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Do the Risks Outweigh the Rewards?

India offers risk and reward. IndusLaw partner, Gaurav Dani and Saurav Kumar spoke on some of the key issues to think about in the context of an equity investment and the pitfalls to be aware of in structuring joint ventures in Tokyo earlier in April

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Do the Risks Outweigh the Rewards?
The Legal Perspective
Gaurav Dani
Partner
13 April 2018
Overview
| Introduction
| Existing Legal Framework In India Impacting Foreign Investment
| Evaluating Joint Venture Opportunities
| Risks Associated with Joint Ventures
| Building-in Commercial Protections
2
Introduction
| Many multinationals have invested in India over the past two decades, and their experiences offer
important lessons for companies that wish to enter or expand their activities
| We have identified three guiding principles for helping companies navigate India's complex
business and regulatory landscape
- Understanding the regulatory regime
- Evaluating joint venture opportunities in forensic detail
- Identifying risks and building-in commercial protections
3
Existing Legal Framework In India Impacting Foreign Investment
| Foreign Direct Investment
- The Foreign Exchange Management Act,1999 regulates the inflow and outflow of foreign
exchange in and out of India
| Company Law
- The new Companies Act, 2013 illustrates why it is important to understand the motivations of
the regulators. Indian legislators appear to have been motivated by a desire to address several
high-profile corporate scams that have occurred in India in recent years
| Competition Law
- Prohibition on combinations which have caused or are likely to cause an appreciable adverse
effect on competition in India
- Acquisition where assets/ turnover is in India (and exceeds specified limits) is subject to the
scrutiny of Competition Commission of India, even if the acquirer/target are located outside
India
4
Existing Legal Framework In India Impacting Foreign Investment
| Intellectual Property Rights
- Recent developments in the field of IPR in India are positive moves towards bringing the IPR
regime in India at par with global standards
| Arbitration
- Amendments introduced to the Arbitration and Conciliation Act, 1996 for expeditious hearing as
well as disposal of arbitration proceedings, making arbitration in India more convenient for
foreign parties
- The latest developments in the arbitration jurisprudence through recent court judgments reflect
the support of the judiciary in enabling India to adopt best international arbitral practices
5
Evaluation of Joint Venture Opportunities
| Selection of the best partner involves three main steps
- formulation of and agreement on an initial business plan
- conducting due diligence on the partner
- determination of the manner in which day-to-day operations, corporate governance and
business relations will be conducted
| Conducting Due Diligence Exercise in India
- Basic checks, such as examining the business license and checking creditworthiness, are
relatively straight forward in India
- Background check of key managerial personnel
- Additionally, the filed accounts and details of legal actions are available as public record.
Discreet checks can be conducted
- Joint ventures have collapsed as a result of insufficient due diligence. Therefore, foreign
companies must take great care with respect to these in advance
6

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Do the Risks Outweigh the Rewards?

  • 1. Do the Risks Outweigh the Rewards? The Legal Perspective Gaurav Dani Partner 13 April 2018
  • 2. Overview | Introduction | Existing Legal Framework In India Impacting Foreign Investment | Evaluating Joint Venture Opportunities | Risks Associated with Joint Ventures | Building-in Commercial Protections 2
  • 3. Introduction | Many multinationals have invested in India over the past two decades, and their experiences offer important lessons for companies that wish to enter or expand their activities | We have identified three guiding principles for helping companies navigate India's complex business and regulatory landscape - Understanding the regulatory regime - Evaluating joint venture opportunities in forensic detail - Identifying risks and building-in commercial protections 3
  • 4. Existing Legal Framework In India Impacting Foreign Investment | Foreign Direct Investment - The Foreign Exchange Management Act,1999 regulates the inflow and outflow of foreign exchange in and out of India | Company Law - The new Companies Act, 2013 illustrates why it is important to understand the motivations of the regulators. Indian legislators appear to have been motivated by a desire to address several high-profile corporate scams that have occurred in India in recent years | Competition Law - Prohibition on combinations which have caused or are likely to cause an appreciable adverse effect on competition in India - Acquisition where assets/ turnover is in India (and exceeds specified limits) is subject to the scrutiny of Competition Commission of India, even if the acquirer/target are located outside India 4
