October 2013

SALES TAX FOR APARTMENTS
In a recent decision having a significant impact on both the developer and the purchaser of flats, a three judge bench of the Supreme Court of India in the case of Larsen and Toubro Limited and Another Vs. State of Karnataka and Another (Civil Appeal No. 8672/2013 and other connected appeals) (on 26.09.2013), has held that the agreements entered into between the developer and the prospective purchaser of flats to construct flats amounts to a "works contract" and is chargeable to sales tax. The Court upheld the view taken by it in K. Raheja Development Corporation Vs. State of Karnataka [(2005) 5 SCC 162] which had been taken up for reconsideration. Further, the Court upheld the validity of Explanation (b)(ii) to Section 2(24) of the Maharashtra Value Added Tax Act and Rule 58(1A) of the Maharashtra Value Added Tax Rules. By this judgment the Court has shut the doors on the arguments against this levy

August 2013

FRONTRUNNING”BATTLE BETWEEN SAT AND SEBI TAKES A NEW TWIST: SEBI INVOKES ITS LEGISLATIVE POWERS TO HAVE ITS WAY
The clarification issued by Securities Exchange Board of India (“SEBI”) by way of a press release on August 12, 2013, whereby SEBI has approved a proposal to amend the SEBI (Prohibition of Fraudulent and Unfair Trade Practice relating to the Securities Market) Regulations, 2003 (“PFUTP Regulations”) to clarify that the list under Regulation 4(2) of the PFUTP Regulations is not exhaustive and that the general provisions of Regulation 3 will override, may possibly set at rest the controversy over whether front running by non-intermediaries is covered at all by the PFUTP Regulations

Independence Day Special - Slashed Limits in ODI and LRS
The Reserve Bank of India ("RBI") has on August 14, 2013, vide a circular (A. P. (DIR Series) Circular No. 24) reduced the existing limit, under the Liberalized Remittance Scheme ("LRS") for any permitted current or capital account transaction or a combination of both, from USD 200,000 per financial year to USD 75,000 per financial year. The RBI has also curtailed the limits for gift and loans in Rupees by resident individuals to NRI close relatives to USD 75,000 per financial year

July 2013

"Un-force" or Enforce: Patent Illegality and Foreign Arbitral Awards
In an interesting development, the Supreme Court, in its recent decision dated July 3, 2013 in "Sri Lal Mahal Ltd vs Progetto Grano SPA", has held that the scope for challenge to a foreign arbitral award on the ground of it being contrary to the public policy of India is lesser as compared to a similar challenge against a domestic award. Patent illegality in a domestic award could lead the same to be considered as contrary to public policy of India, and on that ground be set aside by the Court. However, in the case of a foreign arbitral award, mere patent illegality is insufficient to render it unenforceable. The Supreme Court has held that the words "public policy of India" have to be given a narrower meaning in relation to challenge to a foreign award as opposed to a domestic award. In other words, a foreign award will be considered to be contrary to the public policy of India only if it is contrary to (1) the fundamental policy of Indian law; (2) the interests of India; or, (3) justice or morality. It will not be considered to be contrary to the public policy of India where it is patently illegal or is contrary to the terms of the contract. The context in which the above law was laid down is elaborated in the following paragraphs

SEBI - Empowered Regulator
The President passed the Securities Laws (Amendment) Ordinance, 2013 (“Ordinance”) to amend miscellaneous securities laws on July 18, 2013. The object of this legislation is to provide more powers to the Securities Exchange Board of India (“SEBI”) to enable it to perform its functions more effectively and curb irregularities and frauds in the securities market

June 2013

DIPP issues clarifications with respect to FDI in Multi-Brand Retail Trading
The Department of Industrial Policy & Promotion (DIPP) has clarified the Government's stance on various queries posed by prospective investors in relation to the extant FDI policy ("FDI Policy") on multi-brand retail trading in India

