ALAYA LEGAL BULLETIN
Litigation & Arbitration
The Kerala High Court lays down guidelines for service of summons in suits, for defendants outside of India.
Kerala High Court laid down guidelines on serving summons to defendants residing outside India. The Bench addressed whether the service should follow the modes under Order V Rule 25 of the Civil Procedure Code (CPC) or the Hague Service Convention, which governs the international service of judicial and extra-judicial documents in civil or commercial matters.
The Court stated, “Harmonising the two options, we may venture to say that, there is nothing wrong in trying service of summons on the defendant abroad by the mode prescribed in Order V, Rule 25; and if the defendant appears before the court pursuant to such service, well and good, the service is complete.
Alternatively, if the court get a confirmation regarding service on the defendant - which essentially depends upon the postal arrangement prevailing in the destination State - the courts are still at liberty to proceed.
However, if both these eventualities do not happen within a reasonable time, the parties should necessarily be relegated to the method envisaged in the Hague Service Convention.”
Application under Section 34 of the Arbitration and Conciliation Act, 1996 (1996 Act), cannot be rejected merely because of the approach of the Courts to not interfere with the Awards.
The Delhi High Court, while addressing appeals under Section 37 of the 1996 Act, held that while there can be no quarrel with the proposition that the Arbitral Award should not be interfered with lightly, the same does not imply that applications filed under the provisions of Section 34 of the 1996 Act which lays down specific grounds under which an Arbitral Award can be challenged, ought to be rejected only on the premise that the approach of the Court should be not to interfere with the award.
‘Sufficient Cause’ to extend time for Awards should be interpreted to facilitate effective dispute resolution.
The parties to the arbitration agreement submitted before the Arbitral Tribunal that they would move the Court under Section 29A(4) of the Arbitration and Conciliation Act, 1996 (1996 Act), for appropriate orders for extension of time for making the award.
The Supreme Court held that while the statute incorporates party autonomy even with respect to the conduct and conclusion of arbitral proceedings, there is a statutory recognition of the power of the Court to step in wherever it is necessary to ensure that the process of resolution of the dispute is taken to its logical end, if according to the Court, the circumstances so warrant.
It is in this context that the 1996 Act adopts the well-known language of limitation statutes and provides that the Court can extend the time if it finds that there is sufficient cause.
Corporate & Commercial
National Company Law Appellate Tribunal (NCLAT) upholds National Company Law Tribunal (NCLT) order dismissing insolvency plea against Patanjali Paridhan.
The NCLAT dismissed the appeal filed by Law & Kenneth Saatchi & Saatchi Private Limited against an NCLT ruling.
The Corporate Debtor was demanding a No Objection Certificate (NOC) from the Operational Creditor, through various emails and legal notice to enable him to register the copyright of TVC, which the Operational Creditor had failed to provide.
Clause 26 of the Terms and Conditions stipulated in the proforma invoice, without any exception, that "LKSS or Producer will provide the necessary NOC or any other paper which may require for the IP registration to the Client."
The Appellant Operational Creditor failed to provide the NOC and the Corporate Debtor was unable to register the copyright. The NCLAT noted that the dispute was real and genuine, and not moonshine or feeble, and is supported by evidence, and also that the Corporate Debtor, despite having made substantial payment as advance, had not used the TVC in absence of copyright.
The NCLAT held that the correspondence and dispute regarding issuance of NOC is prior to the issuance of notice under Section 8 of the IBC, and thus, qualifies to be treated as "pre-existing dispute", which is a valid ground for rejection of application under Section 9 of the IBC. The Ld. NCLT had rightly rejected the application under Section 9 of the IBC and the Court did not find any merit in the appeal.
Asset deposited by Corporate Debtor as security before the commencement of CIRP to be the asset of Corporate Debtor.
The case involved a corporate debtor who had been directed to pay damages of ₹12 lakh, along with 24% annual interest, to the respondent. As part of the proceedings, the corporate debtor deposited ₹20 lakh in court in 2016 and provided a bank guarantee for the balance amount.
When the CIRP was triggered in February 2023, the corporate debtor sought to withdraw the ₹20 lakh deposited in court. The court held that that monies or any other asset deposited by a corporate debtor in court prior to commencement of CIRP by way of security (to protect against execution of any judgement or decree), would not cease to be the asset of the corporate debtor, despite the moratorium imposed by Section 14 of the Insolvency and Bankruptcy Code (IBC), which prohibits the enforcement of assets during the resolution process.
The court also noted that the bank guarantee, though revoked by the Supreme Court, had no impact on the debtor's rights over the deposited amount.
Competition Commission of India imposes penalty on Meta
The Competition Commission of India (CCI) has concluded its investigation of WhatsApp’s 2021 privacy policy update, imposing a fine of Rs 213.14 crore for abuse of dominance in violation of Section 4 of the Competition Act, 2003 on the Meta-owned messaging giant and ordering it to implement certain behavioural changes within the next three months.
