What We Practice...

There may be default in payment of loans and financial debt by a company, and in that case of default in repayment, such financial creditor may initiate proceedings against such defaulting company by invoking Section 7 of the IBC, with a prayer to initiate Corporate Insolvency Resolution Process ("CIRP") of such company. Upon admission, the management of the company is suspended and the business is taken over by a Court (NCLT)-appointed Resolution Professional. Thereafter, the Resolution Professional invites bids through public notice, inviting persons to bid for the business of such company — such a bidder is called a Resolution Applicant. The successful bidder then takes over the business of such company upon approval from the Court (NCLT).

Similarly, a vendor can also initiate insolvency proceedings for default in payment pertaining to undisputed trade liabilities on account of supply of goods and services, which the company fails to pay in time. Such a vendor is called an "Operating Creditor" and can file an insolvency petition against the defaulting company under Section 9 of the IBC. The further process of suspension of the current management by the Resolution Professional, and the inviting of bids to take over the business by the Successful Resolution Applicant, remains the same as described above.

Further, there may be cases where the defaulting company, which is unable to pay its debts, itself approaches the Court (NCLT), requesting to put itself into Corporate Insolvency Resolution Process (CIRP), under Section 10 of the IBC. The subsequent process to take over the business by the Successful Resolution Applicant (SRA) remains the same.

All the debts and liabilities of such defaulting company are then settled by the Successful Resolution Applicant (SRA) as per the plan submitted by it, which is called the Resolution Plan. The Resolution Plan is first approved in the meeting of the Committee of Creditors ("CoC") and then placed for final approval before the NCLT.

Any person aggrieved by any order of the NCLT may appeal before the National Company Law Appellate Tribunal ("NCLAT"). Any person aggrieved by any order of the NCLAT may file a final appeal before the Supreme Court. No appeal lies to the High Courts in the case of IBC matters.

Similarly, the guarantors of such defaulting company can also be taken to the NCLT by the creditors, for their personal insolvency.

VGNC handles all matters pertaining to Corporate Insolvency and Personal Insolvency, and handles all this litigation on behalf of creditors, the defaulting company (called the "Corporate Debtor"), and also on behalf of guarantors and promoters. We represent our clients before the NCLT, NCLAT, as well as the Supreme Court.

Apart from the above litigation issues before the NCLT, NCLAT, and the Supreme Court, we at VGNC also advise prospective Resolution Applicants who wish to bid for and purchase such businesses undergoing CIRP, in their due diligence process, and provide representation before the Resolution Professional and the Committee of Creditors for negotiation and closure of the bid. We also represent such Resolution Applicants before the NCLT, NCLAT, and the Supreme Court, for any legal remedies. If the lenders initiate any criminal proceedings against the defaulting company and its promoters, we also represent such cases before the appropriate Courts.

There is the Prevention of Money Laundering Act, 2002, which deals with attachment and confiscation of properties involved in money laundering, and also provides for criminal proceedings and arrest provisions.

The whole idea is that whenever an economic offence takes place — such as corruption, corporate fraud, criminal conspiracy, offences under the Black Money Law relating to undisclosed foreign assets and income, anti-drug laws, etc. — then the proceeds generated out of such economic offences are called "Proceeds of Crime". The Enforcement Directorate ("ED") is the investigating agency to inquire into and detect such proceeds of crime.

In the case of economic offences, it is usually a web of networks involving professionals and finance experts, where proceeds of crime are layered and hidden in such a manner that they get projected as genuine assets of a business. The ED does the investigation to dig out and pull out such concealed proceeds of crime, whether hidden in India or overseas. The ED then has powers to attach such properties constituting and representing such proceeds of crime. Apart from civil proceedings of attachment of properties, the ED also has powers to summon and arrest, if necessary, to investigate the crime of money laundering, and to initiate criminal proceedings before Trial Courts.

While the attachment of property is heard and decided by Adjudicating Authorities and Appellate Tribunal, the criminal trial takes place before Criminal Courts.

For example, when a company defaults in repayment of a bank loan, and the loan account is rendered as NPA, the bank, as per RBI guidelines, investigates the loan account, engaging the services of a forensic auditor to find out if it is a case of fraud by the defaulting company and its promoters — such as bank loan funds diverted by the defaulting company or its promoters to other purposes or to other businesses or associate companies, within India or abroad. If it is found to be a case of fraud, then the lending bank may file an FIR with the CBI or a complaint with SFIO (Serious Fraud Investigation Office).

The CBI/SFIO then investigates the offence of fraud, and simultaneously the ED initiates an investigation to detect proceeds of crime out of such fraud. We at VGNC represent clients before Adjudicating Authorities, the Appellate Tribunal, Trial Courts, as well as before the High Courts and the Supreme Court.

At the time of demonetisation in 2016, the Government of India put into place a very detailed law: the Prohibition of Benami Property Transactions (Amendment) Act, 2016, substantially amending the 1988 Act.

The idea is that all financial transactions are to be done in the name of the actual person who provides the funds for such financial transactions. It is an open secret that public servants with allegations of corruption never buy properties in their own name, but in the name of some proxy individuals or shell companies. Likewise, to come out of many land-ceiling laws, properties are purchased in the proxy names or shell companies. There may be many similar instances on different motives, where people buy properties not in their own name, but in the name of some proxy individuals or shell companies, while on record the owners are these proxy individuals and shell companies, actually the beneficial owner of the property is the person providing the funds to buy such properties.

Income Tax Authorities have been notified by the Government of India to investigate such matters involving benami properties and transactions. Mostly, such transactions of benami property surface in income tax searches. Therefore, it is the Income Tax Authorities who investigate these matters. The law provides for attachment and confiscation of such benami properties, and also for criminal proceedings against such persons.

These matters of attachment of properties are heard and decided by Adjudicating Authorities and Appellate Authorities. Criminal proceedings are held before Criminal Courts.

At VGNC, we represent our clients before these Adjudicating Authorities, Appellate Authorities, and Criminal Courts, and further before the High Court and the Supreme Court.

All foreign inward and outward remittances are regulated by FEMA, and the regulating agency is the RBI. Foreign remittances happen mostly through banks, which are called Authorised Dealers. Remittances include all kinds of investment abroad, including immovable properties, shares, mutual funds, PMS, AIF, metals, or other financial assets abroad, and companies incorporated abroad, such as in Dubai, Singapore, U.K., U.S.A., or other tax-friendly countries. Remittances also include import and export of goods and services. Inward remittances may be in the form of FDI or External Commercial Borrowings. These are some examples, and there is a whole range of transactions which involve inward and outward remittances, the rules and limits for which are prescribed by the RBI.

In case of any violation of inward and outward foreign remittances, there are provisions for heavy penalties under FEMA. The administrative agency to inquire into and investigate FEMA violations is the Enforcement Directorate (ED).

These matters are decided by Adjudicating Authorities and Appellate Tribunals.

We at VGNC represent our clients' cases before these Adjudicating Authorities and Appellate Tribunals, and also before the High Court and the Supreme Court.

Almost all businesses have to plan for their income tax liabilities on their business and other incomes. Income Tax Authorities are vested with wide powers of search, seizure, and assessment, to arrive at the correct amount of tax payable by businesses. It is not uncommon for a dispute to arise between Income Tax Authorities and businesses regarding the assessment of the correct tax liability. When Income Tax Authorities do not agree, they pass assessment orders based on their own logic and understanding (or say, misunderstanding) of facts and law, raising huge demands.

We at VGNC fight and contest these high-pitched assessments before Appellate Authorities, the Tribunal and the High Court, and the Supreme Court.

Almost all businesses have to collect and pay GST on all the goods and services they supply to their customers. Likewise, they procure goods and services from their vendors, and these vendors also charge GST on inward supply of goods and services. The tax paid on inward goods and services is allowed to be set off against outward supply of goods and services, which is popularly known as Input Tax Credit ("ITC").

Generally, export of goods and services does not involve the payment of GST, because the importing country charges customs and taxes on imports in those countries. Similarly, imports into India are liable for payment of customs and IGST.

There are many goods and services that are exempt from payment of GST.

A lot of disputes keep arising regarding the correct liability of GST. A range of disputes also arise in the case of ITC eligibility.

GST Authorities are vested with wide powers to search, survey, and even arrest under GST law. If a business is alleged to have made bogus purchases and claimed bogus ITC, these demands run extremely high.

These tax demands are contested before Appellate Authorities and Tribunals. We at VGNC represent our clients before these Appellate Authorities such as CESTAT and the GST Appellate Tribunal, and before the High Court and the Supreme Court.

In this field, there are cases where dissenting shareholders and partners raise disputes pertaining to corporate governance and mismanagement by the majority shareholders and the Board of Directors. Disputes also arise on the validity of major financial transactions, like FDI, financial borrowings and investments, and conduct of meetings of Directors and Shareholders not in compliance with law. These corporate disputes are governed by the Companies Act, 2013, and are contested before the NCLT. Any appeals go to the NCLAT.

VGNC represents its clients for such corporate disputes before the NCLT, NCLAT, and the High Court and Supreme Court, and also advises and negotiates amicable settlements out of court.

Likewise, commercial disputes arise in businesses with various stakeholders, like vendors, contractors, etc. Many businesses work for the Government on the basis of open tenders — they provide bank guarantees and execute detailed contracts with these Government departments. Normally there is an arbitration clause in these contracts if any commercial dispute arises; similarly, many commercial disputes are also filed before Commercial Courts. VGNC represents its clients in pursuing arbitration matters before Arbitral Tribunals and also before Commercial Courts and the High Court and Supreme Court.

VGNC has a team of Chartered Accountants and Company Secretaries, apart from lawyers. Since 1999, VGNC has been providing risk advisory and compliance services to corporates in the area of their internal controls and internal audit systems and various company law and tax compliances. Therefore, apart from litigation which is at the core of our operations, we have a separate dedicated team to proactively assist our clients in the area of risk advisory, covering internal controls, internal audits, and their due compliance with corporate and tax laws.