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JSA Prism | Dispute Resolution | August 2024

Please click here to download the Prism as a PDF.

Hon’ble Supreme Court of India holds that judicial role encompasses the duty to direct the Executive branch to review the working of the statutes and audit the statutory impact

The Hon’ble Supreme Court of India (“Supreme Court”), in a recent judgment dated July 30,2024[1] in Yash Developers vs. Harihar Krupa Co-operative Housing Society Limited[2], while examining the provisions of Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (“Maharashtra Slum Areas Act”) vis-à-vis scope of judicial review against an order passed by the Apex Grievance Redressal Committee (“AGRC”) under Section 13 of the Maharashtra Slum Areas Act, inter alia held that:

assessment of the working of the statute to realise if its purpose and objective is achieved or not is the implied duty of the Executive branch;
judicial role encompasses the duty to direct the Executive branch to review the working of the statutes and audit the statutory impact; and
judicial review is ineffective until and unless duty is identified with accountability.

Brief Facts

In 2003, Yash Developers (“Appellant”) was appointed as a developer by Harihar Krupa Co-Operative Housing Society Limited (“Respondent No. 1”) to develop a slum rehabilitation building (“Project”) under the Development Agreement dated August 20, 2003 (“Development Agreement”). However, owing to the inordinate delay of more than 16 (sixteen) years (i.e., from 2003 to 2019) in commencing the construction of the Project, the Development Agreement in favour of the Appellant was terminated by the order dated August 4, 2021 passed by AGRC (“Order”).
Aggrieved by AGRC’s Order, the Appellant challenged the said Order in Writ Petition (L) No. 18022 of 2021 filed before the Ld. Bombay High Court (“Bombay HC”). On October 14, 2022, Bombay HC dismissed the Appellant’s writ petition on facts as well as on law, while observing the limited scope of judicial review under Article 226 of the Constitution of India against the decision of the statutory authority such as AGRC.
Thereafter, the Appellant challenged the judgment of Bombay HC before the Supreme Court in the present civil appeal.

Issues

The following issues fell for consideration before the Supreme Court:
- the scope of judicial review against an order under Section 13 of the Maharashtra Slum Areas Act; and
- Accountability of officers exercising power coupled with duty under Section 13 of the Maharashtra Slum Areas Act.
Apart from the aforesaid issues, the Supreme Court also dealt with:
- the submissions of the parties on the facts of the case since Appellant had argued the case only on the facts; and
- issue of performance audit of statute.

Analysis and observations of Supreme Court

While upholding the decision of AGRC and the Bombay HC, the Supreme Court dismissed the Appellant’s civil appeal inter alia observed and held as under:

the submissions of Appellant regarding 16 (sixteen) years delay in the project, the Supreme Court opined that:
- delay from 2003 to 2011, delay of 8 (eight) years in resolving disputes with a competing builder cannot be a justification under any circumstance;
- delay from 2011 to 2014, it was for Appellant as a developer to make all the necessary arrangements for environmental clearances while other sanctions and permissions are pending;
- delay from 2014 to 2019, non-cooperation of some of the members cannot be a ground for delaying the project; and
- delay from 2015 to 2017, findings of the AGRC and Bombay HC are very clear wherein it was correctly held that the delay caused due to the sanction of the draft development plan for the construction of the road cannot be a justification for delaying the project;
case after case, the Bombay HC has been ruling that, in respect of the Maharashtra Slum Areas Act, (a) the developer is duty-bound to complete the project within the stipulated time; and (b) the Slum Rehabilitation Authority has not merely the power but a broader duty to ensure that the developer completes the project within time. However, the said rulings have not had the desired impact, much less compliance. The reason is that, neither the developer nor the authority is asked to face the consequences of their derelictions. Until and unless the duty is identified with accountability, judicial review is ineffective.
The Maharashtra Slum Areas Act came into being in 1971 with the intend to materialize the constitutional assurance of dignity of the individual by providing basic housing, so integral to human life. However, for over 5 (five) decades, the Bombay HC has been exercising judicial review jurisdiction, disposing of writ petitions raising claims or challenges to the exercise of powers or dereliction of duties by authorities under the Maharashtra Slum Areas Act. Such propensity and the proclivity of the statute to generate litigation are worrisome. There seems to be a problem with the statutory framework.
While reviewing and assessing the implementation of a statute, is an integral part of Rule of Law, assessment of the working of the statute to realise if its purpose and objective is achieved or not is the implied duty of the executive government. The purpose of such review by courts is to ensure that a law is working out in practice as it was intended. If not, to understand the reason and address it quickly. It is in this perspective and in recognition of this obligation of the executive government that the constitutional courts have directed governments to carry performance/ assessment audit of statutes or has suggested amendments to the provisions of a particular enactment so as to remove perceived infirmities in its working.
One of the functions of the judiciary is to facilitate access to justice and ensure the effective functioning of constitutional bodies. In this role, the judiciary does not review executive and legislative actions, but only nudges and provides impetus to systemic reforms. The facilitative role is not just inspired from the institutional role that the judiciary perceives for itself but is also a directive of many of the fundamental rights in Part III of the Constitution and the cherished preambular vision of justice-social, economic and political.

