It has been a remarkable year with a slew of landmark judgments delivered by the apex court...Former Chief Justice Dipak Misra once quoted, “The Indian judiciary is the strongest judiciary in the world having capability to handle mindboggling number of cases”. According to him, the Indian judiciary is the “most robust institution” in the world and young lawyers are assets having...
It has been a remarkable year with a slew of landmark judgments delivered by the apex court...
Former Chief Justice Dipak Misra once quoted, “The Indian judiciary is the strongest judiciary in the world having capability to handle mindboggling number of cases”. According to him, the Indian judiciary is the “most robust institution” in the world and young lawyers are assets having potential to develop the jurisprudence.
The year 2019 has been a remarkable one from the legal perspective, given that landmark judgments were delivered by the Supreme Court. Laws relating to insolvency and bankruptcy have been enhanced and quick decisions taken. These landmark decisions given by the Supreme Court have made a mark in the Indian judicial history.
The Swiss Ribbons
The Supreme Court’s decision in Swiss Ribbons v. Union of India upholding the constitutionality of the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) is a landmark in the development of IBC. The Supreme
Court upheld the constitutionality of the statute in the Swiss Ribbons case and the judgment has laid the
foundation for implementation of the IBC. The Supreme Court has supported the IBC and set a benchmark in
international fora where such a speedy decision might not have been taken.
The judgment is likely to impact a number of settlements and resolutions that will happen in the pre-insolvency period as well as swift resolution of corporate debtors in insolvency.
This judgment will also boost the confidence of investors
and bidders in acquiring assets through IBC as well as generally improve ease of doing business in India.
In the words of Shardul Shroff – Executive Chairman, Shardul Amarchand Mangaldas & Co., “For the first time in 70 years, in 13 days from the date of judgment, a change was introduced through an ordinance and converted into a proper Bill and subsequently into an Act. This is the fastest that any Central Legislature has ever acted.”
Crypto Ban in India and its impact on businesses and the society
India has taken a very conservative approach as far as Cryptocurrencies are concerned. There has been an outcry
from Indian crypto businesses and their customers. It has even sparked a legal showdown, with the fight going all
the way to the Supreme Court. The Indian government has defended by saying that crypto is being used to make
illegitimate payments for illegal goods.
In 2018, the Reserve Bank of India (RBI), released a
notification to all of the financial institutions and payment service providers to prohibit with immediate effect, offering accounts to consumers or businesses that handle virtual currencies.
The “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” draft has proposed a 10-year prison sentence for anyone who “mines, generates, holds, sells, transfers, disposes, issues or deals in cryptocurrencies”. Trade in cryptocurrencies was a regulatory grey area in the past, giving many enterprising individuals a new avenue for investment. Despite the volatility in its value, many lay investors took to crypto, even paying tax on profits from trade. The Supreme Court has been postponing the date for hearing of the crypto-ban case and now the Court has scheduled the hearing on 14th Jan 2020. Also, the winter session of Parliament has not considered the Bill on Cryptocurrencies.
According to industry experts, an efficient and robust regulatory mechanism would have served the country’s interests better instead of the ban. The ban, as it stands now, can be circumvented through crypto barter and even cash dealings. With stringent laws in place and sterner trading rules, the largest democracy in the world such as ours could have shunned the inhibitions of the Indian government and rather take a broader approach towards the cryptocurrencies.
Essar Steel-Arcelor Mittal case
A Supreme Court bench ruled that financial creditors enjoy primacy over operational creditors in insolvency
proceedings and the adjudicating authority cannot interfere with the decision approved by the Committee of Creditors.
The judgment shall provide an impetus for banks as it paves way for the “commercial wisdom” of the Committee of Creditors (CoC) to negotiate and accept a resolution plan. The move will help the banks make provisions to boost their capital levels.
The verdict is likely to reduce legal wrangling between
financial and operational creditors and accelerate the resolution process. From the foreign investment point of
view, it will attract investors who were getting wary of the nation’s bankruptcy process.
Padma Shri Dr. T.K Vishwanathan who headed the Bankruptcy Law Reforms Committee (BLRC) points out, “The IBC is a classy example of the interplay between law and economics because it has conferred all the powers upon the Committee of Creditors and decisions are market-based decisions. Judges have to only sit back and play the role of an Umpire.”
Amrapali Case
The judgment by the Supreme Court in the Amrapali case has provided a big relief for homebuyers whose houses are stuck in stalled projects and will have a far-reaching positive impact on the Indian housing market.