Invitation of public comments: Discussion Paper on Liquidation and Voluntary Liquidation Process.
Insolvency and Bankruptcy Board of India (IBBI) has released a discussion paper proposing various amendments to the liquidation process under the IBBI (Liquidation Process) Regulations, 2016 (Liquidation Regulations) and Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017.
Part A proposes changes in the liquidation regulations in relation to:
(a) a Review of the auction Process
(b) ensuring transparency in compromise or arrangement schemes by mandating liquidator apply closure of the liquidation process to the Adjudicating Authority, and
(c) improving the management of unclaimed proceeds in the Corporate Liquidation account by
Part B proposes changes in the voluntary liquidation regulations in relation to:
(a) uncalled capital or unpaid capital contribution, and
(b) improving the management of unclaimed proceeds in the Corporate Voluntary Liquidation account by
The Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fourth Amendment) Regulations, 2024
To enable ease while doing business for startups, the Reserve Bank of India (RBI) has notified the amended Foreign Exchange Management Regulations, 2024.
The new amendments pave the way for the inclusion of the revised definition of startups, as per a 2019 order by the Department for Promotion of Industry and Internal Trade (DPIIT), in the updated forex rules.
The National Financial Reporting Authority (NFRA) finalizes and recommends Auditing Standards to the Central Government
NFRA, finalized and recommended 40 Standards on Auditing (SAs) and related Standards on Quality Management (SQMs) for notification under Section 34A of the LLP (Amendment) Act, 2021.
These standards, earlier finalized in NFRA's 18th meeting, will apply to Limited Liability Partnerships (LLPs) audits on a mutatis mutandis basis. The proposal, supported by seven of eight NFRA members and Institute of Chartered Accountants of India representatives (with reservations on certain standards), awaits Central Government approval for implementation from April 1, 2026.
A guarantor cannot become a financial creditor without making any payment in the discharge of the guarantee.
An appeal was filed challenging the order passed by the NCLT filed by the Defendant wherein the respondent had been allowed directing re-constitution of the Committee of Creditors (CoC) by excluding the appellants.
The NCLAT bench dismissed the appeal holding that Personal Guarantors who have not made any payment in discharge of their Guarantee given to the respondent cannot be accepted as Financial Creditor of the Corporate Debtor, nor any voting share can be allocated to them in the CIRP of the Corporate Debtor.
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Energy and Sustainability
Central Electricity Regulatory Commission (CERC) rejects Solar Energy Corporation of India Limited’s (SECI) Request for Additional Trading Margin on BESS Ancillary Services
The matter involved review of the order dated 16.05.2024 passed by the CERC in the petition filed by National Load Despatch Centre for advance procurement and despatch of 150 MW/300 MWh Battery Energy Storage Systems out of the 500 MW/1000 MWh (2 hours storage) standalone Inter-State Transmission system (ISTS) connected BESS pilot project at 400/220 kV Fatehgarh-III (Rajasthan) substation of Northern Region.
SECI sought clarity regarding the admissibility of an additional trading margin of INR 0.07/kWh for facilitating BESS operations for grid ancillary services. SECI contended that an additional trading margin of INR 0.07/kWh is essential to cover the procurement, scheduling, accounting, and market operations related to charging and discharging Battery Energy Storage System (BESS) for NLDC/Grid Controller of India. These services, according to SECI, are distinct from automatic grid operations and arise under specific commercial needs.
The CERC observed that SECI has failed to point out the discovery of new and important matter or evidence, any mistake or error apparent, or any other sufficient reason which may at any time be corrected by the CERC either of its own motion or on the application of any of the parties. SECI has also failed to point out any reason for invocation of Regulation 52 of the CERC (Conduct of Business) Regulations, 2003. Accordingly, CERC held that there is no error apparent as such and that a review of the impugned order dated 16.05.2024 is not required on this aspect.
APTEL Clarifies Captive Power Plant Compliance Rules and Cross-Subsidy Dispute
The Appellate Tribunal for Electricity (APTEL) has overturned a Tamil Nadu Electricity Regulatory Commission (TNERC) order from July 13, 2023, in a case involving captive power plants operated by Chettinad Cement Corporation Pvt. Ltd. Chettinad Cement, which runs three cement manufacturing units in Tamil Nadu at Karikkali (Dindigul), Puliyur (Karur), and Ariyalur (Perambalur), also operates coal based captive power plants at these sites with a combined capacity of 135 MW.
The dispute revolved around whether electricity generation and consumption from multiple captive power plants could be aggregated to meet the requirement under Rule 3 of the Electricity Rules, 2005, which mandates that at least 51 per cent of electricity generated from captive plants must be consumed by the captive user.
TNERC had ruled that the quantum of consumption should be considered on the basis of the aggregate of all three power plants, rejecting the claim of the appellant that each of the three generating stations be considered separately. The Appellate Tribunal ruled in favour of the Appellant, and consequently, the impugned order of TNERC was set aside.
