INDIA Law and Practice Contributed by: Utsav Johri, Sucheta Bhattacharya and Nishal Makharia, JSA Advocates & Solicitors
Pledge Over Shares A pledgee may enforce a pledge by giving reasonable notice to the pledgor. The pledgee does not need a court order to sell the pledged shares. A pledge can be enforced in the depository system, which provides for ease of enforcement. Other Factors Please note that the time periods for the enforcement of security may vary depending on the facts and cir - cumstances surrounding the enforcement, disputes raised by the security provider, non-co-operation in case of security enforcement, the backlog of cases at the court level and any cross-claims filed by the relevant security provider. In the case of a bona fide enforcement of security in accordance with the contractual arrangements, and in due compliance with the applicable law and if the security is enforced for the purpose of completing a sale, the creditor is generally not liable. In cases where assets are appropriated pursuant to security enforcement and the ownership vests with the creditor for the purpose of operating or using an asset, the creditor may be liable for any continuing Transaction documents for finance raised by an Indian borrower domestically and for NCD issuances by an Indian company are governed by Indian law. Facility agreements are governed by English laws. Security documents for security provided by an Indian company are governed by Indian laws. The choice of foreign law for an agreement is generally upheld by Indian courts, unless the choice of law is not bona fide or the application of the foreign law is opposed to public policy. A foreign judgment is conclusive as to any matter directly adjudicated upon in such decree, other than in certain specified cases. Where the judgment is in the nature of a money decree and is passed by a “supe - rior court” of a “reciprocating territory”, then it can be filed with an Indian court and would be enforceable violations under the applicable law. 6.2 Foreign Law and Jurisdiction
as a decree of an Indian court. Where the judgment is not a money decree, a fresh suit must be filed in a competent Indian court, where the foreign judgment
will be admitted only as evidence. 6.3 Foreign Court Judgments
Please see 6.2 Foreign Law and Jurisdiction . 6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights The limitations applicable to enforcement by a private credit lender are similar to those that apply to other creditors generally, as follows. • The enforcement of security may be impacted by insolvency proceedings, as a moratorium is declared, during which time no proceedings can be commenced against the corporate debtor and no action can be taken for the enforcement of security provided by the corporate debtor. Please see 7. Bankruptcy and Insolvency for further details. • The enforcement of security may be limited if the transaction is classified as a preferential transac - tion under the IBC. Please see 7.6 Transactions Voidable Upon Insolvency for further details. • Limitation periods apply to the enforcement of security. Court proceedings should be brought within the relevant limitation period. • Where the security is enforced over an asset that is leased or licensed, or where a concession is grant - ed by the government, the enforcement of security may require consent from the relevant govern - mental authority, or may be subject to conditions imposed by the relevant governmental authority in relation to such enforcement. 6.5 Timing and Cost of Enforcement Please see 6.1 Enforcement of Collateral by Non- Bank Secured Lenders . 6.6 Practical Considerations/Limitations on Enforcement If an enforcement action in relation to the security (which is generally the case) is contested by the security provider, the enforcement process becomes time-consuming: it could take several years to obtain a judgment in India in such scenario. The timeline depends on the facts and the relief sought, and on
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