the third quarter of
2021. The deal is a win-win for all – AstraZeneca gets into
TRAVERS SMITH CORPORATE CO-HEAD HIRED BY LATHAM IN LATEST
TOP-LEVEL LONDON HIRE
The London private equity practice of Latham &
Watkins has been bolstered with the hire of Travers
Smith’s Corporate Co-head, Paul Dolman. With Latham
having already hired Sam Newhouse, up-and-coming
M&A partner from Freshfields Bruckhaus Deringer, this
year, and Simpson Thacher & Bartlett last week, thus
completing four lateral partner hires in 2020, 3 out of
which are from Magic Circle firms, the move once again
underscores the buying power of top US firms targeting
talent in the City of London.
Described by the firm on its website as the “go to”
lawyer for some of its key clients including Graphite
Capital, Hellman & Friedman, TA Associates and
Bridgepoint Capital, Paul Dolman, is also head of the
private equity and private sponsors’ group. Trained at
Travers Smith, he was made partner in 2006.
He has advised on significant deals such as advising
TA Associates on its acquisition of Old Mutual Global
Investors from Quilter for $770m in 2018 and acting for
Bridgepoint on the $2bn sale of PretA Manger to JAB
Holdings also in 2018.
Deal Corner
another lucrative sector, Alexion a whopping sum of 39
billion dollars while Alexion shareholders will now own
15 per cent of the combined company.
Astra Zeneca has already become the first company
to publish its final-stage clinical trial date in a scientific
journal, clearing a major impediment before starting
mass production of its COVID-19 vaccine that it has
developed with researchers from Oxford University.
British authorities had held back the requisite permission
for mass production and inoculation over some queries
which now have been answered through the final-stage
clinical trial results. The Astra Zeneca-Alexion merger
was advised by Freshfields, Wachtell and Macfarlanes.
“A prolific dealmaker and one of the market’s leading
private equity lawyers” is what managing partner of the
London office of Latham, Stephen Kensell, described
him as. David Walker, global corporate vice chair based
out of London, who was earlier private equity co-head
at Clifford Chance, said, “Dolman’s connections and deal
experience were highly complementary to the firm’s
and that he would play a major role in the continued
expansion of their practice in the UK and globally.”
TA Associates, Bridgepoint and Hellman & Friedman are
notable shared clients with the Milan and Paris offices
of Latham both having advised TA Associates on recent
deals. Bridgepoint is a client of the Paris arm while
Hellman & Friedman are on the Milan team’s roster.
Having advised on 50 deals valued at $40.2bn,
Latham was placed fourth by value in Q1-Q3 2020 in
Mergermarket’s global private equity league table and
in second place by volume after US rival Kirkland & Ellis.
The Europe M&A table by value for the same period too
was topped by the Los Angeles giant which advised on
131 deals worth $157.9bn. While Travers Smith attributes
its relatively rare senior departures to its unified culture,
in July it blamed the 20 per cent provisional fall in profit-
per-partner for the financial year ended 30 June on
COVID-19 and the uncertainty around BREXIT.
Top private equity lawyer Edmund Reed in November
was elected as managing partner unopposed to
predecessor David Patient. In July 2021, Reed will take
up the post. A statement from the firm read: “Paul has
made an important contribution to Travers Smith’s
private equity and financial sponsors practice. We will
be very sorry to see him go – but wish him all the best
for the future.”
www.legaleraonline.com | | January 2021 41
 Within the Circle
LATERAL MOVE
L&L PARTNERS WELCOMES BACK PRABJOT SINGH BHULLAR AS PARTNER
Prabjot Singh Bhullar has joined L&L Partners as a
Partner.
Rajiv Luthra, Founding Partner of the Firm said, “I take
immense pleasure in welcoming back Mr. Prabjot Singh
Bhullar to our family, as I take pride in informing you
that Prabjot was among the first few lawyers to join the
Firm…and I am delighted to have him back on board!!
…I believe Prabjot’s professional experience will add
PIONEERING VENTURES GROUP ELEVATES YASHASVINI KUMAR AS THE
GROUP GENERAL COUNSEL AND CHIEF COMPLIANCE OFFICER
PIONEERING
VENTURES
GROUP
Yashasvini Kumar has been named as the Group General
Counsel and Chief Compliance Officer of Pioneering
Ventures Group. This is a global-level position, and she
is the first woman in the company to hold this position.
42 January 2021 | | www.legaleraonline.com
strength and value to the Firm’s existing practice areas.’’
Prabjot’s professional experience is spread across
the infrastructure sector and enables him to advise
and assist on legal, regulatory and compliance issues
arising during the various phases of the project cycle
i.e. bidding, development, construction and operation,
draft and negotiate complex project construction and
O&M contracts, advise on legal due diligence exercises
for investments and acquisitions including transactional
documents. He has advised on PPP projects including
drafting bid documents in the infrastructure and social
infrastructure space.
Additionally, Prabjot has advised and represented
clients on diverse regulatory issues related to tariff,
licensing and contracts before Electricity Regulatory
Commissions in India and the Appellate Tribunal for
Electricity.
Prabjot has graduated from the Campus Law Centre,
Delhi University in 1992. He has practiced as an
independent legal practitioner and has been a Partner
with leading Indian law firms, including, AZB & Partners
in Mumbai and JSA and Khaitan & Co in New Delhi.
She will be based out of both Mumbai and Switzerland
and will continue her duties as Co-CEO of Pioneering
Ventures India.
An integral part of the PV India team since 2017, Ms.
Kumar has been critical in ensuring a seamless corporate
consolidation and restructuring of the PV group. Whilst
she was the Chief Legal Officer for PV India, she was
instrumental in building HR, Legal and compliance
functions into robust self-sustainable units.
In her new role as Group General Counsel and Chief
Compliance Officer, she will be responsible for providing
leadership, guidance, direction and assistance on
various legal, regulatory, compliance and business
matters across a geographical footprint of 3 continents
and 8 countries thereby ensuring strategic growth and
driving business excellence initiatives across the group.

Congratulating Ms. Kumar on her promotion, Ron Pal,
Founder and Chairman of the PV Board said: “This
promotion is a testament to Yasha’s hard work and
commitment. Yasha is highly respected within the
Company and will continue to be a valuable asset in
building the global footprint of PV Ventures. PV is
committed to growing and developing employees, and
Yasha is a clear example of the exceptional talent we
have in the Company.”
Taking over her new role as the Group General Counsel
and Chief Compliance Officer, Pioneering Ventures,
Ms. Yashasvini Kumar remarked, “The group is at
an inflection point, with tremendous potential for
immediate growth. It is a great honor to be given the
opportunity and I am committed towards ensuring
efficiency and business excellence as we transform the
LEADERSHIP CHANGES AT WILLKIE FARR & GALLAGHER AS VETERAN
CHAIRMAN RETIRES
The outgoing Steven Gartner will be replaced by Matthew
Feldman, who will serve as joint chairman with Thomas
Cerabino.
Restructuring partner Matthew Feldman has been
named as the new joint chairman of Willkie Farr &
Gallagher. Willkie veteran for 35 years, Steven Gartner,
is due to retire at the end of this month and will be
replaced by Matthew Feldman. Feldman, who is based
out of New York, will serve alongside Thomas Cerabino,
who, since 2010, has led the firm with Gartner.
Part of the senior leadership at Willkie during the
same period, Feldman, has been serving as co-chair of
business reorganization and restructuring and on the
firm’s executive committee.
“Willkie is an exceptionally strong institution, and this is
thanks to the groundwork Steve and Tom have laid over
the past decade for a bright and promising future for our
firm… I intend to pick up the baton they are handing me
and continue to grow and develop this place we love so
much, while deepening our commitment to excellence
for our clients, valuing every individual’s contributions,
and aiming to have a positive impact on the communities
in which we live and work,” said Feldman.
Part of the firm since 1991 and a partner since 1998,
Feldman, in 2009 briefly left Willkie to serve in the
Obama administration’s task force on the auto industry
as chief legal advisor.
Deal Corner
food industry globally.”
Ms. Kumar has graduated from NALSAR and has 11
years of professional experience. Before joining PV, she
was a lawyer with Platinum Partners and the M&A team
in Trilegal, two of India’s leading law firms.
Peter Ackermann, PV’s outgoing General Counsel
and Chief Compliance Officer, will move to the role of
Strategic Advisor.
Pioneering Ventures is a food and technology platform
based in India and Switzerland. With more than a
decade of entrepreneurial activity in India, Pioneering
Ventures has built a portfolio of strategically and
operationally interlinked food, technology and financial
service businesses.
STEVEN GARTNER MATTHEW FELDMAN
The task force was constituted during the recession
to help rescue stressed car manufacturers Chrysler
and General Motors. The firm, under the leadership of
Gartner and Cerabino, has grown revenue by over 80
per cent, increased its lawyer headcount from 550 to
750 and expanded geographical reach. It hired in April
former chairman of Jenner & Block Craig Martin and
five other partners to open a Chicago office.
“Steve has been a terrific leader, lawyer, mentor,
colleague and friend, and he has played a pivotal role
in transforming Willkie into the firm we are today…
Matt and I are already accustomed to working closely
together on firm management issues so this will be a
www.legaleraonline.com | | January 2021 43
 Within the Circle
seamless transition. Like Steve and me, Matt has grown
up at Willkie and he very much embodies our cultural
hallmarks of transparency, entrepreneurialism and,
particularly, collegiality and respect,” Cerabino said.
Having joined the firm as a summer associate in 1983,
Gartner’s career saw him recognized as one of the
leading private equity and M&A lawyers in the US. He
LEADING ANTITRUST AND COMPETITION LAWYER ANTONIO BAVASSO
ADDED BY SIMPSON THACHER
SIMPSON
THACHER
Antonio Bavasso will join the London office of Simpson
Thacher & Bartlett LLP as Partner, Antitrust and
Trade Regulation Practice. One of the world’s leading
international law firms, New York-headquartered
Simpson Thacher & Bartlett LLP (www.simpsonthacher.
com) has more than 1,000 lawyers.
A statement from Simpson Thacher & Bartlett LLP
read, “Along with our recent promotion of Étienne
Renaudeau to Partner, we expect David, Antonio
and Étienne to spearhead the future growth of our
European antitrust practice.”
Widely recognized as a leading antitrust and regulation
lawyer with over 20 years’ experience, Bavasso advises
clients across the telecom, media and technology
sectors and in an array of matters before the Markets
Authority, United Kingdom Competition, European
Commission and other global competition authorities.
Bill Dougherty, Chairman of Simpson Thacher’s
Executive Committee, said, “Bavasso has extensive
experience that is relevant to our clients, having
advised on the antitrust aspects of some of the
most high-profile transactions in recent years. That
experience will further enhance our ability to provide
44 January 2021 | | www.legaleraonline.com
retired back in February. “I never dreamed I would
have such a long and successful career in such a special
firm. There is no place I would have rather been for the
past nearly four decades… I am proud of all we have
accomplished as a firm, most recently how we have
come together to support each other and our clients
during the ongoing pandemic,” Gartner said.
clients operating across Europe with top-tier advise in
both tackling complex transactions and in navigating
the enforcement landscape. We are very pleased to
welcome him to the Firm.”
The Antitrust and Trade Regulation practice of Simpson
Thacher advises firms across industries on regulatory
issues affecting their interests and operations around
the world and on global antitrust and competition
needs.
David Vann, Head of Antitrust for Europe and Asia at
Simpson Thacher, said, “Bavasso is known throughout
the market for his superb judgment and ability to
provide clients with insightful and practical advise on
high-profile, cross-border transactions, as well as in
complex antitrust litigation and enforcement matters.
This diversity of experience makes him a natural fit for
Simpson Thacher and a wonderful addition to both
our global M&A and Antitrust and Trade Regulation
Practices, and sets the stage for the further expansion
of our European antitrust and competition practice.
Jason Glover, Managing Partner of Simpson Thacher’s
London office said, “Given the sophistication and
versatility of his experience, Bavasso will deliver
tremendous value to our clients and is an excellent
addition to our outstanding group of lawyers in London.
Along with our recent promotion of Étienne Renaudeau
to Partner, we expect David, Antonio and Étienne to
spearhead the future growth of our European antitrust
practice.”
Bavasso was earlier Co-Head of the Global Antitrust
Practice and Co-Head of the Telecoms, Media and
Technology Practice at Allen &Overy LLP. Both Italy and
UK qualified, Bavasso has a J.D., magna cum laude, from
the University of Florence and Ph.D. from University
College London, where he is visiting professor and Co-
Founder and Co-Director of the Jevons Institute for
Competition Law and Economics.
 LE Zoom In

Vodafone
and India’s Offshore
Indirect Transfer Tax
The saga continues

46 January 2021 | | www.legaleraonline.com

 Zoom In

MUKESH BHUTANI
Founder & Managing Partner

With tax policy certainty

crucial for taxpayers
(including foreign investors)
to make rational economic
choices in the most efficient
manner, India can think of
selectively applying OIT law
as an anti-abuse measure
as it may have a negative
impact on FDI

www.legaleraonline.com | | January 2021 47

 Zoom In
Background
In September 2020, the Permanent Court of
Arbitration at The Hague issued an award in
favor of Vodafone 1 against India’s income tax
department demand to tax gains arising from the
offshore indirect transfers (“OIT”) law in light of
retrospective amendments to the Income-tax Act,
1961.

The concept of OIT law in India was unheard of

until the Vodafone case 2. By way of background,
Hutchison Telecommunication International Ltd.
(“HTIL”), Cayman Island Incorporated, and its
downstream companies held interests in the mobile
telecommunications business across the globe
including India. CGP Investments (Holdings) Ltd.
(“CGP”), the 100% subsidiary of HTIL incorporated
in Cayman Island as an ‘exempted company’.
The investment was made by multiple Mauritius
companies in an Indian company, Hutchison Max
TARUN JAIN Telecom Ltd. (“HMTL”) - later renamed as HEL.
Partner CGP held investments in HEL through subsidiaries
42.3%, through joint ventures 9.6%, trade rights (call
options) 15%.

In 2007, Vodafone International Holdings BV

(“Vodafone” or “Dutch Entity”) entered Sales
Purchase Agreement with HTIL for transfer of share
capital in CGP including all the rights in respect of
its Indian investments for around $11.2 billion. The
moot question was whether the gains arising from
the transaction were chargeable to tax in India
under Section 9 of the Income-tax Act (“ITA”) and
if yes, then the taxes should have been withheld by
Vodafone, failure to do so shall imply that Vodafone
was deemed to be a default assessee under Section
201 of ITA. Interestingly, ITA did not have the
provision of OITs and applicability of withholding
tax provision for a transaction between the non-
residents. The tax department raised notice to
SURABHI CHANDRA Vodafone for non-compliance under the ITA. As a
Senior Associate matter of course, Vodafone filed a writ petition to
the High Court for quashing the demand on grounds
of lack of jurisdiction. The High Court held the capital
gains arising from the transaction was chargeable
to tax in India and, hence, the proceedings under
Section 201 are sustainable.

Vodafone filed an appeal to the Supreme Court

which held that the transfer of shares of a foreign
company having an Indian subsidiary does not
1
PCA Case No. 2016-35: Vodafone International Holdings BV (The
Netherlands) v. India Award.
2
Vodafone International Holdings B.V. v. Union of India [2012] 341 ITR 1 (SC)

48 January 2021 | | www.legaleraonline.com


amount to ‘transfer of any capital asset situated
in India’ as such section is not a ‘look through’
provision. Further, the situs of shares is the place
of incorporation of the company and not the place
where underlying assets are situated. The apex
court held that considering it was an offshore
transaction between two non-resident companies,
with the subject-matter being transfer of shares of
a non-resident company, the Indian tax authorities
had no territorial tax jurisdiction. In order to tax a
transaction, it is necessary to establish the nexus
principle with the jurisdiction. In case of abusive/
sham transaction resulting in tax avoidance, the
tax authorities are within their rights to pierce the
corporate veil for re-characterizing the transaction
in accordance with its economic substance including
in cases of holding company-subsidiary relationship.
The success was short-lived as post the Supreme
Court judgment, ITA was amended retrospectively
to tax such transactions.
Advent of India’s offshore
indirect transfers
While introducing the amendments in the Finance
Bill of 2012, it was explicitly stated that these are
in the nature of ‘clarification’ so as “to restate the
legislative intent as certain judicial pronouncements
have created doubts about the scope and purpose” 3.
Particularly, a validation clause was introduced in
the Finance Act 2012 to recover the taxes along
with interest and penalty from Vodafone. Such
validation clause was retroactive in nature as it
was stated that notice issued for taxes levied prior
to such clause shall be valid and this clause shall
operate irrespective of the order of any Authority 4.
Additionally, “substance over form” was codified
in the form of General Anti Avoidance Rule (GAAR)
law to empower the tax administration to lift the
corporate veil in cases of abusive/sham transactions
to address the issue of aggressive tax planning.
The adverse reactions to the amendments in the
Finance Act 2012 led the Government to form an
expert committee for examining GAAR provisions
for clarity and consultation with the stakeholders
Subsequently, such committee was directed to also
examine the implications of OIT law in the context
3
Memorandum explaining Finance Bill, 2012
4
Ibid
5
Notification, dated September 1, 2012
6
Indian treaties with Canada, Israel, Namibia, South Africa, United Kingdom, Unites States of America, Zambia
7
Cairn U K Holdings Ltd. v. Deputy Commissioner of Income-tax (International Taxation) [2017] 79 taxmann.com 128 (Delhi - Trib.)
8
https://economictimes.indiatimes.com/tech/ites/bain-capitals-acquisition-of-30-stake-in-genpact-heads-for-income-tax-fight/articleshow/15332970
cms#:~:text=NEW%20DELHI%3A%20Bain%20Capital’s%20acquisition,of%20tax%20in%20the%20country
Zoom In
of all non-resident taxpayers 5. The committee
suggested that such provision should not be
retrospective in nature as it is a measure to increase
the tax base and it does not correct anomalies in the
statute or remove technical defects for computation
mechanism. However, the Government did not
reverse the decision of retrospective taxation,
instead formed a committee consisting of CBDT
members for invoking OIT law on transactions
before April 1, 2012 with a rider that no notice or
proceeding has been initiated implying that all new
cases shall first be referred to the committee.
While presenting the Finance Bill 2012, the Finance
Minister asserted that such provisions are applicable
with the countries not having tax treaty with India
implying that the OIT law shall not override the
provisions of the tax treaty. On examining the
provisions of tax treaty, only a handful of Indian
treaties state that the capital gains should be taxed
as per the domestic laws of the source country. 6
This implies that such provisions shall be applicable
as the provisions of tax treaty cannot make the
domestic law static with respect to taxability of a
particular income when unequivocally both have left
it to the domestic laws of the countries 7. However,
the other view held is by virtue of an amendment
to domestic laws, the principle of good faith shall
be breached as the other treaty partner may not be
aware of such amendments.
Application of offshore indirect
transfers law
Post legislation of the OIT law, the high profile
acquisition (30%) of Genpact by Private Equity
Fund Bain caught the eyes of the tax department.
Bain acquired shares of Genpact Ltd, a Bermuda
incorporated company listed on the New York
Stock Exchange having operations and income from
over 80 countries. Genpact India is a subsidiary of
Genpact Ltd. In terms of factual information, 80%
of Genpact’s delivery happens from India, 67% of
the revenues are generated from India and more
than 70% of the employee workforce was based
in India 8. Considering that India did not have a tax
treaty with Bermuda, there were indications of OIT
law being applied. Considering such deal, critical
www.legaleraonline.com | | January 2021 49
 Zoom In
concerns were raised that should the law be applied
to the listed entities and portfolio investors or foreign
institutional investors.
Another prominent case is Cairn U.K Holdings Ltd
(“Cairn Holding”)9. The facts being Cairn Holdings, a
UK incorporated company, and WOS of Cairn Energy
PLC (“Cairn Energy”). Cairn Energy, a Scotland
incorporated company that held various oil and gas
assets in India by way of subsidiaries (direct and
indirect). Cairn Holding and Cairn Energy had entered
a transaction wherein the entire share capital of
subsidiaries of Cairn Energy holding Indian assets
shall be transferred to Cairn Holdings in exchange
for the share capital of Cairn Holding. Subsequently,
Cairn Holdings transferred its entire shareholding in
9 Indian subsidiaries to Cairn India Holding Limited
(“Cairn India Holding”), a Jersey incorporated
company in exchange for the share capital (100%) of
Cairn India Holding. Post which, Cairn India Limited
(“Cairn India”) acquired 100% shareholding of Cairn
India Holding from Cairn Holding by combination
of cash and share swap arrangement. The tax
department contended that the transfer of shares of
Cairn India Holdings to Cairn India qualified as indirect
transfer under the India-UK DTAA, liable to tax in India
under OIT provisions amounting to USD 1.56 billion.
Unlike Vodafone which waited to file for arbitration
proceedings, Cairn Energy and Cairn UK Holding
had filed arbitration proceedings under Article 9 of
the India-UK Bilateral Investment Promotion and
Protection Agreement (BIPA) in advance without
waiting for the decision of the Tribunal. Though a
request was made to the Tribunal to adjourn the
proceedings until the proceedings were concluded
at the International Court of Justice, which got
rejected and the order was passed in favor of revenue
authorities.
However, in light of the amendments, the tax
department disregarding the intent aimed to bring
in various transactions within the Indian tax net
irrespective of whether such right was not provided
by the tax treaty. One of the prominent cases is Sanofi
Pasteur10 wherein the tax department is passionately
contesting that Article 14(5) of the India-France DTAA
covers OIT provisions, which is currently pending in
the Supreme Court. The High Court held that Article
9
Ibid
10
Sanofi Pasteur Holding SA v. Department of Revenue, Ministry of Finance [2013] 354 ITR 316 (Andhra Pradesh)
11
Article 13(4) of OECD Model Convention, 2017 and Article 13(4) UN Model Convention, 2017
12
Sofina S.A. v. Assistant Commissioner of Income-tax [2020] 116 taxmann.com 706 (Mumbai - Trib.)
13
Public Notice [2015] No. 7 issued by China’s State Administration of Taxation on 6 February 2015
14
Indian Draft Report on Retrospective Amendments Relating to Indirect Transfer by Expert Committee (2012)
15
Ibid
16
https://www.tax-platform.org/sites/pct/files/publications/PCT_Toolkit_The_Taxation_of_Offshore_Indirect_Transfers.pdf
50 January 2021 | | www.legaleraonline.com
14(5) is in relation to the shares of the company which
does not allow a ‘look through’ approach and such
interpretation by the tax administration shall imply
a unilateral amendment to the tax treaty. Typically, a
‘look through’ approach is found in the tax treaties
only in relation to shares of a company deriving value
from immoveable property11.
Despite the judgment in the case of Sanofi, the tax
authorities made a similar interpretation in the case
of Sofina12 wherein the tax authority argued that in
case of OITs, the holding company’s share deriving
value from Indian assets shall be deemed to be an
Indian resident. Such interpretation was rejected by
the Tribunal.
International overview of offshore indirect
transfer law
Internationally, OIT law is recognized by limited
countries. E.g.: China has legislated the OIT law under
anti-avoidance law13. It is applicable in case of transfer
of Chinese company indirectly through a sham
arrangement. In Brazil, OIT law is legislated under
statutory provisions which disregard intermediate
company used for the transfer of assets in Brazil if
the company does not have business purposes or
bonafide purpose.14 In Israel, foreign companies are
subject to tax under the OIT law if the asset located
outside Israel gives the right (direct or indirect) to any
asset/property15.
Though the OITs provisions did not find a place in the
OECD Model Convention or UN Model Convention.
However, post three highly publicized OITs (i)
India’s judgment on Vodafone, (ii) indirect sale of
the Peruvian oil company Petrotech Peruana, and
(iii) indirect sale by Zain of various assets in Africa
including a mobile phone operator in Uganda led the
Platform for Collaboration on Tax – a joint initiative of
the IMF, OECD, UN and World Bank Group – to issue
Toolkit on ‘Taxation of Offshore Indirect Transfers’16.
All these transactions had similarities in terms of
these issues were faced by the developing countries
wherein multinational companies escaped taxation
in the source jurisdiction including the jurisdiction in
which the underlying assets are located.

The OECD Model Convention 2017 does not address
tax gains arising on the shares of the company in
the source country, perhaps because it believes that
such gains shall only be taxed in the owner’s resident
state17. However, taking note of the developed
countries, the Twentieth Session of the Committee
of Experts on International Tax proposed insertion
of a draft article concerning capital gains on OITs
in the UN Model Tax Convention for addressing the
issues18. Post consultation, a note was released in the
Twenty-First session for approval which included the
recommendation by the stakeholders in order to be
robust19.
Vodafone’s Arbitration Award and beyond
In view of the Supreme Court decision, against the
retrospective amendments, Vodafone had various
legal options such as (i) legal challenge to the vires
of the validation clause, (ii) seeking solution under
the Mutual Agreement Procedure (MAP) under
India-Netherlands DTAA, etc. Instead, Vodafone filed
arbitration proceedings under Article 4 of the India-
Netherlands BIPA claiming that attempt to recover
taxes violated India’s commitment for fair and
equitable treatment.
Due to the request for confidentiality, the detailed
arbitration award has not been released. The
operative part of the arbitration award holds that:
(i) The Arbitral Tribunal has the jurisdiction to deal
with the ‘retrospective tax issue’ which was
challenged by the government
(ii) Vodafone is covered with the scope of the
‘guarantee of fair and equitable treatment’
under Article 4(1) of the India-Netherlands BIPA
(iii) India breached this guarantee by asserting upon
Vodafone the ‘liability to tax notwithstanding
the Supreme Court judgment’
(iv) India’s breach must be ceased or else would
result into ‘international responsibility’; and
(v) India must reimburse the costs of legal
representation to Vodafone.
The Vodafone award presents an interesting paradox
as there is neither equity in taxation nor fair play
Zoom In
The Vodafone award
presents an interesting
paradox as there is
neither equity in taxation
nor fair play in tax law
in tax law; the sole purpose of which is to impose
an exaction on the subject under the sovereign’s
prerogative20. The jury is clearly out on whether the
tribunal is correct to conclude that the government
has, for all times to come, qua a particular class
of investors (who are covered within the scope of
BIPA), conceded sovereign and legislative authority
to impose any additional tax after the investment, a
stance which the law officers of the government are
bound to closely examine21.
International investment agreements include
investment treaties and tax treaties as the aim of
both such instruments is to foster foreign direct
investment. Depending upon the investment treaty,
the tax issues (domestic or international) may be
carved out from the applicability. Despite the current
trend of limiting such categories of cases and the
tendency to reject the applicability of most-favored-
nation and national treatment clauses to taxation
matters, issues materially connected with the
enjoyment of certain protective rights by an investor
can still be decided through bilateral investment treaty
mechanisms22. The aim of investor protection under
investment treaties is not to provide an alternative
forum for the settlement of tax disputes, but rather
for the prevention of inappropriate behavior by
governments and administrators infringing the
legitimate expectations of the investor23.
In the OECD Model Convention 2008, the tax arbitration
clause was introduced under Article 25 MAP. The
prerequisite for invoking the tax arbitration clause by
the taxpayer was that the case has already been filed

17
Paragraph 30 of OECD Model Commentary 2017 (detailed) on Article 13
18
https://www.un.org/development/desa/financing/events/21st-session-committee-experts-international-cooperation-tax-matters
19
Ibid
20
See, Mukesh Butani & Tarun Jain, What next after the Vodafone tax arbitration? Available at https://www.fortuneindia.com/opinion/what-next-after-the-
vodafone-tax-arbitration/104758
21
Ibid
22
Chapter 8, Arbitration Procedure and the Implementation of Arbitral Awards in Domestic Law of WU Tax Treaties and Procedural Law
23
P. Pistone, General Report , in The Impact of Bilateral Investment Treaties on Taxation p. 41 (M. Lang et al. eds., IBFD 2017), Books IBFD.

www.legaleraonline.com | | January 2021 51

 Zoom In
for MAP application and competent authorities were
unable to reach an agreement to resolve a tax dispute
and no court/tribunal of either state has rendered
decision on such an issue. The arbitration decision
shall be binding on both states unless the taxpayer has
objections.
Though this clause was introduced in the UN Model
Convention 2011 which had a similar condition to invoke
the tax arbitration clause, however, the difference
was that unlike OECD which allows the taxpayer to
file, UN provides that only the competent authority is
authorized to file for arbitration. Further, apart from
giving the option to the taxpayer rejecting the decision,
the UN Model also provides the option to reject the
arbitration decision in case both competent authorities
agree on a different solution within six months of the
decision.
Non-tax arbitration covers a wide range of categories
of disputes, including disputes that may involve cross-
border taxation. Regarding non-tax arbitration, an
award is final and binding under the respective bilateral
investment treaties and UNCITRAL Arbitration Rules24.
Article 54(1) of the ICSID Convention, 2003 states
that “Each Contracting State shall recognize an award
rendered pursuant to this Convention as binding and
enforce the pecuniary obligations imposed by that award
within its territories as if it were a final”. Though India
is not a signatory to the ICSID Convention, therefore, it
does not have an obligation to recognize and enforce
BIT awards as final judgments.
Indian tax officials have been consistent in their position
that tax cases are not covered under BITs. For resolving
tax disputes, the dispute resolution mechanism is MAP
under the tax treaty. Therefore, India has challenged
the authority of the tribunal and the maintainability of
the arbitral proceedings in the case of Cairn Energy and
Cairn UK Holding. Even the Tribunal also disregarded
the pending arbitration in the case of Cairn UK
Holding on the grounds that tax disputes are outside
the purview of BIPA. On a larger level, the Vodafone
Arbitration award raises critical questions whether
investment treaties overwhelm the taxation realm,
does the execution of a BIT restrict the host State from
revisiting its tax policies and laws25. Is the untrammelled
constitutional authority of Parliament to reinstate
the law by legislatively overruling judicial decisions
restricted because the government has executed an
24
Art. 34 UNCITRAL Arbitration Rules.
25
See Tarun Jain, Shankey Agrawal, Investment Treaties Interjecting Taxation’s Realm: The Latest in Vodafone’s India Saga , available at http://kluwertaxblog.
com/2020/10/13/investment-treaties-interjecting-taxations-realm-the-latest-in-vodafones-india-saga/
26
Supra note 22
27
Circular No.41/2016 issued on December 21, 2016
28
Circular No.28/2017 dated November 7, 2017
52 January 2021 | | www.legaleraonline.com
investment treaty with another nation26.
Post-Vodafone Arbitration award, the Government
has gone on record to state “will consider all options
and take a decision on the further course of action
including legal remedies before appropriate fora”.
The Government has sought two weeks’ time from the
Delhi High Court to decide whether it will challenge the
award. Interestingly, in case the Government does not
challenge the award, Vodafone will not pursue a second
arbitration under the India-UK BIPA. The arbitration
award in the case of Cairn Energy is awaited.
Post-script
Considering it has been almost a decade since OIT law
was passed, the current provisions are not adequate
as the Indian tax administration has been very slow
in addressing the issues. The CBDT issued a circular in
order to address the FAQs in respect of applicability
of OIT which instead of providing clarity created
uncertainty amongst the stakeholders27. As a result
of which such circular has been kept in abeyance. The
exemption to the non-residents investing directly or
indirectly, in Foreign Institutional Investors or specified
category of Foreign Portfolio Investor was notified
in the Finance Act 2017. Later the exemption to
the investors of specified funds i.e. Venture
Capital Company, Venture Capital Funds, Category I
and II of Alternative Investment Funds was provided28.
Unlike the global practice wherein the OIT law is
not applicable on the listed entities and business re-
organization within the group subject to continuity
of 100% ownership, India has not carved out such
exceptions. Particularly, the Indian OIT law has
prescribed that non-applicability only in case the
transferor satisfies that it does not hold the right of
management/control and does not hold more than
5% of share capital of the company having underlying
assets in India. These tests have to be checked not
just individually but along with associated enterprises
of such transferor as well. E.g.: an Indian non-resident
shareholder holding investment of 5.5% share capital
in a listed UK entity is planning to sell the shares
on a recognized stock exchange. Such UK entity
has subsidiaries across the globe including India.
The practical problem lies whether such a minority
shareholder will know whether such listed company
is deriving value from Indian assets and whether

the listed company will undertake valuation every
time a minority shareholder is planning to divest its
investments. Furthermore, such transferor has to
check whether these tests are met by the associated
enterprise as well.
Another issue is that in case of any transaction involving
a change in the shareholding of foreign holding
company, such transaction has to be mandatorily
reported by the Indian entity. This is irrespective
of the fact that the OIT law is not applicable to the
transaction. Since the reporting obligation has been
thrust on the Indian entity, failure to comply shall
attract penal provisions. It shall become a challenging
exercise as the Indian entity would have to carry out
a valuation exercise for every transaction in order
to comply with the regulatory requirements and
maintain prescribed documentation which can be
burdensome and tedious. Particularly, in the case of
multinational companies, valuation can be challenging
in the absence of required information.
Another key issue yet to be addressed is how will the
tax credit mechanism work, as OIT law may lead to
multiple taxation for the same transaction. Further, the
credit for such taxes may not be available in the home
jurisdiction. In the absence of a credit mechanism,
29
Press Information Bureau on Foreign Direct Investment Inflow, Release ID: 1666101
30
Ibid
Zoom In
such issues should be resolved mandatorily by Mutual
Agreement Procedure.
Conclusion
As a fact, in these COVID-19 times, during April to
August, 2020 India has received a total FDI inflow
of US$ 35.73 billion which is the highest ever for the
first 5 months of a financial year and 13% higher as
compared to the first five months of 2019-20 (US$
31.60 billion)29. In terms of FDI equity inflow, US$ 27.10
billion has been received during F.Y. 2020-21 (April to
August 2020) which is the highest ever for the first 5
months of a financial year and 16% more compared to
the first five months of 2019-20 (US$ 23.35 billion)30.
As stated by Late S.H. Kapadia in the Vodafone case
“FDI flows towards location with a strong governance
infrastructure which includes enactment of laws and
how well the legal system works. Certainty is integral
to the rule of law. Certainty and stability form the basic
foundation of any fiscal system. Tax policy certainty is
crucial for taxpayers (including foreign investors) to
make rational economic choices in the most efficient
manner”. Hence, India can think of selectively applying
OIT law as an anti-abuse measure as it may have a
negative impact on FDI.

Author: Mukesh Bhutani

Designation: Founder & Managing Partner
Mukesh Bhutani is Founder & Managing Partner of BMR Legal Advocates, a boutique law firm specializing in the areas
of Corporate International Tax, Transfer Pricing, GST, Customs & Trade, with expertise in litigation services, controversy
management, strategic transaction advisory and policy. With specialization in domestic corporate international tax
and transfer pricing, he has over three decades of experience in advising multinationals and Indian conglomerates on a
wide range of matters relating to FDI policy, business re-organizations, cross-border tax structuring, tax controversy and
regulatory policy. He is an acknowledged expert in the area of International Tax policy, controversy & advocacy, and has
to his credit several landmark judicial pronouncements. He has deposed as an Expert Witness on contentious cross-border
tax treaty & TP matters in foreign jurisdictions. Mukesh is a qualified Chartered Accountant and holds a bachelor’s degree

ABOUT in Commerce and Law, and practices as an Advocate before various Tribunals, High Courts and the Supreme Court of India.

THE
Author: Tarun Jain
Designation: Partner
Tarun Jain is Partner in BMR Legal. He is an Advocate qualified to appear before all courts and tribunals in India and carries
over a decade of experience in mainstream tax litigation, which is also his expertise and forte. As an arguing counsel, Tarun
AUTHOR regularly leads the appearance before the tax authorities, tribunals, High Courts and the Supreme Court. He has been
representing a number of Fortune 500 and multinational companies before various tax forums with a high success rate.

Author: Surabhi Chandra

Designation: Senior Associate
Surabhi Chandra is a Senior Associate at BMR Legal. She is a qualified Chartered Accountant and a commerce graduate from
Delhi University. She is an expert in the area of corporate and international tax, cross-border transactions and corporate
structuring. She has authored articles in reputed publications on direct taxation-related topics.

LE
Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.

www.legaleraonline.com | | January 2021 53

 I
LE Zoom In

54 January 2021 | | www.legaleraonline.com

I
Zoom In

DECLINE

TO ANSWER
The principle of protection against compulsion of self-
incrimination is a fundamental canon of the British system of
criminal jurisprudence, which has been adopted by the US and
incorporated as a fundamental right under the 5th Amendment

I decline to answer, using the fifth amendment
right”, “I plead the Fifth”, “The information is
privileged, Your Honor” are phrases we hear
while watching legal dramas on various OTT
platforms like Netflix, Amazon Prime etc. We wonder
if we have such laws in India as well. The answer is yes,
we do. Our constitution provides us with the right to
remain silent under Article 20(3)1.
A Privilege is a special right, or an advantage provided
to a person. For examples, the right against self-
incrimination, spousal privileges, attorney client
privilege etc. The principle of protection against
compulsion of self-incrimination is a fundamental
canon of the British system of criminal jurisprudence.
It has been adopted by the United States and has been
incorporated as a fundamental right under the fifth
Amendment. The said principle has been adopted by
our system under various provisions. The Supreme
Court has given a refreshing analysis of Article
20(3) in the context of national and international
developments in human rights.2
NEED FOR PROVIDING PRIVILEGE UNDER
THE CRIMINAL LEGAL SYSTEM
A democracy cannot function efficiently without
having an efficient legal system. The objective of
any legal system is to maintain law and order and to
remove arbitrariness. Therefore, if proper safeguards
and checks are not incorporated, arbitrariness is bound
to infiltrate the system due to the human interface.
Across jurisdictions, the objective is to establish a
reformative system instead of a punitive one.

1
Protection in respect of conviction for offenses : No person accused of any offense shall be compelled to be a witness against himself
2
V.N. Shukla – The Constitution of India 12th Edition Page 200

www.legaleraonline.com | | January 2021 55

 Zoom In
VINOD CHAUHAN
Associate
Humans, intentionally or unintentionally, have their
prejudices. These prejudices make us function in a
manner which may not always be as per the rule book.
Hence, it is imperative to have appropriate safeguards.
To prevent injustice and to reach the desired
conclusion, safeguards and privileges are provided
to an accused. It is important to state that any sort of
harassment, torture etc. is not only unwarranted but
also illegal. The custodial deaths in Tamil Nadu are a
recent example. In many countries, apart from penal
consequences, such conduct could also invite civil
suits seeking damages.
The criminal jurisprudence in our country functions on
the presumption of innocence. It is for the prosecution
to prove the guilt of the accused beyond reasonable
doubt. Thus, the task of the prosecution is more
difficult. This could be an additional factor for resorting
to unwarranted and illegal methods of unearthing the
truth or sometimes achieving the desired narrative.
However, our constitution requires that dignity and
sanctity of human life shall be maintained.
The Code of Criminal Procedure (“CRPC”) along with the
Indian Evidence Act (“IEA”) provides a comprehensive set
3
MP Sharma vs. Satish Chandra (1954) and later affirmed in Kathi Kalu Oghad (1961)
4
Nandini Satpathy vs. PL Dani 1978 AIR 1025
5
Tofan Singh vs. State of Tamil Nadu Criminal Appeal No.152 of 2013
6
(2008) 4 SCC 668
56 January 2021 | | www.legaleraonline.com
of rules which are based on the constitutional principles
and are intended to prevent any miscarriage of justice
while granting certain rights or privileges to the accused
to enable them to maintain the dignity and sanctity of their
life.
PRIVILEGES ACCORDED TO THE ACCUSED
WHILE BEING UNDER TRIAL OR UNDER
INVESTIGATION
Various privileges are accorded to accused persons to
ensure that justice prevails and legal objectives are met
with. Some of the privileges that are available to under-
trials during the investigation as abovementioned and
are highlighted hereinafter.
RIGHT TO SILENCE
“Silence isn’t empty, it is full of answers.”
- Swami Vivekanand
Article 20 (3) of the Constitution of India provides that
“no person accused of any offense shall be compelled to
be a witness against himself” which provides an accused
from incriminating herself/himself to the crime being
investigated or the right to remain silent. This privilege
is extended both before the investigation agencies
as well as the court and it is a settled law that if the
said protection is intended to be confined to being a
witness only before the court then it would not be an
effective provision and the same can be defeated by
compelling the accused to give all the evidence outside
the court and then, having what he was so compelled
to do proved in court through other witnesses.3 Article
20(3) is a guarantee of dignity and integrity to a person
which is enshrined in the Constitution enabling the
rule of law and ensuring that it does not become a
police state where unjustified means are adopted in
the wake of obtaining information from the accused/
witness4.
Three important elements to avail Article 20(3) are:
1. The person should be an accused of any offense.
2. The person accused should be under compulsion,
and
3. The person should be compelled to be a witness
against himself.
It can be said that this privilege extends to criminal
proceedings strictly and can be availed before the
 Zoom In
police agencies as well as the courts. However, the
same cannot be resorted to before a civil court and a
witness is obliged to answer all the questions. As this The Hon’ble Supreme
privilege is also available before ‘a police officer’, it is
also important to understand who qualifies as ‘a police Court in a recent judgment
officer’.
overruled Kanhaiyalal Vs.
The Hon’ble Supreme Court in a recent judgment5
overruled Kanhaiyalal Vs. Union of India6, and held Union of India, and held
that officers under the Narcotic Drugs & Psychotropic
Substances (NDPS) Act are police officers. Therefore, that officers under the Nar-
the privilege extends to the statements made to
them and cannot be made grounds for conviction. cotic Drugs & Psychotropic
The Delhi High Court in Vakamulla Chandrashekhar vs
Enforcement Directorate & Anr7 relied upon Jeewan Substances (NDPS) Act are
Kumar Raut & Anr vs C.B.I8 which relied upon Raj Kumar
Karwal v. Union of India9 which stands over-ruled. police officers
Therefore, it may be inferred that officers under the
Prevention of Money Laundering Act (PMLA) stand on
“Section 161 of The Code of Criminal Procedure, 1973 :
the same footing as that of those under the NDPS Act.
Examination of the witness by police:
The Supreme Court in another judgment10 observed
(2) Such person shall be bound to answer truly all
that one must show use of compulsion to fall under
questions relating to such case put to him by such officer,
the four corners of Article 20(3). Therefore, where
other than questions the answers to which would have
there is lack of compulsion, such evidence can be used
a tendency to expose him to a criminal charge or to a
by the prosecuting agencies and the privilege does not
penalty or forfeiture.”
extend. Thus, if an accused provides any information
under consent and out of her/his own volition, Article
“Section 27 of The Indian Evidence Act, 1872 : How
20 (3) cannot be a bar to such information being used
much of information received from accused may be
in evidence.
proved. Provided that, when any fact is deposed to
The privilege under Article 20(3) is afforded only to an as discovered in consequence of information received
accused person and not any other person. However, from a person accused of any offense, in the custody of
taking a liberal view and broadening the scope of a police officer, so much of such information, whether it
the same, the Supreme Court11 held that to avail the amounts to a confession or not, as relates distinctly to
privilege under Article 20(3), a formal acquisition is the fact thereby discovered, may be proved.”
required. The protection envisaged under section
Though, nothing can be forced out of the accused,
161(2) CRPC is wider and protects not only the accused
yet any recovery based on information obtained by
but also any person acquainted with the facts and
the investigating agencies can be used to validate
circumstances of the case12. The right to remain silent
the case of the prosecution. However, whether any
stems from the fact that the onus of proving the
discovery being a result of unlawful means should
guilt of the accused lies upon the prosecution. The
be allowed to be read as a part of the evidence, is
prosecution has to prove the guilt by strength of its
an important question which needs to be addressed
case and not on the weakness of the defense. At the
as it would not be outrageous to suggest that not
same time, the same does not mean that the rules are
all rules are followed when nobody is watching. The
wholly one-sided and prevent/hinder conviction.
Fourth Amendment Rights13 do not find a parallel in
The following provisions put some light on the fact the Indian Judicial System. The doctrine of “Fruits of
that our statutes provide a balance to ensure justice. the poisonous tree” needs re-consideration especially
7
W.P.(CRL) 852/2017
8
(2009) 7 SCC 526
9
(1990) 2 SCC 409
10
The State Of Bombay vs Kathi Kalu Oghad And Others 1961 AIR 1808
11
The State Of Bombay vs Kathi Kalu Oghad And Others 1961 AIR 1808
12
Selvi & Ors vs State Of Karnataka & Anr
13
The Constitution of USA, through the Fourth Amendment, protects people from unreasonable searches and seizures by the government. The Fourth
Amendment, however, is not a guarantee against all searches and seizures, but only those that are deemed unreasonable under the law
14
2018 SCC Online SC 2548

www.legaleraonline.com | | January 2021 57

 Zoom In
in light of the judgment of K.S. Puttaswamy v. Union of
India, also it is known that investigating agencies have
been known to adopt “out of the box” methods in
order to derive relevant information. However, if one
resorts to such methods, can we say that Article 20(3)
is an absolute right?
In Prahlad Kumar Vs State of Rajasthan14, the Court
found that the accused did not provide for sufficient
explanations to certain accusations under Section 313
of the CRPC and concluded that negative inference can
be taken if the accused remains silent. It was held that
the courts are empowered to draw adverse inference
to the silence of the accused as per the provisions of
the law15. The Supreme Court16 held that an adverse
inference can be drawn against the accused, however,
the case against the accused was proved beyond
reasonable doubt by circumstantial evidence. Further,
the Supreme Court held that when an inference
regarding the existence of one fact against an accused
was drawn from another set of proved facts, the
burden lay on the accused to rebut such inference by
virtue of his special knowledge about such facts.17
One must always remember that in a matter of
circumstantial evidence, the prosecution should
establish its case beyond reasonable doubt. Without indeed violate the Fifth Amendment right against
there being any possibility of any other explanation self-incrimination. Because in doing so, the individual
and if there is any, the same has to benefit the accused. is providing the law enforcement information which
Therefore, drawing adverse inference to the silence they do not already know.18 But the said question is
when done without observing the requirements as open to debate and yet to be crystallized in the Indian
prescribed by the law invalidates the basic law of judicial system.
criminal jurisprudence in India. Thus, it is not the duty
of the defense to provide for such missing links, but to Another way to prosecute agencies to access a
demolish the case of the prosecution only after they person’s chat is through section 91 CRPC notice to a
have established guilt. service provider (Whatsapp/iMessage etc.). But recent
technological advancement of end-to-end encryption
WHATSAPP MESSAGES AND SELF- whereby the service providers’ claims not to have any
knowledge of the users’ personal information makes
INCRIMINATION it difficult for them to provide such information to
A new trend of prosecution based on the chats/ the investigating agencies. In Facebook Inc. v UOI19,
messages of individuals and using the same as evidence Whatsapp reiterated the aforesaid stand.
in various investigations is on rise and the same is not
bereft of controversy. Apart from raising questions ATTORNEY-CLIENT PRIVILEGE
of violation of the right to privacy, a pertinent issue
Everyone has the right to fair trial and fair
raised is whether compelling a person to open his/her
representation, even an accused in the most heinous
chats/messages violates the protection against self- crimes. To ensure fair representation before the
incrimination. The Indiana Supreme Court (USA) held courts, it is important that the accused is provided
that compelling a person to open one’s phone would with an opportunity to consult and seek legal advise

15
Ramnaresh & Ors. v. State of Chattisgarh (2012) 4 SCC 257
16
Ronny V State of Maharashtra (1998) 3 SCC 625
17
State of West Bengal V mir Mohd Omar (2000) 8 SCC 382
18
Katelin Eunjoo Seo v. State of Indiana Supreme Court Case No. 18S-CR-595
19
Facebook Inc. v. Union of India 2019 (13) SCALE13
20
Greenough v. Gaskell (1833)1 Myl. & K. 98 as per Brougham L.C)
21
Cecilia Fernandes v State represented by the Director General of Police Goa and Anr, Criminal Miscellaneous Application No. 9 of 2005.

58 January 2021 | | www.legaleraonline.com


without any apprehensions and doubts and share all
the necessary facts in complete honesty. The attorney-
client privilege ensures the accused of this confidence.
The courts in England held that if this privilege is not
provided, people would be left to defend themselves.
Deprivation of professional expertise may render
them exposed to unnecessary perils or even if one
approaches a legal counsel, she/he may be sceptical of
sharing the complete details20. The Bombay High Court
held that the right to consult a legal practitioner under
Article 22(1) of the Constitution of India could only be
exercised meaningfully in confidence.21 Thus, a police
officer, while entitled to stay within a certain distance
of an accused, cannot insist on being within hearing
distance so as to prevent an accused from instructing
his or her lawyer in confidence.
BUT EVERY COMMUNICATION IS NOT
COVERED BY THE PRIVILEGE
Section 126 of the Indian Evidence Act inscribes the
abovementioned privilege but incorporates certain
exceptions. These exceptions cast a duty on the
counsel to report certain events when falling in the
said category. It is obvious that a counsel represents
22
Kalikumar Pal v. Rajkumar Pal (1931)58 Cal 1379
23
D. Veeraseharan v. State of Tamil Nadu 1992 Cr. L.J. 2168 (Mad)
24
Ganga Ram v. Habib Ullah (1935)58 All 364)
25
Chandubhai v State, AIR 1962 Guj 290
Zoom In
the accused in best of its capacity with facts as is,
she/he is not to counsel the accused in a manner
which would be aggravating the nature of offense.
It is to say that a lawyer only represents and does
not become an accomplice to any crime. Therefore,
not all client-attorney relationships are covered by
the privilege. Even within the provided degree of
the relationship, not every communication with
one’s legal counsel is protected by the privilege. The
communications made confidentially, with a view to
obtain professional advise are covered by privileged.
The privilege extends to communication only once
pleader-client relationship has been formed and not
prior to that22. In an interesting event, a client was
advised to stay absconding by the attorney through a
written communication, the Madras High Court gave
an observation that communication is privileged and is
an advise in the capacity of an advocate. The exception
under Section 129 IEA was not attracted.23
COURTS CAN SUMMON ANY DOCUMENT
FROM THE LAWYER
The courts have clarified that summons issued under
section 91 CRPC by the court even to a lawyer to produce
the summoned documents. The summons cannot be
opposed on the grounds of privilege. However, as a
safeguard the courts are empowered to decide on its
admissibility whether they are covered under privilege.
Therefore, documents must be produced and then,
under Section 162 of the Act, it will be for the Court,
after inspection of the documents and if it deems fit,
to consider and decide any objection regarding their
production or admissibility.24 The Gujarat High Court
elaborated on this while stating that while holding a
document the lawyer acts as an agent of the client
and thus can be asked to produce the document in the
same capacity as the client herself/himself could have
been asked. Additionally, a document handed over to
the lawyer by the client cannot be said to be privileged
unless the document contains any communication
made to the lawyer by the client in the course and for
the purpose of the engagement as an attorney.25
The privilege cannot be claimed against an order to
produce documents under Section 91 of the Code
of Criminal Procedure. In February 2018, the office
of lawyers of Mr. Nirav Modi was raided by CBI in an
ongoing investigation. The important question is,
whether such actions compromise attorney-client
privilege? If it does, to what extent?
www.legaleraonline.com | | January 2021 59
 Zoom In
The practice of raiding offices of lawyers for
investigation runs contrary to the scheme of the
Constitution. Such practices take away the basic intent
of confidence in the accused of approaching a lawyer.
Furthermore, this also puts pressure on the advocates
that their records are not safe and such raids could be
detrimental to them.
PRIVILEGES ENSURE FAIR TRIAL
“Equality before the law is probably forever
unattainable. It is a noble ideal, but it can
never be realized, for what men value in this
world is not rights but privileges.”
― H.L. Mencken
Equality, privacy, dignity, fair trial, inter alia, are a few
objectives of our Constitution. Fair trial, which means
a trial in which bias or prejudice for or against the
accused, the witness or the cause which is being tried,
is eliminated.26 The task at hand is herculean and needs
positive and continuous attention. To ensure such
atmosphere, the legislation has consciously introduced
safeguards and the same must continue to evolve in
this domain. The safeguards of the past may be helpful
in current times but may not be enough in future. The
courts in our country have stood the test of time and
ensured that law does not stop evolving. Time and
again the apex court has come out with interpretations
which are best suited to allow humanity to thrive and
not just have an animal existence.

26
Zahira Habibullah Sheikh and Ors v. State of Gujarat and Ors. (2006) 3 SCC 374

ABOUT Author: Vinod Chauhan

THE
Designation: Associate | Email: vinod@singhandsingh.com
Vinod Chauhan graduated in Law from Campus Law Centre, University of Delhi in 2017 and is registered as an Advocate
with Bar Council of Delhi and has been practicing Attorney before Delhi High Court, District Courts and various Tribunals.
He is also a qualified engineer and has worked in Industry in Research & Development and Quality Control Department
before joining law school. Previously, he had worked with Mr. R.K. Anand (Advocate) where he handled various criminal
matters and holds keen interest in the subject. Presently, he is associated with Singh and Singh Law Firm LLP and

AUTHOR handling, inter alia, various Patent, Trade Mark and Copyright matters.

LE
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.

60 January 2021 | | www.legaleraonline.com

OUT THE OLD WITH

IN THE NEW WITH

www.legaleraonline.com

LEGAL
ERA

LEGAL MEDIA GROUP

BY THE PEOPLE. FOR THE PEOPLE. OF THE PEOPLE
 LE Cover Story

Personal Data
Protection Bill
A step in the

Right
Direction

An exclusive story capturing the

regulation’s laudable provisions, a
constructive analysis, and insightful
suggestions from experts and luminaries.
62 January 2021 | | www.legaleraonline.com
 Cover Story
Ideally, a regulation that deals with the privacy of individuals should take effect
only after there is enough awareness, and understanding created about it else
it could lead to avoidable consequences. However, given the rapid external
developments where personal data may be at higher risk of being compromised,
the need of the hour is having a workable regulation in place.

with stakeholders, examined all representations, and

proposed 89 amendments to the Bill that has 98 clauses.

THE BILL MARKS A HISTORICAL MOMENT

IN THE OFFING

To have a legislation that addresses how to deal with

personal data and the privacy of data subjects is a welcome
step. The Government needs to be complimented for
bringing this Bill swiftly after wide-ranging consultation
post the Report submitted by the Committee of Experts
on Data Protection chaired by Mr. Justice B.N. Srikrishna.
Personal Data & Privacy are important subjects. Respect
for one’s personal information processed and stored by
another should receive the importance it deserves.

Data is a national asset and should be harnessed and

utilized for the benefit of the communities. Personal Data
as compared to Non-Personal Data is no different. In fact,
personal data needs to be dealt with a higher degree of
care & sensitivity. It should be used for the benefit of
both the community and the person sharing such data.

Dev Bajpai
Executive Director Legal & Corporate
Affairs Hindustan Unilever Limited, and
Vice President -Legal, South Asia, Unilever
The law should, therefore, aim to create a relationship of
trust between the person who shares personal data and
the person who collects and processes such data referred
to in the Bill as the Data Fiduciary. This relationship of
trust casts certain obligations on the Data Fiduciary
to deal with the personal data in a responsible manner
recognizing the rights of the person who shares personal

opines that data referred to as the Data Principal in the Bill.

privacy was declared a Fundamental Right by a nine-
Judge Constitutional Bench of the Hon’ble Supreme
Court in the matter of K.S. Puttaswami & others versus
the Union of India. The Apex Court had also impressed
upon the Central Government to bring into existence
a robust data protection regime. The Government
now proposes to enact a legislation – The Personal
Data Protection Bill, 2019 (the Bill) which has been
referred to a Joint Parliamentary Committee. Amongst
other objects of the Bill, protection of the privacy of
individuals relating to their personal data, creating
a relationship of trust between persons processing
personal data are significant objectives. It is reported
that the Committee has had detailed deliberations
THE DEFINITION OF PERSONAL DATA
COULD BE SIMPLIFIED
The proposed regulation offers several opportunities for
simplification commencing with the definition of Personal
Data itself. The Bill within the definition of Personal Data
includes “any inference drawn from such data for the
purpose of profiling.” That means that any inferences
or attributes that are drawn by virtue of processing of
personal data of the data subject in terms of the choices
that data subjects make, products that they may buy,
their spending habits, lifestyle choices that they make
and so on and so forth will be also be considered Personal
Data. Such data if asked for by the Data Principal or the

www.legaleraonline.com | | January 2021 63

 Cover Story
Regulator, will have to be provided. There is a need to
simplify this by deleting the inclusion made in the definition.
The Data Fiduciary makes the inference through proprietary
tools and algorithms deployed to secure information to
serve the consumer better. These inferences should not be
within the purview of Personal data.
THE DEFINITION OF CHILD COULD BE
RECONSIDERED
Dev Bajpai notes that the definition of Child is pegged at
someone who has not completed 18. The data fiduciary
has an obligation to verify the child’s age and obtain
the consent of the parent or natural guardian before
processing any personal data of the Child. This age of 18
should be reconsidered to either 13 or 14 as is the case in
many advanced jurisdictions. Today, children in their early
teens have access to social media accounts and share
personal data. They are empowered to make decisions
on its processing from a much younger age. Also, casting
additional obligations on the data fiduciary on this account
should not be insisted. There is no need for the regulator
to specify regulations if the age limit is reduced to 13 or 14.
By imposing additional obligations on the data fiduciary,
they would end up collecting more Personal Data of the
parent/guardian that goes against the principle of data
minimization.
THE PROVISIONS CONCERNING CONSENT
COULD BE STREAMLINED
The Bill places heavy reliance on securing Consent as a
primary ground for processing personal data. While the
Bill provides for “reasonable purposes” to be specified by
regulation after considering a set of factors for permitting
the processing of personal data without consent. In the
case of GDPR, such processing is permitted in “legitimate
interest”. Here the legitimate interest can be determined
by the data fiduciary unlike in the Bill, where the regulator
determines reasonable purposes keeping into account the
considerations mentioned in the Bill. The more we make
our law subject to delegated legislation, we may end up
perpetuating the sharing and collecting of more personal
data.
THE DATA PRINCIPAL’S RIGHTS COULD BE
RATIONALIZED AND RESPONSIBILITIES BE
BALANCED
The Data Principal has certain rights some of which emanate
from the judgment of the Apex Court. These include the
Right to Confirmation and Access, Right to Correction and
64 January 2021 | | www.legaleraonline.com
Erasure, Right to Data Portability and Right to be Forgotten.
These rights are welcome. Dev Bajpai suggests that the Bill
has scope for simplification in the exercise of some of these
rights. For instance, the provisions on data correction and
erasure can be simplified. The data is supplied by the data
principal and this party has every right to have it corrected,
completed, updated, or erased. The data fiduciary may not
agree to let the data principal exercise this right only if it
is sought to be exercised in a mala fide manner. Similarly,
in the case of the Right to be Forgotten, the Bill presently
provides that this right can only be enforced upon an order
passed by the Adjudicating Officer on a reference made by
the data principal. There is scope to simplify this aspect. It
is an issue between data principal and fiduciary. Best that it
can be resolved by them when a bona fide request is made
by the principal. The ethos and spirit behind collecting,
processing, and storing personal data are to maintain its
sanctity by using it for the purpose for which it is collected
and demonstrating to the data subject that his/her rights
are protected by not sharing it with any third party unless
the circumstances warrant necessary sharing to preserve
its sanctity. That should be the underlying principle of any
data protection regime. The right to be left alone has to be
respected.
The data fiduciary has several responsibilities under the
Bill and rightfully so. However, these responsibilities have
to be balanced and proportionate to the role of the data
fiduciary. The data fiduciary should not be held responsible
for the acts & omission of independent third-party data
processors that process the data on its behalf. The data
fiduciary should be tasked with educating, conduct due
diligence, building capacity insofar as data processors
are concerned before entrusting any personal data to
processors. However, having done that, they cannot be
held responsible for the actions of processors on their
behalf.
The other area for simplification and rationalization is how
one has to deal with Data Subject Access Requests. It can
lead to avoidable work at the end of the Data Fiduciary and
the possibility of misuse cannot be ruled out on account of
frequent & frivolous requests. There should be a token fee
prescribed for confirmation and access requests.
THE CLASSIFICATION AS A SIGNIFICANT
DATA FIDUCIARY AND CATEGORY OF
CRITICAL PERSONAL DATA NEEDS CLARITY
The classification as a Significant Data Fiduciary should only
be done basis the sensitivity of data processed and not
the basis turnover of the data fiduciary or volume of data
processed.
 Cover Story
Classification of data into personal data & sensitive
personal data is adequate. Creating another category
of Critical Personal Data without specifying what it will
comprise of ends up creating uncertainties. Authorities
have in any case the power to notify certain classes of data
as sensitive, so it does not make much meaning having a
third category of personal data. This should be streamlined
into two categories only.

THE PROPOSED PROVISIONS ON PENALTIES

NEED TO BE RELOOKED

Dev Bajpai opines that the proposed provisions on penalties

need to be relooked. They have to be proportionate to
the breach committed and the harm caused. This law,
therefore, requires a mindset change. As a society, we are
used to collecting and storing data for inordinately long
periods of time. There is also low sensitivity to personal
data that gets collected. All this will require change which
is going to take some time.

THERE IS A NEED TO GENERATE ENOUGH Rajeev Chopra

AWARENESS AND BUILD CAPACITY TO Accenture’s Managing Director - Legal
EMBRACE THIS BILL

Further, when this proposed law is enacted, its implications
should be cascaded across institutions, organizations,
citizenry, authorities, NGOs so that there is enough
awareness built and capacity developed to embrace this
important piece of legislation. Ideally, a regulation that
deals with the privacy of individuals should take effect
only after there are enough awareness and understanding
created about it otherwise it could lead to avoidable
consequences. However, given the rapid external
developments where the personal data is at a higher risk
of being compromised, the need of the hour is to have a
workable regulation in place.
THE REQUIREMENT OF ANONYMIZING ALL
DATA COULD PROVE TO BE ONEROUS
agrees with Dev Bajpai’s view
that the ambit of data that would get regulated under
the Bill as Personal Data is much wider than the European
Union’s General Data Protection Regulation (GDPR). That
will put an onerous obligation on companies to identify all
categories of Personal Data processed by them to ensure
compliance. Further, the Government can direct the data
fiduciary or a data processor to provide any personal data
anonymized or other non-personal data. Rajeev Chopra
cautions it could potentially compromise organizations’
client data, which is being processed by an Indian service
provider in its capacity as a ‘data processor’. This provision
gives the government the prerogative to access business
intelligence and intellectual property of companies for
its own planning and development purposes. This needs
more deliberation.
Even the requirement of anonymizing all data could
potentially prove to be onerous increasing the complexity
of organizations’ data management systems and the
subsequent need for increased security measures
regarding non-personal data. Rajeev Chopra recommends
that the performance of a contract and legitimate interest
be included as a ground for processing personal data
to reduce the burden on data fiduciaries. Additionally,
‘reasonable purposes’ should not just be limited to the
list provided under the Bill and should be entrusted to
the data fiduciaries to self-assess. Rather than have a
Data Protection Authority (DPA) laying down regulations,
data fiduciaries must be empowered to determine the
purposes for data processing.
LOCALIZATION REQUIREMENTS CAN BE
MADE CLEARER
Say if an international company that uses an Indian data
processor for processing personal data of non-Indian
citizens is asked to keep a local copy of personal data in
India. That could potentially breach other data privacy
laws such as the principles of data minimization.

www.legaleraonline.com | | January 2021 65

 Cover Story
THE BILL SHOULD IDEALLY BE CONFINED TO
CIVIL PENALTIES.

In tune with Dev Bajpai’s concern that the proposed

provisions on penalties need to be relooked, Rajeev
Chopra states that criminal liability and imprisonment are
excessive penalties. They should be regulated in criminal
codes and for violations of the law such as cybercrime or
fraud. The Bill should ideally be confined to civil penalties.

THE ADDITION OF 2 NEW RIGHTS DATA

PRINCIPAL IS WELCOME
B. Murli, General Counsel & Company Secretary and
Dhwani Rao, Head Legal Counsel- IP, Digital and HR Legal
at Nestle
welcome the addition of 2 new rights:
The right to access in one place the identities of all data
fiduciaries with whom their data has been shared, and
a right to the erasure of personal data on request.
THERE IS A SCOPE FOR EXCEPTIONS
WHEN THE 2 NEW RIGHTS CANNOT BE
CONFERRED
The Bill could have a scope of exceptions when such
rights cannot be conferred by Data Fiduciary to avoid
disproportionate efforts and purpose by delivering
these rights akin to European law. In some situations,
Data Fiduciary could be allowed to refuse or put a
condition to release information if:
(a) release of information would adversely affect the
rights of others including intellectual property
rights or trade secrets. E.g., if release of the logic
of automated decision-making would involve
release of intellectual property;
(b) If Data Fiduciary holds a large quantity of data
about a data subject, it can ask the data subject
to specify the information or processing activities
to which the request relates; or
(c) the request is made for purposes other than data
protection purposes, then it could be rejected.
Each of these exemptions requires an assessment that
can be accordingly communicated to the Data Principal.
THE REQUIREMENT TO SUBMIT ‘A
PRIVACY BY DESIGN POLICY’ TO THE DPA
FOR CERTIFICATION NEED STIPULATIONS
Such certified design policy should be published on the
website of both the data fiduciary and the DPA. Further
regulations will be enacted in relation to certifications.
B. Murli
General Counsel & Company Secretary
Nestle India Limited
The regulations should stipulate the process, timelines,
and guidelines that will be followed by DPA for
certifications and permissions for ‘A Privacy Policy.’
THE SHIFT FROM REASONABLE TO
‘NECESSARY STANDARDS’ WILL BENEFIT
FROM CLARIFICATION
Making many process controls on encryption, de-
identification, preventing misuse, ensuring accuracy,
and anonymization. It would be helpful if it’s clarified
that necessary standards will have to be read above
‘reasonable’ standard measures laid down in the IT
Act. That would increase technical, safety, and security
compliance which is yet to be defined. If not, this could
impact data audit standards to be complied by the data
fiduciaries internally and externally.
POLICIES FOR DIGITAL ECONOMY CAN BE
MATCHED WITH STEADFAST DISCUSSION
ON ‘NON-PERSONAL DATA FRAMEWORK’
BEING MADE VOLUNTARY
Under the PDP Bill, 2019, the Central Government
has been empowered to frame any policy for the
digital economy that does not govern personal data.
Further, the Central Government in consultation with
the DPA may direct any data fiduciary or processor to
provide any anonymized personal data or other non-
personal data to enable targeted delivery of services or
formulation of evidence-based policy.
B. Murli and Dhwani opine that this move can be
matched with steadfast discussion on ‘Non-Personal

66 January 2021 | | www.legaleraonline.com

 Cover Story
guidelines for the kind of data to be considered critical
and it is hoped that in due course the guidelines will be
issued.

Critical personal data may be transferred out of India only

when such transfer is: (a) to a person or entity engaged
in the provision of health services or emergency services
or when such transfer is necessary for “prompt action.”
(b) on the basis of adequacy determination of a specific
country or international organization or class of entities.
Such initiative has relaxed the industry’s additional
measures that were otherwise required to mirror all
sensitive data that could include- payment data, finance
Dhwani Rao
Head Legal Counsel - IP, Digital and HR Legal
data, salaries of employees, payments to vendors etc.,
attendance biometric data, laptop biometric data that
Nestle India Limited are otherwise stored in Common Group servers and
Data centres that are operated outside of India for many
Data Framework’ being made voluntary. The intent multinationals.
of insertion of such must ensure adaptation of ‘Non-
Personal Data Framework’ discussions and conformity THE BILL SUBSTANTIALLY WATERS
instead of varied exposure and concerns it may have for DOWN INDIA’S POSITION ON DATA
Data Fiduciaries. LOCALIZATION WHICH NEEDS CAREFUL
CONSIDERATION
PROHIBITIONS ON PROCESSING
BIOMETRIC DATA NEEDS FURTHER
DELIBERATION
internationally renowned
The Bill prohibits Data fiduciaries from processing
expert authority
biometric data that has been notified by the Central
Government unless such processing is permitted by law.
Biometric is an important element of digital business.
Publication of draft notification with reasonable time for
comments would provide an opportunity to represent
if it involves sudden breakage of activity or impact on
business.

PROVISIONS ON DATA LOCALISATION /

CROSS BORDER TRANSFER OF DATA AS
AGAINST WHAT WAS PROVIDED IN THE
2018 BILL ARE LAUDABLE

The requirement to store one copy of all personal data

in India has been dispensed with. Sensitive personal
data may be transferred outside India for processing but
will need to be stored in India. Cross-border transfer of
such data may be made only with the explicit consent of
the data principal and when one of the three additional
grounds specified in the Bill are fulfilled.

Critical personal data, as notified by the Central

Government, is subject to hard localization, and may
Dr. Pavan Duggal
Advocate, Supreme Court of India and
be processed only in India. Currently, there are no President, CYBERLAWS.NET

www.legaleraonline.com | | January 2021 67

 Cover Story
cautions that the Bill represents a U-turn on the Indian
approach to data localization. The gains that the Reserve
Bank of India have achieved for Indians on Indian banking
data being located within India, would receive a significant
setback with the Bill. The Bill appears to have significantly
ignored the need to come up with provisions that could
reiterate and strengthen India’s data sovereignty.
Further, the ambit of the Bill is only limited to the
protection of personal information. It excludes non
personal information and general information from its
ambit.
ecosystem. It will serve India best not to act in a hurry.
Dev Bajpai had also opined that a regulation dealing with
the privacy of individuals should take effect only after
there is awareness and understanding around it. On a
similar note, Pavan Duggal makes a case that the very
passing of the Bill without adequate consultations with
stakeholders and experts, may lead to more challenges
than gains in the coming times.

Yes, the Bill is India’s first foray in the area of data

protection. That assumes significance in a country where
data protection was never given the kind of importance it
deserves. However, while the Bill has been substantially
inspired by EU’s GDPR, the Bill seeks to add elements in
the Indian legal ecosystem which were previously not
in existence. History proves that a culture of adopting a
mere cut-and-paste approach is not a successful strategy
in the Indian context. With potential intrinsic conflicts
between the mother legislation being Indian Information
Technology Act, 2000 and the Bill, Pavan Duggal opines
that there is a need for a lot of homework to be done.

INDIA NEEDS TO VIEW THE BILL AS AN

EFFECTIVE VEHICLE TO PROTECT AND
PRESERVE DATA’S CYBERSECURITY
Pavan Duggal argues that India needs to view the Bill
as an effective vehicle to protect and preserve data’s
cybersecurity. That assumes more significance as India
does not have a dedicated law on cybersecurity. The Bill
loses sight of the principle that no data protection law is
complete without adequate attention to cybersecurity
and lacks a futuristic mindset.
Further, with COVID-19 and the subsequent transmigration
to Work from Home, the ground realities have completely
changed. They need to be incorporated in the Bill.
In the context of data repositories and intermediaries,
there is a need to define detailed parameters of due
diligence.
IT WILL SERVE INDIA BEST NOT TO ACT IN A
HURRY ON PASSING THE BILL
India needs to bring not just deterrence but also send a
strong message to the global community that India will
do what it takes to ensure data protection and protection
of both data and personal privacy in the electronic
Salman Waris
Partner and Head TMT and IP Practice
groups at Tech Legis
also expresses concern that
there is still much confusion on the actual enactment and
implementation of the final form of the Bill.
THE DISCRETIONARY POWERS TO THE
EXECUTIVE BRANCH OF THE GOVERNMENT
NEEDS GUIDELINES
Besides, having a regulatory sandbox in place as proposed
may be the need of the hour keeping in mind the growing
need of the digital economy, however, Salman Waris
cautions that an individual’s fundamental right to privacy
stands a high chance of being jeopardized because the
Bill provides the government with unregulated powers
to exempt its agencies from the provisions of the Bill
for certain circumstances. Discretionary powers to the
executive must be accompanied by clear guidelines for
exercising such powers.
He also draws attention to Section 3(2) of the Bill that
defines anonymized data. Waris opines that irreversible

68 January 2021 | | www.legaleraonline.com

 Cover Story
anonymization is impossible. In the absence of provisions
prescribing standards for anonymization and penalties for
breach, the State’s right to access anonymized personal
data is an invasion of the right to privacy over personal
data. The Bill increases State power to surveillance
without creating adequate checks and balances. That is
a big concern.

Anubhav Kapoor, Group Vice President - Legal & Group

Company Secretary, Cummins India

makes pertinent overcharging

observations including
specific observations on the
Gopalakrishnan Committee’s
latest Report.
INDIA COULD BECOME THE FIRST
COUNTRY TO PUT IN PLACE A
COMPREHENSIVE FRAMEWORK FOR NON-
PERSONAL DATA.
He sets content that India is the second-most populous
country in the world and has the second highest number
of smartphone users in the world. Thus India can be
projected as one of the top consumer markets, and by
extension data markets in the world in the foreseeable
future. The Bill therefore is a single national-level
regulation in India to establish rights over non-personal
data collected and created in India. With such a regulation,
India could possibly become the first country to put in
place a comprehensive framework for non-personal data
in place.
THE BILL ONCE IMPLEMENTED COULD
POTENTIALLY REALIZE ECONOMIC VALUE
FROM THE USE OF NON-PERSONAL DATA.
Anubhav Kapoor sees huge promise in the Bill to realize
economic value from the use of non-personal data and
generate economic benefits for citizens and communities
in India and unlock the potential value of data by creating
incentives for innovation and new products/services and
business opportunities in India.
The Gopalakrishnan Committee i.e. the Committee of
Experts Non-Personal Data (Community Data) released
a draft version of its report on 12 July 2020 and public
feedback/suggestions were sought by 13th September
2020. The Committee received over 1500 pieces of
Anubhav Kapoor
Group Vice President - Legal & Group
Company Secretary, Cummins India
feedback from the public/organizations. Based on the
public feedback, the Committee has revised its earlier
report and a revised draft report has now been published
and open for public feedback until January 31, 2021.
THE NEW CLASSIFICATION OF A BUSINESS
CALLED ‘DATA BUSINESS’ NEED TO BE
REGULATED.
Depending on what an organization is into, it could realize
the value of its data either through direct monetization
or internal value realization or through mergers and
acquisitions. There are several approaches developed to
measure the value of data and this is an evolving field.
Some examples of data-based businesses include social
media, search, map-based services, online retail, ride-
hailing platforms, digital healthcare, credit rating, etc.
Google, Facebook, Amazon and the like use data and user-
generated content that they collect and analyze with AI to
make better decisions for businesses and organizations.
Our society experiences such data-enabled services in the
form of platforms like Google Maps, Uber, Amazon, etc.
The recent controversy over the change of privacy terms
by WhatsApp is an example of the increased

www.legaleraonline.com | | January 2021 69

 Cover Story
sensitivity of the users of social platforms on the use of
their data.

Anubhav Kapoor opines that given the fast-evolving

developments in this area and the vast economic
potential, the Committee’s Report proposes a new
classification of a business called ‘Data Business’ which
collects and manages personal and non-personal data.
In a scenario where few companies with access to
large data sets accumulated in a largely unregulated
environment could allow the possibility of creating data
monopolies. A large consumer market such as India could
lead to the creation of imbalances in bargaining power
and competition. Therefore, it becomes necessary to
catalyze and regulate the Data Businesses in a way that
maximizes overall welfare and at the same time, meets
the requirement to provide certainty and incentives for
new business creation for India and its citizens.
“RE-IDENTIFICATION OF ANONYMIZED
DATA” NEEDS ADEQUATE MEASURES
TO ENSURE IT DOES NOT DILUTE THE
PROTECTIONS UNDER THE BILL.
The Committee’s report deliberates on the potential
harms from privacy violations due to “re-identification
of anonymized data”, or from the derivation of
personally identifiable insights from non-personal data.
The Committee evaluated what will happen in case
there is re-identification from non-personal data.
The interface between personal data and non-personal
data framework is more real and complicated than
envisaged. If the individuals whose data constitute the
anonymized dataset are re-identified, such data would
no longer be characterized as anonymized data and will
once again fall within the purview of the Bill. Adequate
measures should be developed to ensure that any data-
sharing framework does not dilute the protections
afforded by the Bill.
THIS MAY BE THE RIGHT TIME TO REGULATE
THE PERSONAL AND NON-PERSONAL DATA
ECOSYSTEM AND LENDING CERTAINTY
A combination of a first-mover advantage for large
data-driven platforms and businesses has left many
new entrants and start-ups squeezed and faced with
significant entry barriers. This may be the right time to
set out rules to regulate the data ecosystem to provide
certainty for existing businesses and incentives for new
business creation.
Na. Vijayashankar
Executive Chairman at Foundation of Data Protection
Professionals, and Data Protection and Data
Governance Consultant
IT IS NATURAL THAT DESPITE
CONSULTATIONS, DIFFERENCES
BETWEEN STAKEHOLDERS MAY PREVAIL
Na. Vijayashankar opines that it is a complex law, and
it is natural that despite elaborate consultations and
accommodations, differences between stakeholders may
prevail. The Tech Start-Ups will be happy that there is a
3-year window for them under the sandbox scheme. The
IT/BPO segment may be happy with the provisions to seek
exemption for application of the Act to process personal
data of foreign nationals.
The need for registration of a Significant or Guardian
Data fiduciary with the DPA with the disclosure of the
Data Trust Score could pose some challenges to the parts
of the industry processing sensitive information in the
health and financial sector.
INNOVATIVE PROVISIONS STRENGTHEN
THE REGULATION AND PROVIDE
OPPORTUNITIES FOR NEW STANDARDS OF
DATA PROTECTION
In sync with B. Murali and Dhwani’s view that the need
to file the Privacy By Design policy with the authority also
could be a challenge, Na. Vijayashankar Naavi however
opines that it is like filing a prospectus with SEBI before
raising funds from the public. It is as if the “Collection of
Personal Data from the public” is similar to raising funds
in the Capital market.
The concept of DTS is similar to the Credit rating of an
instrument and provides an opportunity for Personal Data
Investors to assess the acceptability of a data fiduciary.
This will be particularly handy when choosing the

70 January 2021 | | www.legaleraonline.com


Consent Managers. This will strengthen the regulation
and provide opportunities for new standards of data
protection like the Personal Data Protection Standard
of India which may eventually replace the imported
data protection standards.
Vineet Vij
Global General Counsel, Tech Mahindra
On a similarly positive note
Vineet Vij, Group General Counsel at Tech Mahindra
welcomes the Bill as establishing a much-needed
robust and stringent data protection framework for
the country and ensuring accountability for those
processing personal data or the data fiduciaries.
THE INTRODUCTION OF SOCIAL MEDIA
INTERMEDIARIES AS DATA FIDUCIARIES IS
SIGNIFICANT
Vineet Vij opines that the introduction of social media
intermediaries as data fiduciaries in a world where
social media plays a major role in each sphere of life
is truly significant in its nature and effect in so far as
for creating and upholding measures that protect the
privacy of social media users.
Further, powers given to the Government to designate
large data fiduciaries, whose usage is higher than
the threshold as “significant data fiduciaries”
complimenting the powers vested with DPA is also very
notable to protect the country’s sovereignty. However,
it still needs to be seen how the enforcement would
pan out and its economic impact for players directly
affected by this provision.
The Bill also brings more accountability in dealing with
sensitive and personal data of the citizens by both
Cover Story
private and government organizations. When it comes to
dealing with consumer’s data, the Bill puts consumers in
control of their data. It facilitates them with a transparent
and effective environment to know how, where, and why
their personal data is being processed.
THE BILL HAS A WIDER SCOPE AND IS EVEN
MORE STRINGENT THAN EU’S GDPR
The Bill appears to be more comprehensive in terms of
data privacy provisions and provides ample scope to the
Government to enlarge the definition of sensitive personal
data. It may have wider scope in some areas than the EU’s
GDPR and the California Consumer Privacy Protection Act.
Further, the Bill is significantly more stringent than
the GDPR in terms of responsibility for defining the
“Reasonable Purposes” for processing the data without
consent. Under GDPR, it is the Data Controller who
is responsible to determine the Reasonable Purpose,
however, under the Bill, it is DPA who will ascertain the
Reasonable Purposes.
EXISTING AMBIGUITY ON KEY ISSUES MUST
BE ADDRESSED
Vineet Vij urges there may still be few areas that can
lead to ramifications if unaddressed. For example, the
Government has the power to exempt data processors
that process the personal data of data principals who
are outside the territory of India. The extent and grant of
such exemption require more clarity.
Further, the transfer of data outside India and critical
personal data by the Government can only be processed
in India, this can have far-reaching implications on the
ease of doing business. Pre-requisites for storage of such
data have not been laid down.
STANDARDS FOR ANONYMIZATION OF
DATA NEED TO BE SPECIFIED
Like experts Dev Bajpai, Murali and Dhwani, and Salman
Waris, Vineet Vij also expresses concerns over the power
of the Central Government to direct data fiduciaries or
data processors to share anonymized data or non-personal
data. He makes a case that it can have a far-reaching
impact. The Bill is silent on preventive measures for
protecting the anonymized data shared by data fiduciaries
or data processors. Standards for anonymization of data
are also conspicuously absent in the Bill. The recent
Schrems II judgment by the Court of Justice of the EU
has invalidated the US-EU Privacy Shield on grounds of
www.legaleraonline.com | | January 2021 71
 Cover Story
invasive US surveillance activities encroaching the true
spirit of privacy right of an individual. Ideally, all such
disclosures should be a result of collaborative decisions
and comprehensive guidelines rather than being at the
direction of the Central Government alone.
THE BILL TAKES A TOUGH STANCE ON
PROTECTING CHILDREN.
Vineet Vij notes a significant provision on protecting
children from being profiled or targeted online. DPA
classifies any data fiduciary that operates an online
service or commercial website directed at children,
or processes large volumes of children’s personal
information as a “guardian data fiduciary.” It prohibits
them from profiling, tracking, behaviorally monitoring,
or directing targeted advertising towards children.
Neera Sharma
CEO/CLO at Sistema Smart Technologies Limited
Neera Sharma CEO/CLO at Sistema Smart Technologies
Limited also notes that the Bill helps to protect vulnerable
classes like children, LGBT Community and Patient Data.
The Bill would provide more control and transparency to
consumers, enabling them to become ‘owners’ of their
information. Data accumulated on or from a consumer can’t
be given to third parties without the consent of the consumer.
THE BILL BRINGS TRANSPARENCY TO HOW
THE GOVERNMENT HANDLES CITIZENS’ DATA.
She opines that the Bill would hold both private and
government organizations accountable for the usage
of sensitive and personal data, which will bring more
72 January 2021 | | www.legaleraonline.com
transparency in terms of how the government, one of the
largest data collectors in the country, handles citizens’
data. This measure may diffusely help the government put
up additional mandatory security measures to protect this
category of data.
THE PERTINENCE OF THE BILL IS EXTRA-
TERRITORIAL.
Neera Sharma observes that the pertinence of the Bill is
extra-territorial. It seeks to protect the data of not only Indian
citizens but any data principally within the territory of India
being processed by Indian companies or MNCs situated in
India/Outside. Data audits, trust scores, security parameters,
etc., would pave the way for a uniform data protection
structure resulting in stronger security measures to protect
citizens’ data.
LOCALIZATION OF DATA NEEDS RETHINKING.
In sync with Pavan Duggal’s concerns on the Localization of
Data under, Neera Sharma expresses that it is a considerable
setback for many global players. This will have a larger
economic impact. The free flow of information makes the
world, if not a better place but certainly a more efficient
one. Industry experts are raising larger geopolitical concerns
about digital protectionism resulting in AI nationalism.
THE BILL EXEMPTS GOVERNMENT BODIES.
Neera Sharma raises another pertinent question. Unlike the
GDPR which has a uniform application of the law, the Bill
grants the Central Government the power to exempt any
government agency from the application of the Act, opening
the door for misinterpretations and misuse of the law.
A STRONG AND ROBUST DATA PROTECTION
LAW WILL BECOME A FOUNDATION FOR THE
DATA ECONOMY IN INDIA.
The overarching view is let’s welcome the era of personal
data protection. The Bill is remarkable as it changes the
milieu in which personal data of the citizens is collated
and processed and it paves the way for a better socio-
economic world with strong data privacy and security
regime.
As Dev Bajpai urges, as a nation, we should do everything
to harness the power of data and, equally, be sensitive
to personal data, its collection, processing, storing, and
transfer. This requires a modern law that is practical,
easy to implement, and helps the cause of ease of doing
business.
 LE In Focus

International
Financial Services Centre
Opportunities
for
Aviation
Financing

74 January 2021 | | www.legaleraonline.com

 In Focus

The inclusion of aircraft leases as financial products creates huge

opportunities for the aviation sector, and is the first step towards
implementation of the recommendations of the Ministry of Civil Aviation

www.legaleraonline.com | | January 2021 75

 In Focus

T
he International Financial Services Centres Authority of India in this regard. The provisions of
Authority Act, 2019 (the “Act”) was the Special Economic Zones Act, 2005 and the Special
notified by the Central Government on Economic Zones Rules, 2006 and the regulations
December 19, 2019 with an aim to provide made thereunder need to be complied by IFSC
for establishment of an authority to units. Pursuant to the Aircraft Notification, financial
develop and regulate the financial services market in institutions (as defined in the Act) set up in IFSC can
International Financial Services Centres in India. now undertake aircraft leasing activities.

The Ministry of Finance, Department of Economic The Gujarat Stamp Act, 1958 has been amended
Affairs, by way of a notification dated April 27, 2020 to exempt IFSC units from paying stamp duty for
established the International Financial Services incorporation, setting up, availing or providing
Centres Authority (“IFSCA”) with Gandhinagar, services or acquisition of movable / immovable
Gujarat, being notified as the place of head office for property in relation to aircraft / engine / helicopter
IFSCA. leasing for 10 years from August 2020.

All sections of the International Financial Services

Centres Authority Act, 2019 have been brought into APPLICABILITY OF FEMA
effect by way of notifications in 2020.1 The Act prescribes that the powers of the RBI will
be exercised by the IFSCA in so far as regulation of
AIRCRAFT LEASING AS ‘FINANCIAL financial products, financial services and financial
PRODUCT’ institutions that are permitted in IFSC are concerned.

The Ministry of Finance by its notification dated RBI issued that the Foreign Exchange Management
October 16, 2020 (“Aircraft Notification”) designated (International Financial Services Centre) Regulations,
aircraft lease, including operating leases, financial 2015 (“FEMA IFSC Regulations”), which treat financial
leases, and hybrid of operating and financial leases institutions3 or their branches set up in IFSC and
of aircraft, helicopters or engines or any other permitted / recognized as such by the government of
parts as ‘financial product’ under the Act. The same India or appropriate regulatory authority as person
notification also notified Global In-House Centres resident outside India. Since financial institutions
as financial service to provide services relating to include companies and NBFCs, the benefit of the
financial products in IFSC.2 Units set up in IFSC can FEMA IFSC Regulations should also be available to
provide services through financial products which the IFSC units of Indian companies and NBFCs.
now also includes ‘aircraft leasing’.
All such financial institutions are required to conduct
The inclusion of aircraft leases as financial products business in a manner as determined by the applicable
creates huge opportunities for the aviation sector, regulator.
and is the first step towards implementation of the
recommendations of the Ministry of Civil Aviation Pursuant to FEMA IFSC Regulations, the RBI also
- Working Group on Project Rupee Raftaar which issued a scheme for setting up of IFSC Banking Units
suggested multiple reforms required to facilitate (“IBUs”) by Indian banks and foreign banks already
establishing a viable aircraft leasing market in India, having presence in India, which prescribes the broad
especially in the IFSC. contours and requirements for setting up IBUs in
IFSC (“RBI IBU Scheme”). Prior permission of the RBI
is required for setting up an IBU, which for regulatory
SETTING UP UNITS IN IFSC
purposes are treated at par with foreign branch
Units in IFSC can be set up and approved in of Indian banks. We believe airlines in India could
accordance with Special Economic Zones Rules, 2006 explore possibilities for PDP financing through IFSC
read with guidelines notified by the Reserve Bank of units, subject to end-use restrictions and applicable
India (“RBI”), the Securities and Exchange Board of minimum average maturity period, prescribed for
India and the Insurance Regulatory and Development external commercial borrowings.
1
The notifications are dated April 27, 2020, August 21, 2020, and October 1, 2020
2
Global In-House Centres and its ambit of permissible activities are defined in International Financial Services Centres Authority (Global In-House Centres)
Regulations, 2020. GICs can provide support services to non-resident entities only.
3
Financial Institution includes (i) a company or (ii) a firm (iii) an association of persons or body of individuals whether incorporated or not, (iv) any artificial judicial person
engaged in providing financial services or carrying out financial transactions. Explanation: ‘financial institutions’ also include banks, NBFCs, insurance companies, brokerage
firms, merchant banks, investment banks, pension funds, mutual funds, trusts, exchanges, clearing houses, or other entities by the Government or RBI.

76 January 2021 | | www.legaleraonline.com

 In Focus
On November 18, 2020, the International Financial
Services Centre Authority (Banking) Regulations,
2020 was issued to regulate various aspects of banking
activities permissible in the IFSC which includes inter
alia, purchase of portfolios, factoring and forfaiting
of export receivables and undertaking equipment
leasing, including aircraft leasing. Therefore, clarity
has been provided that banking institutions (Indian
and foreign) can engage in aircraft leasing business
through IBUs. With the benefits available to units
set up in IFSC, this provides opportunities for Indian
banks for trading and securitization of high value
equipment like aircraft.

BENEFITS:
With exemption under section 10AA of the Income-
tax Act, 1961 withdrawn for units set up in SEZ
post 1 April 2020, IFSC units should get tax benefits
including deduction under section 80LA (100% of
profits for 10 consecutive years out of a period of 15
ANAND SHAH
years, beginning with the year in which the requisite
permission for the operation of the IFSC unit was Senior Partner
obtained) for income from aircraft leasing business.

The prospects of an aircraft leasing business in India

are expected to be huge for a market which has nearly
1000 deliveries pending for scheduled operators.
The synergies created by Indian lessor and Indian
operators are likely to create mutually beneficial
aircraft leasing structures.

Recommendations to further incentivize aircraft

leasing business by IFSC units:

IMPLEMENTATION OF CAPE TOWN

CONVENTION (“CTC”):
The CTC has been ratified by India and entered
into force on July 1, 2008, however, it has not been
fully implemented through domestic legislation.
India has taken certain steps to implement the CTC RISHIRAJ BARUAH
provision which would permit an aircraft owner, Senior Associate
lessor or lender to successfully de-register their
aircraft by an “IDERA” within 5 days of making
the application to the Directorate General of Civil
Aviation, however, due to lack of domestic legislation
other provisions of the CTC may be subject to
existing or future laws enacted by the Parliament.
IDERA provisions will be applicable for units in IFSC
as well. The implementation of CTC will be pivotal in
the success of creating ease of business for aircraft
lessors and financial institutions.

www.legaleraonline.com | | January 2021 77

 In Focus

STRONGER DIRECT ENFORCEMENT
RIGHTS:
Currently, the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest
Act, 2002 (“SARFAESI”) does not apply to any
security interest created over an aircraft or any lease
interest over an aircraft.4 Therefore banks, lessor
and financial institutions cannot use enforcement of
security rights conferred by SARFAESI. Further, the
concept of ‘self-help’ remedies recognized under
New York law or English law does not exist in India
and therefore, any hostile repossession of aircraft
will need the intervention of courts. In order to
create credit confidence for an Indian leasing market,
implementation of stronger enforcement rights is
recommended.
CONCLUSION
The amendment to the IFSC regulations is
commendable and gives the necessary boost
required for ease of doing business. There are a few
legislations which need to be further strengthened
in order to create creditor-friendly regulatory
environment which would promote a viable aircraft
leasing and financing market in India.

4
Section 31 (c) and (e), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Author: Anand Shah

Designation: Senior Partner
Anand Shah, Senior Partner at the Mumbai office at AZB & Partners represents major international aircraft leasing

ABOUT
and financing companies and airlines and is experienced in advising across jurisdictional regulations governing civil
aviation in India. Anand’s practice areas also include banking and finance, structured finance transactions, mergers and

THE
acquisitions, private equity transactions and the private client practice. He is also a part of the firm’s regulatory advisory
practice advising clients on banking and securities laws and regulations. Due to the fact that his background covers both
debt and equity, in recent times, he has been particularly active in the restructuring and insolvency space.

AUTHOR Author: Rishiraj Baruah

Designation: Senior Associate
Rishiraj Baruah, senior associate at Mumbai office of AZB & Partners primarily works with the aviation practice. He has
been instrumental in managing end-to-end transactions with a particular focus on aircraft leasing, financing, sale and
purchase, insolvency, re-structuring, and novation’s. He has also advised banks and lessors on issues in relation to filings
under the Cape Town Convention and Aircraft Protocol. Being part of the restructuring practice as well, Rishiraj has been
active in advising on the biggest airline insolvency in India. Rishiraj holds an LLM in air and space law and was previously
a research scholar at UNIDROIT, Rome.

LE
Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.

78 January 2021 | | www.legaleraonline.com

KNOW
THELAW
KNOW THE LAWYERS

LEGAL
ERA

www.legaleraonline.com

FOR SUBSCRIPTION RELATED ENQUIRIES, PLEASE CALL:

+918879634922
Email: subscription@legalera.in
 LE In Focus

Product
Liability
in ASIA
Given the development of ASEAN as a potential trading
bloc, it is hoped that product liability laws, or indeed
consumer protection legislation that address product
liability, be promulgated in consultation with each other
such that the same basic principles of product liability
and the protection of the consumer be consistent

80 January 2021 | | www.legaleraonline.com

 In Focus

www.legaleraonline.com | | January 2021 81

 In Focus
T
he world is becoming increasingly
connected. Consequently, with
increasing globalization, product liability
development in one part of the world
will have ramifications globally. It is
imperative that countries remain cognizant of other
developments in the product liability space.
DEVELOPMENT
In Asia generally, the driving force behind the
development of product liability law is the increasing
awareness of consumer rights propelled by economic
development and the realization by governmental
bodies of the need to protect consumers against
product manufacturers. However, the different
pace of economic development within Asia makes it
practically impossible to expect homogeneity in the
region. For example, many Asian countries such as
Hong Kong, Sri Lanka, and Singapore do not have
specific product liability legislation, but generally
subsume such protection under the principles
of common law or general consumer protection
legislation. On the other hand, countries like Japan
and Korea have enacted specific product liability
legislation.
One of the key inspirations behind product liability
legislation is the European Community’s Product
Liability Directive (“EC Directive”). The central
tenor of the EC Directive was the introduction of
the strict liability regime for defective products.
With increasing economic development, given that
manufacturers have greater resources to anticipate,
prevent, and investigate product defects than
consumers, the introduction of the strict liability
regime was inevitable. It was previously thought that
the strict liability regime conferred better protection
on victims and increased the safety standards of
products.
Countries such as Japan, India, China and Korea have
identified with the underlying rationale of the EC
Directive and thus followed suit. Brief summaries
of the Product Liability landscape of the aforesaid
countries are set out below:
a) Japan’s Product Liability Law (“PL Law”), which
was enacted in 1994, imposes strict liability on
defendants for death, injury, and damage caused
by a defective product manufactured, processed,
imported, or represented as such by the defendant.
A series of cases resulting from defective food or
drugs was also the leading reason for introducing
a new legislation regulating product liability and
82 January 2021 | | www.legaleraonline.com
consumer safety. Japan has even taken it further
to introduce a positive duty on suppliers of any
consumer goods to notify the government of
any serious product-related accident by way of
an amendment in 2006 to the Consumer Product
Safety Law.
b) The Bhopal disaster in India, considered as the
worst industrial disaster in the world, drew India’s
attention (and indeed the rest of the ASEAN
region) to the need to examine and reform law
relating to liability for unsafe productions and
production processes. The increasing realization
of helplessness of the consumers caused the
enactment of Consumer Protection Act of India
in 1986 and now the newly enacted strict liability
regime in India.
c) The People’s Republic of China (“PRC”) adopted
consumer rights’ protection legislation in 1993
under the Law of the People’s Republic of China
on Product Liability. It created statutory liability
for the producer and seller.
d) In Korea, the Consumer Standard Act was enacted
in 2006 and was amended many times thereon. It
regulates manufacturing safety, and provides for
provisions regarding consumer rights, obligations
of manufacturers and retailers, as well as the
role of the government in regulating consumer
protection. The Korean Government also has
policies facilitating product recalls with a set of
guidelines instituting voluntary and mandatory
product recalls.
On the other hand, there are a substantial number
of countries that have not enacted specific product
liability laws. For example, there is no general
statutory provision regulating the sale of defective
products in Hong Kong despite recommendations
being made in the Law Reform Commissioner
Paper on Civil Liability for Unsafe Products (issued
in 1998). Nor is there statutory enactment in
Singapore that creates a comprehensive regime for
product liability, though there are specific statutes
that govern particular areas of law where product
liability issues may arise. Like Hong Kong, product
liability in Singapore is largely based on common
law. This is supplemented by the creation of various
organizations such as the Hong Kong Consumer
Council or the Consumers Association of Singapore
(“CASE”). Both provide a complaint system in which
they may try and mediate between the parties, but
do not have any judicial or quasi-judicial powers. In
the event that mediation is not successful, the only
recourse is to make a claim through the court system.
 In Focus
EFFICACY OF LEGISLATION/CONSUMER
PROTECTION
The enactment of specific product liability legislation
is not a one-stop solution to addressing all product
liability-related issues. Effective protection still hinges
on other factors such as the ease of enforcement of
such legislation, easy consumer access to the justice
system and the integrity of such systems.

Effective product liability protection is especially

challenging in the developing Asian countries where
the level of awareness and the financial means of
the general populace to obtain redress may not be
as high as that of the developed world. This is further
compounded by the lack of sophistication of the legal
systems (such as under-developed court systems and
out-dated legislation) and the inadequate availability
of resources to enforce any such laws.

As a compromise, in view of the limited resources DAVID GOH

(especially in developing Asian countries), some Asian Partner
countries such as India and Sri Lanka have set up
special consumer tribunals to assist in the progression
of product liability protection. Compared to formal
litigation, consumer tribunals are preferred as there is
speedy and affordable disposal of cases. Its flexibility
may cater especially well to developing countries,
particularly due to a low-entry initiation mode, a simple
but rights-based dispute resolution procedure and a
quick enforcement of the outcome. Unfortunately,
the efficacy of these tribunals have turned out to be
different from what the drafters had hoped. Each
matter is bounced around within the processes and
hearings (whether substantive or procedural), and
decisions or rulings are made after significant delay.
Often there are avenues of appeal to the courts, which
in turn causes significant delay and costs. For example,
in India, the definition of what constitutes a “consumer”
under the Consumer Protection Act 1986 (“CPA”) is still
uncertain, with two appeals to the Supreme Court of BINDU JANARDHANAN
India (that we are aware of) dealing specifically on this Registered Foreign Lawyer
issue. Consequently, the Commissions are set up under
the CPA to adjudicate consumer claims.

On the other hand, the threat of the immense damages

compensation resulting from class actions may propel
the speed of development of the product liability regime
in Asia. The attraction of class action claims is that it
enhances access to justice through the provision of a
remedy to those who have little financial means to seek
judicial redress. Class actions and punitive damages are
gaining traction in Asia. Jurisdictions such as Thailand
(2015) and Indonesia (2012) have promulgated laws

www.legaleraonline.com | | January 2021 83

 In Focus
and/or regulations recognizing class actions. In 2016,
Japan also joined the bandwagon and introduced a
“Japanese-style” class action regime. South Korea is
about to pass legislation which would significantly
expand the scope of its existing class action law
(which is only available for securities-related cases)
and allow the award of punitive damages. As for
China, it first introduced punitive damages for
defective products in its Tort Responsibility Law in
2010 and on 31 July 2020, its Supreme Court released
the Provisions on Issues of Representative Securities
Litigation (effective immediately) which provides for
class action claims for investors securities-related
matters. As for Hong Kong, it remains stuck with a
report published by the Law Reform Commission of
Hong Kong proposing that a class action regime be
introduced in Hong Kong. The reform is more of an
opt-out model that would permit product liability and
personal injury claims, but it rejected the adoption of
contingency fees or punitive damages and urged the
preservation of the “loser pays rule”. The Consumer
Protection Act in India also allows the filing of class
action suits by any trade or registered consumer
association, any Central or State Government, or
a number of consumers where there is a common
interest. It is of particular interest that Singapore,
with its highly developed economy and legal system,
has not seen the need for a class action regime and
84 January 2021 | | www.legaleraonline.com
it remains to be seen whether it will embrace such
an action. In that regard, it is our view that class
actions will become a socially accepted normality
in the foreseeable future given the increasing
awareness of consumers of their legal rights coupled
with greater access to information. In short, product
liability on a global scale presents new challenges for
multinational manufacturers.
INSURANCE
Another factor that affects the development of
product liability is insurance claims. Insurers are
generally the first point of contact when a product
liability claim is made. The globalization of the
product supply has invariably contributed to the rise
of global insurance claims. As such, the principles
behind insurers’ rights of subrogation are generally
well understood. Insurers who indemnify an insured
for a loss thereby become entitled to claim against
the wrong-doer who has caused that loss, i.e. by
paying a claim the insurer “steps into the shoes “of
the insured and takes over any rights it has against
the third parties who may be responsible for the loss.
It is an equitable principle that prevents the insured
from retaining the benefit of a double recovery.
Generally, in the automobile sector, a customer may
be more inclined to make an insurance claim for
 In Focus

Despite the non-

any loss or damage resulting from any defect in the
vehicle. Thereafter, it is up to the insurance company

homogeneity of the levels

to proceed with a subrogation claim against the
manufacturer or reporter. Again, in this regard, we see

of development within
different trends in different parts of the Asia-Pacific
region. We have observed that in jurisdictions such as

Asia, the development of a

Japan, Korea and Taiwan, insurance companies have
been more proactive in seeking compensation against

product liability regime is

the manufacturer and/or importer of the products.
However, as we move southward, the number of

subrogation claims has significantly reduced. This is
an interesting phenomenon, especially in countries
with more developed legal systems such as Singapore
or Malaysia where we might expect insurance
companies to use subrogation to recoup the pay-outs
if there is good cause to do so. If defective products
are simply covered by insurance, there is less pressure
on the manufacturers to ensure that they continue to
place emphasis on the safety of their products.
CONCLUSION
Despite the non-homogeneity of the levels of
development within Asia, the development of a
product liability regime is inevitable. It is unmistakable
that legislators and courts in Asia are becoming
increasingly sophisticated. Naturally, this will result
in a gradual push towards more stringent regulation
and establishment of enforcement mechanisms to
inevitable
better protect consumers and reduce the instances
of safety scandals. Given the development of
ASEAN as a potential trading bloc, it is hoped
that product liability laws, or indeed consumer
protection legislation that address product liability,
be promulgated in consultation with each other such
that the same basic principles of product liability
and the protection of the consumer be consistent.
In that regard, it may itself form a model that takes
into account the cultural and political diversity in the
region. This could very well cause other countries in
the Asia-Pacific to look carefully at such legislation for
use in their own jurisdictions. If this can be achieved,
other non-ASEAN members in the region might be
interested in either following the model or taking
parts of it that would be useful in their country.

Author: David Goh

Designation: Partner
David is internationally recognized as a leading product liability lawyer in Hong Kong and Singapore. He has over 25 years
of experience in the defense of product liability claims in the Asia-Pacific region. Leading the team in Asia-Pacific region on
product liability matters, David has been in the forefront in advising clients on how to prevent Product liability claims and
defend high risk cases. David has special interest in advising manufacturing, in particular automotive sector on regulatory

ABOUT requirements and priorities management issues. Apart from product liability, David also handles complex commercial
disputes, whether in litigation, arbitration or other forms of dispute resolution. In particular, David has represented clients

THE
in large shareholder disputes, insolvency and matters relating to internal company matters. He is also often called upon
to handle cross-border matters, and has built up significant experience in dealing with issues relating to conflict of laws or
private international law. He is qualified in Hong Kong, Singapore and England.

AUTHOR Author: Bindu Janardhanan

Designation: Registered Foreign Lawyer
Bindu is an incisive disputes lawyer in Squire Patton Boggs litigation and dispute resolution group in Hong Kong. Her practice
primarily focuses on product liability, particularly in the areas of prevention and defense of class/collective actions in the
Asia-Pacific region. She also has experience in responding to regulatory issues, product recalls, banking and intellectual
property matters in Hong Kong and India. Bindu mainly engages in automotive product liability advising manufacturing,
in particular automotive sector on regulatory requirements, international expert’s witnesses, advertising issues, product
recalls and hazards alerts, data compliance, intellectual property, including litigation and non-litigation mandates. She
has a wealth of negotiating experience and skills, especially in the areas of product liability. Bindu actively participates in
various seminars and publishes materials on different international platforms in product liability matters.

LE
Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.

www.legaleraonline.com | | January 2021 85

 LE Take on Board

Agricultural
POLITICS
by Politicians
BUT WHAT’S THE LAW?

T
he passage of the farm bills has been met
with tremendous scrutiny. Having been
passed by a voice note in the Rajya Sabha,
and the failure of the Deputy chairman to
relay the request of the opposition to put
the Acts to voting, saw a blatant violation of the
procedure enumerated under the Constitution. This
has subverted and hindered the democracy as well as
the federal structure of the country.

The following components attempt to analyze
the passed laws, and elucidate on subsequent
consequences and reactions they received with their
promulgation.
ANALYSIS OF THE IMPUGNED LAWS
The Farmer’s Produce Trade and Commerce
(Promotion and Facilitation) Bill, 2020
The Act helps create a system where farmers and
traders have the freedom to sell/purchase outside
the APMC; promotes barrier-free inter-state and
intra-state of produce; and provides framework for
electronic trading and transaction platform along
with guidelines. However, the Act weakens the APMC
system and could act as a disadvantage to smaller
farmers. Further, states will lose revenue as they will
not be able to collect mandi fees.

86 January 2021 | | www.legaleraonline.com

 Take on Board

While the intent and rationale behind the

three legislations might have been bona fide
and in public interest, the laws, since their
inception, due to various aspects and factors,
ranging from their legislative history and
complexities to the manner in which they
were passed have been riddled with doubt,
controversies and backlash

The Farmer (Empowerment and Protection)
Agreement of Price Assurance and Farm Services Bill,
2020
The Act provides farmers with the opportunity to
enter into contracts with agri-business firms for sale of
future farming produce at a pre-agreed price; ensures
risk mitigation and flow of credit to the farmer or
sponsor by linking farming agreement or insurance;
and provide effective dispute resolution mechanisms
to the parties entering into contract. However, due
to corporate involvement, farmers will be the weaker
party in farming contracts as they will not have the
means to negotiate their demands, with the sponsors
having an edge in entire dealing including in disputes.
THE ESSENTIAL COMMODITIES
(AMENDMENT) ACT, 2020
The amendment removes certain commodities from
the list of essential commodities, and allows the
central government to regulate the supply of certain

www.legaleraonline.com | | January 2021 87

 Take on Board
RAJIV DUTTA
Senior Advocate
The Supreme Court of India
food items under extraordinary circumstances, which
will help in stabilizing the prices. However, removing
restrictions on the storage of some foodgrains may
lead to more imports at cheaper prices affecting the
domestic farmers.
It is clear that the agricultural laws passed are a clear
infringement on the State’s legislative rights and
require immediate response and action to curtail the
impact of the said infringement. It is pertinent to
observe and understand the ways in which the various
State Governments will be responding to the blatant
violation of their legislating powers by the Central
Government.
1. Taking a page from BJP’s book: State Legislations
via Article 254(2) of the Constitution
The Punjab Government passed three bills under
Article 254(2) of the Constitution, which empowers
the State Government to pass legislations in the
matters listed under the Concurrent List, to limit
the scope and impact of the impugned laws. This
approach was subsequently adopted by the Rajasthan
Assembly which too passed three bills, similar to the
amendment bills passed by Punjab.
88 January 2021 | | www.legaleraonline.com
This recourse to negate or override a certain Centre
legislation was observed in 2015, when the BJP
government urged its ruling states to pass legislations
to override the Land Acquisition, Rehabilitation and
Resettlement Act, 2013.
The three acts pave the way for exploitation and
misappropriation by the corporations, through acts
of not just commission, but of omission too: the Acts,
on closer scrutiny, leave numerous things undefined
and open to broad interpretation. State Legislations,
under Article 254(2) of the Constitution, can fill the
above-stated gaps and holes, and provide assistance
to the farmers.
2. Bypassing the Central Law using pre-existing State
Laws
The Central Law, eradicating state regulations and
fees, instilled provisions for creation of new trade
areas for selling and purchasing of crops. Rajasthan,
circumventing the said law, using an administrative
order under the Rajasthan Agricultural Produce
Markets Act, 1961, designated all these new areas
as state-controlled markets, by declaring the FCI
warehouses as a “market area”.
Since, the order does not amend the Central Law
and exercises its powers under a pre-existing law to
bypass certain parts and provisions of the former,
which eradicates any scope of Centre discretion into
the said action, which can then only be questioned in
a court of law, and therefore, bypasses the Central
legislations.
LEGISLATIVE COMPETENCE
Agriculture, with its components and subsidiaries,
including ‘trade and commerce’ and ‘markets and
fairs’ is primarily and majorly a state subject under the
Seventh Schedule of the Constitution. Both, however,
are subject to Entry 33 of the Concurrent List, which
allows the parliament by law to declare any industry
to be under its control if it is ‘expedient in public
interest’, amongst other things.
The same has been applied by the Centre to bring the
impugned laws into force. The overlapping framework
with the State entries ensues suspicion towards
its competence and validity, which was furthered
by the manner in which these laws were passed in
Parliament. Entry 33, with its extended scope, has
been interpreted in a vastly novel manner wherein its
history, context and intention has been ignored.

The Supreme Court has been asked to review the
said legislations due to these suspicions. While
adjudicating over a legislation overlapping between
two entries, the Apex Court in State of Rajasthan v. G.
Chawla held that the doctrine of “pith and substance”
to determine the legislation’s character will be
applied and if it is largely functioning under one list
and encroaching the other only incidentally. The
encroachment of the Acts on the State List is clearly
not incidental and is intentional. The precedent will
weigh heavily if it is proved that the impugned laws
do not fall under Entry 33 of the Concurrent List as
was observed In ITC Ltd. v. Agricultural Produce
Market Committee and Ors., wherein the Supreme
Court upheld the validity of several state laws relating
to agricultural produce marketing, and struck down
the Central Act by interpreting Entry 28 of the State
List (market and fairs) in favor of states.
CONCLUSION
While the intent and rationale behind the three
legislations might have been bona fide and in public
interest, the laws, since their inception, due to various
aspects and factors, ranging from their legislative
history and complexities to the manner in which
they were passed have been riddled with doubt,
controversies and backlash.
Take on Board
The Government will have to invite a more holistic
approach with measures to prevent exploitation
and loss to the farming industry and its subjects, and
ensure that they work in harmony with the States to
maintain the revered federal structure and the future
precedents attached to the same.
THE AUTHOR
ABOUT
Author: Rajiv Dutta
Designation: Senior Advocate
Rajiv Dutta, Senior Advocate, Supreme Court of India, has over
40 years of experience. Mr Dutta is presently a Member of the
Panel of Arbitrators at the Singapore International Arbitration
Centre (SIAC); Panel Arbitrator at the ASSOCHAM International
Council of Alternate Dispute Resolution (AICADR), New Delhi;
Panel Arbitrator at the Indian Council of Arbitration (ICA); and
Panel Arbitrator at the Delhi International Arbitration Centre
(DIAC). He has acted as an Arbitrator under the United Nations
Commission on International Trade Law (UNCITRAL) model
rules, and in ICC International Commercial Arbitrations.
LE
Disclaimer – The views expressed in this article are the
personal views of the author and is purely informative in
nature.
www.legaleraonline.com | | January 2021 89
 LE LAW & POLICY

To the extent
that weeks went
by, corporations
began to realize
that efforts
were not to be
solely geared to
warrant their
operational
safety but also
to the respect
of the right to
privacy of their
employees

90 January 2021 | | www.legaleraonline.com

 LAW & POLICY

Privacy
CHALLENGES
IN THE NEW NORMAL

FERNANDO VICTORIA PEÑA

CHIEF LEGAL AND COMPLIANCE OFFICER

www.legaleraonline.com | | January 2021 91

 LAW & POLICY
T
he world is nowadays facing extraordinary
and unpredictable conditions in which
uncertainty regarding the future is something
that takes away most people’s sleep. In the
course of this year, the economy stood up
against one of its greatest trials, where a portion of the
discussion centered on the balance between life and
economics, a discussion that, in my opinion, took place
in a scientific and economic environment, adopting
educated decisions and in which most of the times
respect for health and life itself prevailed upon any
other economic contest for most countries. Now well,
for corporations (and even including the government),
that by reason of their respective social purposes or
by not having an impact or restrictions, could continue
to operate from a home-working environment or
enjoy some degree of flexibility at their offices, safe
environments were created for employees, the
business itself and their customers, despite the fact of
cohabitating in a low regulated, nervous environment
that evidenced more questions than answers.
From the standpoint of privacy and to the extent that
corporations were permitted to continue in operation,
most of the extraordinary and emergency regulations
imposed obligations regarding monitoring of the
health of employees, aiming to prevent any upsurge
of contagion at their premises. In this order of ideas,
additional data to that already available at most
companies in the normal course of business, there was
now an element of sensitive data that, although being
collected by mandate of the new laws, its collection,
disposition and transfer implied establishment of new
control measures to prevent any incident of privacy
in the context of this new reality. There is no doubt
that this sort of information must be available so that
authorities and companies themselves may adopt
any measures necessary to detain spreading of the
pandemic or reduce its scope, despite that circulation
and storage of an important volume of sensitive data
are not in anybody’s plan but, instead, make part of the
new measures of control in the new normal.
On the other hand, and, as most companies transferred
their workforce to the homes of their employees,
implementing working environments within the family
settings, the obligations of privacy and confidentiality
have not changed nor have they been eliminated but,
instead, have transformed within a non-controlled
situation and carry an, in principle, unknown larger risk
level. To the extent that weeks went by, corporations
began to realize that efforts were not to be solely
geared to warrant their operational safety but also to
the respect of the right to privacy of their employees.
92 January 2021 | | www.legaleraonline.com
Although we navigate in
different waters, legislators
around the world have
focused on measures that
restrict circulation and
control the pandemics or
have even promoted labor-
related reforms seeking to
warrant labor conditions
for employees at company
premises
Although some companies, due to the sensitive
contents of data being processed or even as a result of
the nature of their very customers, became aware of
the need to set monitoring circumstances a lot stronger
than in the homes of their employees including, in some
cases, the use of cameras, the rights of employees are
not to be lost track of since the latter carry, on their
backs, a corporate stress, even to the same degree of
managers, in some cases, and are subject to the same
stress and uncertainty of the times.
In such circumstances, in which privacy and
acquiescence policies are set at trial, in which the new
normal is almost a vertical for the companies that
leveraged its transformation and obliged to implement
remote working measures in order not to disappear, it
is now necessary to care, more than ever before, for the
relationship with employees, their state of mind and the
socialization and need for measures of surveillance of
security within their intimate environment. In some
jurisdictions it may even be an issue of constitutional
nature to the extent that rights to privacy and intimacy
may be adversely affected and where we return to the
beginning in-depth discussions regarding life versus
economics, now exchanging the roles of economics and
privacy.
Regarding this last issue, discussion, in my opinion, is
much simpler; the two are to cohabitate in a different
reality, with minimum rules of the game for corporate
development and the easiness of their own citizens and

corporations. Although we navigate in different waters,
legislators around the world have focused on measures
that restrict circulation and control the pandemics or
have even promoted labor-related reforms seeking to
warrant labor conditions for employees at company
premises. We must understand and protect, warrant
and develop; it is not just a matter of survival within
a new normality; it is a concern for survival with
guarantees for all actors in the new reality and, from
that stage, companies are to work along the authorities
on data protection in a program for privacy in the design
of this new times.
LAW & POLICY
Many are the scars that the pandemics has left but
we, as a society, must continue to remain united
for stabilizing the conditions and work jointly with
government to model the new reality. Issues of privacy
are not to be left aside or diminished in importance by
priorization of other aspects; they are to be treated in
a parallel manner due to their being inalienable rights
of individuals whose protection curve has become
larger in most legislations but, whether for a legitimate
interest or legal mandate, the rights of individuals are
not to be vulnerated.

Author: Fernando Victoria Peña

Designation: Chief Legal and Compliance Officer

ABOUT Fernando Victoria Peña is a Colombian lawyer from the Rosario University with specializations in corporate and commercial

THE
law, and a Master’s degree in business and corporate law from the University of Barcelona, Spain. Victoria Peña is currently
Chief Legal and Compliance Officer of Teleperformance Middle Americas Region, covering Colombia, Guyana, Nicaragua
and Perú, and has more than 10 years of experience in the business sector as general counsel, and legal counsel in law
firms. Fernando has participated as a speaker in many national and international events related to privacy, compliance
AUTHOR and international business. He has been a key component in Teleperformance expansion of new subsidiaries across Latin
America, and in the negotiation of regional and global contracts.

LE
Disclaimer – The views expressed in this article are the personal views of the author and is purely informative in nature.

GINE T
TOUCH
WITH

LEGAL
ERA

www.legaleraonline.com

STAY UPDATED WITH THE LATEST IN THE LEGAL WORLD, WITHIN

A
THE CIRCLE, LAW FIRMS, BUSINESS FRONT AND MORE.

NYTIME
NYWHERE
DOWNLOAD
NOW
www.legaleraonline.com | | January 2021 93
 LE Viewpoint

Litigation
funding
2.0Today, it’s possible
to raise capital from
investors to fund
litigation, just as you
would to expand or
acquire a company
which removes a
formidable barrier to
filing asset recovery
litigation

94 January 2021 | | www.legaleraonline.com


W
here in the world is Raj? He’s
that handsome, charming man
who just a few months ago was
revered as India’s latest and
greatest genius billionaire. Now,
he’s gone missing and bankers are desperate to find
him. They extended Raj massive amounts of credit
based on his companies’ sky-high valuation and
profits. Those numbers weren’t real, and with the
added stress of the pandemic, the whole business
empire just collapsed like a shoddy building in an
8.2 earthquake.
Raj is fictional, but as anyone who’s watched the
Netflix series Bad Boy Billionaires: India can tell
you, the scenario is quite real. India’s economic
boom spawned many charismatic and attractive
entrepreneurs flaunting unimaginable riches.
There are always red flags that bankers and
executives overlook in their zeal to close a deal.
For example, Raj’s incessant private jet travel to
London and Dubai, common locales for fraudsters to
park their wealth, his opaque corporate structures
and related-party transfers. He entertained lavishly
at his spectacular homes in these places and
sometimes flew along financiers and journalists to
party with him.
When a major debtor like Raj crashes, lawyers and
investigators go to work. We are among those
investigators, heading the London and Mumbai
offices of the Mintz Group, a global firm providing
asset-tracing and other investigation services on
every continent around the world.
A GAME-CHANGER
Reciprocating Territories
Last year began with good news for creditors:
India announced in January 2020 that it added the
United Arab Emirates (UAE), which includes Dubai
as its largest city, as a “reciprocating territory.”
This makes it easier to enforce judgments across
borders - previously a nearly impossible ask. Other
reciprocating territories include the UK, Hong
Kong, Singapore, Malaysia, New Zealand, Trinidad
& Tobago, Fiji, Papua New Guinea and Bangladesh.
This global cooperation is a game-changer for
creditors tracing assets in India and the other
reciprocating countries. Later in the year, as COVID
spread with a vengeance, we found that new deals
Viewpoint
were down, litigation was up and asset recovery
was through the roof – in India and the world over.
Meanwhile, third-party litigation funding picked
up its stride, offering another innovative vehicle
for asset recovery. Funders are forming Asset
Recovery Consortiums – a one-stop shop for
aggrieved creditors, with investigators, lawyers,
forensic accountants and other professionals.
Given all these factors, we think it is a good time to
share a few thoughts on recovering assets, based
on our experience tracing them.
INVESTIGATE BEFORE YOU SUE,
DURING LITIGATION AND AFTER A
FAVORABLE JUDGMENT.
When it comes to litigation, the focus needs to be
on recoverability of money, not just the merits of
your case. Litigation is both costly and uncertain,
especially in multi-jurisdictional cases, and winning
is no guarantee of collecting a single penny.
Investigation, therefore, is crucial before deciding
where and against which entities to litigate.
Locating assets, and proving their ownership, is
key.
During litigation, you need investigators to
gather evidence to support the claim. It’s equally
important to keep an eagle’s eye on assets during
lengthy court cases, as otherwise it is inevitable
malefactors will dissipate those assets.
Finally, once you prevail in court, you need “boots
on the ground” to seize assets, whether they’re
bank deposits, commodities, property, yachts and
aircraft, or in the case of an extradition proceeding,
to escort the billionaire bad boy back to justice
himself.
KNOWING YOUR ADVERSARY IS KEY
Litigation is akin to a game of chess with the
beginning, middle and end game, much like the
before, during and after parallel above. Indians
invented the early forms of chess around the
6th Century CE, so the analogy seems apt. Both
chess and litigation require strategic thinking and
maneuvering to outwit your opponent.
Our investigative teams understand the adversary’s
past behavior, such as corporate structures,
www.legaleraonline.com | | January 2021 95
 Viewpoint
jurisdictions of choice, and banking and advisory
relationships. The wealthy and powerful entrust a
small circle of family, friends and advisors. In bad
times, some of those formerly close people become
estranged, and may prove useful witnesses and
sources.

The middle game encompasses where your

adversary currently travels for work and on holiday,
their ongoing business ventures and upcoming
milestone events, whether it’s a daughter’s
wedding, or a balloon payment coming due.

The end game means predicting your opponent’s

response to litigation, pre-empting their attempts
to move assets, or to flee. It also includes a
strategy for creatively but legally circumventing
the creditor queue to recover assets before they
become tapped out.

MICHAEL HARRINGTON MONEY WANTS TO COME OUT TO PLAY

Managing Director and Head, Mumbai
AS WELL AS WORK
The leisure trappings of wealth come out in
property, art, vehicles, jewelry and lavish lifestyle
expenditures. London, New York or Dubai are
particularly popular playgrounds for Indian wealth,
and that is why Mintz Group have investigators on
the ground there to follow the money.

On the work side, our investigators map corporate

structures and jurisdiction footprints, and identify
asset classes such as fixed assets, machinery, cash,
shareholding, transportation fleets, commodities
and trade receivables.

MAURITIUS IS SUSPICIOUS
On 7 May 2020, the European Commission listed
Mauritius as a “high risk third country with strategic
IAN CASEWELL deficiencies in its Anti Money-Laundering and
Partner and Head, London Counter Financing Terrorism (AML/CFT/) regime.”
In 2015, the EU placed the island among 30 tax
blacklist nations; Oxfam listed it as a tax evasion
hotspot in 2016; and the 2018 Financial Secrecy
Index gave it a 72.3 score out of 100 for allowing
questionable tax maneuvers.

THE NEW ROLE OF LITIGATION FUNDING

Today it’s possible to raise capital from investors
to fund litigation, just as you would to expand or
acquire a company. This removes a formidable

96 January 2021 | | www.legaleraonline.com


barrier to filing asset recovery litigation.
Potential investors, however, will require detailed
explanation of your case as well as your strategy for
recovering against the judgment. Once again, this
requires the best possible investigative resources
on your side.
Viewpoint
We find that asset tracing efforts gain momentum
around the world each year as creditors find new
paths to recovery. As we look back at an extraordinary
2020 and look forward to vaccines, gatherings and in-
person court appearances, Raj might try to remain socially
distant.

Author: Michael Harrington

Designation: Managing Director and Head
Michael Harrington is a Managing Director and Head the Mintz Group’s Mumbai office, where he oversees the

ABOUT firm’s work across the South Asia region. He specializes in cross-border intelligence and fact-finding for sensitive

THE
pre-transactional and dispute-related investigations. Prior to establishing the Mumbai office in 2017, Michael was
based in Hong Kong, where he managed casework across most countries throughout the Asia-Pacific region.
Before moving to Asia, Michael was part of the Firm’s U.S.-based practice group that specialized in anti-corruption
investigations globally. He has managed hundreds of matters around the globe and conducted fieldwork in more

AUTHOR
than a dozen countries across Asia.

Author: Ian Casewell

Designation: Partner and Head
Ian Casewell is a Partner and Heads the Mintz Group’s London office. He specializes in providing investigative
support on large-scale disputes and fraud matters. Ian co-heads the Firm’s international asset-tracing practice,
which has been helping creditors enforce judgments in hundreds of cases over the past 20 years. His team is
retained as lead investigators on some of the world’s largest fraud, dispute and judgment enforcement matters.
He represents governments, companies and individuals, assisting in the tracing and recovery of substantial funds.

LE
Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.

LEGAL MEDIA GROUP

BY THE PEOPLE. FOR THE PEOPLE. OF THE PEOPLE.

FOR SUBSCRIPTION RELATED ENQUIRIES,

PLEASE CALL: Know the Law
Know the Lawyers
+91 022 2600 3300/ +91 88796355744
Email: subscription@legalera.in

www.legaleraonline.com | | January 2021 97

 LE Viewpoint

DID CORRUPTION CAUSE THE

COVID-19
OUTBREAK?

What some experts

say could have occurred
at the “Wuhan Huanan
Seafood Wholesale Market”
underscores how low-level
corruption - common in a high-
risk jurisdiction like China - may
have also contributed to the
spread of one of the world’s
deadliest
diseases

98 January 2021 | | www.legaleraonline.com

 Viewpoint

Ronak D. Desai
Associate

W
ith COVID-19 continuing to wreak
incalculable devastation around
the world, questions remain about
how the coronavirus emerged and
whether its spread could have been
prevented.
A host of competing theories are now being bitterly
debated and have adopted an increasingly partisan
dimension, including one that alleges that the virus
originated in a lab in the Chinese city of Wuhan.
Definitive answers are likely to remain elusive for some
time, if not indefinitely.
But one potential contributor of the deadly disease
deserves additional consideration: corruption.
Corruption thrives in times of crisis and the current
crisis is likely no exception. One unique feature of the
COVID-19 pandemic, however, is corruption’s role as
a possible cause of the outbreak rather than just a
consequence of it.

www.legaleraonline.com | | January 2021 99

 Viewpoint
Several weeks ago, the Chinese Center for Disease
Control and Prevention identified an exotic wildlife
market in Wuhan as the epicenter of the lethal outbreak.
In recent weeks, evidence surfaced suggesting that the
disease was transmitted to humans at a potentially
illegally-run Wuhan market after a person ate a snake
that had eaten a bat that carried the virus. Other
research suggests a pangolin was the intermediary.
But what some experts says believe could have
occurred at the “Wuhan Huanan Seafood Wholesale
Market” underscores how low-level corruption -
common in a high-risk jurisdiction like China - may have
also contributed to the spread of one of the world’s
deadliest diseases.
ILLICIT WILDLIFE TRADE
The market’s banal name masked a much darker reality:
an exotic, thriving, but illicit wildlife bazaar in which live
animals such as bamboo rats, civets, bats, ostriches,
baby crocodiles and snakes were purchased and
slaughtered for food and medicinal purposes. Like the
thousands of other markets across the country, the wild
game that were sold in Wuhan are considered culinary
delicacies or essential ingredients in certain medicines
with purported healing powers.
100 January 2021 | | www.legaleraonline.com
China’s official wildlife industry is valued at over $70
billion and employs more than 14 million people.
Dozens of regulations on the books focused on wildlife
smuggling, poaching, health and safety are intended to
prevent the spread of disease both across borders and
across species.
But corruption can easily undermine these laws.
The huge popularity for these exotica combined with
lax enforcement and bribery has pushed the wildlife
trade underground and allowed it to flourish. Illicit
trade is valued at over $22 billion dollars and spans far
beyond China’s borders, underscoring the magnitude of
consumer demand.
Thousands of markets across the country like the
one in Wuhan kept scores of live and slaughtered
animals in close quarters in blatant violation of
governing law.
Enforcement of these regulations is oftentimes left to
local, low-level officials who in the past have shown
a willingness to take bribes in exchange for turning a
blind eye to dangerously unsanitary conditions. These
conditions are the giant petri dish for a host of different
diseases.
 Viewpoint
WHAT HAPPENED IN WUHAN?
The question is whether those diseases also include the
novel coronavirus that continues to infect the world.
Corruption thrives in
Officials from Wuhan’s local regulation authority
times of crisis and the current
inspected the city’s now infamous bazaar last year in crisis is likely no exception.
both November and December but gave it passing
marks. And yet, Wuhan’s mayor acknowledged after One unique feature of the
the initial outbreak that local officials had failed to COVID-19 pandemic, however,
properly regulate the city’s wildlife market, which may
have midwifed the coronavirus pandemic. is corruption’s role as a possible
In fact, many of the animals at the center of the ongoing cause of the outbreak rather
epidemic were reportedly trafficked into Wuhan in
violation of Chinese law through an illegal supply chain
than just a consequence of it
comprised of smugglers and poachers and facilitated by
corrupt government officials. allowed to happen? Did local authorities elect to look
Put simply, corruption could be the culprit of the current the other way in exchange for a small bribe rather than
crisis. enforce an unpopular ban? The illicit trade as well as
these markets roared back to life as the memories of
LESSONS FROM THE PAST SARS faded away.

Unfortunately, the pernicious role that corruption
played in the COVID-19 crisis is not unprecedented.
In 2003, the SARS virus killed more than 750 people,
an extraordinary 10% of those who got the disease.
The deadly outbreak was once again traced back to
China’s exotic animal markets and the illicit supply
chains that support them. Humans involved in wildlife
trade appeared to have contracted the disease from an
infected bat via a palm civet. Then, like now, Chinese
officials moved swiftly to ban all trade of wild animals
and shut down markets throughout the country in an
effort to prevent SARS from spreading.
But enforcement once again remained uneven at
best. Countless markets that were supposed to stay
shuttered reopened and continued to operate, many
illegally. The question that arises is how was this
Nearly two decades later, China is once again
confronting difficult questions over why these markets
were allowed to reopen and whether the present crisis
could have been prevented had the bans been more
strictly enforced.
The current outbreak, however, presents China with
a rare opportunity to learn from its past mistakes.
Chinese officials should move decisively to eradicate
graft surrounding illegal wildlife trafficking permanently
and ensure illegal markets do not resurface like they did
after SARS ravished the region.
The grim reality is that the world will likely never know
what caused the current pandemic. But the prospect
that localized, petty corruption may have once again
helped trigger a global public health crisis is a sobering
one and holds important lessons for the future.

Author: Ronak D. Desai

ABOUT Designation: International Investigations, Enforcement Defense, and Compliance Attorney

THE
Ronak D. Desai is an international investigations, enforcement defense, and compliance attorney
at Paul Hastings LLP. He is deeply experienced in conducting FCPA, white collar, and other cross-
border investigations in high-risk jurisdictions, particularly in Asia. He previously served as investigative
counsel to the U.S. Congress. He also serves as a legal and policy expert at the Lakshmi Mittal South

AUTHOR Asia Institute at Harvard University. He earned joint public policy and law degrees from the Harvard
Kennedy School and Harvard Law School from which he graduated magna cum laude.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.

www.legaleraonline.com | | January 2021 101

 LE Insights
D
igital personal loans and paperless
transactions are the future of banking,
augmented further by the latest
technologies and a relaxed regulatory
environment provided by the Government
of India. With digital loans and alternative lending
platforms, borrowers can now apply for loans anywhere
and at any time, irrespective of whether the bank that
lends to them is present in their geography or not.
102 January 2021 | | www.legaleraonline.com
In addition, the absence of intermediaries in the process
makes online, paperless loans a much more dynamic
and convenient option for borrowers who may have
urgent financial requirements, since they are spared
the hassle of undergoing slow, and almost bureaucratic
processes. At the same time, digitization of end-to-end
processes eliminates the chances of human error, as the
processing of applications as well as credit underwriting
is overseen with the help of technology.
 Insights

DDE - DIGITAL FUTURE

FOR LOAN DOCUMENTATION
NeSL has, as part of the Core Services
assigned to it under the IBC 2016, set up a
secured Digital Documents Execution (DDE)
Platform to aid MSMEs and individuals avail
contactless loans on a remote basis

ABOUT NeSL
National E-Governance Services Ltd. is a Union Siva S. Ramann
Government Company, registered with the Insolvency
and Bankruptcy Board of India, as Information Utility MD & CEO
under Insolvency & Bankruptcy Code, 2016.

DDE CONCEPT
As part of its mandate and to revive the economy and

www.legaleraonline.com | | January 2021 103

 Insights
understand the market needs, NeSL has, as part of
the Core Services assigned to it under the IBC, 2016,
set up a secured Digital Documents Execution (DDE)
Platform, which will facilitate MSMEs and individuals
to avail contactless loans on a remote basis. DDE is a
technology-based platform for automated completion
of Digital Contracts to enable a single window concept
from execution of a document, stamping and signing
and automated transfer to the storage of the executed
document with NeSL, as an IU.
Here, banks can push out several thousands of
loan documents without any physical signature or
paperwork and affixing only paperless e-stamping. This
digital workflow has been endorsed by the Department
of Financial Services (DFS) in the Finance Ministry in its
letter to all Chief Secretaries. It says the states should
issue orders that digital e-stamping will be permitted
on the NeSL-SHCIL platform and be a valid mode of
stamping of documents. The DFS also directed banks to
join the platform to help citizens in this pandemic.

DDE PROCESS FLOW:

The DDE Process broadly would be as under involving
integration of the following modules:
1. Demat Contract Generation Module:
• The contract generation module supports
generation of Contract Document in a paperless
form;
• Lending institutions can generate the loan
contract in their own format and on their terms
by simply sharing the variable data associated
with the transaction with NeSL’s DDE Module.
NeSL is data agnostic to any of the terms or
content of such documents and does not decide
any of the same.
3. E-Signature Module:
2. Digital E-Stamping:
• DDE platform is integrated with a robust and
• Digital E-Stamping through the DDE platform versatile e-Sign / digital signature module, which
facilitates instant payment of Stamp Duty in supports following modes of digital signature
an automated and paperless manner, wherein / e-Signature with OTP-based e-Sign / other
NeSL merely provides the platform to connect variants. NeSL obtains digital signatures of the
the creditor / submitter with the appropriate borrower/co-obligant/guarantors on the loan
authorized authority i.e., SHCIL (Stock Holding contracts.
Corporation of India Ltd), which is an authorized
agent of Government of India. In states where 4. Document Upload Module:
SHCIL is not currently in operation, NeSL has • Document upload module which facilitates
the arrangement with IGR (Inspector General automated uploading of executed document
of Registrations) of the state/s concerned. in the Loan Management System (“LMS”) /
Upon obtaining the consent of the borrower, Document Management System (“DMS”) of
NeSL would arrange for e-stamping of the loan the partner lending institution. NeSL offers
contract in applicable cases and embeds the storage facility also at no extra charges and this
same on the loan contracts is optional to the Banks/FIs.

104 January 2021 | | www.legaleraonline.com


LEGAL BACKING FOR SERVING AS
EVIDENCE:
• Section 5 of the IT Act gives electronic signatures
their legal character.
• Section 10A of the IT Act expressly provides for
validity of contracts formed through electronic
means.
• Section 65B (1) of the Evidence Act provides that any
information contained in an electronic record which
is printed on a paper, stored, recorded or copied in
optical or magnetic media produced by a computer
shall be deemed to be also a document and shall be
admissible in any proceedings, without further proof
or production of the original, as evidence of any
contents of the original or of any fact stated therein
of which direct evidence would be admissible.
Insights
A great digital
leap enabled by all
the Governments to
implement DDE, an
end-to-end remote
based contract
signing facility
• Sec 99 (3) of IBC states that - Where the debt for
which an application has been filed by a Creditor
is registered with the IU, the Debtor shall not be
entitled to dispute the validity of the debt;
• Digital Documents / Loan Contracts executed
using digital signatures, serve as evidence before
the Adjudicating Authorities / any legal fora, for
enforcement.
• NeSL-IU provides a Certificate under Sec 65 B of the
Evidence Act, for enforcement of loan contracts, in
case of need.
• In a recent Judgment delivered by a three-judge
bench of the Hon’ble Supreme Court it was ruled
that the requirement of a certificate under Section
65B(4) of the Indian Evidence Act, 1872 (“Evidence
Act”), is a condition precedent to the admissibility
of electronic record in evidence. This judgment
arose from a reference by a Division Bench of the
Supreme Court, which found that the Division Bench
judgment in Shafhi Mohammad v. State of Himachal
Pradesh required reconsideration in view of the
three-judge bench judgment in Anvar P.V. v. P.K.
Basheer.
The summary of the above Judgment is that -
Under Section 65B(1), notwithstanding anything
contained in the Evidence Act, any information
contained in an electronic record, which is printed on
paper, stored, recorded or copied in optical or magnetic
www.legaleraonline.com | | January 2021 105
 Insights

media produced by a computer is deemed to be a affixed thereon are valid and legally enforceable.
document (under the Evidence Act), if the conditions
1. Advantages of DDE:
mentioned in Section 65B(2) are satisfied. If the
conditions under Section 65B(2) are satisfied, the paper There are several advantages in availing the DDE
on which the information contained in an electronic concept, which is totally paperless, to loans. Some of
record is printed, or the optical or magnetic media the key advantages can be summarized as follows:
produced by the computer in which such information
• No paperwork: Since the process is completely
is stored, recorded or copied, shall be admissible in
digital, customers no longer have to visit the branch
any proceedings, without proof or production of the
office to execute the loan contracts / Security
original, as evidence of any contents of the original or of
Creation Agreements in hard copies. The tedious
any fact stated therein, of which direct evidence would
process associated with filling up multiple loan
be admissible.
contract documents can be avoided in this process.
Where a statement in evidence is sought to be given All the other hassles of paperwork can be avoided
by virtue of Section 65B, Section 65B(4) requires a when the paperless approach to loans is adopted.
certificate to be produced that inter alia identifies
• Quick disbursal: The digital approach to personal
the electronic record containing the statement and
loans has speeded up the process significantly. Once
describes the manner in which it is produced, and gives
the Lending Institution has verified the loan contract
particulars of the device involved in the production
documents, the loan amount will be disbursed
of the electronic record to show that the electronic
instantly.
record was produced by a computer, either by a person
occupying a responsible official position in relation to the • Fraud Prevention Measures: As the true identity
operation of the relevant device, or the management of of the borrower is established before obtaining his
the relevant activities, whichever is appropriate. digital signatures with the help of contact details
furnished by the Bank through OTP etc., the scope
From the above legal provisions & jurisprudence, it is
for impersonation is eliminated.
clear that Digital Loan Contracts and Digital Signatures

106 January 2021 | | www.legaleraonline.com


• Eco-friendly approach: This is one of the main
reasons why many Banks are promoting the
paperless approach. Since the process has gone
completely digital, banks can save a lot of paper and
follow an eco-friendly approach. In this way, Banks
can reduce your carbon footprint and contribute to
the environment.
• Low costs: Banks as Lenders can reduce their overall
costs by following the digital approach. The costs
of paper and printing can be completely eliminated
in this process. The savings obtained in this process
can be transferred to customers.
• High security: NeSL-IU is offering secured storage
of digitally executed loan documents with no
additional cost. Most industry experts believe that
the paperless process is a lot more secure than
maintaining paper files. There is always the risk of
losing key paper documents in the old process.
• Higher Revenue for States: A digital system leads
to a quantum jump in credit flows, resulting in
additional stamp duty revenue for the states since
the system is available for loan documentation,
24X7. It could be a huge source of additional revenue
which is now slipping past them as parties often
avoid the tedium of having to stamp their contracts.
Insights
So, once the states are on board, they can offer bulk
processing of stamp certificates for documents just
by transmitting those through the NeSL platform. It
can also lead to a reduction in administrative costs
for non-registrable instruments by adopting a digital
system; also better MIS and control. They also get
a real-time monitoring dashboard for transactions
which NeSL will provide them.
• By implementing the DDE concept, Banks can save
lot of costs associated with - (1) printing of forms of
loan documents, (2) storage costs; (3) manpower
costs. The Banks are also optimizing the financial
and human resources on account of adoption of
virtual, cashless eco-system & minimum manual
intervention.
CURRENT STATUS OF IMPLEMENTATION
BY BANKS
Having understood all the above advantages of the DDE
service offering of NeSL-IU, many Public and Private
Sector Banks have evinced lot of interest on this service
offering and integrated their LAPS / LMS platforms
with the DDE module of NeSL and commenced pilot
implementation for retail products. In course of time,
they intend to adopt Digital Documents to all categories
of loans.

Author: Siva S. Ramann

ABOUT Designation: MD & CEO | Email: ramanns@nesl.co.in

THE
Siva S. Ramann is from the civil service and is deputed to NeSL by the C&AG of India as the Managing Director & CEO of
National E-Governance Services Limited (NeSL). Prior to joining NeSL, he was the Principal Accountant General of the State
of Jharkhand and is also empaneled as Joint Secretary to the Government of India. Prior to that, he was Executive Director
at SEBI, where he served as CGM and ED on deputation from the Government of India from 2006 to 2013. Shri Ramann

AUTHOR has also been Secretary to the CAG of India and First Secretary at the Indian High Commission, London. His qualifications
are BA (Economics) and MBA from Delhi University, L.L.B. from University of Mumbai, M.Sc Regulations from the London
School of Economics, Certified Internal Auditor from IIA, Florida, and Post Graduate Diploma in Securities Law.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.

www.legaleraonline.com | | January 2021 107

 LE Insights

A NEW YEAR’S
WISHLIST
FOR THE IBC

108 January 2021 | | www.legaleraonline.com

 Insights

The Insolvency and Bankruptcy Code, 2016 (“IBC”) completed its

fourth anniversary in December 2020. As it enters its fifth year,
one cannot help but look back at what a monumental impact
this legislation has had on the Indian insolvency and liquidation
landscape, and consequentially, the Indian economy.

AASHIT SHAH
Partner

www.legaleraonline.com | | January 2021 109

 Insights
O
ver the past four-year period, more
than 4000 corporate insolvency
resolution processes (“CIRP”) have
commenced under the IBC as per
statistics provided by the Insolvency
and Bankruptcy Board of India (“IBBI”). Of these,
over 275 CIRPs have resulted in an approved
resolution plan, more than 1000 companies have
gone into liquidation (although about 74% of them
were already defunct or undergoing restructuring
before the Board of Industrial and Financial
Reconstruction), and almost 300 cases have been
withdrawn from the CIRP. The average timeline
for approved resolution plans is about 384 days
i.e., less than 11 months, and the average recovery
rate during the CIRP by financial creditors has
been almost 44% of their claims. This is a marked
improvement over the erstwhile regime of winding
up under our company law where it took several
years for winding up a company and financial
creditors on an average received about a quarter
of their claims.
The IBC has improved fiscal prudence amongst
borrowers, increased scrutiny of errant accounts
by lenders, inculcated disciplined lending
practices, enhanced information symmetry
amongst stakeholders, emphasized maximization
of value for all stakeholders, and created an
institutional framework to swiftly deal with
corporate insolvencies. The Government and
the IBBI have been receptive of the challenges
faced by stakeholders, which has resulted in
numerous amendments to the IBC and the rules
and regulations framed under it. Whether it was
the constitutionality of the IBC, the distribution
amongst financial creditors and operational
creditors, the primacy of the commercial wisdom
of the committee of creditors or issues pertaining
to ineligibility under Section 29A, to name a few,
the tribunals and courts have swiftly resolved
unprecedented issues that came up before them.
While it is evident that a lot has already been
done, there are still some concerns that need to be
resolved for the IBC to be more efficacious. I have
set out below five key concerns on my wish list.
MAKING PRE-PACKS A REALITY
A pre-pack is an agreement between the debtor and
the financial creditors for resolution of the debts
of a distressed company. Pre-packs have been
widely used in the US and UK to resolve stressed
110 January 2021 | | www.legaleraonline.com
debts. For promoter-led Indian companies, pre-
packs could result in limited disruption to the
business, ensure stability for employees and
minimal asset deterioration (provided Section 29A
is not applicable to pre-packs). However, given the
baggage of the SICA and long-winded winding-
up schemes and to protect the interests of other
stakeholders (mainly operational creditors), pre-
packs should be completed within a compressed
timeframe, Further, to provide legal sanctity,
they ought to be ideally blessed by the National
Company Law Tribunals (“NCLTs”).
However, it is also imperative that the Ministry of
Company Affairs and IBBI work collaboratively with
the RBI to ensure that there are sufficient benefits
vis-à-vis provisioning norms for lenders whilst a pre-
pack scheme is being prepared and implemented
so that lenders are encouraged to use this route.
In order to make pre-packs effective, they must
benefit from the statutory moratorium available
under the IBC (which is unfortunately not available
under the RBI restructuring schemes). Attendant
changes may also be needed to exchange control
and securities regulations to permit flexible
restructuring deals. Further, to mitigate the risk
of litigation, the legislative framework around pre-
packs could provide guidance on how financial
creditors should deal with the interests of other
stakeholders.
A committee constituted by the Government has
issued a report on pre-packs which was released
for public comments in early January.
CO-OPERATION FROM GOVERNMENT
AUTHORITIES
The success of a CIRP depends on the support
received from different government authorities,
whether they are tax authorities or sector-
specific regulators. For instance, government
authorities must willingly agree to the write-offs
provided for government dues in a resolution plan
which is binding on all stakeholders, including
the authorities themselves. Nuisance litigation
and interference (or the potential thereof) from
authorities during and after the conclusion of a
CIRP can delay a timely insolvency resolution, and
sometimes repel potential resolution applicants.
Further, where governmental consents are
required to implement a plan (for instance, in case
of a transfer of license or change of ownership of
a licensee), there must be bright-line conditions
based on which such consent may be refused.

Non-payment or reduction of past dues under a
NCLT-approved resolution plan should not be one
of them. This issue is currently being tested in a
couple of telecom insolvencies. If the Government
wants the IBC to be successful, it must ensure that
it puts in appropriate mechanisms in place for its
instrumentalities to uniformly uphold and adhere
to it.
CLARITY ON THE LIABILITY OF
GUARANTORS
The law on the liability of guarantors when a
company undergoes CIRP is still not fully settled.
Section 14 of the IBC is clear that the moratorium
does not apply to invocation of a guarantee or filing
any proceedings against a guarantor of a corporate
debtor. However, there are some fundamental
issues that need urgent clarity.
An issue that remains uncertain is whether
applications for CIRP can be filed by the creditors
simultaneously against the guarantor and the
corporate debtor for the same claim. In State Bank
of India vs. Ramakrishnan, the Supreme Court
has ruled that the moratorium does not apply to
personal guarantors. Implicitly, lenders ought to
be able to initiate the CIRP against the guarantor as
well as the corporate debtor. The recent judgment
of the National Company Law Appellate Tribunal
(“NCLAT”) in the case of Athena Energy Ventures is
helpful as it clarifies that claims can be made by
creditors in the CIRPs of the corporate debtor
and the guarantor. However, the Athena
Insights
judgment does not explicitly overrule a previous
NCLAT judgment in the case of ACCIL Hospitality
Limited, where it was held that once the resolution
professional has collated the claims in the CIRP of
a corporate debtor, triggering a fresh CIRP against
the corporate guarantor may amount to duplicity
of claims. Further, in the Piramal Enterprises case,
the NCLAT held that simultaneous proceedings
cannot be filed against two corporate guarantors.
Secondly, whether the liability of the guarantor
continues even after the CIRP of a corporate
debtor concludes is not free from debate. In the
Essar Steel case, the Supreme Court upheld that the
resolution plan is binding on personal guarantors
who are stakeholders in the CIRP of the corporate
debtor. The Court also upheld a provision in the
resolution plan that extinguished the right of
subrogation of the personal guarantors in respect
of any amounts paid under the guarantee for the
corporate debtor’s debt. Guarantors have argued
that once the principal debt is resolved under
a NCLT-approved resolution plan, their liability
ought to be extinguished as their liability is only co-
extensive with that of the principal debt. However,
creditors are naturally opposed to this argument
and would want to seek any unpaid debts from
the guarantors. While creditors may buttress their
arguments with the usual “waiver of defenses”
provision in most guarantees, a clear decision from
www.legaleraonline.com | | January 2021 111
 Insights

What the Government

the apex court or a legislative amendment on this
issue would be welcome.

DISTRIBUTION TO SECURED CREDITORS needs to do is

An issue which still creates some ambiguity
amongst secured creditors is the amount that
should be paid to them during the CIRP. Unlike
an explicit waterfall prescribed under Section 53
for distribution of assets in case of liquidation,
the distribution provisions for a CIRP are not
engraved. The IBC and its regulations provide
priority of payment to operational creditors over
financial creditors, and priority of payment of
the liquidation value due to dissenting financial
creditors (those who don’t approve a resolution
plan) over payments to the assenting financial
creditors. The IBC was amended in August 2019
to state that the committee of creditors may take
into account the priority amongst creditors as laid
down in Section 53, including the priority and value
of security interest of a secured creditor when
determining the distribution in a CIRP. However, in
the CIRP of Ruchi Soya Industries, the NCLAT held
that a financial creditor could not dissent on a plan
merely because it would receive a higher amount
of recovery as a dissenting financial creditor. This
has muddied the waters once again on this issue.
If the Supreme Court does not overturn the NCLAT
judgment, it would substantially dilute the sanctity
of obtaining exclusive or better ranking security in
lending transactions.
IMPROVING THE JUDICIAL
INFRASTRUCTURE
Even though CIRPs of more than 2,000 companies
have either been resolved, settled, withdrawn or
significantly increase
the bench strength of
the NCLTs and NCLAT
proceeded to liquidation, there are still a similar
number of ongoing CIRPs. In addition, over 9,000
applications for CIRP are still pending for admission
before various NCLTs and 60% of these have been
pending for over 6 months. While part of the
slowdown is pandemic-related, the NCLTs were
already bogged down by a humungous caseload
even pre-COVID. One of the cornerstones of the IBC
is a time-bound completion of the CIRP. What the
Government needs to do is significantly increase
the bench strength of the NCLTs and NCLAT. There
also needs to be a serious deterrent for frivolous
litigation and unwarranted interference in the
process. Unless this is done soon, delays in the
insolvency process will be more protracted.
As per a RBI Financial Stability Report, the NPA
ratio in Indian banks is likely to balloon from about
8.5% at the end of March 2020 to over 12% at the
end of March 2021. While this is likely to provide
opportunities for distressed debt acquisition, the
concerns set out above need to be addressed
urgently to ensure a meaningful outcome for
distressed companies and maximization of value
for stakeholders in a time-bound manner.

Author: Aashit Shah

ABOUT Designation: Partner

THE
Aashit Shah is an equity partner at J. Sagar Associates and chairs the Finance practice at the firm. He regularly advises
Indian and multinational banks, NBFCs, financial institutions, investors and Indian borrowers in relation to credit
facilities to Indian borrowers, including in relation to capital expenditure, project financing, real estate financing,
acquisition financing and trade finance. He has been actively involved in various debt restructuring and security
AUTHOR enforcement assignments, and the corporate insolvency resolution processes under the IBC. He was awarded the
Banking and Finance Lawyer of the Year Award 2020 by IFLR 1000.

LE
Disclaimer – The views expressed in this article are the personal views of the author and is purely informative in nature.

112 January 2021 | | www.legaleraonline.com

 SUBSCRIPTION FORM
Yes! I would like to subscribe
to Legal Era Magazine
I would first like to have
a complimentary issue

Please fill the form in CAPITAL LETTERS

Name : ___________________________________________________________________________________________
Address : _________________________________________________________________________________________
_________________________________________________________________________________________________
Pin : _________________________ City :______________________________ State : _________________________
Mobile : ___________________________ E-Mail : _______________________________
Birthday : ___________________ Anniversary : ________________ Occupation : _______________________________
Please find enclosed DD/Cheque for : ________________________ Dated : _________________
Cheque/DD made in favor of “Legal Era”. Please write your name and address on reverse of the Cheque/DD & send it to
Legal Era, 301-302, 3rd Floor, Om Palace, Dr. Ambedkar Road Junction, Bandra West, Mumbai - 400 050, India
Terms and Conditions: 1. This is a limited period offer. 2. Legal Era will not be responsible for postal delays, transit losses or mutilation of the forms. 3. All
disputes are subject to the exclusive jurisdiction of competent courts and forums of Mumbai only. 4. Legal Era reserves the right to extend or terminate this offer
at any point or to accept or reject any or all forms at its absolute discretion without assigning any reason whatsoever. 5. Allow 3-4 weeks time for processing of
the subscription. Subscription would be processed only after realization of payments. 6. Payments can be made through Cheque/DD payable at par.

WE DON’T ACCEPT CASH PAYMENT *Conditions apply

SUBSCRIPTION INR
Inclusive of GST

5 Years (60 Issues) ` 7080/- For Subscription Related Enquiries

3 Years (36 Issues) ` 4248/- Email us at: info@legalera.in OR
Contact: +91 22 2600 3300 | +91 8879635574
2 Years (24 Issues) ` 2832/-
 LE Fun ‘N’ Frolic

114 January 2021 | | www.legaleraonline.com

 Fun ‘N’ Frolic

www.legaleraonline.com | | January 2021 115