CERC To Acme Solar-Complete 300 MW Solar Project after Paying Penalty
Ruling on a case involving Acme Solar and Central Transmission Utility of India (CTUIL), the Central Electricity Regulatory Commission (CERC) has allowed Acme Solar an extension on its delayed project in Rajasthan, with the provision of more damages in case it does not deliver phased commissioning under the new deadlines.
ACME Solar Holdings Ltd and ACME Sikar Solar Pvt. Ltd led a petition seeking an extension of time for commissioning a 300 MW Solar Power Project from October 20, 2024, to January 25, 2025.
The Commission condemned the delay but acknowledged the substantial progress made by the petitioners. An amount of (50% of sum of Conn-BG1 +ConnBG2+Conn-BG3, which is Rs 9.5 crores) Rs 4.75 Crores to be paid by Acme Solar to the CTUIL within two weeks ( 14 days) of the issuance of the instant Order, as compensation towards delayed commissioning from committed date of 20.10.2024 till 20.01.2025, it stated.
The Delhi Electricity Regulatory Commission (Terms and Conditions for Green Energy Open Access) Regulations, 2024
The Delhi Electricity Regulatory Commission (DERC) has introduced the Delhi Electricity Regulatory Commission (Terms and Conditions for Green Energy Open Access) Regulations, 2024, applicable to the National Capital Territory of Delhi.
These regulations aim to facilitate non-discriminatory open access for electricity generated from renewable energy sources, including municipal waste-to-energy and refuse-derived fuel plants, using intra-state transmission and distribution systems.
They define eligibility, categorization (long-term, medium-term, and short-term access), and technical requirements, such as ABT-compliant or special energy meters.
Provisions for standby arrangements, banking, and charges are also included, promoting the adoption and integration of green energy in Delhi.
Central Electricity Authority approves the Uniform Protection Protocol for users of the Indian Grid for implementation on a Pan India basis-16 November 2024
The Central Electricity Authority (CEA) has approved the ‘Uniform Protection Protocol’ for users of the Indian Grid to enhance grid stability, reliability, and security, supporting India’s renewable energy targets of 450 GW by 2030 and 2100 GW by 2047.
Developed by the National Power Committee in consultation with RPCs, the protocol applies to regional entities, power generators, and transmission operators connected at 220 kV (132 kV for NER) and above.
It covers protection schemes for various power systems, disturbance monitoring, audits, and compliance monitoring.
The 15th National Power Committee meeting also discussed other key issues, including advanced energy metering, real-time data systems, and SCADA communication improvements.
KERC Issues and Finalizes New Fees Regulations 2024-26 November 2024
The Karnataka Electricity Regulatory Commission (KERC) has released the draft Fees Regulations 2024 and invited comments, suggestions, and objections from stakeholders and affected parties.
A public hearing on these regulations was held on November 25, 2024. After reviewing the feedback, the KERC confirmed the regulations under its powers and issued them as the Karnataka Electricity Regulatory Commission (Fees) Regulations 2024.
These regulations came into effect upon publication in the Karnataka Government Gazette and apply statewide.
CEA recognizes indigenously developed Surface Hydrokinetic Turbine Technology under Hydro Category
The Central Electricity Authority (CEA) has recognized Surface Hydrokinetic Turbine (SHKT) technology under the Hydro Category, promoting renewable energy innovations to achieve net-zero emissions and sustainable development.
Unlike conventional systems, SHKT generates electricity using the kinetic energy of flowing water without requiring significant infrastructure like dams. It offers cost-effective power generation at ₹2-3 per unit and is easy to install, making it ideal for areas with limited grid access.
This technology leverages India's extensive water infrastructure for sustainable energy. It has significant potential for large-scale renewable energy generation, supporting the growth of the power sector.
Information Technology and Artificial Intelligence
Telecommunications (Telecom Cyber Security) Rules, 2024
These Rules apply to all telecommunications service providers, including those under the Telecommunications Act, 2023.
It mandates compliance with cybersecurity protocols and standards set forth by the Central Government for safeguarding telecommunications networks and services against cyber threats.
Telecommunication (Critical Telecommunications Infrastructure) Rules, 2024
These Rules primarily impact telecommunication entities operating in India. It aims to bolster the security and resilience of India's critical telecommunication infrastructure.
By imposing stringent security standards, government oversight, and reporting requirements, the government seeks to mitigate risks and protect essential telecommunication services.
Featured Post
This article discusses the decision of the Hon’ble Supreme Court in the case of Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors., regarding determination of stamp duty on concession agreements.
Stamp duty is applicable on an ‘instrument’ and not a transaction. The instruments shall be chargeable with duty of the amount indicated in the relevant schedule as the proper duty.
In order to ascertain the stamp duty applicable to an instrument, it is essential to determine the nature of the instrument as defined in the Indian Stamp Act, 1899 (‘Stamp Act’) read with State Amendment, where applicable.
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Disclaimer: The content provided in this newsletter is intended only for the purposes of general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional in relation to any specific issues that are mentioned herein.