Conclusion

In respect of the duty of judiciary and Executive branch in respect of working of the statute, Supreme Court held as under:
- assessment of the working of the statute to realise if its purpose and objective is achieved or not is the implied duty of the Executive branch;
- judicial role encompasses the duty to direct the Executive branch to review the working of the statutes and audit the statutory impact; and
- judicial review is ineffective until and unless duty is identified with accountability.
The judgment of the Supreme Court underscores the constitutional court’s duty that while exercising judicial review, the court’s ought to:
- strike a delicate balance, by ensuring that justice is accessible and that the Executive branch remains accountable for the effective implementation of laws. This will ensure that executive actions are in accordance with the law of the land and the legislative intent.
- intervene when necessary and to direct the executive to reassess and review the working of the statutes and audit the statutory impact, and act as a facilitator of ‘access to justice’, one of the roles of the judiciary, especially the constitutional courts.

This Prism is prepared by:

Anupam Varma
Partner

Rahul Kinra
Partner

Girdhar Gopal Khattar
Associate

For more details, please contact [email protected]

[1] P.S. Narasimha and Aravind Kumar, JJ.

[2] 2024 SCC OnLine SC 1840. Civil Appeal No. 8127 of 2024 and connected matter

Tags Dispute Resolution, JSA, JSA Prism, Leading Law Firm, Leading Lawyers, Legal Updates, Supreme Court

JSA successfully advised and represented Tata Communications Limited in defending an award in its favour before the High Court of Delhi

The Delhi High Court, in a decisive and swift ruling, dismissed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, filed by the Union of India, at the very first hearing. The High Court emphatically remarked that the Union of India should never have approached the court with such a meritless challenge. The High Court also directed that the judgment be placed before the Secretary, Ministry of Woman and Child Development, and the Secretary, Department of Legal Affairs, Government of India, for necessary administrative directions.

The High Court, while dismissing the petition, held that there was no absurdity and arbitrariness in the conclusions arrived at by the Ld. Sole Arbitrator, which are sine quo non for interference under Section 34 of the Act.

Our Disputes Team Comprised Partner – Padmaja Kaul, Principal Associate – Yugank Goel and Associate – Vansh Bhutani.

Tags Arbitration and Conciliation Act, JSA, Leading Law Firm, Leading Lawyers, Section 34

Suvaaankoor Das | Group Companies Doctrine

Arbitration has become a key negotiation point for companies before the execution of any agreement. With the Hon’ble Supreme Court’s recent judgment on the group of companies’ doctrine, there has been an expansion in the applicability of the arbitration clause in an agreement to companies other than the signatories (including their subsidiaries and holding companies). There is, therefore, a need to critically analyse the judgment to identify the scope of such expansion, as it would have far-reaching effects on the negotiations conducted prior to execution of an agreement.

In this podcast, our Principal Associate, Suvaaankoor Das discusses about group of companies’ doctrine and the effect of the Hon’ble Supreme Court’s judgment in Cox and Kings Ltd. vs. SAP India Pvt. Ltd. along with the way forward for the pre-dispute stage, i.e., negotiations of the agreement and the post-dispute stage, i.e., prior to and during the arbitral proceedings.

Tags Arbitration, Dispute Resolution, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, Negotiation

JSA Brief | July 2024

This edition of the JSA Brief showcases JSA authored articles, updates & newsletters and achievements such as deals and events in all practice area over the preceding month (July 2024).

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

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Tags Articles, Deal Making, Events, JSA, JSA Prism, Legal Updates, Newsletters, Publications, Recognitions

Dispute Resolution | Semi-Annual Compendium 2024

This compendium consolidates all the relevant notifications and circulars pertaining to Dispute Resolution, which has been circulated during the calendar period from January 2024 till June 2024.

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

*In case the document is not visible on the device you are using, please click the link above.

