Indian Law Lab

SHORT NOTE: The waterfall liability under section 53 of the Insolvency and Bankruptcy Code, 2016 (hereinafter ‘IBC’) places government at fifth place in order of priority. Although with the operation of Sec. 53 of the IBC, the statutory dues/government dues merely have been lowered in order of priority from the sale of the liquidation assets, whereby not abolishing the statutory dues. Simply grading down in the priority order from the sale of the liquidation assets does not impede the government’s right, as it does not extinguish the government’s claim. Therefore, it cannot be said that while placing statutory dues/government dues in the lower order of priority from the sale of the liquidation assets, impede government’s right of taxation. Statutory dues arise pursuant to a provision in the various statute. In taxing statute, the statutory dues get levied from the charging section of the respective statute. There is an enormous difference between employees, members, creditors, guar...

SHORT NOTE: Of late, in India startups have seen a promising ecosystem for them to proactively evolve and prosper. Till date, 15,066 startups have been recognized according to the StartupIndia website. As per the NASSCOM report, startups in India has raised USD 4.2 billion in the year 2018. The biggest hurdle to raise funds can be envisioned during the seed funding stage. It hits the most to startups when they fail to raise funds at the seed funding stage. The alarming factor, however, is not the funding but the legal compliance which is easily swept under the rug by the entrepreneurs. The spectrum of legal compliance includes the type of business entity, founder’s agreement, taxing statutes, labour laws, environmental laws, and other plethora of statutory compliances set forth by the government. If the standard authorized by law is not in conformity with the statutory compliances from the birth of the startup, then it becomes very unlikely to get angel investors/venture capital, th...