  • 5. Existing Legal Framework In India Impacting Foreign Investment | Intellectual Property Rights - Recent developments in the field of IPR in India are positive moves towards bringing the IPR regime in India at par with global standards | Arbitration - Amendments introduced to the Arbitration and Conciliation Act, 1996 for expeditious hearing as well as disposal of arbitration proceedings, making arbitration in India more convenient for foreign parties - The latest developments in the arbitration jurisprudence through recent court judgments reflect the support of the judiciary in enabling India to adopt best international arbitral practices 5
  • 6. Evaluation of Joint Venture Opportunities | Selection of the best partner involves three main steps - formulation of and agreement on an initial business plan - conducting due diligence on the partner - determination of the manner in which day-to-day operations, corporate governance and business relations will be conducted | Conducting Due Diligence Exercise in India - Basic checks, such as examining the business license and checking creditworthiness, are relatively straight forward in India - Background check of key managerial personnel - Additionally, the filed accounts and details of legal actions are available as public record. Discreet checks can be conducted - Joint ventures have collapsed as a result of insufficient due diligence. Therefore, foreign companies must take great care with respect to these in advance 6
  • 7. Risks Associated with Joint Ventures Case Analysis | Asia Foundation & Constructions Ltd v State of Gujarat - Issue: Whether the members of the JVA could be held jointly and severally liable for performance of construction work jointly undertaken, irrespective of internal division of work | Key Takeaways - Joint venture partners may be jointly or severally liable to third parties for the debts of the joint venture, claims from employees or even tax liability - The terms of JVA should be adequately designed to determine the extent of liabilities that may arise pursuant to each party’s commitment to the JV. Indemnifications should be suitably built in - Including exclusivity and non-compete agreements in the contracts - to prevent partners from abandoning their commitments if another attractive opportunity arises 7
  • 8. Risks Associated with Joint Ventures Case Analysis | McDonald’s v Vikram Bakshi - McDonald’s signed a JVA in India with Connaught Plaza Restaurants Limited (“CPRL”) | Key Takeaways - Foreign businesses do not have to choose a single partner for all of India - Multiple joint partnerships can diffuse risk while providing regional insight into the market - Identify differences in decision making, long & short term strategy, hierarchies - JVA is not simply a document but rather an anticipation of future conflicts - Contracts should include clear protocols for decision making, conflict resolution, and exit strategies - Consult a legal advisor based in India to better understand the regulatory landscape and focus on drafting a contract, which protects partners in cases of dispute 8
  • 9. Risks Associated with Joint Ventures Fiduciary Liability | Indian courts have taken divergent views on the issue of liability of directors and key managerial personnel for offences committed by a company - View 1: A director can only be prosecuted if there is sufficient evidence of his active role with criminal intent or where the statutory regime itself attracts the doctrine of vicarious liability of the director for offence committed by the company - View 2: The person responsible for the conduct of the business of the company alone, may be prosecuted for the acts of the company as there is no statutory requirement that such person cannot be prosecuted unless the company is also an accused | Key takeaways - Director indemnification clauses in shareholder and director agreements should cover directors for indemnification from any proceedings brought by a third party for both legal costs and liabilities incurred - The directors should specifically seek directors and officer's liability insurance protection 9
  • 10. Risks Associated with Joint Ventures Mitigation | Construction of Transaction Documents - Transaction documents include a Joint Venture Agreement or Shareholders’ Agreement, Memorandum and Articles of the JV, trademark license or assignment agreement, technology transfer agreements - A Joint Venture Agreement will not bind the JV company unless its terms are included in the articles of the company - Secure the right to appoint and remove key officers, particularly those with a financial oversight function and whenever possible, buttress contracts with collateral security - Unsecured commitments are risky by definition, and partners should be particularly diligent in vetting potential partners that cannot provide collateral - The indemnity clause should be unambiguous and cover all losses 10