The case has definitely set a precedent for all errant developers habituated to circumventing the law and has provided assurance for homebuyers that the Central and State Governments are bound to take necessary steps to ensure that buyers, who have booked and paid for houses, are provided the houses. The judgment is a watershed moment for the real estate sector in the country and is likely to protect the homebuyers from being cheated by unscrupulous builders.
SC ruling on AGR in the telecom sector
According to telecom giants Vodafone Idea and Bharti Airtel, the Supreme Court’s decision to define Adjusted
Gross Revenue (AGR) as all revenue accrued to telcos, including from non-core activities, would deal a disastrous blow to the telecom sector that is reeling under severe financial stress and pressure on tariffs. The issue had been dragging on for the past 14 years, with telecom providers and the Department of Telecommunications (DoT) locked in a battle over the definition of AGR.
On the Supreme court ruling, Dr. Manoj Kumar, Founder & Managing Partner of Hammurabi & Solomon Partners said, “When the Hon. Supreme Court on 24th October, 2019 upheld the stand taken by the Department of Telecommunications (DoT) in a long protracted legal battle for payment of dues to the Government in terms of License Fee (LF) & Spectrum Usage Charge (SUC), it finally set to rest all contentions and counter-contentions surrounding outstanding dues and liabilities of telecom service providers (TSPs) to the Government.”
According to Reserve Bank of India data, the commercial banks’ exposure to the telecommunications sector rose to 1.15 trillion in September 2019, from 81,126 crore in September 2017. State Bank of India’s exposure to the industry increased to 35,735 crore as of September 2019, from 25,538 crore a year ago.
Vodafone Idea and Bharti Airtel reported a whopping combined loss of close to 74,000 crore in the September 2019 quarter, as leading telecom operators were hit by statutory dues arising from the recent Supreme Court ruling on AGR. It said that post the adverse SC order in the long-standing AGR case, Airtel and the combined entity of Vodafone Idea are liable to pay 21,700 crore and 28,300 crore, respectively.
The Supreme Court ruling on AGR has not just hit Indian telecom firms hard, but has eroded the profits of their foreign partners as well, with the latest casualty being Airtel’s joint venture (JV) partner Singtel.
Both Vodafone Idea and Airtel, in their respective press releases post the SC judgment, have appealed to the government to review the impact of the verdict on the industry and find ways to mitigate the financial burden on the sector.
According to legal experts, the impact of the Supreme Court order on the definition of adjusted gross revenue (AGR) may not be restricted to telecom companies. It could also have an impact on any entity that has taken telecom service license, such as internet service providers (ISPs), satellite communications providers, cable operators and even companies in the power, steel and railways sector making them liable to pay AGR-based dues.
As many as 40 license holders are liable to pay their dues to the DoT. A rough calculation puts this amount at more than 94,000 crore in dues over the past five years and more than 2.8 lakh crore for the past decade, including interest and penalties. This could have a broader impact amid slowing economic growth in the country.
Ayodhya Judgment
The long-awaited Ayodhya verdict was pronounced by a five-judge Constitution bench unanimously. The Ayodhya
dispute was a political, historical, and socio-religious debate in India. The century-old clash of the disputed land in Ayodhya came to an end with the Supreme Court ruling that the Hindus would get the entire disputed 2.77
acres in Ayodhya and allotting an alternate plot of five acres to the to the Sunni Waqf Board for the construction
of a mosque.
The judgment is hugely significant, revolving around an intersection of faith and politics that gripped the country for the past many years.
According to Soli Sorabjee, “It is a balanced and sensible judgment. The fact that it is unanimous gives it cogency. It is good that the issue has been finally settled, and all parties should accept it in good spirits.”
The largest democracy in the world has set an example reiterating the principle of equality of faiths that forms the core of our Constitution. The judgment does not dilute India’s commitment to secularism. The Court verdict was based on principles that are in accordance with the secular fundamentals of the Constitution and preponderance of evidence and not on the intensity of faith.
India needs to move beyond the divisive politics of religion and focus on building solidarity and economic strength.
According to market analysts and economists, the verdict would do good for the economy and will help improve confidence of global investors towards the Indian economy. It is also predicted that any such measure that has been taken to facilitate smooth functioning of the country will inspire a lot of confidence among global investors in our country. It is believed that once a temple and a mosque are constructed, it could boost tourism in the state.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.