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Arka Mookerjee | Role of Capital Markets in funding India`s economic development

Sharing a highlight from the JSA Mint India Investment Summit 2025, featuring a series of engaging breakout discussions.

Among these was a compelling conversation between our partner, Arka Mookerjee, and Suraj Krishnaswamy, Managing Director & Head – TMT, Infrastructure & Conglomerates Coverage at Axis Capital Ltd.

Their discussion delved into the crucial topic: “How are capital markets fueling India’s economic journey?” This insightful dialogue explores the evolving role of capital markets in nation-building and provides valuable perspectives on their impact on India’s economic landscape.

Watch this enlightening video and gain deeper insights into how capital markets shape India’s future.

Tags Axis Capital, Capital Markets, Economic Development, India Economy, Investment Banking, JSA, JSA Events, JSA Mint IIS 2025, JSA Thought Leadership, Leading Law Firm, Leading Lawyers, Mint India Investment Summit

JSA advised IIFL Capital Services on ₹799.86 Cr Rights Issue of partly paid-up shares by Fusion Finance Limited

JSA advised IIFL Capital Services Limited, the Lead Manager, in connection with the rights issue of Fusion Finance Limited (formerly known as Fusion Microfinance Limited), involving up to 6,10,58,392 partly paid-up equity shares aggregating to approximately ₹799.86 crores.

The Letter of Offer was filed on March 29, 2025, and the issue closed on April 25, 2025.

Fusion Finance Limited is a non-banking financial company (NBFC), and microfinance institution focused on providing financial services to underserved and unserved women across rural, semi-urban, and urban areas in India, with household incomes of up to ₹300,000.

The JSA team was led by Madhurima Mukherjee Saha (Lead Partner) and included Anuj Pethia (Partner), Bhavini Mohan (Senior Associate), and Kumar Shubham, Anshuman Singh, and Devina Chopra (Associates).

Tags Capital Markets, Equity Shares, Financial inclusion, Financial Services, India Deals, JSA Deal Alert, Legal Advisory, Microfinance, Nbfc, Rights Issue, Rural Finance, Semi Urban Finance, Urban Finance

Filing of Draft Offer Document for Public Issuance of Municipal Green Bonds of Surat Municipal Corporation

JSA advised Surat Municipal Corporation (“Corporation”) and A.K. Capital Services Limited, in the public issuance of municipal green bonds of the Corporation aggregating up to ₹2,000 million (“Green Bonds”). The Draft Offer Document was filed with SEBI on May 9, 2025.

The Corporation is the municipal body of Surat city, constituted under the Constitution of India and Bombay Provincial Municipal Corporation Act, 1949. Surat is a city situated in the state of Gujarat and an important industrial hub and commercial centre of the country. Aligned with the Government of India’s commitment for green and climate-positive infrastructure, the Corporation proposes financing a few of the infrastructure projects aimed at reducing Corporation’s carbon footprint by issuing green municipal bonds. Issuing a debt instrument such as a green bond aligns with Corporation’s objective of promoting sustainability, addressing climate change challenges, and fostering inclusive economic growth in Surat.

Our Transaction Team Comprised Lead Partner, Madhurima Mukherjee Saha and Anish Mashruwala, Partners, Sagar Batra and Srinjoy Bhattacherjee, Senior Associates, Ambuj Gupta and Bhavini Mohan & Associates Arpita Mittal, Nidhi Prakriti, Rachit Munjal and Shivani Agrawal.

Deal value – INR 2 billion

Tags Climate Finance, Climate Positive, Debt Instruments, ESG, Green Bonds, Green Investment, Gujarat, India Deals, Infrastructure Funding, JSA Deal Alert, Legal Advisory, Municipal Bonds, Public Issuance, SEBI Filing, Surat City, Sustainable Infrastructure, Urban Development

JSA Prism | Finance | May 2025

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Please click here to download the Prism as a PDF.

The Reserve Bank of India eases norms for short-term investments by Foreign Portfolio Investors under the general route

The Reserve Bank of India (“RBI”), vide its notification dated May 8, 2025 (“Notification”), has provided significant relaxations relating to investments by Foreign Portfolio Investors (“FPIs”) in corporate debt securities under the general route.