  • 11. Building-in Commercial Protections Lessons from the Tata Docomo Case | This dispute centres around the Tata group dishonouring the shareholders’ agreement (the “SHA”) between Tata group and NTT Docomo Inc. (“Docomo”) in relation to the shares of Tata Teleservices Limited (“TTSL”) | Under the SHA, if TTSL failed to satisfy certain ‘Key Performance Indicators’, Tata group would be obligated to find a buyer for Docomo’s shares in TTSL at a pre-fixed price. However, the Tata group did not comply with this condition in the SHA | Docomo initiated arbitration proceedings against the Tata group before an arbitral tribunal in London (the “AT”) which passed an award against Tata group, awarding damages of around $1.17 billion to Docomo (the “AT Award”) | Tata group initially petitioned before the Delhi High Court opposing the enforcement of the AT Award | During the pendency of the petition, the parties amicably settled their dispute and filed a settlement agreement before the Delhi High Court | The Reserve Bank of India (the “RBI”) objected to such settlement on the ground that the remittance of amounts under the AT Award or the settlement agreement violated provisions of the Foreign Exchange Management Act, 1999 (“FEMA”) and RBI’s pricing guidelines 11
  • 12. Building-in Commercial Protections Lessons from the Tata Docomo Case | The Delhi High Court, dismissed the RBI’s objections, upheld the validity of the AT Award and directed the parties to act upon the terms of the settlement on the following grounds - RBI not being a party to the arbitration, did not have the locus standi to oppose the enforcement of the AT Award - Tata group could have lawfully performed its obligation under the SHA by finding a non-resident buyer for Docomo’s shares - the AT Award involves payment of damages to Docomo and not the payment for sale of shares at pre-fixed price under the SHA | Key takeaway - The foreign investor should be mindful of the fact that any arrangement entered into with an Indian investee company should not violate any applicable laws - The agreements executed in relation to such arrangements should be drafted in a manner that it cannot be rendered illegal or void due to violation of any applicable laws 12
  • 13. Building-in Commercial Protections Lessons from Ranbaxy Daiichi | In June 2008, Japanese drug maker Daiichi Sankyo (“Daiichi”) bought a 64% stake in the Indian pharmaceutical company Ranbaxy from the Indian promoters and other shareholders, for a consideration of INR 1,98,04,02,45,051 | In September 2008, the United States Food & Drug Administration (the “US FDA”) banned drugs manufactured in Ranbaxy‘s units in India from being sold in the US on the ground of gross violation of approved manufacturing norms under the US FDA | Later, the US Department of Justice (the “US DoJ”) moved a motion against Ranbaxy in a local US court alleging forgery of documents and indulging in fraudulent practice for obtaining approval from the US FDA | In 2013, Daiichi moved Singapore’s international arbitral tribunal (“SIAT”) against the Indian promoters for concealment and misrepresentation of facts in relation to the ongoing investigations by the US FDA on Ranbaxy’s drugs and sought compensation for losses | In 2014, Daiichi sold its stake in Ranbaxy to an Indian company, Sun Pharmaceuticals Industries Limited for a consideration of INR 2,26,79,00,00,000 13
  • 14. Building-in Commercial Protections Lessons from Ranbaxy Daiichi | In May 2016, SIAT passed an order for payment of damages amounting to $400 million to Daiichi (the “Foreign Award”) by the Indian promoters | In April 2016, Daiichi filed a petition for enforcement and execution of the Foreign Award before the Delhi High Court which passed an order, in 2018, allowing enforcement of the Foreign Award and recovery of over INR 35,00,00,00,000 (including interest on the amount of Foreign Award and legal costs) by Daiichi, as damages, from the Indian promoters | Key takeaways - A foreign investor must carry out a thorough due diligence on the investee Indian company - The indemnity and arbitration and dispute resolution clauses in the agreement entered into between the parties should be carefully drafted to protect the investor from any liabilities arising out of actions taken prior to the investment 14
  • 15. Gaurav Dani Partner Delhi gaurav.dani@induslaw.com LLM, Boston University (2001) LLB, University of Buckingham (1999) Admitted to practice in India, New York PRACTICE Mergers & Acquisitions, Fund Formation, Fund Investment, Joint Ventures & Collaborations, Capital Markets & International Offerings, Corporate & Commercial Advisory, Suneeth Katarki Partner Bangalore suneeth.katarki@induslaw.com B.A. LL.B (Hons), National Law School of India University, Bangalore (1996) Admitted to practice in India PRACTICE Fund Investment, Private Equity & Venture Capital, Mergers & Acquisitions, Fund Formation, Intellectual Property, Joint Ventures & Collaborations, Corporate & Commercial Advisory INDUSLAW JAPAN DESK KEY CONTACTS
  • 16. Saurav Kumar Partner Delhi saurav.kumar@Induslaw.com LL.B., ILS Law college, University of Pune (2002) LL.M., University of Bristol (2003) Admitted to practice in India PRACTICE Joint Ventures & Collaborations, Mergers & Acquisitions, Private Equity & Venture Capital, Corporate & Commercial Advisory Ray Vikram Nath Principal Associate Delhi rayvikram.nath@induslaw.com B.A. LL.B., Symbiosis Law School, 2003 LLM: University of Pennsylvania Law School, 2009 Admitted to practice in India PRACTICE Mergers & Acquisitions, Joint Ventures & Collaborations, Private Equity, Projects and Project Financing, Corporate & Commercial Advisory INDUSLAW JAPAN DESK KEY CONTACTS
  • 17. BANGALORE DELHI 101, 1st Floor, “Embassy Classic” 2nd Floor, Block D, The Mira #11, Vittal Mallya Road Mathura Road, Ishwar Nagar Bangalore, 560 001 New Delhi 110 065 T: +91 80 4072 6600 T: +91 120 472 8100 E: bangalore@induslaw.com E: delhi@induslaw.com HYDERABAD MUMBAI 204, Ashoka Capitol 1002A, Tower 2, Indiabulls Financial Center Road No.2, Banjara Hills Senapati Bapat Marg, Lower Parel (W) Hyderabad, 500 034 Mumbai, 400 013 T: +91 40 4026 4624 T: +91 22 4920 7200 E: hyderabad@induslaw.com E: mumbai@induslaw.com DISCLAIMER This presentation is for information purposes only. Nothing contained herein is, purports to be, or is intended as legal advice and you should seek legal advice before you act on any information or view expressed herein. Although we have endeavored to accurately reflect the subject matter of this presentation, we make no representation or warranty, express or implied, in any manner whatsoever in connection with its contents. No recipient of this presentation should construe it as an attempt to solicit business in any manner whatsoever. Contact

Editor's Notes

  1. Foreign Direct Investment: The Foreign Exchange Management Act,1999 regulates the inflow and outflow of foreign exchange in and out of India. ownership of property in India by foreign entities, transfer and issue of shares to foreigners and non-resident Indians (NRIs), the ability of Indian companies to borrow foreign debt, provide guarantees and security for the indebtedness of foreign subsidiaries. Company law: For the first time Key Managerial Personnel has been defined. The idea was to ensure greater responsibility over the persons in managerial roles. In Section 2(6) of the Companies Act, 2013, the expression "joint venture" has been defined to mean: “a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.” Companies Act, 2013 now recognises a ‘joint venture’ as a distinct legal concept in India. Competition law: A “Combination”, for the purposes of the Competition Act means: an acquisition of control, shares or voting rights or assets by a person; an acquisition of control of an enterprise where the acquirer already has direct or indirect control of another engaged in similar or identical business; or a merger or amalgamation between or among enterprises; that exceed the ‘financial thresholds’ prescribed under the Competition Act. The Competition Act, 2002 and Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (“Combination Regulations”) prohibit combinations which have caused or are likely to cause an appreciable adverse effect on competition (“AAEC”) in India. The CCI has exempted enterprises: (a) being parties to any acquisition (b) acquiring control over an enterprise when it has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service; and (c) being parties to any merger or amalgamation, where the value of assets being acquired, taken control of, merged or amalgamated is not more than INR 3,50,00,00,000 in India or having turnover of not more than INR 10,00,00,00,000 in India, from notifying the CCI regarding such a transaction.
  2. Intellectual Property: In 2013, India became a signatory to the Madrid Protocol which gives an option to make an application for registration of trademark, in different member countries to Madrid Protocol, in one single application. Department of Industrial Policy and Promotion signed a deal with WIPO to establish Technology and Innovation Support Centres in India. The new Trademark Rules, 2017 provide for fewer forms for applications, extend concessions to start-ups and individuals and lay down a process for determination of well-known marks Arbitration: The following key amendments were introduced to the Arbitration Act in 2015: flexibility has been granted to parties with foreign-seated arbitrations to approach Indian courts for aid in foreign seated arbitration; application for interim relief and application for setting aside an arbitral award, in case of international commercial arbitrations, can be made directly before High Court having jurisdiction; introduction of a twelve-month timeline for completion of arbitration seated in India; expeditious disposal of applications along with indicative timelines for filing arbitration applications before courts in relation to interim reliefs, appointment of arbitrator, and challenge petitions; incorporation of fast track arbitration procedure for resolution of disputes within a period of six months; upon filing an application for setting aside an arbitral award, there will not be any automatic stay on the execution of award and an order has to be passed by the court expressly staying the execution proceedings. Post 2012, the Supreme Court has consistently taken a pro-arbitration approach by introducing the following key legal points: Indian arbitration law to be seat-centric; Indian judiciary has limited power to interfere with arbitrations seated outside India; referring non-signatories to an arbitration agreement to settle disputes through arbitration; simple fraud is an arbitrable subject.
  3. Asia Foundation & Constructions Ltd v State of Gujarat (1987 GLH (2) 510) The court observed that if services to be rendered by parties to a JV are allocated amongst the parties by an internal agreement, the rights and duties of the members, inter se are also regulated by that agreement. However, these internal agreements are not effective vis-à-vis third parties. Therefore, if one member of the JV does not fulfil his commitments, the others may have to carry out such obligations vis-à-vis the customer
  4. McDonald’s signed a JVA in India with Connaught Plaza Restaurants Limited (CPRL) headed by Vikram Bakshi for the entire north and east India. CPRL is a family run business and did not have their base in the food and beverage industry CPRL was headed by Vikram Bakshi for the entire north and east India In August 2013, McDonald’s ousted Bakshi, accusing him of financial irregularities Bakshi brought the case to National Company Law Tribunal, arguing McDonald’s was attempting to buy his shares at an undervalued rate In July 2017, 43 McDonald’s outlets in Delhi closed for failure to renew regulatory health licenses   Shortly thereafter, McDonald’s announced termination of the JV
  5. Under Indian law, numerous statutes (such as Companies Act, 2013, Income Tax Act, 1961, Competition Act, 2002) impose vicarious liability for the acts of the company upon its directors and other officers key managerial positions. The statutes generally contain an exception stating that the director shall not be held vicariously liable for the acts of the company if he is able to prove that the alleged act was committed without his knowledge and negligence and has exercised all due diligence to prevent the commission of the offence. Supreme Court judgments in relation to vicarious liability of directors for acts of the company: In Sunil Bharti Mittal v. Central Bureau of Investigation and Others, it was held that when the company is the offender, vicarious liability of the directors cannot be imputed automatically, in the absence of any statutory provision to that effect. In J.K Industries Limited and Others v. Chief Inspector of Factories and Boilers and Others and P.C Agarwal v. Payment of Wages Inspector, M.P and Others, it was held that for vicarious liability under strict liability statutes, a person in charge would be deemed to be responsible for the acts of the company. In State of Madras v. CV Parekh it was held that the liability of the person responsible for running the business of the company is binding when a contravention is committed by the company and if the company is not prosecuted, the person concerned could not be held liable. In Sheoratan Agarwal v. State of Madhya Pradesh, it was clarified that the company alone or the responsible for the conduct of the business of the company alone, may be prosecuted for the acts of the company as there is no statutory requirement that such person cannot be prosecuted unless the company is also accused with him. In Aneeta Hada v. Godfather Travels and Tours (P) Ltd. it was ruled that the prosecution of a company is a condition precedent if the officer-in charge or responsible for the conduct of its business is to be prosecuted. Key takeaway: The directors and officer's liability insurance should cover within its ambit liabilities for which the company cannot indemnify the director. It must be ensured that the indemnification and insurance provisions for directors protect them fully even post expiry of their term as directors in the company.
  6. Key points relating to indemnity clause in the transaction documents: It is important to avoid usage of terms “make good” or “compensate” as it may be interpreted as covering claims only due to actual loss suffered by the indemnified party and not cover instances where the liability has accrued but no payment has been made. Hence, it is advisable to use the “Hold Harmless” instead to cover both the situations. Further, usage of phrase “protect from liability” ensures that the indemnifier has an added obligation of duty to defend cast upon him which requires the indemnifying party to defend the indemnified against covered third-party claims and potentially first party claims depending on the language included in the provision. In Queen Villas Homeowners Association v. TCB Property Management, (California court) it has been observed that, the words "indemnify" and "hold harmless" are not synonymous. One is offensive and the other is defensive - even though both contemplate third-party liability situations. "Indemnify" is an offensive right, a sword which allows a party to seek indemnification. "Hold harmless" on the other hand is defensive which simply provides for a right not to be bothered by the other party itself seeking indemnification.
  7. Key observations of the Delhi High Court: There is no provision of law under which, RBI which is not a party to the suit, can have locus in the matter. It was further stated that as long as the Award stands, there is no need for any special approval of the RBI for remission by Tata of the amount awarded thereunder to Docomo as damages. The said clause of the SHA the SHA protected Docomo from losing no more than 50% of its investment and the RBI seemed to have accepted that this was in the nature of a downside protection and not an assured return on investment. Tata could have lawfully performed its obligation under the SHA to find a buyer at any price through finding a non-resident buyer without any violation of FEMA. The AT award was of the nature of damages and not the pre-fixed sale price of the shares under the SHA. The issue of an Indian entity honouring its commitment under a contract with a foreign entity which was not entered into under any duress or coercion will have a bearing on its goodwill and reputation in the international arena. It will indubitably have an impact on the foreign direct investment inflows and the strategic relationship between the countries where the parties to the contract are located. These too are factors that have to be kept in view when examining whether the enforcement of the Award would be consistent with the public policy of India.
  8. Key observations of the Delhi High Court: There is no provision of law under which, RBI which is not a party to the suit, can have locus in the matter. It was further stated that as long as the Award stands, there is no need for any special approval of the RBI for remission by Tata of the amount awarded thereunder to Docomo as damages. The said clause of the SHA the SHA protected Docomo from losing no more than 50% of its investment and the RBI seemed to have accepted that this was in the nature of a downside protection and not an assured return on investment. Tata could have lawfully performed its obligation under the SHA to find a buyer at any price through finding a non-resident buyer without any violation of FEMA. The AT award was of the nature of damages and not the pre-fixed sale price of the shares under the SHA. The issue of an Indian entity honouring its commitment under a contract with a foreign entity which was not entered into under any duress or coercion will have a bearing on its goodwill and reputation in the international arena. It will indubitably have an impact on the foreign direct investment inflows and the strategic relationship between the countries where the parties to the contract are located. These too are factors that have to be kept in view when examining whether the enforcement of the Award would be consistent with the public policy of India.
  9. Daiichi petitioned before the Delhi High Court for enforcement and execution of the Arbitral Award. Key observations of the Delhi High Court: The Indian promoters made false representations by concealing a documents and information about the genesis, nature and severity of pending investigations by the US FDA and US DoJ against Ranbaxy, thereby, fraudulently inducing Daiichi to acquire the shares of Ranbaxy. A court while awarding damages under section 19 of the Indian Contract Act, 1872 should award reasonable compensation to ensure that the plaintiff is put in the same position he would have been if the representation had been true. Daiichi is not precluded from making a case of fraud notwithstanding the absence of any express representation, warranty or indemnity in the share purchase and share subscription agreement executed between the parties (“SPSSA”). The court examined the grounds for challenging the enforcement of a foreign arbitral award in India and observed the following: While considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award nor does it enquire as to whether, while rendering foreign award, some error has been committed. The enforcement of a foreign arbitral award can be challenged before a court of law in India only if such enforcement is contrary to: (a) fundamental policy of Indian law; or (b) the interests of India; or (c) justice or morality. Further, the scope of “fundamental policy of Indian law” is limited and much narrower than the scope of “public policy of India”, which is a ground for setting aside a domestic arbitral award.
  10. Daiichi petitioned before the Delhi High Court for enforcement and execution of the Arbitral Award. Key observations of the Delhi High Court: The Indian promoters made false representations by concealing a documents and information about the genesis, nature and severity of pending investigations by the US FDA and US DoJ against Ranbaxy, thereby, fraudulently inducing Daiichi to acquire the shares of Ranbaxy. A court while awarding damages under section 19 of the Indian Contract Act, 1872 should award reasonable compensation to ensure that the plaintiff is put in the same position he would have been if the representation had been true. Daiichi is not precluded from making a case of fraud notwithstanding the absence of any express representation, warranty or indemnity in the share purchase and share subscription agreement executed between the parties (“SPSSA”). The court examined the grounds for challenging the enforcement of a foreign arbitral award in India and observed the following: While considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award nor does it enquire as to whether, while rendering foreign award, some error has been committed. The enforcement of a foreign arbitral award can be challenged before a court of law in India only if such enforcement is contrary to: (a) fundamental policy of Indian law; or (b) the interests of India; or (c) justice or morality. Further, the scope of “fundamental policy of Indian law” is limited and much narrower than the scope of “public policy of India”, which is a ground for setting aside a domestic arbitral award.