NCLAT
Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Appellate Tribunal, New Delhi: The Coram of  Ashok Bhushan, J (Chairperson), Shreesha Merla (Technical member), and Naresh Salecha (Technical member) has held that regardless of the delay made in filing the claims by homebuyers, a resolution professional should include the corporate debtor’s liabilities as mentioned in the Memorandum of Information(MoI).

Facts of the case and issue raised

An appeal was filed against the Order passed by the Adjudicating Authority (NCLT, New Delhi).

The observation of the Adjudicating Authority was that the claims of the homebuyers have been filed after a gap of eight months from the last date of the submission of the claim and therefore the claims cannot be admitted. Further, it was stated that the Committee of Creditors (CoC) had already approved the resolution plan.

The following issues were raised-

  • Whether the Resolution Professional was obliged to include the details of Homebuyers as reflected in the records of the Corporate Debtor in the Information Memorandum, even
    though they have not filed their claim before the Resolution Professional within time?
  • Whether Resolution Applicant ought to have also dealt with Resolution Plan regarding Homebuyers, whose names and claims are reflected in the record of the Corporate Debtor, although they have not filed any claim?

Submissions of the counsel

Appellant’s Counsel submitted that even though they could not file their claims within the time prescribed, details of their allotment and payments made by them already existed in the records of the Corporate Debtor. It was further submitted that it was the duty of the Resolution Professional to inform the Appellants to file their claims and in case the financial creditors were not able to do so the Resolution Professional could have included their claims in the Information Memorandum prepared under Regulation 36 of Corporate Insolvency Resolution Process (CIRP) Regulations as liabilities to Corporate Debtor.

Respondent’s Counsel submitted that Appellants did not file their claims within the time and filing of their claims was also beyond 90 days as provided by Section 12 of the Insolvency and Bankruptcy Code, 2016 (IBC) therefore no error was committed by Resolution Professional by not including the names of the Appellants in the ‘list of creditors’.

Analysis and decision

Firstly, the Coram stated that when the allotment letters are issued to the Homebuyers against the payment made, the real estate company is under the obligation to provide possession of the houses along with other attached liabilities.

Further, the Coram opinioned that the liability towards Homebuyers who had not filed their claim exists and are required to be included in the Information Memorandum. Non- consideration of such claims in the information memorandum can lead to inequitable and unfair resolutions.

Therefore, the Coram directed the resolution professional to submit the details of homebuyers, which are mentioned in the records of the corporate debtor including their claims, to the resolution applicant, based on which the resolution applicant shall prepare an addendum to the resolution plan, which may be placed before the CoC for consideration.

[Puneet Kaur v. K.V. Developers (P) Ltd., 2022 SCC OnLine NCLAT 245, dated- 01-06-2022]


Advocates before the tribunal

For Appellant(s): Mr. Mahesh Kumar and Ms. Simran Soni, Advocates.
For Respondent: Mr. Abhinav Vasisht, Sr. Advocate with Mr. Rakesh Kumar Bajaj and Mr.Harish Taneja, Advocates, Mr. Nitin Kumar and Mr. Gagan Gulati, Advocate.
Mr. Sumesh Dhawan and Ms. Vatsala Kak, Advocates.

NCLAT
Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal, Delhi (NCLAT): The Coram of Justice Ashok Bhushan (Chairperson) and Shreesha Merla (Technical Member) held that decision taken by the class of Homebuyers will be binding on all the homebuyers.

An appeal was filed against the Order passed by the Adjudicating Authority (NCLT, New Delhi).

The observation of Adjudicating Authority was that the class of Homebuyers were already represented in the matter and the applicant had already filed the application question rejection of the claim which was still pending before the Adjudicating Authority. The intervention applications were rejected.

Appellant’s Counsel submitted that even the authorized representation of the Homebuyer was not being provided for the facts and information and hence, the appellant filed an Intervention Application.

Analysis and Decision

Tribunal held that the appellant as a homebuyer had to go with the class of Homebuyers and the decision taken by the class of Homebuyers was binding.

The authorised representative in the event of any difficulty, it is always open for him to approach the Resolution Professional and Adjudicating Authority, if so required.

Concluding the matter, Tribunal held that the Adjudicating Authority did not commit any error in rejecting the Intervention Application of the appellant and there was no merit in the appeal. [Sandeep Kumar Jain v. Anil Tayal Resolution Professions of AVJ Developers (India) (P) Ltd., 2022 SCC OnLine NCLAT 187, decided on 27-4-2022]


Advocates before the Tribunal:

For Appellant: Mr. Harshit Aggarwal, Advocates.

For Respondent: Mr. Abhishek Anand and Mr. Karan Kohli, Advocates for RP.

High Court Round UpLegal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Here’s our interesting picks of the week from the stories reported


“Notaries operating from public taxis around vicinity of Court”: Dignity of the profession needs to be maintained and the legal profession cannot be allowed to function from the streets | Bom HC   

“…though we have full sympathy for the Advocates who do not have their offices of their own to function from, we do not believe that the dignity of the profession needs to be maintained and the legal profession cannot be allowed to function from the streets.” 

Read full report, here.


Gangubai Kathiawadi | Can after certification granted by Board, public exhibition of a film be prohibited? Bom HC answers

In respect to petitions with regard to the release of movie Gangubai Kathiawadi, Division Bench of Dipankar Datta, CJ and M.S Karnik, J., while expressing that “Once the film is granted a certificate by the competent statutory authority, i.e. the Board, the producer or distributor of the film has every right to exhibit the film in a hall unless, of course, the said certificate is modified/nullified by a superior authority/Court”, held that, there cannot be any kind of obstruction for the exhibition of a film, which is certified, unless the said certificate is challenged and Court stays its operation,

Read full report, here.


If husband and wife get their marriage registered under Special Marriage Act & under Parsi Marriage and Divorce Act, 1936 as well, would this require them to get nullity of marriage under both Acts or one? Court decides

G.S. Kulkarni, J., expressed that, there is no provision under legislations, that if a marriage between the same couple is annulled under a competent law as enacted by the Parliament, it can as well be of a legal effect in the corresponding enactment.

Read full report, here.


If husband brings home concubine due to which wife leaves house, would that lead to desertion by wife? Chh HC explains

The Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., expressed that,

“If the husband keeps another lady; gives shelter to her; and proceeds to have child with the said lady and for that reason if the first wife has to leave the matrimonial home because of physical and mental torture meted out to her it cannot be presumed as a desertion on the part of wife.”

Read full report, here.


Can an Admin of a messaging service group be held criminally liable for the offensive content posted by member of a group? Kerala HC addresses

While addressing the question of whether the creator or administrator of a WhatsApp group is criminally liable for offensive content posted by a group member, Dr Kauser Edappagath, J., held that a person can be criminally liable for the acts of another if they are party to the offence.

Read full report, here.


Can flat owners be prevented from use of certain open spaces and facilities by builders? NCDRC answers

“The Common Area and Facilities remain undivided and no Apartment Owner or any other person shall bring any action for partition or division of any part thereof.”

Read full report, here.


If granting exclusion of time would help Corporate Debtor from liquidation, should NCLAT allow such exclusion? Here’s what NCLAT says

“If granting of 90 days helps the Corporate Debtor to revive, then the basic objective of the I&B Code, 2016 will be met. Liquidation is the last resort.”

Read full report, here.


Zee Insider Trading Case | In absence of direct evidence, matters of insider trading are to be tested on what grounds? SEBI lifts restrictions on 10 entities

“…considering the fact that in today’s age of technology with mushrooming applications that enable seamless calls and messages which provide service of end- to-end encryption assuring complete anonymity, it will be a simplistic assumption to state that the Entities would have communicated the UPSI with each other through the regular telephone calls only.”

Read full report, here.

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission, New Delhi (NCDRC): The Coram of R.K. Agrawal (President) and Dr S.M. Kantikar (Member) addressed a matter wherein the builder took money from the purchaser for the formation of a co-operative housing society but failed to do so and when asked for the refund, he did not return the money as well.

An agreement was entered between the complainant and the OP to construct Bungalow and as per that, the complainant had paid Rs 10,00,000 as consideration. The said agreement was not notarized, after handing over the possession and Occupancy Certificate, OP had to form a Co-operative Society, for which an amount was collected from the complainant, which was Rs 75,000, but OP failed to do so and also did not enroll the complainant as a member or executed independent Deed of Sale.

Later it came to the complainant’s knowledge that the OP had executed a few individual sale deeds in respect of some purchasers but not for the complainant. The complainant got drafted a sale deed, but the OP demanded a further amount even after agreeing initially that he would execute the same.

The complainant even obtained a NOC under FEMA. Yet the sale deed was not executed by the builder.

Hence, on being aggrieved with the above circumstances, the party reached the consumer forum for a refund of Rs 10,00,000 along with interest @18% p.a.; compensation of Rs 5,00,000 and Rs 50,580 towards travel expenses due to postponement of Air Ticket to USA.

Analysis, Law and Decision

Coram noted that the appellant builder executed individual Sale Deeds in respect of some purchasers.

Commission found that the Complainant had agreed to join Co-operative Housing Society, but the appellant did not form any and also did not refund the money paid by the complainant as ‘advance towards the maintenance and formation of the Co-operative Housing Society”.

Based on the above discussion, the OP was liable for deficiency in service. [Dilip Sagun Naik v. Dr Maliyil Cheriyan Mathai, 2022 SCC OnLine NCDRC 30, decided on 17-2-2022]


Advocates before the Commission:

For the Appellant: Mr. Dileep Poolakkot, Advocate

For the Respondent: Mr. S.N. Joshi, Advocate

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): While noting whether the flat owners can be prevented from the use of certain common spaces, the Coram of Justice R.K. Agarwal (President) held that under the provisions of the Maharashtra Apartment Ownership Act 1970 and even Maharashtra Ownership Flats (Regulation of the promotion of construction, sale management and transfer) Act, 1963, a Society had to be formed by the builder and the entire building premises including the open space in question was to be transferred to the Society or a legal body for its maintenance and further, as per Section 6 of the MAOA 1970, each flat owner is entitled to an undivided interest in the common areas and the facilities.

Complainants challenged the order of the Maharashtra State Consumer Disputes Redressal Commission under Section 21(b) of the Consumer Protection Act, 1986.

What was the dispute?

Dispute between the parties was with respect to the use of substantial open space surrounding the building.

The complainants were being prevented from using and enjoying the open space as respondent 1 had covered the said space by erecting an iron grill.

Factual Matrix

Respondent 4 Society had allotted Plot No. 29 in question to respondent 1 on lease. In terms of the resolution passed by the Society allowing its member to construct the multi-storied building on the allotted plot, respondent 1 entered into a Development Agreement with respondent 2 who further transferred his rights of development in favour of respondent 2 Partnership Firm in which respondent 3 was a Partner.

Further, on completion of the building, the completion certificate was obtained. As per the Development Agreement, the flat nos. 1 and 2 at the Ground Floor of the building in question were retained by respondent 1 and flat no’s 3,4, 5 and 6 situated at 1st and 2nd floors were purchased by the complainants executing necessary registered agreements.

Respondent 1 submitted that in the Development Agreement executed with Late Vinayak Shridhar Deshpande, the right of the open space surrounding the Building was not given to him. As per the sale agreement, only staircase and top terrace were to be declared as common space

Analysis, Law and Decision

Coram opined that there was merit in the conclusion arrived at by the District Forum that the rights of the parties with regard to the use of open space surrounding the building in question, were governed by the various provisions of the Maharashtra Ownership Act, 1970 and the respondents were under an obligation to form a Society/legal body to take care of the entire Building Premises.

The above was the reason that during the pendency of the Complaint, respondent 1 executed a Deed of Declaration on 10-01-2005 to bring the property in question under the provisions of the MAOA 1970. Though the said deed of the declaration was not submitted as required under the provisions of the Maharashtra Apartments Ownership Act, 1970.

Whether the open space constitutes as part of the common area and facilities?  

As per Section 3(f) of the MAOA, 1970, the open space in question was a part and parcel of the Common Areas and the Flat Owners were within their right to use the same.

Section 2 (e) of the Maharashtra Housing (Regulation and Development) Act, 2012 specifically include any open space around the building in the definition of “Common Areas and Amenities and Facilities”

Further, Coram stated that the Apartment Owner has the right to use the common area and facilities in accordance with the purpose for which they were intended without hindering or encroaching upon the lawful rights of the other apartment owners.

“The Common Area and Facilities remain undivided and no Apartment Owner or any other person shall bring any action for partition or division of any part thereof.”

While citing the decision of Supreme Court in Nahalchand Laloochand (P) Ltd. v. Panchali Cooperative Building Society Ltd., (2010) 9 SCC 536, it was noted that the Builder/Promoter has no right to sell any area of Building except the unsold flats.

Therefore, the District Forum’s decision was restored, and the State Commission’s decision was set aside. [Parvin G. Joshi v. Sarojini Gangadhar, 2022 SCC OnLine NCDRC 34, decided on 22-2-2022]


Advocates before the Commission:

For the Petitioner: Mr. Ankur Gupta, Advocate

For the Respondents: Mr. Rohan S. Darandale, Advocate

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission, New Delhi (NCDRC): While addressing a case wherein there was a delay of 6 years in handing over the possession to the buyer, the Coram of Dr S.M. Kantikar (Presiding Member) and Binoy Kumar, Member, held that in view of catena of Supreme Court decisions on the said issue, the buyer was entitled to get legal possession along with compensation.

An appeal was filed under Section 51(1) of the Consumer Protection Act, 2019 against the decision of the State Consumer Disputes Redressal Commission Uttar Pradesh, whereby the complaint filed by the appellant/complainant was partly allowed.

Respondent/OP was engaged in developing a township and a flat was allotted to Anish Singhal who paid a sum of Rs 1,50,000 to the respondent/OP as a booking amount.

Further, the appellant/complainant returned the deposited amount to the original allottee Anish Singhal and paid a sum of Rs 2,50,000 to the respondent/OP, hence the respondent/OP transferred the flat in the name of appellant/complainant as per previous terms and conditions.

For a total price of Rs 18,21,763, the flat buyer agreement was signed and executed by all the parties. As per the agreement/contract, possession of the flat was to be given within a period of 18 months.

Appellant/Complainant had paid more than 50% of the total consideration as per the construction linked payment plan to the respondent/OP, but even after 6 years the said flat was not handed over.

On being aggrieved with the acts of respondent/OP, the appellant/complainant filed a complaint before the District Forum which was dismissed due to lack of pecuniary jurisdiction.

Analysis, Law and Decision

Commission expressed that appellant/complainant cannot wait for an indefinite time as he had invested heavily his hard-earned money with the intention to get legal possession of the flat.

Further, it was added that since the said agreement was a valid legal document, possession should have been given in 18 months i.e. by May, 2013 or by November, 2013 if the grace period of 6 months was added.

Coram found that there was a delay of about 6 years by the respondent/OP in obtaining the Occupancy Certificate and offer of possession. The reason for the delay was also unexplained.

Therefore, the appellant/complainant was entitled to get legal possession of his flat with reasonable compensation for the delay. [Ved Prakash Aggarwal v. Logix City Developers (P) Ltd., 2022 SCC OnLine NCDRC 35, decided on 22-2-2022]


Advocates before the Commission:

For the Appellant: In Person

For the Respondent: Binoy Kumar, Member

Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Appellate Tribunal for Electricity (APTEL)


State commission disallows benefit of increase in the tariff based on the change in law provision; Tribunal directs reconsideration

A Coram of R.K. Gauba (Officiating Chairperson) and Sandesh Kumar Sharma (Technical Member) decided on an appeal which was filed by Solar Power Project Developer (“SPD”) assailing order passed by respondent Bihar Electricity Regulatory Commission (“the State Commission”) disallowing the benefit of increase in the tariff based on the change in law provision with respect to increased Operation and Maintenance (O&M) costs of its 10MW solar power generating system.

Read full report here…


Armed Forces Tribunal (AFT)


AFT grants war injury pension to soldier who sustained injuries resulting in disability during Operation Hifazat

The Bench of Justice Dharam Chand Chaudhary (Member J) and Vice Admiral HCS Bisht (Member A), granted war injury pension to the ex-serviceman who had sustained injuries resulting in disability during Operation Hifazat.

Read full report here…


Arbitral Tribunal, New Delhi


Arbitral Tribunal finds SJDA at fault; directs to refund bid amount of Rs 84.24 crores to the claimant in New Township Project

“No permission for conversion of land was obtained and, therefore, even if all other conditions were fulfilled, the Claimant-Developer could not have commenced construction activities on the agricultural lands without obtaining conversion of land use.”

Read full report here…


 Competition Commission of India (CCI)


Apple charging a commission of up to 30% on all payments made through its in-app purchase system, is a violation of its dominant position? CCI orders investigation 

“Some consumers may have preference for closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google.” 

Read full report here… 

Why did CCI suspend the Amazon-Future deal? Detailed analysis of CCI order imposing Rs 202 crores penalty on Amazon

“Amazon had misled the Commission to believe, through false statements and material omissions, that the Combination and its purpose were the interest of Amazon in the business of FCPL.”

Read full report here…

Is Google abusing dominant position in news aggregation? CCI gives prima facie findings; discusses Snippets, Mirror Image Websites, Paywall Options, etc.

“Google appears to operate as a gateway between various news publishers on the one hand and news readers on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.”

Read full report here…


 Customs Excise & Service Tax Appellate Tribunal (CESTAT)


“Obiter dictum” not legally binding as precedent; jurisdictional commissioner cautioned for filing frivolous applications

Suvendu Kumar Pati (Judicial Member) dismissed an appeal which was filed in response to the order passed by this Tribunal for rectification of mistake on the ground that the order to the extent of availment of service of outdoor catering was not proper.

Read full report here…

Jurisdiction for claim of refund filed/initiated to be dealt under the provision Central Excise law and not by the provision of CGST law

Ashok Jindal (Judicial Member) dismissed the application filed by the Revenue (CCE & ST, Panchkula) for ratification of mistake in a final order by the Tribunal which was noticed by the Applicant. The Tribunal dealt with two issues (a) whether to ratify previous order & (b) to deal with the jurisdiction

Read full report here…

Is there any provision under Cenvat Credit Rules, 2004 or Finance Act, 1994 for reversal of CENVAT credit for services provided for which no consideration is received by an assessee? CESTAT analyses

“CENVAT Credit Rules or Finance Act there was no provision for reversal of CENVAT credit for the services provided for which no consideration for service provided was received by an assessee.”

Read full report here…


District Consumer Disputes Redressal Commission, Kolkata


Consumer cannot be forced to pay “service charge” in a restaurant: Consumer Forum finds conduct of restaurant contrary to principles of Consumer Protection Act

“The OPs must have been aware of the guidelines of Fair Trade Practice related to changing of service charge from the consumers by hotels/restaurant issued by Department of Consumer Affairs, Government of India, inter alia, stipulating that service charge on hotel and restaurant bill is “totally voluntarily” and not mandatory.”

Read full report here…


Income Tax Appellate Tribunal (ITAT)


If lessee is not actual owner of property, can actual rental expenses be claimed on return of income? ITAT decides

“The assessee-company has merely taken the assets on lease from the owner, and it is accordingly eligible to claim actual rental expenses in the return of income.”

Read full report here… 

Can merely disowning bank accounts exempt assessee from paying tax? Read why ITAT approved addition of Rs 12.81 Crores under S.68 of Income Tax Act

“Merely disowning the bank accounts by the assessee does not lead to the conclusion that the accounts are not maintained by him when there is a direct evidence contrary to the contention of the assessee.”

Read full report here…


 National Consumer Disputes Redressal Commission (NCDRC)


Homebuyers cannot be expected to wait indefinitely for taking possession: NCDRC allows consumer complaint against Builder, directs refund, imposes costs

Commission dealt with a complaint filed under Section 21 read with Section 2(c) of the Consumer Protection Act, 1986 by the complainant in respect of a plot allotted to him promoted by the OP, claiming deficiency of service due to delay in handing over possession of the plot allotted and claiming refund of amount deposited with compensation.

Read full report here… 

Insurer refuses to issue insurance policy as Risk Confirmation letter obtained on concealment of material fact by Insurance Broker: Policy will be vitiated? NCDRC answers

“Section 19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused.”

Read full report here…

Plastic pieces found in slices of bread, but compensation denied to consumer. Read why NCDRC set aside State Commission’s order of compensation

Ram Surat Maurya (Presiding Member) addressed a matter wherein Britannia was alleged to have pieces of plastic in its bread, but the complainant failed to prove that the bread was manufactured by the said company.

Read full report here…

Minor treated for “Measles” instead of “Stevens-Johnson Syndrome” due to wrong diagnosis and leading to medical negligence: Read detailed report on NCDRC’s decision

“The patient at her young age of 12 years suffered very serious and potentially fatal SJ syndrome. It was the patient’s sheer good luck that she survived in spite of such grossly inappropriate/inadequate treatment at every stage.”

Read full report here…


National Company Law Appellate Tribunal (NCLAT) 


Is it proper for NCLT to record finding regarding default when RP is yet to consider it and submit report? NCLAT discusses Ss. 95, 97, 99 IBC

“…there cannot be any dispute with the statutory scheme as contained in Section 97 that when application is filed by the Resolution Professional under Section 95, the Adjudicating Authority shall direct the Board within seven days of the date of the application to confirm that disciplinary proceedings pending against the Resolution Professional or not and the Board was required within seven days to communicate in writing either confirming the appointment of the Resolution Professional or rejecting the appointment of the Resolution Professional and nominating another Resolution Professional.” 

Read full report here…

Aggrieved with the categorisation as ‘unsecured creditor’, Tribunal secures ‘secured creditor’, having relinquished the security interest

The Coram of Ashok Bhushan J, (Chairperson), and Dr Alok Srivastava (Technical Member) while accepting the appeal and rejecting the claim of the respondent, the Tribunal was of the opinion that the Adjudicating Authority committed an error in rejecting the claim of the appellant to be ‘secured creditor’.

Read full report here…

Is approval with 90% vote of CoC required before allowing withdrawal of CIRP application even where CoC was not yet constituted? NCLAT clarifies law on S. 12-A IBC 

“…when the application is filed prior to the constitution of Committee of Creditors, the requirement of ninety percent vote of Committee of Creditors is not applicable and the Adjudicating Authority has to consider the Application without requiring approval by ninety percent vote of the Committee of Creditors.”

Read full report here…

Dominant position and Predatory Pricing or Win-Win for riders and drivers? NCLAT upholds CCI’s decision

“We do not think that Ola could operate independently of other competitors in the relevant market, and hence it did not enjoy a dominant position in the market.”

Read full report here…

Once Adjudicating Authority approves Resolution Plan, does it still remains a confidential document? Read what NCLAT says

“The category of creditors including the Members of the suspended Board of Directors or the partners of the corporate persons, who are entitled to participate in the meeting of the Committee of Creditors are entitled to receive copies of all documents.”

Read full report here…


 National Green Tribunal (NGT)


Rampant noise pollution, incessant use of horns; a Deplorable state of affairs! NGT finds Rajasthan in contempt of Supreme Court’s order 

While addressing the issue of pressure/air horns and motor vehicles being driven with intolerable sound in Rajasthan, the Bench comprising of Justice Sheo Kumar Singh (Judicial Member) and Dr. Arun Kumar Verma (Expert Member) found the State of Rajasthan in contempt of the Supreme Court’s order and issued notice to the state government to reply within three weeks.

Read full report here…


Securities Exchange Board of India (SEBI)


Twitter, Telegram and the tattered chances-Illicit act of swindlers recommending stock tips on social media; Tribunal acts immediately

“The tips circulated through the Channel create an inducing impact which are then followed by the subscribers and ironically, such stock tips may also prove to be true, if large number of recipients of such tips believe it and collectively act on it. Slowly and gradually, after seeing the price of the said thinly traded scrip actually rising, more and more subscribers start believing in the tips and start acting on it, which further strengthens the belief of such tips being genuine, as large number of individuals end up acting on such tips and by their collective buying actions, convert the deceitful, specious and baseless tips to realty”

Read full report here…

‘Billionaire’ dream turns into dread-Unauthorsied investment advisory amounted to fraud & misrepresentation

S.K. Mohanty, Whole Time Member while affirming an ex-parte interim order of SEBI, was of the view that the activities of the Noticees, Billionaire Solutions Pvt. Ltd. (Sole proprietor Akash Jaiswal) was covered within the definition of “fraud” defined under regulation 2(1)(c) of the PFUTP Regulations, 2003. And therefore was held liable for the violation of provisions of Section 12A (a), (b), (c) of the SEBI Act, 1992, Regulations 3 (b), (c) & (d), 4(1), 4(2)(k) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations, 2003).

Read full report here…

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): The Bench of Justice Venugopal M. (Judicial Member) and V.P. Singh (Technical Member) and Shreesha Merla (Technical Member), while addressing the present Company Appeal observed that:

No penalty can be saddled either under Section 65(1) or (2) of the Code without recording an opinion that a prima facie case is established to suggest that a person ‘fraudulently’ or with malicious intent for the purpose other than the resolution of Insolvency or Liquidation or with an intent to defraud any person has filed the Application.

The instant appeal emanates from the Order passed by National Company Law Tribunal Delhi whereby application under Section 7 of the Insolvency and Bankruptcy Code 2016 was admitted.

Factual Matrix

Corporate Debtor is a builder of High-End Project wherein a flat was booked for a total sale consideration of Rs 3,80,10,000. 

Respondents were the second purchasers of the above-stated flat booked vide Agreement Buyer Agreement. As per Agreement, the completion period was 36 months plus six months as a grace period, i.e. February 2015.

Appellant contended that after adjusting the payments made by the Original buyer, the respondent paid a total sum of Rs 2,75,55,186 as against the total cost of the flat as Rs 3,80,10,000. The last payment was made by the respondents on 26-08-2013, and after that, despite several reminders, no payment was made.

Respondents opted for a Construction linked plan but failed to pay the instalments on time.

Appellants submitted that the respondents are defaulters. Therefore, Corporate Debtor was constrained to cancel their allotment.

Respondents initiated the proceedings under Section 7 of the Insolvency and Bankruptcy Code against the appellant.

Appellant pleaded that the proceedings initiated by respondents 1 and 2 are against the provisions of the Code and have been done so, to pressurise the Corporate Debtor.

Further, respondent 1/Homebuyer submitted that as per the Agreement, possession was to be handed over within 36 months from the date of commencement of the construction or execution of the Agreement, whichever is later.

Despite the assurances, the Appellant failed to deliver the possession of the said unit to the Respondents. Therefore, the Respondents/Financial Creditor had filed the Application under Section 7 of the Code.

NCLT observed that the Corporate Debtor did not hand over the possession of the flat to the Financial Creditor as the construction work could not be completed within the stipulated time and there was no proof of extension of time by the Authority concerned. A debt of more than Rs 1 lakh was due and payable, which the Corporate Debtor failed to pay.

In view of the above circumstances, application wad admitted by NCLT and the same has been challenged in the instant appeal.

Issues for Consideration:

  1. Whether the Corporate Debtor has committed default in not completing the Construction of the flat in time and handing over possession of the same in terms of Agreement?
  2. Whether Financial Creditor/Home Buyer committed default in making payment of the instalments as per ‘ABA’ under construction link Plan?
  3. Whether the Application under Section 7 of the Code is filed fraudulently with malicious intent for the purposes other than for the Resolution of Insolvency or liquidation, as defined under Section 65 of the I&B Code, 2016?
  4. Whether the application is barred by limitation?

Analysis and Decision

On considering the above-stated issues, Bench observed that the Corporate had committed default in completing the construction work of the flat n time and failed to deliver the possession on the stipulated date as per the Agreement.

In a reply to a notice, Corporate Debtor himself admitted that unlike other builders who have abandoned the project and stopped the work, it is completing the Project which is at the final stage where flooring and finishing work is underway.

It was observed from the Agreement that under the Construction linked payment plan, it is mandatory to issue demand notice for instalments in the commencement of respective stages of Construction by speed post or courier.

In the instant case, there was no evidence to show that the demand notice at the respective stages of Construction was ever sent to the Allottee. Whereas, Clause 2.18 of the Agreement makes it mandatory to send the Notice to the Allottee under Construction linked plan. No compliance of conditions of Clause 2.17 and 2.18 were made in the instant case.

Hence, in the present case, it is difficult to ascertain as to when Instalment became due, at the start of the respective stage of the Construction.

Bench observed that:

Mandatory condition of issuing Notice through speed post or courier to the Allottee, at every stage of Construction as per Agreement has not been followed.

Hence, it cannot be concluded that the allotted committed any default in paying the instalment when due and the fact that the flat was to be delivered latest by 2nd week of February 2016, but construction work was still going on in the year 2018 also cannot be denied.

Justification for Invoking Section 65 of the Code

In accordance with the Supreme Court decision in Pioneer’ Urban Land Infrastructure v. Union of India, (2019) 8 S SCC 416, Corporate Debtor has the responsibility to furnish the details of default. It was held that:

“Under Section 65 of the Code, the real estate developer can also point out that the insolvency resolution process under the Code has been invoked fraudulently, with malicious intent, or for any purpose other than the resolution of Insolvency. The Allottee does not, in fact, want to go ahead with its obligation to take possession of the flat/Apartment under RERA, but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it. The Allottee does not, in fact, want to go ahead with its obligation to take possession of the flat/Apartment under RERA, but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it.”

Bench stressed upon the point that Section 65 of the Code is not meant to negate the process under Section 7 or 9 of the Code. Penal action under Section 65 can be taken only when the provision of the Code has been invoked fraudulently, with malicious intent.

In the Supreme Court decision of Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17, it was held that:

“…in order to protect the corporate debtor from being dragged into the corporate insolvency resolution process mala fide, the Code prescribes penalties.”

Hence, from the above discussion, it is clear that

the Code provides stringent action under Section 65 against the person who initiates proceedings under the Code fraudulently or with malicious intent, for the purpose other than the resolution of Insolvency or liquidation under the Code.

Requirement for levying penalty under Section 65 IBC is that a ‘prima facie’ opinion is required to be arrived at that a person has filed the petition for initiation of proceedings fraudulently or with malicious intent.

While parting with the decision, Tribunal held that the Real Estate Developer failed to prove that Allottee is a speculative Investor and is not genuinely interested in purchasing the flat and initiated proceeding under the Code to pressurise the Corporate Debtor.

Thus, Tribunal found no justification to invoke Section 65 of the I&B Code against the Allottee.

Decision

NCLT’s order requires no interference. [Amit Katyal v. Meera Ahuja, 2020 SCC OnLine NCLAT 748, decided on 09-11-2020]

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National Consumer Disputes Redressal Commission
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National Consumer Disputes Redressal Commission (NCDRC): V.K. Jain (Presiding Member), held that homebuyers cannot be made to wait indefinitely for the possession of the plots allotted to them and they are entitled to refund of the amount which they paid

Developer Company was selected by Government of Uttar Pradesh for the development of a township in Greater Noida in the name of ‘Sushant-Megapolis’.

No Time Frame

Large number of complainants booked residential plots and executed agreements with the OP. In the agreement, no time frame for delivering possession of the plots to the allottees was incorporated but the complainants were verbally told that the possession would be handed over within 36 months from the execution of the agreement.

Case of the Complainants

Complainants stated that the township has not been developed, hence no possession was offered to them along with other allottees.

Class Action

Therefore complainants approached the commission by way of class action under Section 12(1)(c) of the Consumer Protection Act seeking a refund of the amount paid by the allottees along with compensation.

Vide an order in 2017, Commission granted the permission to the complainants to institute this complaint on behalf of all the allotted who wanted a refund of the amount paid to the OP. Hence, public notice in two newspapers, circulated in Delhi/NCR were published and several allottees were permitted to join the complaint.

Preliminary objection raised by the OP was that the complaint is barred by limitation.

Analysis & Decision

OP having not completed the development and having not offered possession of the allotted plots to the allottees, they had a recurrent cause of action to file the Consumer Complaint, bench relied on the decision of Meerut Development Authority v. Mukesh Kumar Gupta, (2012) CPJ 12 (SC).

Commission found no merit in the above contention.

Farmers’ Protest | Compulsory Acquisition

With regard to delay in development due to the farmer’s protest, bench on perusal of the communication sent by OP noted that there was no dispute with the farmers as the land comprised in the project namely ‘Megapolis’ was concerned, the said land having been purchased by the complainant on market rate with the consent of landowners, the said case is not of compulsory acquisition of land by the State government.

Small Parcels of Land | Patches required to be acquired from State Government

The proposed project was a large land acquired directly from the farmers, though there were some small patches which were to be acquired from the State Government. OP having advertised the project and having executed the agreements for development and sale of plots, it was for them to purchase those small patches of land from the landowners at a negotiated price even if they had to pay a price higher than the price they were willing to pay.

Hence, it could not be said that the non-acquisition of such small parcels of land delayed the project.

Further, the bench stated that even if the plea taken by the OP with respect to non-acquisition of those small parcels of land is accepted on its face value, the allottees cannot be made to suffer for the inability of the OP to acquire those land parcels.

It’s been 12 years since the sale of the said plots started, but till this date, it is not known whether the OP will be able to complete the development work and if so when the said development would be completed.

Class Action

Counsel for the complainant stated that they have settled with eleven allottees other than the original complainants and they are in negotiations with thirteen other allottees.

For the above-stated, Commission stated that even if the above situation prevails, that would not lead to the dismissal of the class action. Once the jurisdiction of this Commission by way of a class action is invoked, the Commission is required to take the matter to its logical conclusion unless the matter is settled with each and every member of the class.

No Specific Time Period

Commission added to its analysis that though no specific time period for completing the development and offering possession to the allottees was indicated in the agreement, that would not entitle the builder to prolong the development work to an indefinite period.

As far as the development of plots is concerned, such a work does not require as much time as required for construction of group housing flats in multistoried buildings.

“…the development work of the plots, even on a large scale, must be completed within a period of three years from the approval of the lay-out plans.”

Bench relied on the Supreme Court decision of Pioneer Urband Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725 and Kolkata West International City (P) Ltd. v. Devasis Rudra II, (2019) CPJ 29 (SC).

In view of the above discussion, Commission held that the allottees of residential plot in the project namely ‘Sushant Megapolis’ cannot be made to wait indefinitely for the possession of the plots allotted to them and they are entitled to refund of the amount which they paid to the OP along with appropriate compensation.

Further, the OP shall refund the entire principal amount received and pay Rs 50,000 as cost of litigation.[Bhrigu Kaushik v. Ansal Hi-Tech Township Ltd., Consumer Case No. 1951 of 2016, decided on 16-10-2020]

National Consumer Disputes Redressal Commission
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National Consumer Disputes Redressal Commission (NCDRC):  A Division Bench of Dr S.M. Kantikar (Presiding Member) and Dinesh Singh (Member) held that, a homebuyer cannot be made to wait indefinitely for possession.

The instant appeal was preferred by the appellant under Section 19 of the Consumer Protection Act, 1986 against the Order passed by the Maharashtra State Consumer Disputes Redressal Commission wherein OP was directed to handover the possession of the subject flat to the respondent — complainant after receiving the balance consideration amount from respondent — complainant.

Advocates for the appellant — Siddhesh Bhole, Royden Fernandes and Deepam Rangwani.

Advocates for the respondent — Sukruta A. Chimalker and S.B. Prabhavalkar.

State Commission held that there was a deficiency on the part of the OP is not handing over possession and not obtaining the necessary certificates for the subject flat.

Opposite Party was directed to handover possession of the flat within three months after receiving the remaining consideration of Rs. 5.50 lakh as well as to provide Occupancy Certificate and Building Completion Certificate to the Complainant.

Aggrieved with the State Commission’s order, OP filed an appeal before the Commission.

Bench noted that the complainant had paid Rs 11 lakhs by cheque to the OP towards consideration for the subject agreement. OP contended that the subject agreement was cancelled by the complainant.

On perusal of the cancellation letter, it was evident that for more than 2 years, there was no construction work/development at the site of the project. Complainant was also paying interest on the amount paid to the Opposite Party builder firm, therefore, the Complainant requested the Opposite Party to return the entire amount paid.

With regard to the delivery of possession, OP contended that the agreement did not mention the date of delivery of possession of the said flat to the Complainant. However, the buyer cannot be made to wait for an indefinite period.

It was OP’s duty itself to mention the date of delivery of possession in the agreement and failure to do so necessarily requires to be read against the OP. In all contingencies, the complainant could not have been made to wait indefinitely for possession.

OP argued that State Commission grossly erred in disregarding the applicability of the relevant provisions of Specific Relief Act, 1963.

In the above regard, the Court noted that the Act 1986 is for better protection of the interests of consumers, to provide speedy and simple redressal to consumer disputes.

Section 3 specifically provides that the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

In the year 2003, the complainant requested for refund of the entire amount paid by her but OP did not refund the amount paid with or without interest.

Commission opined that the State Commission’s order was reasoned, hence the instant appeal being misconceived and bereft of merit was dismissed.[Adrian Pereira v. Anita Ronald Lewis, 2020 SCC OnLine NCDRC 466, decided on 16-10-2020]

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Division bench of Justice R.K. Agrawal (President) and S.M. Kanitkar (Member) directed the developer to refund the principal amount along with compensation in the form of 9% p.a. interest and 25,000 as litigation costs in view of a 4-year delay in giving the possession of the apartment.

Consumer complaint was filed against Pioneer Urban Land and Infrastructure Limited.

Complainants booked an apartment in the Pioneer Group Housing Project called “Araya” for an amount of Rs 30,00,000. Pursuant to the execution of apartment buyer’s agreement, a unit was allotted to the complainants.

Complainants submitted that on visiting the site regularly they were surprised to see no progress in the construction of the project. Entire site seemed to be an abandoned piece of land with semi constructed structure. 

Failed to deliver the possession of Apartment

Till 16.12.2015 complainants had paid a sum of 3,22,18,954 out of the total consideration of 3,45,22,779 i.e. almost 95% of the total Consideration towards the cost of the apartment.

However, the Developer failed to deliver the possession of the Unit, complete in all respect, even after expiry of a long period of approx. five years despite repeated requests and remedies over letters, email, phone calls and personal visits.

Hence, in view of the above, complainants alleged deficiency in service on the developer’s part.

Complainants by the present petition sought more than contractual benefits from the developer.

Natural causes

Developer contended that the delay in completing the project was due to reasons beyond their control. Further, for refund and compensation, the Complainants have to adhere to the provisions made in Clause 11.5 of the Agreement.

Clause 11.5 of the Apartment-Buyer’s Agreement

Bench observed that, with regard to Clause 11.5 of the Agreement upon which the reliance has been placed by the Developer for refund and compensation payable to the Complainants, this Commission in Consumer Complaint No. 2000 of 2016 – Geeta Bansal v. Ireo Grace Realtech (P) Ltd.  – decided on 24-09-2018,  held that such a Clause is wholly one sided and unfair and, therefore, the Complainants would not be bound by the same. If the Developer is unable to justify the delay, this Commission would be competent to direct refund of the amount paid by them to the Developer along with appropriate compensation.

However, Pioneer had approached Supreme Court against the decision taken by Commission in the above Order, but Supreme Court affirmed the finding returned by this Commission and dismissed the Civil Appeals.

Hence, in the present matter, commission referring to the Supreme Court’s decision, allowed the complainant and directed the OP-Developer to refund the principal amount with compensation in form of simple interest @9% p.a. with costs of Rs 25,000 to be pid to the complainants.

Interest was awarded in light of the current market situation and three months times has been granted to the developer to refund the same. [Smita Uban v. Pioneer Urban Land & Infrastructure Ltd., Consumer Case No. 1430 of 2017, decided on 23-07-2020]