Under the Notification, the RBI has immediately withdrawn the short-term investment limit and concentration limit applicable on investments made by FPIs in corporate debt securities under the general route. Earlier, the FPIs were permitted to invest only up to: (a) 30% of their total investments in short-term corporate debt securities (i.e., corporate debt securities with a residual maturity of up to 1 (one) year); and (b) 15% of the prevailing investment limit for corporate debt securities for long-term FPIs (i.e., Sovereign Wealth Funds, Multilateral Agencies, Pension/Insurance/Endowment Funds and foreign Central Banks), and 10% of the prevailing investment limit for corporate debt securities for other FPIs.

RBI has also revised the Master Direction – Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 to incorporate this revision.

Conclusion

The relaxations provided by the RBI simplifies the regulatory framework and provides FPIs with a greater flexibility to structure their investments. This change is also expected to promote foreign inflows in the Indian corporate debt security market.

This Prism has been prepared by:

Nand Gopal Anand
Partner

Harshit Dusad
Principal Associate

For more details, please contact [email protected]

Tags Corporate Debt, Debt Markets, Financial Regulation, FPI Norms, FPI Regulations, India Finance, Investment Ease, JSA, RBI Update, Regulatory Update

JSA advised Dentcare Dental Lab and its promoters on the primary and secondary investments by ICICI Venture Funds Management

JSA advised Dentcare Dental Lab Private Limited (“Dentcare”) and its promoters on the minority investment by ICICI Venture Funds Management Company (“ICICI”) Limited in Dentcare’s share capital through primary and secondary transactions.

Dentcare is engaged in the manufacturing of dental products and services, with a strong presence in both domestic and international markets. This investment will result in a comprehensive capital structure for Dentcare, thus supporting its business growth and expansion plans. It will further enable Dentcare to consolidate its subsidiaries and expand its operations, thereby strengthening its market position and global footprint.

Dentcare was the first Company to obtain CDSCO approval for manufacturing of dental prostheses and has witnessed remarkable success since its inception, with operations expanding across the Middle East, Australia, New Zealand, UK and USA.

This is the first investment round raised by Dentcare, which makes this an innovative and one of its kind deal in this sector.

Our transaction team comprised Lead Partner & National Corporate Lead, Iqbal Khan, Partner, Ashid Basheer, Principal Associate, Krishaal Morjaria & Associates, Archit Chakravorty and Nidhi.

Our Employment team comprised Partner, Gerald Manoharan and Sonakshi Das.

Tags CDSCO, Corporate Law, Dental Innovation, Dentcare, FDI India, Growth Capital, Healthcare Deals, Healthcare Investment, ICICI Venture, International Expansion, JSA Deal Alert, Private Equity, SA deal

Chambers and Partners | Global Practice Guide | Acquisition Finance 2025

Our Partners, Anish Mashruwala, Utsav Johri, Megha Upadhyaya, and Principal Associate Sahil Unadkat, have authored the Global Practice Guide for the India region in “Acquisition Finance 2025”, for Chambers and Partners. This comprehensive guide offers valuable insights and analysis that underscore our commitment to excellence in acquisition finance.

Please click here to read the Global Practice Guide.

Tags Acquisition Finance, Chambers and Partners, Corporate Finance, Cross Border Transactions, Debt Financing, Finance Law, Financial Services, India Business Law, India Finance Guide, JSA Thought Leadership, Legal Advisory, Legal Insights, Mergers and Acquisitions, Structured Finance, Transaction Advisory

JSA advised Sumitomo Mitsui Banking Corporation in acquiring 20% stake in YES Bank to become the Bank’s largest shareholder

Kedaara Capital Fund II LLP sells its 100% stake in Sunbeam Lightweighting Solutions Private Limited

JSA advised Sumitomo Mitsui Banking Corporation in acquiring 20% stake in YES Bank Limited. The transaction will result in SMBC becoming the Bank’s largest shareholder. SMBC will acquire the 20% stake in YES Bank through a secondary purchase of 13.19% from SBI and 6.81% from other shareholders including Axis Bank Limited, Bandhan Bank Limited, Federal Bank Limited, HDFC Bank Limited, ICICI Bank Limited, IDFC First Bank Limited and Kotak Mahindra Bank Limited. SBI and the other selling shareholders had invested in the Bank as part of the YES Bank Reconstruction Scheme in March 2020.