Tags Arbitration Law, Dispute Resolution, High Court, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, NCLT, Newsletters, Supreme Court of India

JSA successfully represented Resolution Professional of Smaaash Entertainment Private Limited before Ld. NCLT in obtaining an order of investigation against the erstwhile promoters for concealing important information from the Resolution Professional

In landmark Judgment on the interplay of the Companies Act, 2013 (“Companies Act”) and the Insolvency and Bankruptcy Code, 2016 (“Code”), on 31.07.2024, Ld. National Company Law Tribunal (“Ld. NCLT”) passed an Order, under an application filed under Section 19 of the Code, issuing a notice under Section 213(2) of the Companies Act against the promoters of the Corporate Debtor to investigate if affairs of the Corporate Debtor was conducted to defraud the creditors. The NCLT Order provides relief to the Resolution Professional against the errant erstwhile management and discourages actions adopted by the erstwhile management in creating impediments in CIRP of the Corporate Debtor.

Our disputes team comprised: Lead Partner – Varghese Thomas, Partners – Kunal Kaul and Fatema Kachwalla, and Associate – Virgil Braganza.

Tags Educate Girls Globally, JSA, Leading Law Firm, Leading Lawyers

JSA Prism | Dispute Resolution | August 2024

Please click here to download the Prism as a PDF.

‘Effect of ‘accord and satisfaction’ or ‘full and final settlement’ on arbitration; unsuitability of ‘eye of the needle’ and ‘ex-facie meritless’ tests in modern day arbitrations; and role of the referral courts

‘Accord and satisfaction’ or ‘full and final settlement’ of claims arising under a contract, do not by themselves, preclude future arbitration in respect of such settled claims, if the party alleges fraud, coercion or undue influence in the execution of the contract. Tests such as ‘Eye of the Needle’ and ‘ex-facie meritless’, previously laid down by courts, do not conform with the principles of modern-day arbitration. Referral courts must not conduct an intricate evidentiary enquiry as to whether the claims are time barred and this determination should be reserved for the arbitrator.

In a recent judgment of SBI General Insurance Ltd. vs. Krish Spinning[1], the Hon’ble Supreme Court of India (“Supreme Court”) has held that parties may refer a dispute to arbitration even after full and final settlement of the contract, if the party said to have executed the contract (a discharge voucher in the present case) alleges that the execution was on account of fraud, coercion or undue influence exercised by the other party.

Furthermore, in exercise of its powers under Section 11 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), the referral court will only look into the existence of the arbitration agreement and will refuse arbitration only where it was manifest that the claims were ex- facie time barred, or the claims are ex-facie frivolous and non-arbitrable. A referral court may reject arbitration only in exceptional cases where the plea of fraud or coercion appears to be ex-facie frivolous and devoid of merit.

The Supreme Court has reiterated and clarified that at the stage of deciding an application under Section 11 of the Arbitration Act, the referral court must not conduct an intricate evidentiary enquiry into the question as to whether the claims are time barred and must leave that determination for the arbitrator.

Brief facts

The brief facts of the case are as follows:

Krish Spinning (“Respondent”) obtained a standard fire and special perils insurance policy from SBI General Insurance Company (“Appellant”) for a total insured sum of INR 7,20,00,000 (Indian Rupees seven crore twenty lakh), with the period of insurance from March 31, 2008, to March 30, 2019.
During the policy period, 2 (two) fire incidents occurred at the Respondent’s factory; first incident on May 28, 2018, with the Respondent claiming a loss of INR 1,76,19,967 (Indian Rupees one crore seventy-six lakh nineteen thousand nine hundred and sixty-seven); and the second incident on November 17, 2018, with the Respondent claiming a loss of INR 6,32,25,967 (Indian Rupees six crore thirty-two lakh twenty-five thousand nine hundred and sixty-seven). The appeal before the Supreme Court pertained to the disputes arising out of settlement of claims with respect to the first incident. A surveyor was appointed to assess the loss due to the fire incident.
Subsequently, the Respondent signed an advance discharge voucher dated January 4, 2019, confirming receipt of INR 84,19,579 (Indian Rupees eighty-four lakh nineteen thousand five hundred and seventy-nine) from the Appellant as the full and final settlement towards its claim. The discharge voucher also stated, inter alia, that the Respondent was discharging the Appellant of the liability arising under its claim.
Disputes arose between the parties as the Respondent subsequently alleged that it had to sign the final discharge voucher as it was badly in need of money and sought balance claim settlement amounts from the Appellant.
As the parties were unable to arrive at any amicable resolution of the dispute and as no arbitrator was nominated by the Appellant in response to the notice invoking arbitration, the Respondent filed a petition for the appointment of arbitrator under Section 11(6)of the Arbitration Act, before the High Court. The High Court allowed the petition and appointed an arbitrator.
The Appellant filed a special leave petition before the Supreme Court challenging the Order of the High Court appointing an arbitrator (“Impugned Order”).