FVCI/FDI Reporting: Handle with Care
RBI has, by a notification dated June 12, 2013, clarified that when SEBI registered FVCI acquires shares of an Indian company under FDI Scheme in accordance with Schedule 1 of Notification No. FEMA.20 / 2000 - RB dated May 3, 2000 the FDI investment shall be reported in form FC-GPR/FC-TRS as prescribed. On the other hand investments made by FVCI in a Foreign Venture Capital Investment Scheme covered under Schedule 6 of the Notification ibid are excluded from complying with the reporting requirements by way of filling form FC-GPR/FC-TRS as prescribed

Keeping it simple: DIPP defines group company
The Department of Industrial Policy and Promotion (DIPP) through its Press Note 2 (2013 series) dated June 3, 2013 has introduced the definition of 'group company' in the Foreign Direct Investment (FDI) policy

May 2013

Welcome move to formalize clarifications on FDI Policy Issues
The Department of Industrial Policy and Promotion (DIPP) has, pursuant to a notice dated May 10, 2013, prescribed a format for seeking clarification on FDI Policy issues

April 2013, May 2013 & June 2013

REGULATORY AND CASE LAW UPDATES
RBI's clarifies queries on guidelines for licensing of new banks in the private sector, Guidelines issued for investment by CIC’s in insurance business, ECB policy modified, private placement of debt instruments by NBFCs to be regulated, law on prevention of sexual harassment at workplace passed, SEBIs issues clarifications on listed company mergers, Supreme Court clarified position of secured creditors/banks vis-à-vis workmen’s dues of a company facing winding up, Karnataka High Court allows government to withdraw from its promise of giving a tax benefit, ITAT holds website is not a permanent establishment unless servers also located in India, DTH Services can be subject to entertainment tax-SC, Supreme Court’s verdict on the Novartis case.

February 2013

REWRITING THE LAWS ON LISTED COMPANY MERGERS? SEBI’s latest circular on M&A
The Securities and Exchange Board of India has through a circular dated February 4, 2013, revised the norms applicable to listed companies for schemes of mergers and arrangements under Sections 392, 304 and 100 of the Companies Act, 1956

TRANSFER BETWEEN WHO? SEBI GUIDANCE ON PROMOTER TRANSFERS
In an informal guidance issued by SEBI in October 2012 (made public on January 23, 2013), SEBI has yet again looked into the exemption available under the Takeover Code for inter-se transfer of shares amongst the Promoters

February 2013 & March 2013

REGULATORY AND CASE LAW UPDATES
“RBI guidelines for licensing of new banks in the private sector, SEBI Guidelines for conversion of IDR’s into equity shares, changes to the exemptions under Service Tax, the Supreme Court’s decision to give a nod to composite arbitrations, Delhi High Court’s views on competition and the tort of unjust commercial enrichment, the Competition Commission’s reasons for finding BCCI guilty of abuse of dominant position”

January 2013

"Who can advise What?: SEBI Investment Adviser Regulations notified"
Securities Exchange Board of India (“SEBI”) notified on January 21, 2013 the much awaited SEBI (Investment Advisers) Regulations, 2013 (“Regulations”) requiring mandatory registration of Investment Advisers

CCI AMENDS THE APARTMENT BUYERS’ AGREEMENT PERTAINING TO THE PROJECT UNDERTAKEN BY DLF LIMITED
The Competition Commission of India(“Commission”) in the matter of Belaire Owners’ Association vs. DLF Limited and Ors., passed an order under Section 27 of the Competition Act, 2002 (“Act”) on January 3, 2013, modifying the Apartment Buyers’ Agreement(“ABA”) entered into between DLF Limited(“DLF”) and the apartment allottees of the housing complex “the Belaire” in DLF City, Gurgaon

January 2013

INTERNATIONAL COMMERCIAL ARBITRATIONS – CRAFTING INDIA TO BE A PRAGMATIC CHOICE AS THE SEAT?
The Bharat Aluminium Co. Vs. Kaiser Aluminium Technical Services, Inc. judgment (“BALCO Judgment”) of the Supreme Court of India (“Supreme Court”) has removed all the anomalies regarding the applicability of the Part I of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) to international commercial arbitrations outside India The Supreme Court revisited the doctrine