This transaction is the largest cross-border investment in the Indian banking sector. The transaction is subject to the necessary regulatory and statutory approvals including from the Reserve Bank of India and Competition Commission of India and will be subject to customary closing conditions.

SMBC, is a wholly owned subsidiary of Sumitomo Mitsui Financial Group, Inc. SMFG is the second largest banking group in Japan with Total Assets of ~US$2tn as of December 2024 with strong global presence. SMFG is listed on the Tokyo Stock Exchange, Premier Market of the Nagoya Stock Exchange and SMFG’s American Depositary Receipts (ADRs) are also listed on the New York Stock Exchange. SMFG is rated A1 / A- (Stable) by Moody’s and S&P respectively (long-term outlook).

SMBC is among the leading foreign banks in India and SMFG’s wholly owned subsidiary, SMFG India Credit Company Limited, is among the largest diversified NBFCs in India.

The transaction is a significant milestone to drive YES Bank’s next phase of growth, profitability and value creation and we expect to leverage SMBC’s global expertise in this phase.

The JSA Team was led by Lead Partner Vikram Raghani along with Partner Birbahadur Sachar, Principal Associate Vwastav Ghosh, Senior Associates Vaishnavi Vyas and Aleesha Jadhav & Associates Tavishi Chandra, Samika Pachouly, Pranjal Shorey, and Niki Shah.

The banking and finance team comprised Partner Anish Mashruwala along with Partners Pratish Kumar and Sumitava Basu, Principal Associate Karan Abhichandani, and Associate Anmol Narang.

Our competition team was led by Partner and Chair of Competition Law, Nisha Kaur Uberoi, Partner along with Partner Harshita Singh Parmar, Principal Associate, Shambhvi Sinha, & Associates Akanksha Mathur, Keerthana Kesavan, Aditya Prakash, K Ashmeka and Meghaa G.

Tags Cross Border Investment, Financial Services, India Deals, Indian Banking Sector, JSA Deal Alert, Legal Advisory, Regulatory Approvals, Secondary Purchase, Strategic Stake Acquisition

JSA Prism | Insolvency Law | May 2025

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Please click here to download the Prism as PDF.

Known statutory claims survive Insolvency and Bankruptcy Code, 2016 resolution plan, if not disclosed

On April 2, 2025, the Madurai Bench of the Madras High Court (“Madras HC”), in M/s. Empee Distilleries Limited vs. The Superintending Engineer and Ors.[1], delivered a pivotal ruling on the interplay between the Insolvency and Bankruptcy Code, 2016 (“IBC”) and statutory claims under litigation. The Madras HC held that a claim pending before a statutory appellate body is not extinguished upon approval of a resolution plan by the National Company Law Tribunal (“NCLT”) if it was known but not disclosed during the Corporate Insolvency Resolution Process (“CIRP”). This decision underscores the duty of the Interim Resolution Professional (“IRP”) and promoters to ensure full transparency regarding known debts.

Brief facts

M/s. Empee Distilleries Limited (“Empee”) underwent CIRP, with a resolution plan approved by the NCLT on January 20, 2020, for INR 475 crore (Indian Rupees four hundred and seventy-five crore), covering secured creditors, statutory dues, and unsecured creditors under the waterfall mechanism.
The Tamil Nadu Generation and Distribution Corporation Limited (“TANGEDCO”), a statutory creditor, claimed INR 1,23,69,195 (Indian Rupees one crore twenty-three lakh, sixty-nine thousand, one hundred and ninety-five) in electricity dues, including INR 1,14,80,039 (Indian Rupees one crore fourteen lakh, eighty thousand and thirty-nine) under litigation in a writ petition (W.P. No. 26553 of 2013) pending since 2013, which was known to Empee’s promoters and the IRP.
TANGEDCO did not participate in the CIRP, and its claim was not included in the resolution plan. Post-approval, the new management sought electricity reconnection, which TANGEDCO denied due to unpaid dues.
Empee challenged TANGEDCO’s demand via a writ petition, arguing that the claim was extinguished under the IBC’s ‘clean slate theory’. The single judge ruled that while TANGEDCO could not enforce the claim directly, it could refuse reconnection under the Tamil Nadu Electricity Supply Code.
Empee appealed, leading to the present intra-court ruling by the Madras HC.

