Articles

Fractional share investment has demonstrated its significance in advancing the growth and expansion of capital markets across multiple jurisdictions, as well as retail investor empowerment. In India, the regulatory framework for the clearing and settlement process of trades would necessitate technological and legal modifications to implement fractional share investment. This paper explores the legal and technological aspects of implementing fractional share investment in India. It addresses taxation, shareholder voting rights, and initial public offerings, and proposes changes to the roles of depositories and clearing houses. The paper advocates for the adoption of distributed ledger technology to facilitate fractional share investment, which will offer an efficient legal and technological model. It also examines the economic rationale and international best practices to present a comprehensive blueprint for fractional share investment in India.

In November 2022, the Securities and Exchange Board of India (‘SEBI’) undertook a comprehensive review of the regulatory regime relating to buybacks or stock repurchases through the Consultation Paper on Review of SEBI (Buyback of Securities) Regulations, 2018. For the most part, SEBI was quite clear about what it envisions for India’s buyback regime. However, one aspect that lacked clarity was the approach India would take towards the taxation of buybacks. SEBI recognised the problem that exists in the Indian regime wherein the company itself has to bear the tax burden for exiting shareholders. To address this issue, SEBI argued that it was ‘desirable’ to ‘realign’ the regime and tailor it to shift the tax burden on existing shareholders. Ultimately, SEBI left the decision to the Ministry of Finance. Surprisingly, the 2023 Budget did not account for SEBI’s discussion at all and neither did the Finance Act, 2023. This paper undertakes a detailed analysis of the buyback taxation regime in India and examines its lacunae. It does so by examining the traditional rationale behind the buyback of shares, comparing the taxation of buybacks with dividends and undertaking a comparative jurisdictional analysis with respect to the policy surrounding buybacks. Ultimately, this paper proposes a course of action for the Ministry of Finance to ensure that neither buybacks nor dividends are preferred for tax reasons. It concludes by proposing certain amendments to the Income Tax, 1961. The proposed amendments have their edifice in an idea put forward in 1967 – the economic equivalence of buybacks and dividends.

There is an increasing trend of litigants approaching the Supreme Court of India (‘SCI’) directly under Article 32 with writ petitions to claim bail, anticipatory bail, quashing of First Information Reports (‘FIRs’), etc. This paper examines this litigation trend and its judicial handling and critique it at various levels. The primary argument is that such a trend nullifies the relevance of statutory remedies under the Code of Criminal Procedure 1973 (‘CrPC’), that are specifically tailored for settling criminal procedure claims. This has two further adverse implications. One, there are certain conditions and tests curated into the CrPC provisions that one must satisfy to succeed, for instance, in their anticipatory bail applications. However, adjudication of such claims under Article 32 has enabled litigants to dodge such warranted statutory thresholds. Second, it also leads to asymmetric dispersal of justice since not every similar litigation for criminal procedural claims under the writ jurisdiction is entertained. This paper builds upon these findings by studying several litigations under Article 32 between 2020 and 2023 that point towards the vagaries of the trend in question. The paper proceeds to suggest an adjudicatory framework based on norms of judicial review, like judicial minimalism and constitutional avoidance, to reverse the critiqued trend. The recommended model advocates that the SCI should not entertain its writ jurisdiction when the deserved remedy can be effectively granted through statutory routes of litigation before the ‘magistrates, sessions courts, and High Courts’ (‘CrPC courts’), that the CrPC purposefully designates to settle criminal procedural disputes in the first instance. To conclude, if this trend is allowed to go unregulated, it will further entrench the existing institutional concerns, such as the historical distrust and subordination of the CrPC courts and the top heaviness of the Indian judiciary.

The current jurisprudence regarding the interplay between §7 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and arbitration stands in favour of the former in light of the Supreme Court’s decision in Indus Biotech v. Kotak India Venture (Offshore) Fund (‘Indus Biotech’). However, the recent pronouncement of the Supreme Court in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. (‘Vidarbha’)  has added an element of discretion between determination of default and admission of an application under §7 of the IBC. Interestingly, the effect of Vidarbha on the jurisprudence as established by Indus Biotech has not been examined and decided by any court of law in India till date. Therefore, this paper has been written from a practitioner’s perspective and aims to address this research gap by examining the impact of Vidarbha Industries on Indus Biotech. This paper does not critique the judgment in Vidarbha and primarily aims to explore the element of discretion whilst adjudicating upon a §8 application under the Arbitration Act, 1996. In essence, this paper analyses the potential impact of the ratio laid down in Vidarbha to the existing interplay between insolvency law and arbitration in India assuming that the discretion by the Adjudicating Authority is exercised in a reasonable manner. This part also analyses and aims to provide certain guiding principles whilst exercising discretion under §7 of the IBC particularly in context of arbitration. Moreover, this paper also opines that the Resolution Professional (‘RP’) would not be inclined to initiate any arbitration proceedings on behalf of the corporate debtor because of the strict timelines under the IBC. Finally, this paper concludes that though it is not mandatory for the Adjudicating Authority to refer all insolvency applications to arbitration, a harmonious reading of Indian insolvency law and arbitration law in light of the Vidarbha ruling should ordinarily persuade the tribunal to refer disputes to arbitration.

The Arbitration and Conciliation Act, 1996, (‘AA’) was designed to settle disputes out of courts for quicker results. Logically extended, the judicial oversight of those must also be governed by the similar objective of a quick pace. With the introduction of the Commercial Courts Act, 2015, (‘CCA’) and its application to arbitral appeals, added speed should have been the easily-inferred objective. However, the provision in the AA for creating the right to appeals, namely, §37, has been bestowed with an interpretation that sedates pace. The provision does not speak about the most crucial aspect of a fast-paced dispute resolution, i.e. limitation. This paper highlights that the judiciary reads this silence as importing both a limitation period and a licence to condone delays against it from the prevailing general law. As just and equitable as it may seem, importing the latter runs counter to the prevailing law. The CCA has provided a hard cap for limitations, with no mention of condonation. While ‘no condonation’ is doubly suggested by the speedy intent of both the legislations alone, there exist more jurisprudential trends compelling this approach. The Limitation Act, 1963, (‘LA’) is a general law, which applies its exemptions only if they are invited or if promptitude is not the primary factor governing the special law. Neither is the case with the CCA. This legislation is territorially aggressive and is quick to shut out general laws from applying to its disputes. Moreover, the AA has generally pointed, site by site, where it behaves as a general law itself. This is wherever it cedes its procedural governance to the Code of Civil Procedure, 1908. At those sites, it then behaves like a general law unhesitatingly inviting another of its kind, and where a more wholesome application of the LA made sense. §37 is not one such site. This paper, therefore, argues that reading the availability of condonation for commercial-arbitral appeals is unjustified by every available legal metric.

Article 19 (the right to freedom of speech and expression), Article 21 (the right to life and liberty) and Article 14 (the right to equality) of the Indian Constitution, 1950, are collectively called the ‘golden triangle’. The said provisions are used to challenge the constitutionality of various legislations that tend to infringe on Part III rights. This paper deals with the application of the aforesaid articles under the fundamental rights jurisprudence. It argues that the practice of reading Article 19 conjunctively with Articles 14 and 21 leads to neglection of consideration of the specific grounds on which Article 19 may be restricted, since that requirement is not present for laws restricting Article 14 or Article 21. This article substantiates this through an empirical analysis  of all decisions between January 31, 2021, till August 31, 2022, involving Articles 14, 19 and 21. The result of the empirical analysis is that whenever Articles 14 and/or Article 21 are invoked, the probability of considering the specific exception grounds to Article 19 is reduced, which militates against the legal mandate. The normative significance of the said finding is that a conjunctive reading increases the probability of a rights-infringing law to pass the constitutional threshold, going against the Indian constitutional ethos. Therefore, this paper calls for a consideration of the exception grounds of Article 19 separate from the reasonability requirements under Articles 14, 19 and 21 read conjunctively.

In this note, the authors navigate through the papers published in Volume 15(2) of the NUJS Law Review. The authors succinctly summarise the arguments made in the said papers and conclude by expressing gratitude to the contributors of this issue.

The doctrine of stare decisis is an essential facet of India’s judicial framework. Generally, judicial precedents of the higher courts are binding on the lower courts. This is not only a constitutional mandate, but also ensures consistency, certainty, and discipline in the huge judicial system that India has. However, there are certain exceptions, such as the rules of per incuriam and sub-silentio. An interesting question which has cropped up in Indian jurisprudence is the power of the High Court to hold a Supreme Court judgment as per incuriam and sub-silentio. This has potentially disturbed the doctrine of stare decisis and might negatively impact the judicial hierarchy, creating inconsistency and uncertainty. This is precisely what the High Court of Kerala has held in Haris KM v. Jahfar. This note analyses the Haris KM case and the judicial position of the rules of per incuriam and sub-silentio in India. It argues that the High Court could not have rendered a Supreme Court judgment as per incuriam and sub-silentio.