{"id":3003,"date":"2022-09-29T12:21:00","date_gmt":"2022-09-29T12:21:00","guid":{"rendered":"https:\/\/zeus.firm.in\/zeus-newsletter-september-2022\/"},"modified":"2023-04-24T13:38:53","modified_gmt":"2023-04-24T13:38:53","slug":"zeus-newsletter-september-2022","status":"publish","type":"post","link":"https:\/\/zeus.firm.in\/zeus-newsletter-september-2022\/","title":{"rendered":"ZEUS Newsletter September 2022"},"content":{"rendered":"
Highlights:<\/span><\/p>\n Corporate Brief<\/strong><\/span><\/p>\n RERA Brief<\/strong><\/span><\/p>\n Litigation Brief <\/strong><\/span><\/p>\n Corporate Brief<\/em><\/strong><\/span><\/span><\/p>\n RBI Notification No. RBI\/2022-23\/98 dated 01.08.2022 on \u201cExternal Commercial Borrowings (ECB) Policy \u2013 Liberalisation Measures<\/strong><\/span><\/p>\n The Reserve Bank of India (RBI) on August 1, 2022 has issued a Notification on \u201cExternal Commercial Borrowings (ECB) Policy \u2013 Liberalisation Measures\u201d. Attention is invited to paragraph 2.2 of FED Master Direction No.5 on External Commercial Borrowings, Trade Credits and Structured Obligations, dated March 26, 2019, in terms of which eligible ECB borrowers are allowed to raise ECB up to USD 750 million or equivalent per financial year under the automatic route, and paragraph\u00a02.1.vi<\/a>. ibid, wherein the all-in-cost ceiling for ECBs has been specified. As announced in paragraph five of the press release on \u201cLiberalisation of Forex Flows\u201d dated July 06, 2022, it has been decided, in consultation with the Central Government, to:<\/p>\n The above relaxations would be available for ECBs to be raised till December 31, 2022.<\/p>\n Master Circular issued by the Reserve Bank of India on 02.08.2022 regarding Credit Facilities to Minority Communities.<\/strong><\/span><\/p>\n The Reserve Bank of India, vide its notification dated 02.08.2022 issued Master Circular regarding Credit Facilities to Minority Communities to ensure that the minority communities secure the benefits flowing from various Government sponsored schemes. The Government of India has also annexed a list of 121 minority concentration districts having at least 25% minority population The Circular states that:<\/p>\n Central Board of Indirect Taxes (CBIC) Circular No. 178\/10\/2022-GST dated 03.08.2022 clarifying GST applicability on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law<\/strong><\/span><\/p>\n CBIC has issued a circular clarifying the GST applicability on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law. The circular has clarified that \u201cAgreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act\u201d has been specifically declared to be a supply of service in para 5 (e) of Schedule II of CGST Act if the same constitutes a \u201csupply\u201d within the meaning of the Act.\u201d<\/p>\n The circular stated that \u201cforfeiture of earnest money by a seller in case of breach of \u2018an agreement to sell\u2019 an immovable property by the buyer or such forfeiture by Government or local authority in the event of a successful bidder failing to act after winning the bid for allotment of natural resources, is a mere flow of money, as the buyer or the successful bidder does not get anything in return for such forfeiture of earnest money. Forfeiture of earnest money is stipulated in such cases not as a consideration for tolerating the breach of contract but as a compensation for the losses suffered and as a penalty for discouraging the non-serious buyers or bidders. Such payments being merely flow of money are not a consideration for any supply and are not taxable.\u201d<\/p>\n Notification issued by the Reserve Bank of India on 08.08.2022 regarding Authorised Dealer Category-I License eligibility for Small Finance Banks.<\/strong><\/span><\/p>\n The Reserve Bank of India, vide its notification dated 08.08.2022 stated that all the scheduled Small Finance Banks, after completion of at least two years of operations as Authorised Dealer Category-II, will be eligible for Authorised Dealer Category-I license, subject to eligibility norms laid down in Annex-I of the notification. The eligible Small Finance Banks can approach Foreign Exchange Department, Central Office, Reserve Bank of India with their application along with the supporting documents with regard to their eligibility and the list of requisite documents is laid down in Annex-II of the notification.<\/p>\n Notification issued by the Ministry of Corporate Affairs, Government of India on 18.08.2022 amending the Companies (Incorporation) Rules, 2014<\/strong><\/span><\/p>\n The Ministry of Corporate Affairs, Government of India, vide its notification dated 18.08.2022 inserted Rule 25B in the Companies (Incorporation) Rules, 2014. The rule is regarding the physical verification of Registered Office of the company and provides format for the report on physical verification of the Registered Office of the company. The rule states that:<\/p>\n Reserve Bank of India issued the Foreign Exchange Management (Overseas Investment) Directions, 2022 on 22.08.2022.<\/strong><\/span><\/p>\n The Reserve Bank of India, vide its notification dated 22.08.2022, issued the Foreign Exchange Management (Overseas Investment) Directions, 2022. The directions simplify the existing framework for overseas investment by persons resident in India to cover wider economic activity and significantly reduces the need for seeking specific approvals, which will reduce the compliance burden and associated compliance costs. The directions enhance clarity with respect of various definitions, has introduced the concept of \u201cstrategic sector\u201d, introduces \u201cLate Submission Fees\u201d for reporting delays. Detailed operational instructions are mentioned in Annex-I and Annex-II attached with the notification.<\/p>\n The regulations provide detailed provisions for financial commitment by modes of equity capital, debt, guarantee, pledge or charge. The regulations also provide acquisition or transfer by way of deferred payment, mode of payment, what are the obligations of person resident in India etc.<\/p>\n Notification issued by the Ministry of Finance in the Official Gazette issued the Foreign Exchange Management (Overseas Investment) Rules, 2022 on 22.08.2022.<\/strong><\/span><\/p>\n The Ministry of Finance, vide its notification dated 22.08.2022 issued the Foreign Exchange Management (Overseas Investment) Rules, 2022.\u00a0The rules aim to simplify the existing framework for overseas investment by a person resident in India to cover wider economic activity and significantly reduce the need for seeking specific approvals. The rules will will subsume extant regulations pertaining to Overseas Investments and Acquisition and Transfer of Immovable Property outside India Regulations, 2015.<\/p>\n Notification issued by the Ministry of Corporate Affairs in the Official Gazette notifying the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2022 on 24.08.2022.<\/strong><\/span><\/p>\n The Ministry of Corporate Affairs, vide its notification dated 24.08.2022 issued the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2022 to amend the Form No. STK-1 and Form No. STK-5A under the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.<\/p>\n Circular issued by SEBI regarding enhanced disclosures by CRAs and norms of rating withdrawal on 25.08.2022. <\/strong><\/span><\/p>\n SEBI, vide its circular dated 25.08.2022 has laid down enhanced disclosures and norms of rating withdrawal. The new framework will be applicable to credit ratings of securities that are already listed or proposed to be listed on a stock exchange. Credit Rating Agencies (CRAs) will have to compare two consecutive rating actions. Further, a CRA will have to disclose a sharp rating action if the rating change between two consecutive rating actions is more than or equal to three notches downward. CRAs also have to frame detailed guidelines on what constitutes non-cooperation by issuers and need to have a detailed policy regarding methodology in respect of assessing the risk of non-availability of information from the issuers.<\/p>\n Circular issued by SEBI regarding disclosures requirement for Asset Management Companies (AMCs) on 25.08.2022. <\/strong><\/span><\/p>\n SEBI, vide its circular dated 25.08.2022 laid down disclosure requirement for Asset Management Companies (AMCs). Vide the circular, SEBI has amended the definition of \u201cassociate\u201d as per clause (c) of sub-regulation (1) of regulation 2 of SEBI (Mutual Funds) Regulations, 1996. The circular also states that AMCs shall ensure scheme wise disclosure of investments, as on the last day of each quarter, in securities of such entities that are excluded from the definition of associate. Further, the circular states that disclosure of Investment shall include International Securities Identification Number (ISIN) wise value of investment and value as percentage of Assets under management (AUM) of scheme.<\/p>\n Notification issued by the Ministry of Corporate Affairs notifying the Companies (Acceptance of Deposits) Amendment Rules, 2022 on 29.08.2022.<\/strong><\/span><\/p>\n The Ministry of Corporate Affairs, vide its notification dated 29.08.2022 notified the Companies (Acceptance of Deposits) Amendment Rules, 2022 to amend the Companies (Acceptance of Deposits) Rules, 2014. In rule 16, after the words \u201cauditors of the company\u201d of the Companies (Acceptance of Deposits) Rules, 2014, the words, letters and figure \u201cand declaration to that effect shall be submitted by the auditor in Form DPT-3\u201d has been inserted and certain changes have been made in Form DPT-3 and Form DPT-4 by the Companies (Acceptance of Deposits) Amendment Rules, 2022.<\/p>\n Notification issued by the Ministry of Corporate Affairs notifying the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2022 on 29.08.2022.<\/strong><\/span><\/p>\n The Ministry of Corporate Affairs, vide its notification dated 29.08.2022 notified the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2022 to amend the Companies (Appointment and Qualification of Directors) Rules, 2014 by introducing new forms in the Annexure, for e-form DIR-3-KYC\u00a0 and\u00a0 web-form DIR-3-KYC-WEB..<\/p>\n Notification issued by the Ministry of Corporate Affairs notifying the Companies (Registration of Charges) Second Amendment Rules, 2022 on 29.08.2022.<\/strong><\/span><\/p>\n The Ministry of Corporate Affairs, vide its notification dated 29.08.2022 issued the Companies (Registration of Charges) Second Amendment Rules, 2022 to amend the Companies (Registration of Charges) Rules, 2014. Rule 13 was inserted after rule 12 of the Companies (Registration of Charges) Rules, 2014 which is regarding signing of charge e-forms by insolvency resolution professional or resolution professional or liquidator for companies under resolution or liquidation.<\/p>\n \u00a0<\/em><\/strong>Real Estate Brief<\/em><\/strong><\/span><\/span><\/p>\n \u00a0<\/em>\u00a0<\/strong>Circular issued by <\/strong>Punjab<\/strong> RERA providing for filing of RERA execution applications<\/strong><\/span><\/p>\n Vide Circular No. RERA\/Legal\/2022\/7816 dated 04.08.2022, Punjab Real Estate Regulatory Authority (\u201cAuthority<\/strong>\u201d) provided the procedure for filing of execution applications arising from the complaints filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016 (\u201cAct<\/strong>\u201d). The said applications shall be heard by the Authority or respective benches of Authority or Adjudicating Officer, as the case maybe. The said execution application may be filed personally or through an authorized representative in the prescribed format. In case the application is found to not be in the prescribed format, a communication shall be given to the applicant to rectify deficiencies within 15 (fifteen) days. Upon due consideration of the execution application and finding a prima facie case<\/em>, the Authority shall issue notice to the respondent\/ judgment debtor.<\/p>\n Order issued by Odisha RERA providing for eventualities for extension of time period under Section 7(3) of the Act<\/strong><\/span><\/p>\n Vide Order no. 3332\/ORERA dated 05.08.2022, Odisha Real Estate Regulatory Authority (\u201cAuthority<\/strong>\u201d) provided for eventualities whereby extension of a project beyond one year under Section 7(3) of the Act may be considered. The Odisha RERA Authority reiterated parts of the judgment of Hon\u2019ble Bombay High Court in \u201cNeelkamal Realtors Suburban Pvt Ltd v. Union of India\u201d wherein the Hon\u2019ble High Court opined that a genuine promoter may not always be able to complete a project within stipulated time owing to justifiable reasons and therefore, the provisions of Section 6 and Section 7 of the Act should be read harmoniously in interest of the larger public in order to regulate the real estate sector. Furthermore, in case of failure of completion of project within stipulated time period, the only outcome shall not be to directly oust the promoter from the project. The promoter may be provided with an opportunity to convince the Authority by providing compelling reasons leading to delay in completion of project and the same shall be accordingly examined on a case to case basis. In pursuance of the observations of the Hon\u2019ble High Court, it was provided that in case a promoter of a registered project fails to complete a project within an extended period of at most one year as allowed under Section 6 of the Act, then, such promoter may apply afresh in Form-II for further extension of registration on payment of requisite fees and such application shall be considered by the Authority under Section 7(3) of the Act subject to restrictions and conditions imposed by Hon\u2019ble High Court in abovementioned judgment.<\/p>\n Order issued by Maharashtra RERA <\/strong>introducing guidelines for submission of proforma of the allotment letter and agreement for sale at the time of registration<\/strong><\/span><\/p>\n Vide Order No. 35\/2022 dated 12.08.2022, Maharashtra Real Estate Regulatory Authority (\u201cAuthority<\/strong>\u201d) introduced guidelines for submission of proforma of the allotment letter and agreement for sale at the time of registration of real estate project in accordance with Clause (g) of Sub-section 2 of Section 4 of the Act. The said order stipulates that the proforma of the allotment letter proposed to be signed by the promoters with the allottees should be in conformity with the model allotment letter as approved by the Authority and such allotment letter should be annexed with the application for registration of real estate project. The promoters are also required to upload the proforma of the agreement to sale proposed to be executed. If the promoters choose to execute an allotment letter or agreement to sale which is not in accordance with the approved proforma or model agreement, respectively, then, the deviations\/ modifications in such allotment letter or agreement, as the case may be, shall be highlighted in a different colour before being uploaded along with a deviation sheet mentioning such deviations\/ modifications in order to enable the allottees to make an informed decision. Non-compliance of the mentioned directions shall lead to rejection of registration application subject to the mandate of the proviso appended to Section 5 of the Act.<\/p>\n Order issued by UPRERA enacting Regulation No. 48 to prescribe the amount of fee payable by real estate agents<\/strong><\/span><\/p>\n Vide Notification dated 23.08.2022, Rajasthan Real Estate Regulation Authority (\u201cAuthority<\/strong>\u201d) made amendments in Form-G (Agreement for Sale) of Rajasthan Real Estate (Regulation and Development) Rules, 2017 by virtue of which Term 18A was inserted titled \u201cThe Rajasthan Apartment Ownership Act, 2015\u201d. Term 18A reads to effect assurance by the promoter to the allottee(s) regarding completion of project as per Rajasthan Apartment Ownership Act, 2015. By virtue of Term 18A, the Promoter further assures the allottee(s) that all provisions of other laws, rules and regulations prevailing in Rajasthan have been duly complied with regard to the project.<\/p>\n Notification issued by Rajasthan RERA amending Form-G of Rajasthan Real Estate (Regulation and Development) Rules, 2017<\/strong><\/span><\/p>\n Vide Order No. 9845\/U.P.RERA\/Gen.Regulation\/2022 dated 26.08.2022, the Uttar Pradesh Real Estate Regulatory Authority (\u201cAuthority<\/strong>\u201d) provided for insertion of Regulation No. 48 to prescribe the amount of fee payable by real estate agents for amendment to registration certificate granted to real estate agent in Form-H to effectuate the amendment in the period of validity of the registration certificate of the real estate agent. The said\u00a0 regulation provided that such fee shall amount to Rs. 1,000\/- (Rupees One Thousand only) in case of real estate agent being and individual and Rs. 5,000\/- (Rupees Five Thousand only) in case of real estate agent being anyone other than individual. Payment of such fees is to be made through online modes as provided on the website of the Authority.<\/p>\n Litigation Estate Brief<\/em><\/span><\/strong><\/p>\n Statutory pre-litigation mediation mandatory under Section 12A of the Commercial Courts Act, 2015.<\/strong><\/span><\/p>\n \u00a0<\/strong>IN THE MATTER OF:<\/strong> Patil Automation Private Limited and Ors. Vs. Rakheja Engineers Private Limited, MANU\/SC\/1004\/2022<\/p>\n Decided by Hon\u2019ble Supreme Court on 17.08.2022<\/p>\n \u00a0<\/strong>Facts:<\/strong><\/span><\/p>\n \u00a0<\/strong>Issues:<\/strong><\/span><\/p>\n The issue which arose in the instant case is whether the statutory prelitigation mediation provided under Section 12A of the said Act as amended by the Amendment Act of 2018 is mandatory so as to reject a plaint filed in a commercial suit for non-compliance of the said pre-condition.<\/p>\n \u00a0<\/strong>Court\u2019s Observations and Findings:<\/strong><\/span><\/p>\n \u00a0<\/strong>Case Analysis: Vidarbha Industries Power Limited Vs. Axis Bank Limited [Civil Appeal No. 4633 of 2021]<\/strong><\/span><\/p>\n \u00a0<\/strong>The captioned appeal was filed before the Hon\u2019ble Supreme Court against a final judgment and Order dated 02.03.2021 passed by the Hon\u2019ble National Company Law Appellate Tribunal, New Delhi (\u201cNCLAT<\/strong>\u201d) in Company Appeal No. 117 of 2021. The main issue in the said matter was the following:<\/p>\n Facts-<\/strong><\/span><\/p>\n Observations of the Hon\u2019ble Supreme Court- <\/strong><\/span><\/p>\n Conclusion-<\/strong><\/span><\/p>\n For the reasons discussed above, the captioned appeal was allowed. The impugned Order dated 29.01.2021 passed by the NCLT and the impugned Order dated 2.03.2021 passed by the NCLAT dismissing the appeal was set aside. The NCLT was directed to re-consider the application of the Appellant for stay of further proceedings on merits in accordance with law.<\/p>\n ****<\/span><\/strong><\/p>\n Disclaimer:<\/p>\n For private circulation to the addressee only and not for re-circulation. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and\/ or publication of this Newsletter is strictly prohibited. This Newsletter is not intended to be an advertisement or solicitation. The contents<\/em> of this Newsletter are solely meant to inform and is not a substitute for legal advice. Legal advice should be obtained based on the specific circumstances of each case, before relying on the contents of this Newsletter or prior to taking any decision based on the information contained in this Newsletter. ZEUS Law disclaims all responsibility and accepts no liability for the consequences of any person acting, or refraining from acting, on such information. If you have received this Newsletter in error, please notify us immediately by telephone.<\/em><\/p>\n Copyright \u00a9 2022 ZEUS Law. All rights reserved. Replication or redistribution of content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of ZEUS Law.<\/em><\/p>\n [1]<\/a> MANU\/SC\/0352\/1979<\/p>\n [2]<\/a> MANU\/MH\/0403\/2021<\/p>\n\n
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