Issue

Does a statutory claim under litigation, known but not disclosed during the CIRP, get extinguished upon approval of a resolution plan by the NCLT?

Findings and analysis

The Madras HC, after reviewing IBC provisions and judicial precedents, held as follows:

the pending writ petition over TANGEDCO’s INR 1,14,80,039 (Indian Rupees one crore fourteen lakh, eighty thousand and thirty-nine) claim was known to Empee’s promoters and the IRP but was not disclosed to the committee of creditors. This omission breached the IRP’s statutory duty, preventing the claim’s extinguishment;
citing Ghanashyam Mishra and Sons (P) Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd.[2], the court affirmed that the ‘clean slate theory’ (where claims not in the resolution plan are extinguished), applies only when all known debts are disclosed. Non-disclosure of a known, sub judice claim undermines this principle;
the court harmonized State Tax Officer vs. Rainbow Papers Limited[3] (“Rainbow Papers”), which treated statutory dues as secured debts, with Paschim Anchal Vidyut Vitran Nigam Limited. vs. Raman Ispat Private Limited[4], clarifying that Rainbow Papers applies narrowly and does not override the IBC’s disclosure requirements. Here, the focus was on procedural lapse, not the nature of the dues; and
due to the IRP’s failure to disclose the pending claim, TANGEDCO’s demand remained enforceable as a condition for reconnection, subject to the litigation’s outcome. The IRP failed to gather and present information about the pending statutory dues, breaching IBC mandates. The court rejected Empee’s argument that TANGEDCO’s non-participation in the CIRP extinguished the claim, emphasizing that known debts cannot be excluded by silence.

Conclusion

The ‘clean slate theory’, or the ‘fresh start theory’, in the context of IBC, means that once a resolution plan for a financially distressed company is approved, the company is considered to have a fresh start, free from all past liabilities except those specifically addressed in the approved plan. This judgment reinforces that the IBC’s ‘clean slate theory’ hinges on transparency. Known statutory claims, including those under litigation, survive resolution plan approval if not disclosed during the CIRP. It places a heightened onus on IRPs and promoters to diligently report all liabilities, protecting creditors like TANGEDCO from being prejudiced by procedural lapses. The decision clarifies that while the IBC overrides inconsistent laws under Section 238, this protection does not extend to shielding non-disclosure of known debts.

This Prism has been prepared by:

Varghese Thomas
Partner

Fatema Kachwalla
Partner

Shaan Mamta Bhatt
Associate

For more details, please contact [email protected].

[1] W.A (MD) No. 1426 of 2022

[2] (2021) 9 SCC 657

[3] (2022) SCC Online SC 1162

[4] (2023 SCC OnLine SC 842)

Tags CIRP, Clean Slate Theory, Corporate Debts, IBC Compliance, IBC Litigation, Insolvency Law, JSA, JSA Prism, Madras High Court, Resolution Plan, Statutory Dues, TANGEDCO, Transparency In IBC

JSA Prism | Employment Law | May 2025

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Please click here to download the Prism as PDF.

Karnataka High Court to examine validity of compulsory gratuity insurance rules

In the ongoing case of Bruhat Bangalore Hotels Association and Ors. vs. The Principal Secretary[1], a single judge bench of the Karnataka High Court (“Karnataka HC”), while examining the constitutional validity of the Karnataka Compulsory Gratuity Insurance Rules, 2024 (“Insurance Rules”) has, vide an interim order dated April 28, 2025, restrained the Government of Karnataka from taking coercive action against the petitioners for non-payment of gratuity insurance premiums for employees who have not completed 5 (five) years of continuous service, subject to the petitioners continuing to pay insurance premiums for employees who have completed 5 (five) years of continuous service.

Brief facts

On January 10, 2024, the Government of Karnataka notified[2] the Insurance Rules pursuant to Section 4A of the Payment of Gratuity Act, 1972 (“Gratuity Act”), requiring all eligible employers in Karnataka to obtain compulsory gratuity insurance from Life Insurance Corporation of India or other approved insurers, for their liability towards payment of gratuity to all eligible employees under the Gratuity Act. Existing establishments were required to comply with these directions within 6 (six) months of the notification (extended from the initial 60 (sixty) days), while new establishments are expected to comply within 30 (thirty) days of commencement of their operations.

On March 19, 2024, the Bruhat Bangalore Hotels Association and other industry bodies filed writ petitions before the Karnataka HC, challenging the constitutional validity of the Insurance Rules in its entirety and seeking:

a declaration that the notification dated January 10, 2024 (i.e., the Insurance Rules) is unconstitutional and violative of Article 14 of the Constitution of India; and
an interim stay on the operation of the Insurance Rules pending final adjudication.

Grounds for challenge

The challenge is primarily premised on the following[3]:

pursuant to requirements under the Insurance Rules, employers are bound to pay insurance premiums even for those employees who have not completed 5 (five) years of continuous service as prescribed under the Gratuity Act — despite gratuity becoming payable only upon completion of such period under the Gratuity Act; and
the Insurance Rules apply uniformly to all employers, without accounting for differences in the size or financial capacity of the establishment — potentially impacting the profitability of small-scale businesses.

Preliminary observations and interim order

While passing the interim order that no coercive steps should be taken against the petitioners for not paying premiums for employees who have not completed 5 (five) years of continuous service—so long as premiums are paid for eligible employees—the Karnataka HC made the following observations:

as the pleadings in the matter are yet to be completed, it would not be appropriate to stay the operation of the Insurance Rules entirely at this stage, as such a direction could prevent employers in a position to pay the insurance premium, from continuing to do so;
continuing with coercive enforcement measures during pendency of the proceedings could result in undue hardship—particularly in respect of employers who are unable to pay premiums for employees who have not completed 5 (five) years of continuous service, and therefore, are not yet eligible for gratuity under the Gratuity Act.

The matter is next listed for hearing on June 3, 2025.

Potential outcome and impact

The ongoing proceedings before the Karnataka HC assume particular significance as they mark the first constitutional challenge to the Insurance Rules. Notably, several employers across key sectors such as hospitality, manufacturing, retail have already commenced compliance efforts—ranging from procuring group gratuity insurance policies, to undertaking internal documentation and registration requirements as compliance measures under the Insurance Rules and Gratuity Act.

Against this backdrop, the outcome of the present case is likely to set a precedent with broad-based implications. Should the Karnataka HC uphold the validity of the Insurance Rules—particularly the obligation to insure employees who have not yet completed 5 (five) years of continuous service—employers will be required to front-load insurance costs regardless of whether gratuity has legally accrued. This would effectively result in continued concerns around cost efficiency, disproportionate burden on smaller enterprises, and inconsistency with the broader statutory construct under the Gratuity Act. Conversely, a favourable ruling for the petitioners could potentially offer significant relief to financially constrained businesses and may prompt a reconsideration of the manner in which gratuity insurance obligations are framed and enforced.

This Prism has been prepared by:

Sonakshi Das
Partner

Mitali Jain
Associate

For more details, please contact [email protected].

[1] W.P. Nos. 9358/2024, 12931/2025 and other connected petitions (Interim order passed on April 28, 2025)

[2] Notification No. LD 397 LET 2023

[3] As per Karnataka High Court Daily Order dated April 28, 2025

Tags Constitutional Law, Employer Compliance, Employment Regulations, Gratuity Act, Gratuity Insurance, JSA, JSA Prism, Judicial Update, Karnataka High Court, Labour Law, Legal Challenge, Policy Impact, Writ Petition

JSA Prism | IFSCA | May 2025

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Please click here to download the Prism as PDF.