Issues

Whether execution of a discharge voucher towards full and final settlement between the parties will operate as a bar to invoke arbitration?
What is the scope and standard of judicial scrutiny that an application under Section 11(6) of the Arbitration Act can be subjected to when a plea of ‘accord and satisfaction’ is taken by the defendant?
What is the effect of the decision of the Supreme Court in In Re: Interplay between arbitration agreements under the Arbitration Act and the Indian Stamp Act 1899 on the scope of powers of the referral court under Section 11 of the Arbitration Act?

Key findings of the Supreme Court

Re: Whether execution of a discharge voucher towards full and final settlement between the parties will operate as a bar to invoke arbitration.

there is no rule of an absolute kind which precludes arbitration in cases where a full and final settlement has been arrived at. In National Insurance Co. Ltd vs. M/S. Boghara Polyfab Pvt. Ltd[2], the discharge voucher was alleged to have been obtained on the ground of coercion and it was observed that a discharge voucher or a no-dues certificate extends only to those vouchers or certificates which are validly and voluntarily executed;
mere execution of a full and final settlement receipt or a discharge voucher would not by itself operate as a bar to arbitration when the validity of such a receipt or voucher is challenged by the claimant on the ground of fraud, coercion or undue influence. In other words, where the parties are not ad idem over accepting the execution of the no-claim certificate or the discharge voucher, such disputed discharge voucher may itself give rise to an arbitrable dispute; and
once the full and final settlement of the original contract itself becomes a matter of dispute and disagreement between the parties, then such a dispute can be categorised as one arising ‘in relation to’ or ‘in connection with’ or ‘upon’ the original contract. And such a dispute can be referred to arbitration under the arbitration clause contained in the original contract, notwithstanding the plea that there was a full and final settlement between the parties.

Re: Scope and standard of judicial scrutiny that an application under Section 11(6) of the Arbitration Act can be subjected to when a plea of ‘accord and satisfaction’ is taken by the defendant:

relying on Vidya Drolia and Ors vs. Durga Trading Corporation[3], it was held that in exceptional cases, where it was manifest that the claims were ex- facie time barred and deadwood, the Court could interfere and refuse reference to arbitration. In the context of ‘accord and satisfaction’, this view was recently adopted in NTPC Ltd. vs. M/s SPML Infra Ltd.[4], where the ‘eye of the needle’ test was elaborated, which permits a referral court to reject arbitration in such exceptional cases where the plea of fraud or coercion appears to be ex-facie frivolous and devoid of merit;
in the present case however, the Supreme Court held that tests like the ‘eye of the needle’ and ‘ex-facie meritless’, although try to minimize the extent of judicial interference, yet they require the referral court to examine contested facts and appreciate prima facie evidence (however limited the scope of enquiry may be). These tests, as such are not in conformity with the principles of modern arbitration which place arbitral autonomy and judicial non-interference on the highest pedestal; and
thus, the position is that ordinarily, in exercise of its powers under Section 11of the Arbitration Act, the Court will only look into the existence of the arbitration agreement and would refuse arbitration only as a demurrer when the claims are ex-facie frivolous and non-arbitrable.

Re: Interplay between arbitration agreements under the Arbitration Act and the Indian Stamp Act 1899 on the scope of powers of the referral court under Section 11 of the Arbitration Act:

relying on its seven-Judge Bench decision in In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act1996 and the Indian Stamp Act 1899[5], the Supreme Court held that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else.

The Supreme Court further held that in view of its decision in In Re: Interplay (supra), the observations made in Vidya Drolia (supra) that the jurisdiction of the referral court when dealing with the issue of ‘accord and satisfaction’ under Section 11 of the Arbitration Act extends to weeding out ex-facie non-arbitrable and frivolous disputes, would no longer continue to apply; and

the dispute pertaining to the ‘accord and satisfaction’ of claims is not one which attacks or questions the existence of the arbitration agreement in any way. The arbitration agreement, being separate and independent from the underlying substantive contract in which it is contained, continues to remain in existence even after the original contract stands discharged by ‘accord and satisfaction’; and
the question of ‘accord and satisfaction’, being a mixed question of law and fact, comes within the exclusive jurisdiction of the arbitral tribunal, if not otherwise agreed upon between the parties. Thus, the negative effect of competence-competence would require that the matter falling within the exclusive domain of the arbitral tribunal, should not be examined by the referral court, even for a prima facie determination, before the arbitral tribunal first has had the opportunity of looking into it.

Supreme Court’s clarification of the judgment in M/s Arif Azim Co. Ltd. vs. M/s Aptech Ltd[6]:

the Supreme Court has confirmed the earlier position that while determining the issue of limitation under Section 11 of the Arbitration Act, the referral court must limit its enquiry to examining whether such application is within the limitation period as prescribed under Article 137of the Limitation Act, 1963, i.e., 3 (three) years from the date when the right to apply accrues in favour of the applicant. The limitation period for filing a petition under Section 11(6) of the Arbitration Act only commences once a valid notice invoking arbitration has been sent by the applicant to the other party, and there has been a failure or refusal on part of that other party in complying with the requirements mentioned in such notice; and
the Supreme Court has however clarified that at the stage of deciding an application under Section 11 of the Arbitration Act, the referral court must not conduct an intricate evidentiary enquiry into the question as to whether the claims raised by the applicant are time barred and must leave that question for determination by the arbitrator.

Conclusion

This is a significant judgment augmenting the modern arbitration regime in India and examines several important issues which repeatedly arise in present day arbitrations. The Supreme Court has removed yet another obstacle in the way of arbitrations by holding that ‘accord and satisfaction’ or ‘full and final settlement’ of claims arising under a contract, do not by themselves, preclude future arbitration in respect of such settled claims, if the party (to the contract) alleges fraud, coercion or undue influence in the execution of the contract. Essentially, by doing so, the Supreme Court has underlined the presumption of separability of an arbitration agreement, distinct from the underlying contract. Moreover, the baton to determine the validity of such ‘accord and satisfaction’ or ‘full and final settlement’, has been passed on from the referral court to the arbitral tribunal.

Additionally, by reading down the test of ‘Eye of the Needle’ and ‘ex-facie meritless’, the Supreme Court has further restricted judicial interference of the referral court by limiting its powers only to a broad examination of the existence of the arbitration agreement, and refusal to refer disputes to arbitration only in exceptional cases where the claims are manifestly frivolous and non-arbitrable.

Lastly, on the issue of limitation, the Supreme Court by clarifying its earlier judgment in M/s Arif Azim (supra), has further trimmed the powers of the referral court to avoid conducting an intricate evidentiary enquiry of whether the claims are time barred; the determination of which is now reserved for the arbitrator.

This Prism is prepared by:

Sidharth Sethi
Partner

Shreya Sircar
Partner

Raghvendra Pratap Singh
Senior Associate

For more details, please contact [email protected]

[1] 2024 INSC 532. Judgment dated July 18, 2024.

[2] (2009) 1 SCC 267

[3] (2021) 2 SCC 1

[4] (2023) SCC Online SC 389

[5] 2023 INSC 1066

[6] 2024 INSC 155

Tags Arbitration Law, Dispute Resolution, JSA, JSA Prism, Leading Law Firm, Leading Lawyers, Legal Updates

Inter-Corporate Loans and Deposits: Treatment of Such Debts in Case of Default

Companies may give such loans, guarantees, or acquire securities up to a maximum of 60% of their paid-up share capital, securities premium account and free reserves2 or 100% of their securities premium account and free reserves, whichever is more3 [collectively, inter-corporate deposits (“ICDs”)]. Such financial assistance provided inter se companies, whether in the form of a loan, guarantee or security, plays a pivotal role in offering liquidity to group or affiliated companies to address short-term financing needs. Therefore, ICDs sustain businesses and support growth and corporate operations by ensuring a steady flow of funds for various companies in need of capital. That said, while corporates with short-term surplus may place their deposits as ICDs, such loans are offered on an uncollateralised basis and as such, are unsecured borrowings, inherently at a substantial risk and therefore, come at a high-risk premium built into higher rates of interest.

Please click here to read the full article by Sidharth Sethi and Shreya Sircar, published in SSC Times.

Tags ICDs, JSA, Leading Law Firm, Leading Lawyers, Loans and Deposits

JSA successfully advised and represented Foundation to Educate Girls Globally in proceedings for recovery of amounts due to it from the licensor before the Bombay High Court and Ld. Sole Arbitrator

JSA successfully advised and represented Foundation to Educate Girls Globally(“FEGG”), a non-profit organisation (“NGO”) focused on mobilising communities for women’s education in rural and educationally backward areas, in relation to resolution of disputes with a former licensor of a premises taken on leave and license (“Respondent”).

The dispute between FEGG and the Respondent related to the pending refund of the security deposit and additional security paid by the FEGG as per the Leave and License Agreement entered into between the parties. In this regard, owing to the continuous failure of the Respondent to refund the same, JSA on behalf of FEGG filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”) before the Bombay High Court, for resolution of the disputes arisen between the parties.

JSA represented FEGG before the Bombay High Court in the Section 11 application wherein an order was passed by the Bombay High Court appointing the Ld. Sole Arbitrator to adjudicate the disputes between FEGG and the Respondent.

Thereafter, JSA advised and represented FEGG before the Ld. Sole Arbitrator and was able to obtain a favourable award with directions to the Respondent to make payment towards dues owed to FEGG with interest.

As FEGG is an NGO registered under Section 8 of the Companies Act, 2013, JSA represented the party on a pro bono basis in the proceedings before the Bombay High Court and the Ld. Sole Arbitrator.

Our Disputes Team Comprised Lead Partner – Varghese Thomas, Senior Associate – Ahsan Allana, and Associate – Kabir Saund.

Tags Educate Girls Globally, JSA, Leading Law Firm, Leading Lawyers

JSA Prism | Aviation and Power (Budget) | July 2024

Please click here to download the Prism as a PDF.

Highlights of the budget with focus on aviation and power

While the interim budget promised various incentives for Civil Aviation industry such as expansion of airports and introduction of new air routes, the Union Budget for 2024-25 (“Budget 2024”), seems to have focus on developing the Maintenance, Repair and Overhaul (“MRO”) facilities in India.

In the power sector, Budget 2024 demonstrates the decision of the Government of India (“GOI”) to give a boost to the renewable energy sector. The Ministry of New and Renewable Energy is allocated INR 19,100 crore (Indian Rupees nineteen thousand and one hundred crore), while INR 16,394.75 crore (Indian Rupees sixteen thousand three hundred and ninety-four point seven five crore) is allocated to the total solar energy segment, INR 851,00,00,000 (Indian Rupees eight hundred and fifty-one crore) to wind and other renewable sources and INR 600,00,00,000 (Indian rupees six hundred crore) on National Green Hydrogen Mission. The major takeaways from the Budget 2024 for aviation and power are discussed below.

Aviation

New initiatives

An overall budget of INR 2,357.14 crore (Indian Rupees two thousand three hundred fifty-seven point fourteen crore) has been allocated to the Ministry of Civil Aviation which is reduced from last years’ budget.
New airport will be constructed in Bihar for which additional allocation of capital investment will be provided by the GOI.
The GOI will obtain the legislative approval for ‘Variable Capital Company Structure’ for efficient and flexible financing for leasing of aircrafts and pooled funds of private equity through this structure.
To support domestic aviation and boat and ship MRO, the GOI has offered to extend the period for export of goods imported for repairs from 6 (six) months to 1 (one)
The GOI has extended the time limit for re-import of goods under warranty from 3 (three) to 5 (five)
Requisite airport infrastructure to be upgraded/revived by Airport Authority of India (“AAI”) and concerned States based on the proposals awarded under the Regional Connectivity Scheme (“RCS”). The proposal is for revival of 22 (twenty-two) airports across the country.
Efforts to be made towards enhancing RCS air connectivity by connecting airports, heliports and water aerodromes through 124 (one hundred and twenty-four) RCS routes.
To improve regional air connectivity in North-Eastern Region, the GOI will provide Viability Gap Funding along with a new scheme for air connectivity and aviation infrastructure for the region. The number of RCS flights to be operated in the region is estimated to be 5,000 (five thousand).
The GOI will also present the Bhartiya Vayuyan Vidheyak 2024 in the upcoming monsoon session, which will replace the existing Aircraft Act 1934, providing provisions for ease of doing business in the civil aviation sector.
The first schedule to the Customs Tariff Act, 1975 is being amended to create new tariff lines in respect of defence products, technical textiles, sustainable blended aviation fuel, products used in Indian semiconductor machines, e-bicycles, natural menthol, printer cartridge etc. This is to align the tariff lines with world customs organisation classification and better identification of goods. These changes will come into effect from October 1, 2024.

Scheme wise allocation

The budget allocation for UDAN (Ude Desh Ka Aam Nagrik) RCS is cut by 60% and fixed at INR 502,00,00,000 (Indian Rupees five hundred and two crore) from its previous record-high grant of INR 1,244 crore (Indian Rupees one thousand two hundred and forty-four crore). This funding aims at rejuvenating unused and underused airports in tier-2 and tier-3 cities.
‘Production Linked Incentive (PLI) Scheme for Drone and Drone Components’ gets an allocation of INR 57,00,00,000 (Indian Rupee fifty-seven crore) while Krishi Udaan Scheme gets INR 1,00,000 (Indian Rupees one lakh).
INR 85,00,00,000 (Indian Rupees eighty-five crore) is allocated for providing medical benefit to retired employees of Air India post disinvestment.

Budgetary allocation to authorities

The allocation for the Director General of Civil Aviation is reduced to INR 302,64,00,000 (Indian Rupees three hundred and two crore and sixty-four lakh) which will be utilised for meeting the establishment expenditure, training projects, eGCA Project, construction of DGCA Bhawan and towards India’s contribution to International Civil Aviation Organisation.
Bureau of Civil Aviation Security also gets a reduced allocation of INR 89,00,00,000 (Indian Rupees eighty nine crore) which is to be utilised for establishment expenditure, procurement of security and IT equipment, construction of Headquarter building, as well as India’s contribution for ICAO’s Cooperative Aviation Security Program and for conference and summits related to aviation security.
On the other hand, allocation to Airports Economic Regulatory Authority has been increased to INR 17,45,00,000 (Indian Rupees seventeen crore forty-five lakh) as compared to INR 13,00,00,000 (Indian Rupees thirteen crore) in Budget 2023-24.

Power

New initiatives

Policy document prepared for energy transition pathways for ensuring employment, growth and environment sustainability in power sector.
The GOI will promote pumped storage project for storage of electrical power generated through renewable energy sources.
An amount of INR 600,00,00,000 (Indian Rupees six hundred crore) is allocated to 6 (six) North-Eastern States viz. Assam, Manipur, Meghalaya, Mizoram, Tripura and Nagaland for power system improvement.
Budgetary support for intra-State transmission and distribution projects for Sikkim and Arunachal Pradesh have been segregated in view of these States having sensitive borders. An amount of INR 1,315.01 crore (Indian Rupees one thousand three hundred and fifteen point zero one crore) has been allocated towards strengthening of transmission system in these 2 (two) States.
Additionally, INR 449,25,00,000 (Indian Rupees four hundred forty-nine crore and twenty-five lakh) is allocated for support for flood moderation storage at hydro-electric projects.
Development of indigenous capacity for production of high-grade steel and other materials to benefit the power sector as well.
Submission of the final mega power project certificate is extended from 120 (one hundred and twenty) months to 156 (one hundred and fifty-six) months, from the date of assent to the Finance (No.2) Bill 2024.

Nuclear power plants

The GOI to encourage Research and development (“R&D”) in small and modular nuclear reactors. The GOI to partner with private players for (a) Bharat small reactors; (b) R&D in Bharat Small modular reactors; (c) new technologies for use of nuclear energy for power generation.
Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI) situated in Tamil Nadu, is entrusted with task of planning, executing and operating an integrated program of Fast Breeder Technology (“FBR”) based Nuclear Power Stations for generating electricity on a commercial basis. An amount of INR 1,184 crore (Indian Rupees one thousand one hundred and eighty-four crore) is allocated towards development of India’s most advanced nuclear reactor-Prototype Fast Breeder Reactor.
Amount of INR 7,597.92 crore (Indian Rupees seven thousand five hundred ninety-seven point nine two crore) is allocated to Nuclear Power Corporation of India Limited (NPCIL) which is the nodal agency to undertake the design, construction, operation and maintenance of the atomic power stations for generation of electricity under the provisions of the Atomic Energy Act, 1962.

Thermal power plants

The GOI to introduce indigenous technology for Advanced Ultra Super Critical Thermal Power plants with much higher efficiency. The joint venture between National Thermal Power Corporation and Bharat Heavy Electricals Limited will set up 800 MW (eight hundred megawatt) commercial power plant using aviation science
Power projects, including setting up of a new 2400 MW (two thousand four hundred megawatt) power plant at Pirpainti, will be taken up at a cost of INR 21,400 crore (Indian Rupees twenty-one thousand and four hundred crore).

