Law Firms NewsNews



B9 Beverages Private Limited | Series D fund raise- from Kirin Holdings Pte Ltd







Alcohol beverages



Announcement Date




Completion Date




Name of Client

B9 Beverages Private Limited



Issuer Details

B9 Beverages Private Limited | India (Bira 91)

B9 Beverages is a start up with the mission to bring a craft beer revolution in India. It is engaged in the business of manufacturing and marketing of Bira91 beer.



Subscriber Details

Kirin Holdings Japan (invested through the Singapore entity Kirin Holdings Pte. Ltd.)



Deal Description

Advised Bira 91 in relation to its second round of investment of USD 70 million from Kirin Holdings Pte. Ltd. Kirin Holdings had earlier invested USD 30 million in Bira 91 in 2021.



Total Consideration

USD 70 Million



Team Members

The core team consisted of Mayank Singh (Partner), Kairavi Shah (Senior Associate), Suchita Vyas (Associate) and Esha Chauhan (Associate) with assistance from the following:
Assistance on competition law related aspects: Pranjal Prateek (Partner)



Role of Firm

Advised Bira 91 in relation to it equity investment through (Series D) of USD 70 million from Kirin Holdings Pte. Ltd.

Mahindra Holdings
Law Firms NewsNews


Mahindra Holdings Limited and Mahindra Susten Private Limited | Investment by Ontario Teachers’ Pension Plan Board







Infrastructure: Renewable energy, Solar Energy



Announcement Date




Completion Date




Name of Client

Mahindra Holdings Limited



Investor Details

Ontario Teachers’ Pension Plan Board through 2452991 Ontario Limited | Canada | Investor



Seller Details

Mahindra Susten Private Limited | India | Seller



Deal Description

Advised Mahindra Holdings Limited and Mahindra Susten Private Limited on Ontario Teachers’ Pension Plan Board’s investment of 30% stake in Mahindra Susten Private Limited for a total consideration of INR 2,371 crore (~USD 300 million). Through this strategic partnership, parties aim to capitalize on the growing renewables opportunity in India and contribute towards the country’s decarbonization ambitions.

The proposed transaction also envisages the setting up of an Infrastructure Investment Trust (“InvIT”) in compliance with applicable regulations of the Securities and Exchange Board of India. The InvIT is initially proposed to comprise renewable power assets seeded by MSPL with operational capacity of around 1.54 GWp.
Further, the Mahindra Group and Ontario Teachers’ will jointly explore the sale of an additional 9.99% stake in Mahindra Susten by 31 May 2023. The Mahindra Group will deploy these funds, plus an incremental amount of up to INR 1,750 crore, into the business and the InvIT over the next seven years. Over the same period, Ontario Teachers’ will deploy an additional amount of up to INR 3,550 crore into the business and the InvIT.

The partnership with Ontario Teachers’ will enable the Mahindra Group to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage & round-the-clock (RTC) green energy plants.



Total Consideration

INR 2371 crore (USD 300 million)



Team Members

The core team consisted of Haigreve Khaitan (Senior Partner), Sudhir Bassi (Executive Director), Akhil Bhatnagar (Partner), Shantanu Gupta (Partner), Swathy Ramanath (Partner), Aayush Mohata (Partner), Niyati Bhatt (Principal Associate), Shivam Tandon (Principal Associate), Bhagirath Ashiya (Senior Associate), Sushmita Ravi (Senior Associate), Anwesha Singh (Associate), Palak Rajesh Mohta (Associate), Prerna Kapur (Associate), Vismita Gahlot (Associate) and Radhika Pandey (Associate) with assistance from the following:

Antitrust Law aspects: Anisha Chand (Partner), Soham Banerjee (Principal Associate) and Siddharth Bagul

Employment Law aspects: Anshul Prakash (Partner) and Abhimanyu Pal (Principal Associate)

Regulatory aspects: Divya Chaturvedi (Partner) and Srishti Rai (Senior Associate)

Real Estate aspects: Devendra Deshmukh (Partner) and Amruta Joshi (Principal Associate)



Role of Firm

Advised Mahindra Holdings Limited and Mahindra Susten Private Limited on Ontario Teachers’ Pension Plan Board’s investment of 30% stake in Mahindra Susten Private Limited.



Financial Advisors

Avendus Capital acted for Mahindra Group

Ambit acted for Ontario Teachers’ Pension Plan Board



Other legal advisors if any with names of Lead Lawyers

Cyril Amarchand Mangaldas represented Ontario Teachers’ Pension Plan Board

Torys LLP, Linklaters LLP and Ropes and Gray LLP assisted on ancillary aspects


Law Firms NewsNews



Epack Durable Private Limited | Investment by Affirma Capital







Electrical / Electronic Manufacturing



Announcement Date

13 September 2022



Completion Date

7 September 2022



Name of Client

Epack Durable Private Limited



Issuer Details

Epack Durable Private Limited | India



Subscriber Details

Affirma Capital | Singapore



Deal Description

Advised Epack Durable Private Limited in raising funds through primary investment from Affirma Capital.



Total Consideration




Team Members

The core team consisted of Mayank Singh (Partner), Kairavi Shah (Senior Associate), Hitakshi Mahendru (Associate) and Suchita Vyas (Associate) with assistance with Palak Kumar (Associate) on execution aspects.



Role of Firm

Khaitan & Co. represented Epack Durable Private Limited in raising funds through primary investment from Affirma Capital.



Financial Advisors

Deloitte / KPMG



Other legal advisors if any with names of Lead Lawyers

AZB & Partners



Press Coverage

Epack Durable raises $40 mn in round led by Affirma (

Op EdsOP. ED.


Jewellery, as soon as we hear the term, rings a bell for occasions such as wedding, birthday of a special one or an investment made for the future, especially in a country like India. Indian jewellery with its exquisite craftsmanship and variety, inspired from India's rich culture and heritage, has an element of extensive uniqueness in its designs.

With the pandemic hit world in the present and in the past, from traditional modes of business, it is the need of the hour for various jewellers to have online businesses with a website, to cater to the stiff competition across the industry. With expansion of businesses on e-commerce for reaching a wider consumer base and additional sales, there is a greater need for protection of various jewellery brands and designs, because of greater accessibility of the designs to the public at large. Intellectual property law provides such protection for various jewellery brands, their designs, and ideas. Further, there is a greater need for protection on the e-commerce platforms against cybercrimes. For luxury goods like jewellery, criminals are devising methods to hack online security of the consumers.

Given the nature of goods and credibility requirement, the jewellery industry has to follow certain compliances to safeguard the interests of the consumers and to create uniform standards. Bureau of Indian Standards plays a key role in enforcing and applying these compliances.

The article also includes a comparative analysis across jurisdictions to entail the protection available in the jewellery industry and better application in India.

Protection of jewellery under the intellectual property law regime in India

► Trade mark

The Trade Marks Act, 19993 (Indian TM law) implies that the name, symbol, form, packaging, and colour combinations used in jewellery can all be protected under the law. There are three requirements for seeking trademark protection for jewellery which are as follows:

1. An appropriate mark for jewellery is required.

2. The mark for jewellery must be vividly displayed.

3. The jewellery mark must be distinct from other recognisedjewellery marks.

To obtain a trademark for a jewellery name, form, logo, or colour, one must demonstrate originality. For the jewellery to have a distinct personality, it must have intrinsic traits that set it apart from other pieces of jewellery. Further, as issue which isa bone of contention in case of jewellery industry is the use of family names for example, Joy Alukkas or Kalyan Jewellers, one of India's biggest jewellers, is named after its founder. There are umpteen number of cases where an enterprise is named after the family or the founder. However, registration of such family names has become a tricky domain from a trademark perspective. The Indian TM law, unlike its predecessor law4, has no provision to allow or disallow the use of surname or personal names. The definition of the “mark” doesnot explicitly include or exclude surnames and personal names. Thus, it is assumed that such registration is allowed, and hence, even applied for. The renowned automobile brand Mahindra and Mahindra5, in the past has obtained successful injunction against a party using the surname “Mahindra” as their trade name in spite of this surname being quite common in India. The rationale behind this being that Mahindra had acquired distinctiveness and secondary meaning of the word “Mahindra” with its continuous use and if such a mark is used by another party, it would result in confusing the public.

However, in another case6, filed by a leading lawyer in Delhi (currently a sitting Judge at the High Court of Delhi), against a Delhi-based law firm called “Singh and Associates,” the Court noted that the surname “Singh” is a very common surname in India and no person can claim his/her monopoly over it. Hence, for registration and further protection, it becomes important for a brand to acquire its own distinctiveness for further protection.

► Copyright

Sketches of jewellery designs are protected under the Copyright Act, 19577, as artistic work. Copyright protection lasts throughout the designer’s lifetime plus another 60 years. Copyright registration is not a mandate in this regard, however, if you wish to enforce a design, you must register it.

Creating a 2-dimensional or 3-dimensional representation of a jewellery design or drawing can also be protected under the Act. Moreover, the idea, expression, and dichotomy come into play in this regard. The owner of the jewellery might claim copyright not only because of the uniqueness of the concept but also because of the distinctive method in which his jewellery is presented.

► Design

The appearance (photographic depiction) and pattern of an individual product or a group of goods are protected under the design law. The design is protected for ten years, which can be extended by another five years. Because the two laws overlap when it comes to jewellery, the Copyright Act stipulates that if the work can be registered as a design, it will not be protected under copyright and if it can be registered as a design but hasnot been, copyright protection will be lost if the product using the design is manufactured more than 50 times.8 Hence, in case a design is reproduced more than 50 times, then registration must be done under the Designs Act, 20009 to get protection for 15 years, otherwise copyright protection can be sought for the design.

The legislative aim underlying the Copyright Act, 1957, and the Designs Act, 2000 has been made clear in Microfibres Inc. v. Girdhar & Co.10, wherein a Division Bench of the Delhi High Court observed that the relevant Acts appear to be providing higher protection to “pure original creative works” and “lesser term of protection to designs with a commercial character”.

► Geographical Indication (GI)

GIs may be held in a group and protect indicators for an indefinite time. GI registration and protection is excessively helpful as only members of a community can produce those designs. It has been a practice in India to grant GIs for traditional jewellery designs, for instance, “Silver Filigree of Karimnagar” as Karimnagar had been producing the unique jewellery for generations. Also, a GI for “Temple Jewellery of Nagercoil” was filed in 2007, and a logo was registered in 2016 in connection to the GI. The origins of temple jewellery may be traced back to Nagercoil in the 17th century, according to the GI’s journal copy.

► Patent

The technology used in making jewellery can be patented. However, it has to be unique and different. There can be two cases where a patent can be granted (a) patent on the product i.e. article of jewellery; and/or (b) process of manufacturing a piece of jewellery. However, in all cases, the following essentials are required to be satisfied:

(a) Patentable subject-matter: The Patents Act, 197011 provides for cases where an invention is not patentable. Hence, the precondition for patenting is to come out clear from these conditions.

(b) Novelty: Novelty is an important criterion in determining patentability of an invention. novelty or new invention is defined as “any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification i.e. the subject-matter has not fallen in public domain or that it does not form part of the state of the art”. The novelty requirement in essence states that an invention should never have been published in the public domain. It must be new with no same or similar prior arts.

(c) Inventive step or non-obviousness: Inventive step is defined under Section 2(ja)12 of the Patents Act as “a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art”. This means that the invention must not be obvious to a person skilled in the same field as the invention relates to. It must be inventive and not obvious to a person skilled in the same field.

(d) Capable of industrial application: Industrial applicability is defined under Section 2(ac) of the Patents Act as “the invention is capable of being made or used in an industry”. This essentially means that the invention cannot exist in abstract. It must be capable of being applied in any industry, which means that the invention must have practical utility in order to be patentable.

Hence, for obtaining a patent, it is essential to comply with all the abovementioned conditions. Further, once protection is granted, the owner gets a strong set of rights to be the sole manufacturer of such a product.

► E-commerce and jewellery

India’s fastestgrowing and most interesting commercial transaction channel is e-commerce. From US $48.5 billion in 2018, the Indian e-commerce sector is anticipated to rise to US $200 billion by 2026. Between 2017 and 2018, online jewellery sales increased by more than 14%.13 Modern e-commerce technology allows replicating (or even improving) the in-store purchase experience easier than ever before.

Online buyers can analysejewellery pieces from every aspect, using techniques such as 360-degree imagery and zoom lenses. The industry is likely to grow more competitive as more merchants in the jewellery industry see the tremendous possibilities in the e-commerce sector.

But e-commerce, has its challenges for IP owners, as pointed by the Delhi High Court in Christian Louboutin Sas v. Nakul Bajaj14, that the “sellers of counterfeit or infringing products seek shelter behind the platform’s legitimacy.” The Court further went on to point out that the owner of the trademark suffers a huge loss of customer base especially in the case of luxury goods like jewellery and the trademark owner's brand equity is also diluted.

Even after the challenges, e-commerce provides a huge opportunity for jewellery brands to present themselves outside their geographical territory. A robust framework with the right legal and cyber protection is a key to successful e-commerce operations. Further, in any e-commerce operation, compliance with the information technology laws is a must as an operator tends to collect a series of personal data right from preferences of a customer to their financial details such as bank account. Hence, protection of the customer data becomes a high-risk factor and the most important aspect in the e-commerce industry.

► Protection of jewellery business from cybercrime

While e-commerce has proven to be a great opportunity for both sellers and buyers of jewellery but, it has its own perils. A recent study from Foason shows fraud attacks increased by 19% from 2018 to 2019 across the online retail landscape.15 This is worrisome especially in the case of luxury items like jewellery which involve huge capital transactions.

These attacks range from phishing, return abuse and shipping fraud to account takeovers, identity theft and other emerging threats. Recently, the famous jewellery brand Pandora also, became a victim of phishing after, multiple people were sent after a fake website manifesting to be Pandora showed its products at unreasonably low rates16. Similarly, last year the global jewellery brand Claire's succumbed to a mageware attack when the hackers were able to breach into the website of the brand and access the payment details of the buyers.17

Thus, protection of jewellery businesses from cybercrime becomes essential, and seeing an opportunity arising out of this situation, a lot of insurance companies globally have started providing cybersecurity insurance which indemnify in case of any cyberattack.

► Why certifications and standardisations are essential

Apart from the brand and aesthetics, the quality of a jewellery piece also becomes a relevant factor to draw consumers from the window to the counters, in other words, for a precious good like jewellery, a consumer would always want to check the quality before buying. Standards and certifications are the most important elements to determine the genuineness and quality of a product.

In India, the national standard body is the Bureau of Indian Standards (BIS), which is based on certain international standards and allows the jewellers to register and obtain the same. A registered jeweller can have his jewellery hallmarked through the BIS authorised Assaying and Hallmarking Centres (A&H Centre).BIS which has been established through the Bureau of Indian Standards Act, 201618 (BIS) is theNational Standard Body of India forstandardisation, certification, and testing and certification of goods. BIS provides traceability and tangibility benefits to the national economy by safeguarding reliable consumer goods; mitigating health risks to buyers; supporting foreign trade alternatives; controlling the proliferation of varieties. There are guidelines that stipulate the procedure for grant, operation, renewal, and cancellation of the certificate of registration. The certificate of registration issued by the BIS for sale of hallmarked articles shall be displayed prominently in the sales outlet19. The consumer is entitled to compensation from the jeweller in case of failure of the sample which has been sold by him.

Hallmarking, why is it necessary: The precise assessment and formal recording of the proportional amount of precious metal in items is known as hallmarking. As a result, hallmarks are official markings that are employed as a guarantee of the purity or fineness of precious metal goods in several nations. Under this system, BIS grants jewellers registered status under the hallmarking scheme. Any of the BIS approved Assaying and Hallmarking Centres can have their jewellery hallmarked by BIS certified jewellers.

From 1-6-2021, the Government has made hallmarking of gold jewellery and antiquities compulsory.20 The goal of mandatory hallmarking of gold and silver ornaments is to safeguard consumers from being duped.

► Protection of jewellery— Global trend

United States: Under the US law, the Copyright Act of 1976 gives a work copyright protection from the moment it is created (as long as it is original and has been fixed in a physical medium of expression) and allows a work to be legally registered with the copyright office. The copyright office needs proof of originality as outlined in the Copyright Act and the Supreme Court case Feist Publications Inc. v.Rural Telephone Service Co. Inc.21 to acquire registration.

While copyright generally protects a jewellery design from the start, a trademark can only protect a design once it has been on the market for at least five years and the maker or designer has invested a significant amount of time and money into it.

In Yurman Design v.PAJ22 the plaintiff “Yurman” wanted copyright and trade dress protection for whole range of products it was argued that PAJ had violated copyrights and trade dress rights for certain jewellery which had “the creative combination of cable (jewellery) with other components” the Court held the trade dress claim was excessively broad and did not properly explain the precise common features intended to be protected. Consequently, the Court determined that, while Yurman’s copyright in its distinctive cable braided pattern was sufficiently unique, it failed to define the components and qualities that distinguish its trade dress thus, it was awarded copyright but not the trade dress.

Later in Yurman Design v.Golden Treasure Imports Inc.23 Yurman filed another trade dress infringement suit against a different defendant for identical designs. Yurman did not attempt to protect the trade dress of a whole line of jewellery without referring to specific parts, but rather laid out all the numerous designs as contained in specific pieces of jewellery, trying to protect the trade dress of each item separately. In response, the Court determined that its description was enough and gave it protection. Thus, while one aspect of jewellery design may appear in several pieces from the same source, owners seeking trade dress protection should specify the protection sought in each unique design in the collection.

United Kingdom: Every object sold as precious metal (gold, silver, or platinum) in the United Kingdom must be examined and hallmarked by an independent third-party assay office to ensure that the metal is of the quality indicated by the retailer, according to the British Hallmark Act, 1973. Copyright protection is available in the United Kingdom as long as your jewellery design is substantially distinctive and unique. In order to defend the rights, there is a need to establish ownership as well as the date your jewellerywas created. Designs are automatically protected by “design right” which means that using them for any purpose without the owner's consent would be a patent infringement. Any violation of design or copyright (such as by other jewellers) would empower the IP holder to file a civil lawsuit to recover damages. Unregistered design rights are only granted to three-dimensional designs in the United Kingdom. To protect a two-dimensional design, the intellectual property office (IPO) recommends filing a registration application with the UK Designs Registry.

► Contractual protection

For a jewellery line, there maybe a case where they maybe hiring third-party contractors for different tasks such as advertisement, celebrity endorsement, designers, manufacturers, etc. A good and watertight agreement is the need of the hour in such transactions as it is not just a question of money but also of goodwill, quality, and four cornered protection. A poorly drafted contract or an arrangement without a contract may lead to either poor services or any liability which is uncalled for. Hence, while developing a business and even till the end, rock solid contracts are the most important factor to be taken care of. A contract not only ensures clarity of terms but also givesjewellers a way to transcribe the best practices in the industry in clear words. More often than not, the jewellery industry, even after being one of the most lucrative industries, faces a good attrition rate. Hence, it becomes far more important for an employer to ensure effective employment agreements and policies to be in place as it will not only ensure fair terms with employees but will also help in protecting the designs and secrets of a jeweller and its business.

► Conclusion

The abovementioned IP rights protect the interests of the creators while the rights of the buyers are protected by bodies like BIS through tools like Hallmarking. Under the Indian regime, we can claim copyright on jewellery sketches/drawings under the copyright laws. When it comes to the DesignsAct, the pattern, form, and colour of jewellery can all be claimed as protected. The TM Act protects the name, logo, domain name of a jewellery brand. Patent law may protect the unique process of making a piece of jewellery and geographical indication may protect traders of a particular area producing a unique set of articles which represents their area. Almost all countries have a common basis for granting IP rights for jewellery i.e. originality but there are different tools through which they can be protected, and damages granted for breach vary exponentially.

The monetary penalty in countries like UK and US seems to be exponentially higher as compared to India and this shall also be followed in India to deter wilful infringers. Also, the jurisprudence regarding e-commerce seems much more advanced in countries like US and UK as they seem to provide better protection to consumers. Thus, the Indian legislature as well, as the judiciary, shall thrive to bring the relevant jurisprudence at par with modern needs. A need for such protection and safeguard arises more as industry and the methods of doing business are evolving and transitioning from one mode to another. A consumer can now at its comfort, see, explore, and purchasejewellery articles from sellers all over the country. Such a transition is not only opening new doors and new opportunities but also inviting new and advanced threats to businesses. These are the times where it is important for a jeweller to upscale his/her business with the right legal and IT protections. These times also call for industry bodies and the lawmakers to make more stringent laws and policies for ensuring the industry thrives in the long run.

† Co-Founding Partner at Chambers of Jain and Kumar. Author can be reached at

†† Partner at Chambers of Jain and Kumar. Author can be reached at

The views expressed in this paper are the personal views of the authors.

3. Trade Marks Act, 1999.

4. Trade and Merchandise Marks Act, 1958 under clause (d) of S. 9 refused the registration of surname as trade mark.

5. Mahendra and Mahendra Seeds (P) Ltd. v. Mahindra & Mahindra Ltd., 2002 OnLine Guj 324.

6. Prathiba M. Singh v. Singh and Associates, 2014 SCC OnLine Del 1982.

7. Copyright Act, 1957.

8. Ritika (P) Ltd. v. Biba Apparels (P) Ltd., 2016 SCC OnLine Del 1979.

9. Designs Act, 2000.

10. 2009 SCC OnLine Del 1647.

11. Patents Act, 1970.

12. Patents Act, 1970, S. 2.

13. Tabitha Cassidy, “US Jewelery Retailers Grow Online Sales 22.5% in 2020”,DigitalCommerce 360, accessible at <>.

14. 2018 SCC OnLine Del 12215.

15. Michael Pearl, “Pandemic Creates E-commerce Risks for Jewelers”, accessible at <>

16. Nishtha Grover, “Valentine’s Day Scam: Fake Website Imitates Jewellery Brand, Phishes Couples”, accessible at <>.

17. Seth Adler, “Jewellery Chain Claire's Hit by e-Commerce Mageware Attack”, accessible at <>.

18. Bureau of Indian Standards Act, 2016.

19. <>.

20. Mandatory Hallmarking Order, dated 1-6-2021>, accessible at <>

21. 1991 SCC OnLine US SC 46 : 113 L Ed 2d 358 : 499 US 340 (1991).

22. 98 Civ. 8697 (RWS) (SDNY 11-7-2001).

23. No. 00 Civ. 0202 (JGK) (SDNY 30-7-2003).

Reserve Bank of India
Legislation UpdatesNotifications


On 28-08-2022, Reserve Bank of India (‘RBI') notified that for smooth functioning of the Regional Rural Banks (‘RRBs') and to ensure smooth implementation of Clause 77 of the Master Direction- Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 (‘MD-TLE') notified on 24-09-2021, the difference between the carrying value of Security Receipts (‘SR') should be calculated over a 5-year period starting with the financial year ending 31-03-2022.

According to Clause 77 of MD-TLE, investments by lenders in SRs issued by Asset Reconstruction Companies (‘ARC') must be valued periodically by calculating the Net Asset Value declared by the ARC based on the recovery ratings received for such instrument. The circular “Guidelines on Sale of Stressed Assets by Banks, excludes the RRB from its ambit. Hence, to provide a glide path for the RRBs it is advised that in respect of valuation of investments in SRs outstanding on the date of issuance of MD-TLE ie.24-09-2021 these have to be followed:

  1. The difference between the carrying value of such SRs must be provided over a 5-year period starting with the financial year ending 31-03-2022: FY2021-22 till FY2025-26.

  2. Subsequent valuation of investment in such SRs should be strictly in compliance with provisions of MD-TLE.

Experts CornerKhaitan & Co

Union Budget 2022-2023 provides the right impetus for climate action and energy transition and is a welcome step towards transition to a carbon neutral economy in India. This is in line with the “panchamrit” strategy for achieving climate targets announced by the Prime Minister (PM) in COP26 – that among other things aimed at increasing India’s renewable energy capacity to 500 GW by 2030. Budget has a clear focus on the renewable energy sector, laying down the blueprint for the same in the “amrit kaal” with initiatives like clean and sustainable mobility in urban areas, energy service company business model for conservation of energy in large commercial buildings, increased allocation towards production linked incentive (PLI) scheme to ensure manufacture of high efficiency solar PV modules as well as green bonds for clean energy financing.


While expansion of infrastructure remains the primary agenda of this year’s budget with PM Gati Shakti Master Plan taking the centre stage, the Government has retained focus on climate action by recognising energy transmission and social infrastructure as complementary forces in promoting the economy. The growth-oriented and climate-friendly budget, with increased capex outlay of INR 7.5 lakh crores, demonstrates the Government’s intent to facilitate transition towards clean energy.


Increased emphasis on energy transition and climate action in the budget, in addition to the PM announcing ambitious climate targets to be achieved by 2030, has created immense opportunity across various sectors within the green infrastructure sector in India, including development of sustainable and innovative business models for energy storage, 4 pilot projects for coal gasification and transition to clean and sustainable mobility in urban areas with a zero fossil fuel policy and an  EV ecosystem. Additionally, allocation of INR 19,500 crores under the PLI scheme to facilitate increase in solar power production through manufacture of high efficiency solar PV modules is a step ahead towards achieving the renewable energy capacity of 500 GW in India, as also an opportunity to increase participation of private players. The aforesaid allocation under the PLI scheme is a favourable measure for waitlisted PLI bidders and will bolster the domestic solar manufacturing ecosystem. However, achieving a 500 GW renewable energy capacity in India would mean addition of about 62 GW every year for the next 8 years, which would require large investments and a framework for long-term financing. An effective strategy to meet the above requirement is to utilise the thematic funds for blended finance which would garner confidence amongst private parties to increase investment in infrastructure for production of other sources of renewable energy such as wind, hydro power and green hydrogen, in addition to solar power. The blended finance model introduced in this year’s budget is similar to the viability gap funding of the Government for financial support to PPP projects, with the exception that the management of funds has been entrusted upon private fund managers. It will be interesting to see the operating framework the Government will adopt to put in motion the virtuous cycle of investment, where public investment will help crowd-in private investment, potentially increasing the commercial viability of PPP projects manifold.


In order to optimise private participation and investments in green infrastructure, a revised procurement policy with specific relaxations to bid criteria in public procurement of projects, including measures such as Finance Minister (FM) announcing acceptance of surety bonds instead of bank guarantees and a single platform for green clearances, will be welcome. This will attract private players and help create a level playing field for Indian bidders as well as foreign bidders already in the country and those intending to enter the country, thereby improving competition and enabling efficiency in the green energy sector.


Further, an important incentive for clean energy financing is the sovereign green bonds initiative announced by the FM, which, tied in with the push in capex, is expected to become a key driving force in achieving India’s carbon emission reduction target. While the green bond market in India is still in its nascent stage, introduction of sovereign green bonds will potentially have twofold benefits: (i) being an indication of the Government’s commitment towards climate action and sustainable development, it will foster trust amongst private investors and attract capital towards green investments; and (ii) it will give impetus to the development of the domestic green bond market in India. However, we expect further clarity from the Government on the strategy for issuing green bonds, in the absence of which there could be several challenges in implementation.


The Union Budget 2022-2023 exhibits an overall paradigm shift towards environment consciousness, apart from economic growth and it will be noteworthy to see how the Government will plan the implementation of climate-friendly strategies to realise its carbon-neutral ambition.

† Partner, Khaitan & Co

†† Associate, Khaitan & Co

Op EdsOP. ED.

The travaux préparatoires of the Convention on Settlement of Investment Disputes between States and Nationals of Other States

The Convention on Settlement of Investment Disputes between States and Nationals of Other States (hereinafter “the Convention”) established the International Centre for Settlement of Investment Disputes[1] (ICSID). The Convention was formulated by the Executive Directors of the International Bank for Reconstruction and Development (World Bank). On 18-3-1965, the Executive Directors submitted the Convention, with an accompanying Report, to member governments of the World Bank for consideration with a view to its signature and ratification. The Convention came into force on 14-10-1966 when it was ratified by 20 countries. As on date, there are 155 signatory States to the Convention.

A dive into the travaux préparatoires[2] of the Convention, shows that the Convention was drafted in three stages, an initial drafting process at the World Bank, a series of regional meetings where legal experts from participating States reviewed and discussed the World Bank’s draft and then finally a convocation of member State delegates for the Legal Committee that rewrote the document for the final approval by the World Bank Executive Directors[3].

The first draft of the Convention, prepared by renowned jurist Aron Broches, did not impose any subject-matter restrictions on the proposed dispute resolution facility, the first draft proposed extending the Centre’s jurisdiction to any disputes between contracting States and nationals of other contracting States. The only preconditions in this draft were that the Centre would have jurisdiction through the mutual consent of the parties and provided that the sum in dispute was at least $100,000. The text of the first draft contained no reference to the need for an underlying “investment” as a precondition for invoking the jurisdiction of the Centre[4].

This first draft then proceeded to the second stage and was placed before the Regional Committee of experts. The Memorandum of their meetings suggest that there were concerns about the open-ended language of the first draft of the Convention in so much that any conceivable dispute between individuals and foreign Governments would be covered. It was accordingly proposed that only disagreements concerning legal rights, contractual rights or property rights, rather than political or commercial disputes be the subject-matter of the Convention. One notes that even at this stage there was no overt articulation for the need for an investment as a prerequisite to invoke the jurisdiction of the Centre[5].

The draft then went through an internal review at the World Bank over the course of one year, the Executive Directors of the World Bank and its staff generally agreed that the jurisdiction of the Tribunal could not be left open ended but they were equally concerned about having an excessive, specific or technical hurdle which would foreclose access to the Centre[6].

The next draft of the Convention which arose from the aforementioned round of internal discussions was circulated in October 1963. It tried to find a middle ground by limiting the Centre’s jurisdiction to proceedings regarding “any existing or future investment dispute of a legal character as opposed to a political, economic or purely commercial dispute[7].

After four rounds of expert meetings broadly speaking the members were divided into two camps with one proposing that a wide range of disputes be referred to ICSID while the other suggested that matters or claims which were based on regulatory politics or unapproved investments be excluded from the jurisdiction of the Tribunal. The next draft circulated by the staff of the World Bank in September 1964 retained the restriction on the Centre’s jurisdiction to only disputes arising out of “any investment”. As a further note of interest, for the first time, the draft proposed a definition of the term “investment” as “any contribution of money or other asset of economic value for an indefinite period or, if the period be defined, for not less than five years[8].

This draft was placed before the Legal Committee on settlement of Investment Disputes, where once again the aforementioned fault lines emerged and since no resolution was possible, the entire issue was transferred to a working group[9]. The impasse was so serious that the working group was unable to reconcile the differences between the two groups[10].

The issue was reopened by the Legal Committee on 8-12-1964 where the United Kingdom proposed a solution that resulted in a compromise yielding the jurisdictional definition and structure of ICSID that exists today. The solution proposed contemplated a wide-open jurisdiction for ICSID with the option for individual states to opt-out or limit the jurisdiction on an individual basis. The draft proposed by the United Kingdom proposed three things namely that the jurisdiction of the Centre be retained over “investment” disputes, that while there was to be no definition of what would constitute an investment its text introduced a sub-section for states to notify signatories of the categories of disputes that they would not consider submitting to arbitration[11].

The Convention as revised in the manner previously mentioned, received support from members of both factions and as a result the Legal Committee adopted essentially the version of Article 25 of the Convention as it exists today, extending the jurisdiction of the Convention “to any dispute of a legal character, arising directly out of an investment”. It also created a notification process whereby member States were to notify the category of cases they were unwilling to submit to the jurisdiction of the Centre[12].

The Report of the Executive Directors which accompanied the Convention and invited signatures and ratification by member States explained that “no attempt was made to define the term “investment” given the essential requirement of consent by the parties, and the (notification) mechanism through which contracting States can make known in advance, if they so desire, the classes of disputes they would or would not consider submitted to the Centre[13].

Here may be an appropriate moment to revert back to the Schrödinger thought experiment, where a cat, a flask of poison and a radioactive source are placed in a sealed box, because of which it could not precisely be said whether the cat were dead or alive without actual observation by a subjective observer. Niels Bohr, a scientist had proposed that a radioactivity measurement device placed inside the box would dispel the need for an external observer and hence, answer the question as to whether the cat was alive or dead within the box with precision.

The Convention as it arose from the various rounds of debate, did not include any measurement device, in the form of a definition, limitation by which one could with an element of precision define what constituted an investment, requiring the “box to be opened” so to say so that its contents could be observed by an external observer namely the ICSID Tribunals before whom disputes were brought.

Icsid Tribunals and their observations on the notion of investment

The Convention was ratified in the year 1966 and the first case came to be filed before ICSID in the year 1972. There was only one case filed that year and cases remained in the single digits until the latter half of the 1990’s. ICSID has seen an average of 40 cases filed annually between the years 2011-2021[14].

With an increase in the number of cases being filed before ICSID, the opportunities for ICSID Tribunals to analyse the concept of investment and incidental enquiries increased. Each case in the opinion of the author has proven to be a unique thought experiment of sorts.

In 2001, Christoph Schreuer (Schreuer) wrote his treatise on the ICSID Convention[15] where he suggested the five typical characteristics of an investment as being (a) a certain duration of the enterprise;(b) a certain regularity of profit and return; (c) an assumption of risk;(d) a substantial commitment by the investor; and (e) some significance for the host State’s development[16].

Schreuer did not intend for the aforesaid to be a prescriptive test to determine whether or not a given venture was an investment, ICSID Tribunals have apparently adopted it as one. This is particularly problematic given what we have seen from our discussion on the travaux of the Convention and in particular the discarding of limitations of quantum, significance and duration of the investment during the development of the Convention[17].

The first case which I would like to review is the ruling in Salini Costruttori SpA and Italstrade SpA v. Kingdom of Morocco[18]. The claim in these proceedings was made by two Italian construction companies for unpaid sums due to them for construction of a major motorway within the Kingdom of Morocco. At the time as noted by the Tribunal, there had been no major pronouncement on what constituted an investment for the purposes of Article 25 of the Convention. The only prior instance of any guidance was the refusal by the Secretary General of ICSID to register a request for arbitration arising out of a simple sale[19]. Although, Article 25 does not prescribe any qualifications or limitations on what would constitute an investment, the Tribunal nevertheless recorded that “generally” the term investment infers: contributions, a certain duration of performance of the contract and a participation in the risks of the transaction which add to the economic development of the host State of the investment[20]. It then went on to examine whether these “requirements” had been met in the facts of the case[21]. The basis for this reasoning of the Tribunal was nothing but its own ipse dixit accumulated from general descriptions of what were the elements of investment found in commentaries on Investment Arbitration[22] and from a reading of the Preamble to the Convention which records that reads the contracting States “considering the need for international cooperation for economic development, and the role of private international investment therein”. The law with respect to interpretation of statutes however, regards the views expressed by authors and/or legal scholars on the meaning of legal text as being merely persuasive and these rules resort to the Preamble as an internal aid in construction only in cases where the provision in question were ambiguous[23]. We have already seen that the requirements for a duration of the investment had been expressly removed from the text of an earlier draft of the Convention along with certain other qualifiers. Hence, one could argue that to read this qualification into Article 25 especially when the travaux préparatoires showed a clear intention to not include any such condition precedent is not justified[24].

A completely different perspective was taken by the Arbitral Tribunal in Patrick Mitchell v. Democratic Republic of Congo[25]. The case pertained to the confiscation and forced closure of the legal practise of Mr Patrick Mitchell, an American attorney in the Democratic Republic of Congo. There the Tribunal held that “in the absence of any indication directing to the exclusion from the scope of the Treaty of particular activities that may be considered as services, such a concept should be given a broad meaning, covering all services provided by a foreign investor on the territory of the host State”. In its award, the Tribunal also expressly rejected considerations of any objective requirements of an investment such as its term, its significant contribution to the State’s economy, etc. as not being formal requirements for the finding that a particular activity or transaction constitutes an investment[26]. The Democratic Republic of Congo challenged the award in annulment proceedings but was unsuccessful.

The early jurisprudence of ICSID thus produced two completely different thoughts on the notion of an investment for the purposes of the Convention. One case saw the Tribunal introduce a test in order to verify whether there had been an investment and the other the Tribunal expressly refusing to enter into any such examination noting that the Convention did not call for it. In both cases however the Tribunal held that it had jurisdiction.

In Banro American Resources and Societe Aurifère du Kivu et du Maniema SARL v. Democratic Republic of the Congo[27] the Tribunal was asked to give its finding on whether the investment in question was made by a national of another contracting State. In this case Banro Resource (the parent company) a Canadian entity had invoked the jurisdiction of ICSID through its Congolese subsidiary. Canada was not a signatory of the Convention and Banro American Resources was not a signatory of the Mining Treaty in question. The Tribunal by majority, held that it was willing to deem the American subsidiary as a signatory to the Mining Treaty through its holding company Banro Resource and its Congolese subsidiary company, but that it was unwilling to exercise jurisdiction as the parent company had utilised diplomatic means of protection. The question as to whether the investment was made by a national of a contracting State really remained unanswered, though having held that Banro American Resources was deemed to be a party to the Mining Treaty in question there could only have really been one answer.

In TokiosTokelés v. Ukraine[28],the majority took the view that the method adopted by the Tribunal in Banro[29] noted above was not the proper approach to define the nationality of the claimant. The Tribunal ruled that it could not and did not need to pierce the corporate veil in order to determine the identity or source of the investment and would determine the identity of the claimant basis its country of incorporation.

Again, we find two different ICSID Tribunals coming to two completely different conclusions whilst interpreting the same terms of the Convention. Here of course, not only did the Tribunals approach the problem differently they also arrived at opposite conclusions.

In conclusion, it is an undesirable state of affairs that the Tribunals come to divergent views on the same legal terms and provisions. Provisions of law are not experiments and litigants are not metaphysical cats to be whimsically subjected to these experiments. It is essential that the law have certainty and clarity. To propose for a limited or expansive view is itself a thought experiment and this is not what the author proposes to suggest. The history of the Convention and in particular the problems faced by its draughtsmen is a forewarning as it would appear that the Convention has once again been dragged back into the tug of war match between two rival perspectives leaving one guessing as to whether the investment is alive or dead.

*Independent Arbitrator and practising Advocate of Bombay High Court.

[1]ICSID Convention, Regulations and Rules, ICSID/15 (April 2006). <>.

[2] The History of the ICSID Convention, International Centre for Settlement of Investment Disputes.


[3]Aron Broches, Development of International Law by the International Bank for Reconstruction and Development, 59 AM. SOC’Y INT’L PROC. 33 (1965).

[4] Working Paper in the form of a Draft Convention (5-6-1962) in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968).

[5] Memorandum of the Meeting of the Committee of the Whole, 52 (5-6-1963) in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at p. 96.

[6]Memorandum of the Meeting of the Committee of the Whole, 52 (5-6-1963) in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at p. 96.

[7]Preliminary Draft of a Convention on Settlement of Investment Disputes between States and Nationals of Other States, Art. II (15-10-1963) in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at p. 204.

[8] Draft Convention on the Settlement of Investment Disputes between States and Nationals of Other States (11-9-1964), in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at p. 623.

[9] Summary Proceedings of the Legal Committee Meeting (27-11-1964, Morning), in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at p. 711.

[10]Report on Scope of Jurisdiction of the Centre, Arts. 26, 29 (7-12-1964), in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at p. 828.

[11]Summary Proceedings of the Legal Committee Meeting (27-11-1964, Morning), in History of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 59 (1968) at pp. 821-822.

[12] A thorough and elaborate discussion on the history and travaux of the Convention can be found in: The Meaning of “Investment”: ICSID’s Travaux and the Domain of International Investment Law by Julian Davis Mortenson published in Vol. 51 of Harvard Internal Law Journal (2010).

[13] Report of the Executive Directors of the International Bank for Reconstruction and Development on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18-3-1965.

[14] ICSID Caseload Statistics, Issue 2021-22.

[15] Christoph Schreuer, The ICSID Convention:  A Commentary (2001).

[16] Christoph Schreuer, The ICSID Convention:  A Commentary (2001), at p. 122.

[17] This has however not been understood by ICSID Tribunal’s and in cases like Phoenix Action Ltd. v. Czech Republic, ICSID Case No. ARB/06/05, dated 6-4-2007, the Tribunal has applied this test as if it were an objective parameter to determine what were an investment.

[18] (2003) 42 ILM 609.

[19] 18I.F.I. Shihata and A.R. Parra, The experience of the International Centre for Settlement of Investment Disputes: ICSID Review, Foreign Investment Law Journal Vol. 14 (No. 2), 1999 at p. 308.

[20]Salini Costruttori SpA and Italstrade SpA v. Kingdom of Morocco, (2003) 42 ILM 609, para 52.

[21] Salini Costruttori SpA and Italstrade SpA v. Kingdom of Morocco, (2003) 42 ILM 609, paras 53 to 58.

[22] D. Carreau, Th. Flory, P. Juillard, Droit International Economique: 3rd Ed., Paris, LGDJ, 1990, p. 558-578.

  1. Schreurer, Commentary on the ICSID Convention: ICSID Review – FILJ, Vol. 11, 1996, pp. 318-493.

[23]Motipur Zamindary Co. (P) Ltd. v. State of Bihar, AIR 1962 SC 660; Sita Devi v. State of Bihar, 1995 Supp (1) SCC 670.

[24] Reference under Art. 317 (1) of the Constitution of India, In re, (1983) 4 SCC 258.

[25] Case No. ARB/99/7, award dated 9-2-2004, para 24.

[26] Case No. ARB/99/7, award dated 9-2-2004, para 24.

[27] ICSID Case No. ARB/98/7, dated 1-9-2000.

[28] ICSID Case No. ARB/02/18, dated 29-4-2009.

[29] ICSID Case No. ARB/98/7, dated 1-9-2000.

Experts CornerTarun Jain (Tax Practitioner)


It was under the shadow of a war that India introduced two major fiscal legislations; the Income Tax Act, 1961 and the Customs Act, 1962, paving way for tax policy of independent India. Both legislations have witnessed umpteen amendments to accommodate the shifting priorities of the incumbent Governments and are now well past their sell-by date. In respect of customs, no fundamental alteration is required as the law is mostly aligned to the international framework[1] which ensures that it stays abreast with the changing times. However, the framework of the income tax law – notwithstanding the tide of significant policy changes and amendments to reverse the judicial pronouncements – continues to wheel the Indian economy like a patchy retreated tyre.


Earnest attempts to bring about holistic changes have not yielded fruit despite the Direct Taxes Code of 2009,[2] the Direct Taxes Code Bill, 2010,[3] followed with a 2013 Bill,[4] all of which lapsed. Thereafter, another fresh attempt in recent past by an Expert Committee in 2019[5] seems to have met the same fate. This is so despite the fact that substantial changes have been made in the income tax policy and law. To enumerate certain landmark changes, the 2016 black money legislation[6]; 15% corporate tax rate for new manufacturing entities announced in 2019;[7] India’s digital services tax i.e. the 2020 Equalisation Levy;[8] Taxpayers’ Charter;[9] scheme for faceless assessments, appeals, penalties;[10] the new scheme for reopening of assessments unveiled in 2021;[11] etc. are some of the path-defining measures. However, their fullest potential cannot be realised given the limitations inherited under the old framework. It is not a surprise, therefore, that the Supreme Court recently implored the Parliament, particularly the draftsmen, to frame simpler tax laws which do not scuttle the taxpayers’ ability to carry out their affairs.


Recent decision of Supreme Court

September 9 decision of the Supreme Court in South Indian Bank[12] is a quintessential illustration on why the founding premise of the tax law needs to be revisited. The decision has been rendered in the context of Section 14-A of the Income Tax Act which disallows claim for expenses which are incurred for earning tax free income.[13] This single provision, which was inserted in 2001, has seen more than its fair share of litigation. Notwithstanding the correctness of the underlying premise,[14] stretched interpretation of the law and an indiscriminate and patchy implementation has resulted into multiple and tiresome controversies. In its two decades of existence, it has engaged the Supreme Court more than 25 times and cluttered the dockets of the tax tribunals and High Courts.


This part of law illustrates that an over-empowered tax administration results into ad hoc stances. It is routinely invoked by tax officers who insist that a proportional disallowance to the ratio of average investments to average assets is mandatory.[15] The application of this provision and the accompanying subordinate legislation[16] warrants a closer look at the minutest of facts of a business enterprise during the assessment stage, which have to be subsequently revaluated at multiple appellate levels in the tax litigation system. In most cases, the disallowance is pressed upon to require businesses to justify whether the expenditure is not just directly related to exempt income but also to rule out its indirect linkage.[17]

The practice of ad hoc disallowance may appear to be trivial but it indicates a discomforting scenario. It not only obliges business to incur more compliance costs, but also disproportionately influences business choices, making them perennially sceptical of Tax Department’s outlook, and perpetuates a penny wise pound foolish quandary.


The Supreme Court decision, echoing Adam Smith’s canon of certainty in tax law, seeks to impress upon the Government that “it is the responsibility of the regime to design a tax system for which a subject can budget and plan”. The Supreme Court has unhesitatingly implored upon the Government to ensure a fair balance of taxpayers’ entitlements such that “unnecessary litigation can be avoided without compromising on generation of revenue”. The observations of the Court, therefore, could not have come at a more appropriate instance. The Government must, however, go beyond. It must reinstitute the tax system such that it scuttles the tax officials’ urge to assume the role of the corporate managers and review their decisions from a tax expediency perspective. In other words, the Department should not be permitted to put itself in the shoes of the taxpayer to assess how a prudent businessman should operate.[18]


Aspirational cravings

The ambitious outlines of the Government, to make India a 5 trillion dollar economy[19] and an economic powerhouse, cannot be achieved with an outdated tax system. The recent withdrawal of 2012 retrospective amendment[20] reveals that the Government is not shy of undertaking bold course correction measures. Having undone all legacy issues, it is time for reforming the administration and functioning of officials. All bets now rest on the faceless assessment scheme, which has had a rough start, given the clutch of writs issued by some High Courts on denial of natural justice and quashing of notices for fallacious reopening of past cases by application of old archaic provisions despite simplification brought into the statute.[21] One cannot over-emphasise the urgency for a new tax system which synergises (and not digests) the aspirations and energies of this reinventing nation, a tax system which facilitates business activity and does not scare away business or drive out investments with humongous compliances and energy sapping inspector-like approach of tax officers.


The Government of India must attempt a GST-like[22] rewriting of entire direct tax landscape which should be based on deep stakeholder consultations such that the progressive advancement of tax system is not replete with thorny issues. The basis premise of the law must be simple; business should focus on doing business without managing tax consequences and Tax Department should collect tax without sitting in judgment over how business should do business. The correct tax lawmaking process, which is usually centred around budget day, is too secretive and gives overwhelming powers to the tax bureaucracy and requires businesses to immediate react to the changes because, many of which are overnight. India can do well to take inspiration from advanced countries wherein lawmaking is a continuous process of stakeholder discussion and duly factors economic metrices and impact analysis before deploying the tax measure. Such system avoids a trial and error approach and obviates the need for frequent course correction measures which become inevitable when the measure has not been thought through. In short, the tax law must reduce avenues for friction.

† Tarun Jain, Advocate, Supreme Court of India; LLM (Taxation), London School of Economics.

[1]The Indian Customs policy and law is aligned to India’s participation and multilateral agreements inter alia under the aegis of (a) World Trade Organisation; (b) World Customs Organisation; and (c) Harmonised Commodity Description and Coding System (or Harmonised System).

[2] This was draft for public consultation. Available  HERE.

[3] Introduced in the Lok Sabha on 28-8-2010. Available HERE.

[4] Available at HERE.

[5] The Task Force on Direct Tax Code submitted its Report to FM Nirmala Sitharaman on 19-8-2019. For details, see HERE.

[6]The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

[7] For details, see, corporate tax rates slashed to 22% for domestic companies and 15% for new domestic manufacturing companies and other fiscal reliefs, (PIB 20-9-2019), available  HERE.

[8]Vide Chapter VI (Part VI) of the Finance Act, 2020 (amending provisions of Finance Act, 2016).

[9]Unveiled in year 2020. For details, see HERE.

[10]For details, see <HERE>.

[11]In terms of Ss. 40-45 of Finance Act, 2021 (amending Ss. 147-151 of Income Tax Act, 1961).

[12]South Indian Bank Ltd. v. CIT, 2021 SCC OnLine SC 692.

[13]“14-A. Expenditure incurred in relation to income not includible in total income.— (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.”

[14]In a detailed decision in Maxopp Investment Ltd. v. CIT, (2018) 15 SCC 523, the Supreme Court upheld the underlying premise of S. 14-A.

[15]For illustration, see CIT v. Jagson International Ltd., 2018 SCC OnLine Del 12874 opining that the mandatory conditionalities under the Income Tax Rules need to be satisfied before S. 14-A disallowance can be triggered and rejecting the stand of the tax authorities of automatically applying the provision.

[16]I.e. R. 8-D, Income Tax Rules, 1962.

[17]For illustration, see CIT v. Sociedade De Fomento Industrial (P) Ltd., 2020 SCC OnLine Bom 1896 : (2020) 429 ITR 207.

[18]For illustration, see recent decision of the Supreme Court in Shiv Raj Gupta v. CIT, 2020 SCC OnLine SC 589 where the “doctrine of commercial expediency” has been affirmed. In this case the Supreme Court inter alia observed that “a catena of judgments has held that commercial expediency has to be adjudged from the point of view of the assessee and that the Income Tax Department cannot enter into the thicket of reasonableness of amounts paid by the assessee”.

[19] For details, see Vision of a USD 5 Trillion Indian Economy, (PIB 11-10-2018), available HERE.

[20]Vide Taxation Laws (Amendment) Act, 2021 (Act 34 of 2021), assented by the President on 13-8-2021.

[21]For illustration, see Pooja Singla Builders and Engineers (P) Ltd. v. National Faceless Assessment Centre, 2021 SCC OnLine Del 4294, holding that even if principles of natural justice have been complied with, still the proceedings cannot be sustained if an order was passed without issuing a show-cause notice which is a mandatory statutory condition.

[22]See generally, Tarun Jain, One Year of “Goods and Services Tax” in India, available at HERE.

Case BriefsHigh Courts

Rajasthan High Court: A Division Bench of Indrajit Mahanty, CJ and Vinit Kumar Mathur, J., direct State to inform them regarding steps taken for restoring the land which has been dug-up during the course of operation of the mines.

The present petition was filed as the petitioner alleged that Bajari is extracted from river and once the extraction takes place it creates huge ditches in the river belt which restrict the flow of water and water gets collected in these ditches. Consequently, free flow of water in the river bay has been impeded.

The Court observed that at various locations within Rajasthan, Dams have been created by the State for providing drinking water to various urban establishments as well as water for Agriculture and Animal Husbandry. Since excavations have been taking place at river beds and big crevices have been formed, due to such excavation, water gets retained in such ditches and crevices and such water does not even travel and reach the Dams and the primary purpose of dams are not met.

It was illustrated before the Court that Ramgarh Dam created by the State where Asian Championship was once held, today probably for the reasons as noted here-in above practically no water exists in such Dams and water is being blocked at various locations, therefore, the State should take steps to stop all activities which impede natural flow of water for the larger purpose of providing drinking water to its citizens and animals as well as providing water for irrigation.

The Court thus directed the State “to file an affidavit of what steps the State propose for taking care of the situation as noted here-in-above.”

The case is next listed for 06-09-2021.[Kisan Vikas Sewa Samiti v. State Of Rajasthan, D.B. Civil Writ Petition No. 6300/2021, decided on 03-08-2021]

Arunima Bose, Editorial Assistant has reported this brief.


For Petitioner(s): Mr Arvind Shrimali

For Respondent(s): Mr Sandeep Shah

Cabinet DecisionsLegislation Updates

The Cabinet Committee on Economic Affairs considered and approved the proposal of Department for Promotion of Industry and Internal Trade for Central Sector Scheme for Industrial Development of Jammu & Kashmir. The scheme is approved with a total outlay of Rs. 28,400 crore upto the year 2037.

Government of India has formulated the New Industrial Development Scheme for Jammu & Kashmir (J&K IDS, 2021) as a Central Sector Scheme for the development of Industries in the UT of Jammu & Kashmir. The main purpose of the scheme is to generate employment which directly leads to the socio-economic development of the area. Considering the historic development of reorganization of Jammu & Kashmir with effect from 31.10.2019 into UT of Jammu & Kashmir under the J&K Reorganisation Act, 2019, the present scheme is being implemented with the vision that industry and service-led development of J&K needs to be given a fresh thrust with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones.

The following incentives would be available under the scheme:

  1. Capital Investment Incentive at the rate of 30% in Zone A and 50% in Zone B on investment made in Plant & Machinery (in manufacturing) or construction of the building and other durable physical assets(in service sector) is available. Units with investment upto Rs. 50 crore will be eligible to avail this incentive. Maximum limit of incentive is Rs 5 crore and Rs 7.5 crore in Zone A & Zone B respectively
  2. Capital Interest subvention: At the annual rate of 6% for maximum 7 years on loan amount up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets(in service sector).
  3. GST Linked Incentive: 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building and all other durable physical assets(in service sector) for 10 years. The amount of incentive in a financial year will not exceed one-tenth of the total eligible amount of incentive.
  4. Working Capital Interest Incentive: All existing units at the annual rate of 5% for maximum 5 years. Maximum limit of incentive is Rs 1 crore.

Key Features of the Scheme:

  1. Scheme is made attractive for both smaller and larger units. Smaller units with an investment in plant & machinery upto Rs. 50 crore will get a capital incentive upto Rs. 7.5 crore and get capital interest subvention at the rate of  6% for maximum 7 years
  2. The scheme aims to take industrial development to the block level in UT of J&K, which is first time in any Industrial Incentive Scheme of the Government of India and attempts for a more sustained and balanced industrial growth in the entire UT
  3. Scheme has been simplified on the lines of ease of doing business by bringing one major incentive- GST Linked Incentive- that will ensure less compliance burden without compromising on transparency.
  4. Scheme envisages greater role of the UT of J&K in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved
  5. It is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of J&K face
  6. Earlier schemes though offered a plethora of incentives. However, the overall financial outflow was much lesser than the new scheme.

Major Impact and employment generation potential:

  1. Scheme is to bring about radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones, thereby enabling J&K to compete nationally with other leading industrially developed States/UTs of the country.
  2. It is anticipated that the proposed scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons. Additionally, because of the working capital interest subvention the scheme is likely to give indirect support to about 35,000 persons.

Expenditure involved:

The financial outlay of the proposed scheme is Rs.28,400 crore for the scheme period 2020-21 to 2036-37. So far, the amount disbursed under various special package schemes is Rs. 1,123.84 crore.

Cabinet Committee on Economic Affairs (CCEA)

[Press Release dt. 07-01-2020]

[Source: PIB]

Op EdsOP. ED.


Bilateral Investment Treaties (‘BIT’) establish the terms and conditions for private investments made by individuals and business entities from one sovereign State into other sovereign State[1]. The first ever BIT was entered between Germany and Pakistan on November 25, 1959[2] and since then, the BITs have evolved in an unprecedented manner.  However, the genesis of across the border investments is very old and can be traced back to the colonial periods and multifold investments across the territory of India were made but one could not have argued against the vile intricacies of the investment back then before an investment arbitral tribunal[3]. However, with the passage of time, the modalities of investments have changed and now the investments are made under binding agreements and disputes arising therein are resolved qua dedicated investment tribunals working under different conventions and rules.

The disputes arising out of a BIT are not a contractual dispute as such because there is no privity between the parties. Perhaps, that is the reason why, investment arbitration is also known as arbitration without privity[4]. The disputes that arise between the parties of the BIT are between two States so, the entire dynamics of such an arbitration is different as what one would usually observe in a domestic arbitration. A commercial arbitration is based on an arbitration agreement, whereas investment arbitration may be based on either an investment treaty or a bilateral/multilateral treaty.

India as one would recall was rather a closed economy prior to the 1991 economic liberalisation but after the 1991, the Indian economy underwent some major structural changes. For the very first time, countries all around the world were encouraged to invest in India and the Indian economy saw liberalisation to reach new heights.

Bilateral Investment Treaty: Indian Context

The BIT primarily came into picture to safeguard the investments which were made by different countries. An investment across the borders is generally a long term relationship and the investor look for certain level of safety before making the investment. The BITs do not afford protection such as insurance coverage for the investments rather it devolves a mechanism to resolve the disputes arising during the tenure of investment. India signed its first BIT in 1994 with the United Kingdom. Since, 1994, India has signed around 84 BITs out of which according to the latest data, currently, there are 14 BITs which are in force, 58 out of 84 BITs have been terminated. In addition to the BITs, India has also entered into Comprehensive Economic Cooperation Agreements (‘CECA’) which covers issues like investment, trade, intellectual property rights, etc. India has also contemplated the idea of entering Foreign Treaty Agreements (‘FTA’) with European Nations[5].

As per the recent data, India is ranked among the top 10 nations in the world for the inbound Foreign Direct Investment (‘FDI’)[6] and among the top 20 for the outbound FDI. In last five years, FDI inflow in India has increased by 11.5% totalling to around 62 billion dollars in the FY 2018-2019. In the same financial year, the outbound FDI also rose up to 11 billion dollars. The uprising in the quantum of FDI is a result of unprecedented change in the Indian FDI policy. India has now allowed FDI in Defence[7], Telecom[8], Information and Broadcasting, etc. India had also increased its FDI capping in E-commerce[9] and Insurance[10] sector from 49% to 100% which has seen massive investments being made by foreign entities in the Indian companies. India has also worked towards promoting ‘ease of doing businesses’ with dedicated ministry and departments.

Institutions adjudicating investment Arbitrations across the world 

There are institutions across the world which governs different investment arbitration more specifically depending upon to which institution the parties agree to submit their disputes. The mechanism in such arbitration is just like an international commercial arbitration. The tribunal under the various institutions primarily adjudges behavior of the host States towards a foreign investor. The International Centre for Settlement of Investment Disputes (ICSID), International Chamber of Commerce International Court of Arbitration (ICC) and Stockholm Chamber of Commerce (SCC) are preferred arbitration institutions by the parties. Generally, where a bilateral investment treaty exists, investors are free to bring arbitration actions in any of the arbitration institutions as identified in the said treaty.  Most of the BITs provide for a mechanism of dispute settlement through any of the arbitral institutions as mentioned above[11].

Underlying facets of BIT

BIT has many facets to it, however, there are a few underlying facets of BIT which holds great significance. They have been enlisted and discussed below[12]:

a) Fair and Equitable Treatment (FET): FET is considered to be one of most frequently invoked facets in a BIT. When an investor invests into a country, an expectation of fair and equitable treatment comes on a pretext of a healthy competition with the local/domestic players of a host country. However, it is pertinent to consider that the contours of its deciphering may differ with the specific wording/nomenclature of the specific clause as mentioned in a BIT.

b) Protection from Expropriation: Expropriation can be understood as nationalisation of assets of a foreign investor or taking any such measures which have similar effects as that to a right of property of an individual. Prevention against expropriation is the fundamental principle of International Law and hence, it holds out as a very significant facet of a BIT. A foreign investor would apprehend the prospects of expropriation as generally the quantum of investments made is very high.

There is also a concept called ‘creeping expropriation’ which means that the economic value of the investment has been eaten out to such a level that it virtually becomes worthless[13].

c) Most Favoured Nation Treatment (MFN): It is one of the most alluring facets of a BIT. The MFN clause ensures that a foreign investor will get all the advantages within the four walls of the highlighted clause in a BIT with respect to the investment made in the host State. It boasts the confidence of the investor State as MFN status invariably promises to treat the foreign investor at par with all the domestic investors of the host State.

d) Full protection and security: The host State is under an obligation to ensure that the investments made by a foreign investor is protected and secured. The protection herein is multifold as the host State should protection of the employees, assets, facilities associated with the investment. The said clause of protection and security may also include guarantee and security provided by the host State.

e) National Treatment: It is one of the responsibilities of the host State that it treats the foreign investor equally as its domestic investors and market players. It is also to ensure for the host State that the foreign investors are made available all the competitive opportunities as may be available with any of the domestic players.

f) Freedom to transfer funds: It is one of the primary responsibilities of the host State under a BIT to ensure that a foreign State is able to transfer the returns from the investment to their own country and in their own currency. It also comes in as one of the most sought out clauses in a BIT as smooth realisation of funds/returns from an investments attract more investors in a host State.

g) Sunset Clause: Sunset clauses are regarded as survival clauses. A general sunset clause will include a period of 5 years and longest could go up to 25 years. For instance, China and India entered BIT into 2007 but the BIT got terminated in 2017[14]. The termination would ideally mean an exit for the parties to the BIT but such survival clauses in the BITs complicate the exit route. The process of denunciation becomes cumbersome if the BITs are not negotiated between the parties prudently which could result in having such a clause in the BIT.

h) Fork in the road clause: In the Model BIT, 2016, an investor ideally has to explore all the domestic redressal avenues before approaching the investment arbitral tribunals. However, in few of the agreements, the investors have an option of either moving before domestic courts and tribunals or to move before the investment tribunals. Such a clause is known as fork in the road clause[15].

BIT Arbitrations in India 

After signing its first BIT in 1994, India devolved its first Model BIT in 2003 and it resembled with the United Kingdom BIT. However, India faced its first round of BIT arbitration in the year 2004 in the infamous Dabhol Power Plant case[16]. The plant was to be set up in the State of Maharashtra and various investor states like United Kingdom, Netherlands, Mauritius, France, Switzerland and Austria invoked the BIT arbitration against India. More specifically, Bechtel and General Electric brought claims against India under the India-Mauritius BIT, alleging expropriation of their interest in the power plant by the Indian Government. The claims were however settled and India had to compensate for losses.

Thereafter, one of the first substantive cases related to BIT arbitration came up in the White Industries case[17]. In 1989, the Australian company entered into a contract with the Coal India Limited, a public sector undertaking for developing of coal mines in Piparwar (Erstwhile Bihar, now Jharkhand), India.  White Industries alleged that due to inconceivable delay at the hands of the Indian judiciary spanning around 9 years, the company had incurred huge losses and there has been a breach of treaty guarantee. One of the interesting facets of the said case was while passing the award, the tribunal held that there had been a breach of guarantee to provide ‘effective means to assert claims’, a guarantee which was not present in the India-Australia BIT and was drawn from India-Kuwait BIT. The award[18] made India pay approximately USD 4 million as damages and legal cost[19].

Investor-State Disputes in India 

Whenever disputes relating to investments come to our mind specifically in the Indian context, the case of Louis Dreyfus Armateurs SAS v. India [20] cannot be ignored. It is considered to be one of the first cases where India succeeded in having an award in its favour. In first of its cases resulted out of a dispute that arose after termination of the agreement by Haldia Bulk Terminals Private Limited (‘HBT’). Louis Dreyfus initiated investment arbitration against India under the India-France BIT alleging that the termination of HBT virtually decimated the investment. An UNCITRAL arbitral tribunal has reportedly dismissed a US$ 36 million claim by a French investor, Louis Dreyfus Armateurs SAS (“LDA“), against India under the 1997 France-India bilateral investment treaty (“BIT“). The award is not public at this time, but press reports state that LDA has also been ordered to pay approximately US$ 7 million in respect of India’s substantial legal expenses[21]. The Permanent Court of Arbitration held[22] that in order to invoke jurisdiction of the tribunal by an investor in an indirect investment, the investor shall hold at least 51% ownership in order to fall within the protection granted by the BIT as defined under Article 2(1) of the BIT.

Among the other investment arbitrations like Deutsche Telekom AG v. Republic of India[23], Khadamat Integrated Solutions Private Limited v. Kingdom of Saudi Arabia[24], one such case which is also very significant is Union of India v. Vodafone GroupPlc [25]. In 2014, Vodafone International Holdings BV (‘VIHBV’) initiated investment arbitration against the Republic of India under the India-Netherlands BIT. It was interesting to note that while the abovementioned arbitration was pending the VIHBV filed another set of investment arbitration under the India-UK BIT against the retrospective effect of an amendment made by the Indian Government under Section 9(1) and Section 195 of the Income Tax Act, 1961 read with Section 119 of the Finance Act, 2012. The Indian Government approached the Delhi High Court seeking an anti-arbitration injunction against VIHBV for initiating two parallel arbitral proceedings. However, in the year 2018, the Delhi High Court rejected[26] the contentions of  Republic of India upholding the principle of ‘kompentz kompetz’ and held that the purview of intervention with a BIT arbitration is very limited and the provisions of the Arbitration and Conciliation Act, 1996 will not apply to the BIT arbitrations.

The year 2019 also saw some more relevant inter-State disputes.  Khaitan Holdings (Mauritius) issued a notice of dispute to Republic of India under the India-Mauritius BIT.  Republic of India moved before the Delhi High Court seeking anti-arbitration injunction against Khaitan Holdings. However, the Delhi High Court while relying upon Vodafone Plc[27] (supra) held that it is with the arbitral tribunal to determine whether Khaitan Holdings were investors as defined under the India-Mauritius BIT. The Delhi High Court in its judgment in Union of India v. Khaitan Holdings (Mauritius)[28] held that the provisions of the Arbitration and Conciliation Act, 1996 will not be applicable to such arbitrations[29].

Another interesting set of investment arbitration took place in Nissan Motor Co. Ltd. v. Union of India[30], where one of the facets of BIT i.e. fair and equitable treatment was evaluated by the Permanent Court of Arbitration. Nissan Motors initiated investment arbitration against India under India-Japan Economic Partnership Agreement against the non-payment of unpaid incentives under the Indian tax regime. Nissan also alleged that Republic of India has also violated Comprehensive Economic Partnership Agreement (CEPA) wherein the agreement affords some protection to the Japanese entities in India and vice versa.  Republic of India however, raised an objection before the Permanent Court of Settlement, Singapore with respect to its jurisdiction to adjudicate the dispute. The Permanent Court of Settlement, Singapore rejected the contentions made by  Republic of India. The case is still pending for final adjudication[31].

Model BIT, 2016-India’s Reconnisance attempt 

With the passage of time and after witnessing multiple investment arbitration downfalls, India tried to devolve a new Model BIT in 2016[32]. The Model BIT consists of 38 articles and 7 chapters and showcased a departure from the locus India used to have with its erstwhile BITs. It could be said that the 2016 Model is more State centric than its earlier predecessors i.e. the 2003 India Model BIT. The Model BIT has adopted  Salini Criteria’ as was held in the landmark case of ‘Salini Costruttori S.p.A and Italstrade S.P.A v. Kingdom of  Morocco[33] in order to determine the investment criteria for a foreign investor. The investment as mentioned in Article 1.4 has to be operated by the investor in ‘good faith’ which remains a point of deliberation while negotiating treaties with other countries[34].  Salini Criteria also postulated a mechanism which evaluates the substantial business activities for the test of investor[35].

The Model BIT has also made an exclusion of pre-investment activities from the purview of investments. It could be seen under Article 1.4(iii) which stated that “any pre-operational expenditure relating to admission, establishment, acquisition or expansion of the enterprise incurred before the commencement of substantial business operations of the enterprise in the territory of the Party where the investment is made.”

The Model BIT, 2016 has removed the Most Favoured Nation (‘MFN’) clause. A MFN clause ensures protection for a foreign investor and its investment and its primary purpose to afford equal treatment of both foreign and domestic market players. India has done away from the MFN clause taking its cue from Salini case[36] wherein the investor tried to import arbitration as a dispute settlement mechanism from Jordan-UK BIT through the MFN clause in the Jordan-USA BIT. The contention was, however, rejected by the International Centre for Settlement of Investment Disputes. India has tried to curb the chances of an investor seeking benefits from a separate treaty with a third party however, by not having MFN clause exposes a foreign investor to differential treatment risks.

India has also incorporated Article 15.2 which states that an investor has to necessarily seek legal remedy from the domestic courts of a host states for an initial period of 5 years before seeking a claim under Model BIT. If a foreign investor had to take a cue from the episodes of Indian judicial system in White Industries[37] then having this clause in the BIT might just prove preposterous for any investment.

One of the welcoming articles of Model BIT is Article 10 which deals with ‘Transparency’. The article ensures that the investing state or the investor get well versed with the prevailing laws, regulations and procedures. Also, Article 10.2 which postulates a mechanism of consultation with the investor State or the investor regarding a particular law, regulation, procedures will instill confidence in the investors.

The Model BIT, 2016 has also devolved a differentiation between direct and indirect expropriation. There is no precise definition of expropriation. However, the Model BIT, 2016 under Article 5 specifically deals with expropriation. The Model BIT, through indirect expropriation has covered the concept of ‘creeping expropriation’. The Model BIT has further broadened the contours of expropriation by stating that the character, intent and objective of the measure taken by the government of the host country has to be prudently evaluated before considering the prospect of expropriation. A perusal of Article 5 of Model BIT, 2016 reveals that it has been made more host-State-centric and requirements to adopt indirect regulatory measures create cynicism in the minds of the investor and further acts as a road block for an investor seeking refuge under the purview of expropriation before the investment arbitration tribunals.

Handling BITS and Investments during and after COVID-19 [38]

The entire world is undergoing an epidemic which has not only engulfed many lives but has considerably decimated multiple economies. For instance, the International Air Transport Association has estimated a loss of global revenue at USD 63 billion to USD 113 billion[39]. In these challenging times, it becomes pertinent to evaluate the global investment psychology as resistance in investments would become a common phenomenon. It would be interesting to see how India would re-plan and formulate its strategies so as to reinvigorate the investments in India[40].

It would be also interesting to see how investors are treated under such dire circumstances. As the lockdown, which has been enforced in a majority of nations across the world, the commitments underlying within a treaty may get disgruntled[41]. The prospect of indemnification with respect to the investors also needs to be evaluated.  One has to evaluate as to how will a non-performance of an obligation under a treaty will be treated? As most of the BITs provide for expropriation (direct & indirect) and general exceptions, it would also be interesting to see that how will be interpreted under the light of extra-ordinary circumstances such as COVID-19.  For instance, Article 32 covers the General Exceptions and Article 32.1(ii) specifically states that ‘(ii) protect human, animal or plant life or health’.

Times like these seek greater conscience and greater responsibilities. The very need to avoid the investor-Sate dispute could never have been any greater. When the entire world economy has been crippled by COVID-19, resorting to high stake Investor State Dispute Settlement (‘ISDS’) mechanism does not seem to be a good option. More specifically, for developing countries like India which has already been economically rattled by the pandemic, any investor-state dispute will further worsen the situation. According to the fact that the litigant might be reeling under a financial stress, an option of third party funding by someone who has a majority stake in the investment could be ruled out. A recent judgment of the High Court of Bombay in Norscot Rig Management Private Limited v. Essar Oilfields Services Limited[42], wherein it was held that, an arbitration award, which has been obtained due to third party funding, cannot be termed as against of public policy of India. The validity of such agreements would be tested by the fact of the validity of the arbitration award.

However, it is pertinent to mention that a study of the OECD estimates the average cost to defend a claim is USD 8 million[43]. Specifically for developing countries like India, claims by different foreign investors are bound to surface but a situation like this would require a holistic approach in order to have a feasible investment environment.

Parting Thoughts 

In the last decade, international investments have increased in an unprecedented manner but at the same time India has also terminated many of its BITs. The disputes related to BIT and investment arbitration is a fast evolving law. There have been a flurry of investment arbitrations and legal proceedings post arbitral proceedings which have challenged the fundamentals of BIT arbitration in India. India as a contesting party has had lot of debacles in the BIT arbitrations, sometimes due to weak clauses in the treaty and sometimes due to constrained usage of legal acumen. Most investment arbitrations nowadays are brought on the basis of bilateral and multilateral treaties and are conducted under different conventions like ICSID Convention, UNCITRAL Arbitration Rules, etc. India is not a signatory to the ICSID Convention, which is among the most sought out institution for BIT arbitrations. However, some recent decisions in the year 2019, for instance Tenoch Holdings Limited (Cyprus), Maxim Naumchenko (Russian Federation)[44], South-East Asia Entertainment Holdings Limited[45] cases bring some positivity to the BIT arbitrations in India.

One cannot ignore the fact that COVID-19 as an epidemic has savaged the world economy. With expectations of multiple claims to be made in future by foreign investors, it would be interesting to see how India handles the situation. 

*Authors are advocates practicing in Delhi.


[2] Treaty Between Federal Republic of Germany and Pakistan for Promotion and Protection of Investments dated 25-11-1959 (Bonn)

[3] Discrimination or Social Networks? Industrial Investment in Colonial India’ by Bishnupriya Gupta, University of Warwick; Department Economics.

[4] Friday Group Speaker: Justice Indu Malhotra : Bilateral Investment Treaty Arbitration: Last visited on 01.05.2020 (

[5] Department of Economic Affairs, Bilateral Investment Treaties (BITs)/Agreements







[12] V. Inbavijayan & Kirthi Jayakumar, “ARBITRATION AND INVESTMENTS– INITIAL FOCUS”, Indian Journal of Arbitration Law, Vol. 2, Issue 1




[16] Capital India Power Mauritius I and Energy Enterprises (Mauritius) Company v. India,    ICC Case No. 12913/MS, Award dated 27-4-2005 (ICA).

[17] White Industries Australia Limited v. Republic of India, Final Award dated 30-11-2011 (UNCITRAL)

[18] Ibid


[20] Louis Dreyfus Armateurs Sas (France) v. The Republic of India, PCA Case No. 2014-26, Award dated 11-9-2018 (PCA)


[22] Louis Dreyfus Armateurs Sas (France) v. The Republic of India, PCA Case No. 2014-26, Award dated 11-9-2018 (PCA)

[23] Deutsche Telekom AG v. the Republic of India, PCA Case No. 2014-10,  Interim Award dated 13-12-2017 (PCA)

[24] PCA Case No. 2019-24, dated 7-2-2020 (PCA)

[25] Union Of India v. Vodafone Group Plc United Kingdom, 2018 SCC OnLine Del 8842

[26] Ibid

[27] Ibid

[28] Union of India v. Khaitan Holdings (Mauritius), 2019 SCC OnLine Del 6755


[30] Nissan Motor Co. Ltd. (Japan) v. The Republic of India; PCA Case No. 2017-37



[33] ICSID Case No. ARB/00/4; Decision on Jurisdiction dated 23-7-2001



[36] Salini Costruttori SpA and Italstrade SpA v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction dated 23-7-2001 

[37] White Industries Australia Ltd. v. Republic of India, Final Award dated 30-11-2011 (UNCITRAL)





[42] Norscot Rig Management Pvt Ltd v. Essar Oilfields Services Limited; 2019 SCC OnLine Bom 9153 


[44] Tenoch Holdings Limited (Cyprus) v. Republic of India, Case No. 2013-23 (PCA)

[45] Astro All Asia Networks and South Asia Entertainment Holdings Ltd.  v. Republic of India; Award dated 8-10-2018 (UNCITRAL)

Business NewsNews

The Competition Commission of India (CCI) has approved Kora Master Fund LP investment of up to 10% ($75 million) in Edelweiss Securities Limited under sub-section (1) of Section 31 of the Competition Act.

The notification relates to a proposed investment by Kora in Edelweiss Securities Limited (ESL) and Edelweiss Global Investment Advisory Business (EGIA) Subsidiaries of up to INR equivalent to $75 million, as set out in the Share Subscription Agreement.

The Acquirer is a foreign portfolio investor (FPI) registered with the Securities Exchange Board of India (SEBI). Its principal activity is that of investment holding and related activities.

The Target Entities belong to the Edelweiss Group, with Edelweiss Financial Services Limited (EFSL) as the ultimate holding company, are broadly engaged in the Edelweiss Global Investment Advisory Business.

Ministry of Corporate Affairs

[Press Release dt. 16-10-2019]

Patna High Court
Case BriefsHigh Courts

Patna High Court: A Single Judge Bench comprising of Ahsanuddin Amanullah, J. dismissed a criminal petition filed under Section 482 of the Code of Criminal Procedure, 1973 praying for quashing of lower court’s order whereby a prima facie case under Sections 420 and 120-B of the Indian Penal Code, 1860 was made out against petitioner.

In the present case, respondent 2 had on petitioner’s persuasion, he invested in a company named Panjon Finance and an agreement was executed between the parties where it was stipulated that shares would mature after four years when repayment would be made to the respondent by the company. It is alleged that upon expiry of the term, despite several reminders and request to pay back the amount as per terms of the agreement, the same was not done leading to filing of a complaint under IPC. 

Learned counsels for the petitioner Mr Ajay Kumar Thakur, Mr Nilesh Kumar, Mr Pravin Kumar and Mr Udbhav submitted that the petitioner was merely an employee of the company and since he had only signed as a witness on the agreement, he could not be made criminally liable for non-performance of terms of the agreement. The dispute was purely a money dispute which could be resolved through civil law.

The Court opined that petitioner, in the capacity of the company’s local manager company, persuaded the respondent for investment.  Respondent 2 had relied on him and his trust was belied by the petitioner. As such, a prima facie case was made out against the petitioner. Relying on the dictum in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 it was held that there was no infirmity in lower court’s order and the petition was dismissed.[Dharmendra Kumar v. State of Bihar,2018 SCC OnLine Pat 2218, decided on 13-12-2018]

Business NewsNews

SEBI has been monitoring investment by foreign Governments and their related entities viz. foreign central banks, sovereign wealth funds and foreign Governmental agencies registered as foreign portfolio investors (hereinafter referred to as FPIs) in India. Since various stakeholders have been seeking guidance on clubbing of investment limits to be applied to foreign Government/its related entities, the following clarifications are issued:

A. What is the investment limit for foreign Government/foreign Government related entities registered as Foreign Portfolio Investors (FPI)?
Reply: The purchase of equity shares of each company by a single FPI or an investor group shall be below ten percent of the total paid up capital of the company. [Ref. Regulation 21(7) of FPI Regulations].

B. What is an investor group?
Reply: In case, same set of beneficial owners are constituents of two or more FPIs and such investor(s) have a common beneficial ownership of more than 50% in those FPIs, all such FPIs will be treated as forming part of an investor group and the investment limits of all such entities shall be clubbed at the investment limit as applicable to a single foreign portfolio investor. [Ref. Regulation 23(3) of FPI Regulations and FAQ 58].

C. How to ascertain whether an FPI is forming part of any investor group?
Reply: The designated depository participant engaged by an applicant seeking registration as FPI shall ascertain at the time of granting registration and whenever applicable, whether the applicant forms part of any investor group. [Ref. Regulation 32(2)(a) of FPI Regulations].

Further, at para 2.2 in the Form A of First Schedule, the applicant seeking registration as FPI is required to furnish information regarding foreign investor group. Accordingly, it is the prime responsibility and obligation of the FPI to disclose the information with regard to investor group.

D. How is the beneficial ownership of foreign Government entities/its related entities determined for the purpose of clubbing of investment limit?
Reply: The beneficial owner (BO) of foreign Government entities/its related entities shall be determined in accordance with Rule 9 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (hereinafter referred to as PMLA Rules). The said PMLA Rules provide for identification of BO on the basis of two methodologies, namely (a) controlling ownership interest (also termed as ownership or entitlement) and (b) control in respect of entities having company or trust structure. In respect of partnership firms and unincorporated associations, ownership or entitlement is basis for identification of BO.

E. Whether two or more foreign Government related entities from the same jurisdiction will individually be permitted to acquire equity shares in an Indian company up to the prescribed limit of 10%?
Reply: In case the same set of beneficial owner(s) invest through multiple entities, such entities shall be treated as part of same investor group and the investment limits of all such entities shall be clubbed as applicable to a single FPI. [Ref. Regulation 23(3) of FPI Regulations].

Accordingly, the combined holding of all foreign Government/its related entities from the same jurisdiction shall be below ten percent of the total paid up capital of the company.

However, in cases where Government of India enters into agreements or treaties with other sovereign Governments and where such agreements or treaties specifically recognize certain entities to be distinct and separate, SEBI may, during the validity of such agreements or treaties, recognize them as such, subject to conditions as may be specified by it. [Ref. Regulation 21(9) of FPI Regulations].

F. How will the investment by a Foreign Government Agency be treated?
Reply: Foreign Government Agency is an arm/department/body corporate of Government or is set up by a statute or is majority (i.e. 50% or more) owned by the Government of a foreign country and has been included under “Category I Foreign portfolio investors”. [Ref. Regulation 5(a) of FPI Regulations].

The investment by foreign Government agencies shall be clubbed with the investment by the foreign Government/its related entities for the purpose of calculation of 10% limit for FPI investments in a single company, if they form part of an investor group.

G. Whether any investment by World bank group entity IBRD, IDA, MIGA and IFC should be clubbed with the investment from a foreign Government having ownership in such World bank group entity?
Reply: Government of India, vide letter No. 10/06/2010-ECB dated January 06, 2016 has exempted World Bank Group viz. IBRD, IDA, MIGA and IFC from clubbing of the investment limits for the purpose of application of 10% limit for FPI investments in a single company.

H. Where Provinces/States of some countries with federal structure have set up their separate investment funds with distinct beneficial ownership constituted with objectives suitable for their respective provinces, such funds not only have separate source of financing but also have no management, administrative or statutory commonality. Kindly inform whether investments by these foreign Government entities shall be clubbed?
Reply: The investment by foreign Government/its related entities from provinces/ states of countries with federal structure shall not be clubbed if the said foreign entities have different BO identified in accordance with PMLA Rules.

I. How will the foreign Government/ its related entities know the available limit for investment, to avoid breach of the limit?
Reply: The custodian of securities reports the holdings of FPIs/investor groups to depositories who monitor the investment limits. As such, NSDL is in ready possession of aggregate holdings of FPIs/investor groups in any particular scrip. [Ref. Regulation 26(2)(d) of FPI Regulations]. To this effect, SEBI, vide communication dated November 02, 2017 has already advised DDPs/custodians of securities to approach NSDL to get information regarding aggregate percentage holdings of the group entities on whose behalf they are acting in any particular company before making investment decisions. SEBI has no objection to the said arrangement for sharing of data.

J. What if the investment by foreign Government/its related entities cause breach of the permissible limit?
Reply: The FPIs investing in breach of the prescribed limit shall divest their holdings within 5 trading days from the date of settlement of the trades causing the breach. Alternatively, the investment by such FPIs shall be considered as investment under Foreign Direct Investment (FDI) at the FPI’s option. However, the FPIs need to immediately inform of such option to SEBI & RBI, since they cannot hold equity investments in a particular company under FPI and FDI route, simultaneously.

2. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

3. A copy of this circular is available at the links “Legal Framework-Circulars” and “Info for P.I” on our website The DDPs/ Custodians are requested to bring the contents of this circular to the notice of their FPI clients.

Securities and Exchange Board of India


Tribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): NCDRC has held that though trading in shares is a commercial transaction outside the purview of Consumer Protection Act but those who buy shares as an investment are covered under the definition of “consumer”. The court was hearing a revision petition filed by Venve Light Metal Ltd. challenging the order of State Commission which directed the Firm to refund the amount of unallotted shares to the complainant with interest. Earlier, the complainant had paid an amount of Rs 1 lakh by cheque and Rs 1.40 lakhs in installments through cash payment for allotment of shares of Venve Light Metal Ltd. but neither were the shares issued nor was the money refunded to the complainant. The complainant filed a complaint before District Forum claiming Rs 2.40 lakhs along with interest but her complaint was dismissed. The Firm had contended before Forum that it had already allotted 10,000 shares of Rs.10 each for the amount of Rs1 lakh and there was no record of the remaining Rs 1.40 lakhs. Being aggrieved, complainant filed an appeal before the State Commission, which while observing that the company failed to produce any document to show that shares had be received by the complainant, set aside the order of the District Forum and allowed the appeal, with directions to the petitioner to pay Rs.2,40,000/-to the complainant with interest @ 9% on Rs.1,00,000/-from 31.1.2000 and on Rs.1,40,000/-from 31.1.2001, together with cost of Rs.2,000/-. In revision, after perusing the Board Resolution of the Firm, NCDRC observed that it is clear that the Firm had received the entire consideration from the Complainant and deficiency on the part of the Firm is writ large. While also rejecting the plea taken by the Firm for the first time in the revision that complainant is not a consumer since she is trading in shares, NCDRC upheld the order of the State Commission and imposed costs of Rs 10,000/ on the Firm. (Venve Light Metal Ltd. v. Arpitha Reddy, Revision Petition No. 3941 of 2007, decided on August 1, 2014)