International Financial Services Centres Authority notifies fund management regulations 2025 to streamline fund management industry in Gujarat International Finance Tec-City – International Financial Services Centres, offering investor-friendly measures and more operational flexibility

In furtherance of the commitment to develop the Gujarat International Finance Tec-City (“GIFT”) city as the premier global centre for fund management activities and with a view to facilitate the next phase of growth in fund management operations within the International Financial Services Centres (“IFSCs”), the International Financial Services Centres Authority (“IFSCA”) undertook a comprehensive review of the extant IFSCA (Fund Management) Regulations, 2022 (“2022 FM Regulations”). Pursuant to this review, the IFSCA notified the International Financial Services Centres Authority (Fund Management) Regulations, 2025 (“2025 FM Regulations”) on February 19, 2025, superseding the 2022 FM Regulations.

Key amendments introduced under the 2025 FM Regulations

Non-retail scheme (venture capital and restricted scheme)

The minimum corpus of the scheme has been reduced from USD 5,000,000 (US Dollars five million) to USD 3,000,000 (US Dollars three million). This change will make entry of the new fund managers more accessible.
The validity of private placement memorandum has been increased to 12 (twelve) months from 6 (six) months. It will provide more time to Fund Management Entities (“FMEs”) to raise the minimum corpus to start a scheme.
FMEs or their associates can now invest up to 100% (as opposed to erstwhile 10%) in a venture capital scheme provided that:
- the FME and its associate investing in the scheme, are persons resident outside India and do not have any person resident in India as their ultimate beneficial owners; and
- not more than one-third of the corpus of the scheme is invested in an investee company and its associates.
Open-ended schemes have been permitted to commence its investment activities upon receiving an investment of USD 1,000,000 (US Dollars one million) and the minimum corpus of USD 3,000,000 (US Dollars three million) can be achieved within a 12 (twelve) month period. This allows FMEs additional time period to achieve necessary corpus.
A provision for joint investments has been introduced for restricted schemes. It aims to increase investor participation in the schemes launched by FMEs.

Retails schemes

The minimum corpus has been reduced from USD 5,000,000 (US Dollars five million) to USD 3,000,000 (US Dollars three million).
The mandatory requirement for listing close-ended retail schemes on recognised stock exchanges has been made optional, provided that each investor’s minimum contribution to the scheme is not less than USD 10,000 (US Dollars ten thousand).
The ‘sound track record’ requirement for retail FMEs now considers the experience of other entities in the FME group, making it easier for new fund managers to enter.

Portfolio management services

The minimum investment amount has been reduced to USD 75,000 (US Dollars seventy-five thousand) from USD 150,000 (US Dollars one hundred and fifty thousand).
Clients under a portfolio management services may maintain their funds in specific account of the client maintained with a regulated broker dealer, amongst other accounts subject to certain prescribed conditions.

Manpower and operational flexibility

No prior approval of IFSCA is required for appointing any Key Managerial Personnel (“KMPs”) – only an intimation will suffice.
FMEs managing Assets under Management (“AUM”) over USD 1,000,000,000 (US Dollars one billion) (excluding the AUM of fund of funds) will have to appoint one additional KMP within a period of 6 (six) months from the end of the financial year. This requirement is meant to manage the higher operational risks associated with larger AUM.
It is mandated that the employees of FMEs should undergo certifications from specified institutions to ensure continuous professional competence.
The requirements regarding educational qualifications, work experience, eligibility criteria of the KMPs have been clarified to widen the pool of eligible candidates to man the KMP positions and to streamline the process for appointment of KMPs.

Conclusion

2025 FM Regulations represents a regulatory advancement aimed at reinforcing the positioning of IFSC as globally competitive financial jurisdictions by balancing business facilitation with investor protection mechanisms. In nutshell, the aim of replacing 2022 FM Regulations is to enhance the overall ease of doing business, incorporate protective measures to safeguard the interest of investors and provide necessary clarification to the intent and scope of existing regulatory regime.

This Prism has been prepared by: