India Business Law Journal – February 2014

This recent statement by Anand Mahindra, the chairman and managing director of Mahindra & Mahindra, one of India’s largest companies, sums up the current mood in India. With parliamentary elections just weeks away, everyone is waiting and watching. According to Mahindra, even buyers of cars are holding back; the past year saw car sales fall for the first time in 11 years.

Yet, like many other observers, Mahindra is cautiously optimistic that better times are on the way. He also spoke of “enormous suppressed demand” that he expects will be liberated after the elections.

Of course, much is riding on the election results. India needs strong leadership to lift it out of its current malaise, but doubts persist over whether the election will deliver such an outcome.

The answer will become apparent in the coming months. In the meantime, the prevailing paralysis is less than ideal for the pressing matters of state that need to be addressed, let alone for time-sensitive business activities, such as foreign investment deals.

In this month’s Cover story we explore how a spanner thrown in the works of one such foreign investment deal – Etihad’s purchase of a stake in Jet Airways – in the form of an appeal filed before the Competition Appellate Tribunal, could have wide repercussions for mergers and acquisitions in India.

While the Competition Act, 2002, is designed to enable parties to a merger to obtain clearances in a timely manner, this case is a pertinent reminder that considerable uncertainty still dogs the process.

Writing in this month’s Vantage point PM Devaiah, a partner and general counsel at Everstone Capital Advisors, also focuses on the uncertainties in India’s regulatory framework. Devaiah writes that “occasional knee-jerk regulatory clean-up ends up being reactive and short-sighted”. He also laments the lack of long-term thinking, which he believes is thwarting attempts to rejuvenate the economy.

One area that has received some long-term thinking, albeit rather belatedly, is the problem of sexual harassment in the workplace. In Battling discrimination we turn the spotlight on the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, which was recently brought into force and has far-reaching implications for employers and employees alike.

Every company is now required to institute a policy to ensure compliance with the act. In addition, companies with more than 10 employees at any of their workplaces are required to set up an internal complaints committee.

This month’s What’s the deal? offers a behind-the-scenes glimpse at the legal and regulatory aspects of a recent acquisition in the pharmaceutical sector: Mylan’s purchase of Agila Specialties. The transaction was challenging not only because of the sheer diversity of Agila’s operations, but also because acquiring pharmaceutical companies in India is a politically sensitive business. As a result, the structuring of the deal required innovation and patient negotiation. Our coverage follows the transaction to completion and scrutinizes the legal and regulatory obstacles that were encountered along the way.

In Banking on the courts, we turn our attention to a thorny issue that has been encountered by many parties doing business in India: the tendency for banks – particularly private-sector banks – to seek court injunctions to delay honouring commitments flowing out of a letter of credit or a bank guarantee. Citing several court rulings, we describe a situation where a bank’s commitment must be honoured and how it is only in exceptional cases of fraud or irretrievable injustice that the court should intervene. We trust this coverage will be valuable to all companies that have found themselves grappling with this issue.

Rounding off our line-up this month is a special report revealing the winners of India Business Law Journal’s 2013 Indian Law Firm Awards.

Despite the challenges of the year gone by, companies looking for legal advice could not have had it better. India’s law firms have been widening and deepening their expertise in an effort to stay ahead of the game, while increased competition has driven down legal fees for many types of work.

To find out which firms finished the year ahead of the pack, our editorial team turned to in-house counsel and other qualified observers, many of whom made nominations for the awards or offered valuable feedback on the quality of legal services provided by different law firms.

As one would expect, India’s largest full-service firms all scored highly, but the awards also recognize the talents and achievements of many of the country’s smaller and more specialist firms.

Our top award of law firm of the year goes to Amarchand Mangaldas, which received widespread praise from the market. “Their professional resource base and intellectual pool gives them the edge on various levels,” said Avya Kapoor, the operations director at Cunningham Lindsey International, in comments that echo those of many other of the firm’s clients.

Amarchand is not only named law firm of the year, but also picks up 13 practice area awards. This is a remarkable feat.