Solar Power projects

GOI has allocated INR 24,01,00,000 (Indian Rupee twenty-four crore and one lakh) for implementation of Phase-III of the Off-grid solar PV program which covers installation of 3,00,000 (three lakh) solar street lights, distribution of 25,00,000 (twenty-five lakh) solar study lamps and installation of solar power packs of total aggregated capacity of 100 MW (one hundred megawatt). In addition, under AJAY Phase-II over 3,00,000 (three lakh) solar street lights would be installed.
An amount of INR 6,250 crore (Indian Rupee six thousand two hundred and fifty crore) is allotted in PM Surya Ghar Muft Bijli Yojana launched by Government of India, which is to subsume the existing ‘Solar Power (Grid)’ scheme.
The GOI to has also revised the Basic Customs Duties (“BCD”) subsequent to a periodic review undertaken in consultation with the trade and other ministries:
- exemption to machinery/components for initial setting up of non-conventional power generation plants (81/2005-Customs dated September 8, 2005) extended upto March 31, 2026 to encourage commissioning of grid connected solar power (ground mounted/rooftop) in the country;
- BCD on specified capital goods for use in manufacture of solar cells or solar modules, and parts for manufacture of such capital goods is reduced from 7.5% to 0%, while BCD on solar glass for manufacture of solar cells or solar modules is increased from 0% to 10% (w.e.f. from October 1, 2024) and BCD on tinned copper interconnect for manufacture of solar cells or solar modules is increased from 0% to 5% (w.e.f. from October 1, 2024). These aim at increasing domestic manufacturing of solar panels and solar cells.

Scheme wise allocation

Energy Conservation: An allocation of INR 25,00,00,000 (Indian Rupees twenty-five crore) is made towards ‘Energy Conservation’ project which will be utilised for (a) carrying out awareness creation on Energy Conservation through print, electronic and other media for general public, (b) continuation of EC awards and painting competition on Energy Conservation, (c) implementation of the National Mission for Enhanced Energy Efficiency (NMEEE) (d) the upscaling of the efforts to create and sustain market for energy efficiency to unlock investments and (e) shields and certificates given by the Ministry of Power to generating stations, transmission and distribution utilities and rural distribution franchise for recognising meritorious performance in operation, project management and environmental protection.
National Electricity Fund: GOI has allocated INR 500,00,00,000 (Indian Rupees five hundred crore) to National Electricity Fund which will provide interest subsidy on loans to be disbursed to the distribution companies both in the public and private sector, to improve the distribution network for areas not covered by Rajiv Gandhi Grameen Vidyutikaran Yojana (for rural areas) or Restructured Accelerated Power Development and Reforms Programme (for towns with population greater than 30,000) schemes (since subsumed in DDUGJY and IPDS respectively).
Power System Development Fund: An amount of INR 1,200 crore (Indian Rupees one thousand two hundred crore) is allocated towards Power System Development Fund for enhanced execution of projects to bring improvement in grid safety and operation.
Reform Linked Distribution Scheme: The Reform Linked Distribution Scheme aimed to ensure 24×7 sustainable power along with a financially viable and operationally efficient distribution sector, is allocated a budget of INR 12,585 Crore (Indian Rupee twelve thousand five hundred eighty-five crore) in this budget.
Manufacturing zones under the Atmanirbhar Bharat Package: GOI has also allocated INR 80,00,00,000 (Indian Rupees Eighty Crore) for setting up of 3 (three) Manufacturing zones under Atmanirbhar Bharat Package for Power and Renewable equipment in 3 (three) different States. The manufacturing facilities in the zones shall be based on cutting edge, clean and energy efficient technology for minimising dependency on import of equipment, critical components, basic raw material, critical spares etc. required for Power sector and renewable.
Green Energy Corridor: GOI has allocated INR 600,00,00,000 (Indian Rupees six hundred crore) towards Green Energy Corridor for construction of transmission system in 10 (ten) implementing States and grid integration of large-scale renewable generation capacity in the states.
National Green Hydrogen Mission: With a budget of INR 600,00,00,000 (Indian Rupees six hundred crore), National Green Hydrogen Mission aims to make India the global hub for production, usage and export of green hydrogen and its derivatives and to achieve the aim of being self-sufficient through clean energy and serve as an inspiration for the global Clean Energy Transition.
Bio energy program: A total of INR 300,00,00,000 (Indian Rupees three hundred crore) has been allocated to Bio energy program.

Sector wise allocation

The overall budgetary allocations for various sectors stand as under:
- Ministry of Power: INR 20,502 Crore (Indian Rupees twenty thousand five hundred and two crore) allocated.
  - Solar energy segment – INR 16,394.75 Crore (Indian Rupees sixteen thousand three hundred and ninety- four point seventy-five crore)
  - Wind and other renewable sources – INR 851,00,00,000 crore (Indian Rupees eight hundred fifty-one crore)
  - Bio energy – INR 300,00,00,000 (Indian Rupees three hundred crore)

- Ministry of Petroleum and natural gas: INR 15,930.26 crore (Indian Rupees fifteen thousand nine hundred thirty point twenty six crore)
- Ministry of New and Renewable Energy: INR 19,100 Crore (Indian Rupees nineteen thousand one hundred crore) allocated.

This Prism has been prepared by: