Article

Introduction of the ‘On-going Projects’ regime under CSR – A welcome move

By Noorul Hassan and Kumar Panda

Highlighting the participation of corporate India in supplementing the efforts of the government, the first article in this issue of Corporate Amicus discusses at length an important recent amendment in the Corporate Social Responsibility (‘CSR’) provisions. According to the changes, Section 135(6) of the Companies Act, 2013 now enables corporates to transfer unspent amounts concerning an ‘on-going project’ to a separate account designated as an ‘unspent CSR account’. The amounts are required to be spent in the next 3 financial years towards that on-going project. Deliberating on the concept of on-going project, the article tries to answer as to whether the unspent amount can be re-allocated to a different project. The article also discusses the obligations of the corporate in case the amounts are transferred to a Section 8 Company, registered trust, or society. It recommends that companies undertake prior and proper due diligence before engaging any implementation agency, as the ultimate obligation still lies with the company. According to the authors, the changes will transform the companies into Socially Responsible Corporates...

Limitation for filing of appeals under Section 37 of Arbitration and Conciliation Act

By Rashi Srivastava and Ankit Parhar

The second article in this issue of the newsletter discusses a recent decision of the Supreme Court in the case of Government of Maharashtra v. Borse Brothers Engineers & Contractors Pvt. Ltd. The Apex Court has held that if the specified value of the subject matter is INR 3,00,000 or more, then an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 must be filed within 60 days from the date of the order as per Section 13(1A) of the Commercial Courts Act. However, when the specified value is a sum less than INR 3,00,000, the appeal under Section 37 would be governed by Articles 116 and 117 of the Limitation Act, 1963. The Court has also held that the expression ‘sufficient cause’ under Section 5 of the Limitation Act is not elastic enough to cover long delays, and merely because sufficient cause has been made out, there is no right to have such delay being condoned. The authors note that the Apex Court has also observed that the same yardstick will be applicable for public sector companies and no special treatment can be afforded merely because the government is involved...

Notifications and Circulars

• Companies (Incorporation) Rules, 2014 amended for fourth time in 2021
• SEBI’s Technical Group on Social Stock Exchange (SSE) issues recommendations
• Innovators Growth Platform – SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 amended
• Business Responsibility and Sustainability Reporting by listed entities
• Draft Trade Union Rules issued
• Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 amended
• SEBI (Alternate Investment Funds) Regulations, 2012 amended

Ratio decidendi

• Petition filed under IBC Section 7 to be decided notwithstanding pendency of application under Arbitration Section 8
• Company Court cannot, in winding-up proceedings, decide which party has defaulted compromise

News Nuggets

• Creditors/lenders can initiate insolvency proceedings against personal guarantors
• Recoveries from Director for issuance of NCDs in violation of Companies Section 73(2) – Subsequent liquidation proceedings under IBC against company, not material
• Insolvency – Value of security or recoverability of debt not material for not triggering CIRP
• Environmental clearance for industrial units – States do not have power to grant exemption
• Liquidation of corporate debtor based on sole decision of related part Financial Creditors not correct
• Review of the regulatory framework of promoter, promoter group and group companies as per SEBI (ICDR) Regulations, 2018 on cards
• Regulations pertaining to debt securities and non-convertible redeemable preference shares to be merged