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  Perfect Judgment to justify why an Investor must have an indemnification clause in a share purchase agreement: Investor got indemnification of entire liability of 82 Lakh from seller which the investor has to pay to the income tax department Shubham Budhiraja [1] There is a Share Purchase agreement between parties Mr. A & Mr. B and seller represented to the buyer/ investor that it warranties that all tax liability is paid. However during the subsequent years, the pending tax liability arose and that Mr. A being the buyer/ Investor who has Invested the heavy amount has to pay the tax liability out of company funds. He invoked representation and warranty clause against Mr. B through arbitration and arbitrator has awarded in his favor because seller/ Mr. B has breached the promise and now it has to indemnify.  The HC in Section 34 upheld the award while refusing the contention of Mr. B that no actual loss occurred to Mr. A due to payment of tax liability because these l...

  Can you force a party to perform the contractual obligation when period of contract is over during arbitration proceedings ? Shubham Budhiraja [1] There is a contract between Company A & Company B whereby Company B has developed a software at Company A system as a part of contractual condition. There arises a dispute and matter referred to arbitration where Company B stating that contract is void or voidable. The matter is pending for cross examination of witnesses of Company A. Company A filed a Section 17 application before the arbitrator praying to get an order for disintegration of software from their system because contract period is over whereas Company B contended that disintegration of software should not be allowed because it contains essential data which is relevant for cross-examination. The tribunal refused the prayer and against which Section 37 petition filed by Company A. The HC allowed the Company A prayer for disintegration by holding that: once a contrac...

                                                           Shubham Budhiraja [1] Not when bank have delayed in auction and due to such delay, market value has reduced which result in balance due. Example, Suppose you have taken a bank loan of R.S 1 Crore by mortgage your immovable property worth R.S. 1.2 Crore & you have made a default in repayment in year 2019 and through legal action, bank attached the property in year 2019 to recover its dues. The bank instead of auction the property in year 2019/2020 has waited a long which led to reduction of its market value to R.S. 80 LAKH at time of auction. The court held that the bank cannot now recover balance 20LAKH because downgrade of value was due to delay caused by bank. The bank is duty bound to take actions to maximize the value of assets  Pushpa builders v. Vaish Cooperative ...

  Shubham Budhiraja [1] (NCLAT, Company Appeal (AT) No. 148 of 2020, 21.06.2021) The company filed its Financials for year 2015-16 but it failed to file financials for year 2016-17, 2017-18 & 2018-19 and thereafter ROC issued show cause notice to strike off the company for non-filling of statutory returns for more than 2 years. The NCLT dismissed the order for restoration but NCLAT allowed the restoration on ground that: (I)                  ROC cannot strike off the company when the company is operational (II)                The Non-filling of return was not intentional but due to lack of knowledge on part of management and lack of professional guidance (III)              The Company is not defunct but operational and it has various tangible and intangible as...

AMAZON- FUTURE RETAIL- RELIANCE: SUPREME COURT Shubham Budhiraja [1] I have divided this entire brief into few parts; 1.        History & Introduction 2.        Petitioner & Respondent contentions 3.        Judgment of the Court 4.        Road ahead HISTORY & INTRODUCTION The Dispute between Amazon and Future Retail and Reliance group has many facets. It is a battle to control the offline retail market between two dominant players. I.e. Amazon and Reliance Group Future Retail is a part of Future Group which started as offline Retail Company with a single store which later becomes India’s largest offline retail group in terms of revenue, consumer base, etc. The retail sector works in a way where cash inflows are delayed but cash outflow are on daily basis to maintain stock requirements, etc. Thus, working capital requirement is always hig...

  Can Banks make the Managing director personally liable for the dues of the company on basis of a cleverly drafted share pledge agreement?  Shubham Budhiraja Company A took credit facility from the bank and that the MD signed the credit facility agreement in its official capacity. In addition to it, MD pledges its 20,000 shares through share pledge agreement in favor of bank against the credit facility taken by the Company A. There arises some default and bank initiated recovery proceedings before debt recovery tribunal (DRT) under Recovery of debt due to banks & financial institution (RDDBFI) Act which passes the order ex-parte against MD & the Company A and make them liable jointly and severally. DRAT confirmed the order in appeal by holding that the term “borrower” under SARFESI Act includes pledger, etc. Hence, Writ petition under Article 226 seeking prayer in nature of appropriate writ to quash the DRT order & subsequently recovery proceedings . The HC ...

Shubham Budhiraja [1] The Delhi Govt. constituted committee to recommend on scheme to appreciate the role of advocates and to constitute a welfare scheme for them. The committee recommendations were accepted and Delhi CM Welfare scheme for Advocates brought into force. The conditions for getting benefit of this scheme were as follows: (I)                  Enrolled with Bar council of Delhi (II)              Member of any bar association such as Patiala House bar association, NCLT Bar association, Delhi HC bar association, etc. (III)              Must be resident of Delhi The 3 rd condition was challenged as arbitrary in a Writ Jurisdiction under Article 226 before High Court of Delhi. The Court held that though sub-classification of a class (i.e. Advocate enrolled with Delhi is...