{"id":3029,"date":"2023-02-24T13:59:00","date_gmt":"2023-02-24T13:59:00","guid":{"rendered":"https:\/\/zeus.firm.in\/zeus-newsletter-february-2023\/"},"modified":"2023-04-24T13:39:03","modified_gmt":"2023-04-24T13:39:03","slug":"zeus-newsletter-february-2023","status":"publish","type":"post","link":"https:\/\/zeus.firm.in\/zeus-newsletter-february-2023\/","title":{"rendered":"ZEUS Newsletter February 2023"},"content":{"rendered":"
Corporate Brief<\/strong><\/span><\/p>\n RERA Brief<\/strong>\u00a0<\/strong><\/span><\/p>\n NCLT Brief<\/strong><\/span>\u00a0<\/strong><\/p>\n Litigation Brief <\/strong><\/span><\/p>\n Circular dated 04.01.2023 issued by RBI on Foreign Investment in India- Rationalisation of reporting in Single Master Form (SMF) on FIRMS Portal<\/em><\/strong>.<\/strong><\/span>\u00a0<\/strong><\/p>\n Circular dated 05.01.2023 issued by SEBI on Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015<\/em><\/strong>.<\/strong><\/span>\u00a0<\/strong><\/p>\n Circular dated 12.01.2023 issued by SEBI on Facility of conducting meetings of unitholders of REITs\u00a0 through\u00a0 Video Conferencing or Other Audio-Visual means<\/em><\/strong>.<\/strong><\/span>\u00a0<\/strong><\/p>\n Circular dated 12.01.2023 issued by SEBI on Facility of conducting meetings\u00a0 of\u00a0 unitholders\u00a0 of\u00a0 InvITs\u00a0 through\u00a0 Video Conferencing or Other Audio-Visual means.<\/em><\/strong><\/span>\u00a0<\/strong><\/p>\n Circular dated 12.01.2023 issued by SEBI on participation of AIFs in credit default swaps.<\/em><\/strong><\/span>\u00a0<\/em><\/strong><\/p>\n Order dated 10.01.2023 issued by Maharashtra Real Estate Regulatory Authority regarding real estate agent training and certification.<\/strong><\/span><\/p>\n Public Notice issued by Kerala Real Estate Regulatory Authority regarding Form No. 6 of the Kerala Real Estate Regulatory Authority (General) Regulations, 2020.<\/strong><\/span>\u00a0<\/strong><\/p>\n Case Analysis: Hem Singh Bharana Vs. M\/s Pawan Door Estate Private Limited & others \u2013 NCLAT, Delhi [CA (AT) (Ins) 1481 of 2022]<\/strong><\/span><\/p>\n Issue:<\/u><\/strong><\/p>\n Whether a settlement proposal under Section 12A of the Insolvency & Bankruptcy Code (\u201cIBC<\/strong>\u201d) can be entertained after a resolution plan has been approved by the Committee of Creditors u\/s 30 IBC and pursuant thereto, an application for its approval has already been filed before the National Company Law Tribunal (\u201cNCLT<\/strong>\u201d)?<\/p>\n Factual Matrix:<\/u><\/strong><\/p>\n Corporate Insolvency Resolution Process (\u201cCIRP\u201d)<\/strong> was initiated against the Corporate Debtor \u2013 Pawan Doot Estate Private Limited by the National Company Law Tribunal (\u201cNCLT<\/strong>\u201d) on 10.05.2019. Subsequently, a Resolution Plan for the Corporate Debtor was approved by the Committee of Creditors (\u201cCOC\u201d) <\/strong>on 17.01.2020.<\/strong> \u00a0Pursuant thereto, application for approval of Resolution Plan was filed by the Resolution Professional (\u201cRP\u201d)<\/strong> before the NCLT under Section 30 (6) of the IBC.<\/strong> Thereafter, the ex-promoter of the Corporate Debtor submitted a settlement proposal to the financial creditors vide letter dated 11.08.2022. The ex-promoter filed an application before the NCLT under section 12A of the IBC to keep in abeyance the hearing of the application filed by the RP for approval of the resolution plan which was rejected by the NCLT on 23.11.2022. Further, the application for approval of resolution plan was heard and the order was reserved on 02.12.2022. Aggrieved by the order of the NCLT, an appeal was filed before the NCLAT by the ex-promoter of the Corporate Debtor.<\/p>\n Contention of the Ex-Directors (Appellant): <\/u><\/strong><\/p>\n The Counsel for the Appellant submitted that the Appellant has submitted a settlement proposal to the financial creditors under Section 12A of IBC for the Corporate Debtor which was approved by more than 84% vote. It was submitted that the mere fact that Resolution Plan has been approved by the COC is no impediment in subsequently accepting the Settlement Proposal by the COC. The commercial wisdom of the CoC is paramount and the CoC in its commercial wisdom can accept the settlement proposal which is a better financial proposal as compared to the approved resolution plan. Under Section 33, sub-section (2) of the Code, the COC has the power, even after approving the Resolution Plan, but before the approval of the Resolution Plan by the Adjudicating Authority, to approve the liquidation of the Corporate Debtor. Hence, the COC can certainly approve a Settlement Proposal under Section 12A. Thus, the RP has committed error in not submitting the settlement proposal submitted by the Appellant under Section 12A for consideration and voting before COC.<\/p>\n Contentions of RP (Respondent): <\/u><\/strong><\/p>\n The Counsel for the RP refuting the submissions made by the Appellant had submitted that since the Resolution Plan has been approved, no settlement proposal could be entertained. It was submitted that the approved Resolution Plan also binds the COC and the COC itself cannot take any decision in this regard. Reliance was also placed on the judgement of the Hon\u2019ble Supreme Court in the matter of Ebix Singapore Pvt. Ltd. vs. Committee of Creditors of Educomp Solutions Limited and Anr. Civil Appeal No.3224 of 2020<\/em><\/strong> wherein it was observed that the approval of Resolution Plan by COC binds the successful resolution applicant as well as the COC. Hence, the COC could not be permitted to take any different stand at the instance of the ex-promoter. It was further submitted that no application under Section 12A of IBC could be entertained after the Plan had been approved by the COC. It was also stated that the Resolution Plan was approved more than two years ago and the ex-promoters’ settlement proposal was filed after two and a half years and hence should not be considered.<\/p>\n Observation of NCLAT: <\/u><\/strong><\/p>\n Conclusion:<\/u><\/strong><\/p>\n Maintainability of an appeal under Section 13(1A) of Commercial Courts Act for an order passed under Section 36 of Arbitration and Conciliation Act <\/strong><\/span><\/p>\n Judgment referred: HP Cotton Textile Mills Ltd versus Oriental Insurance Company Ltd. 2023 SCC OnLine Del 511 pronounced on 23.01.2023 by Hon\u2019ble Delhi High Court.<\/p>\n It was laid down in this judgment by the two-judge bench of Delhi High Court holding Justices Vibhu Bakhru and Amit Mahajan in the intra-court appeal against the impugned order of single judge bench of the Delhi High Court, passed under Section 36 of the Arbitration & Conciliation Act, 2016 (A&C Act), that the appeal is not maintainable under Section 13 (1A) of the Commercial Courts Act, 2015 (CC Act) as the CPC has a binding power over these acts and the abovementioned order is not the order enumerated under Order XLIII of the Code of Civil Procedure, 1908 (CPC), from which an appeal would lie.<\/p>\n It is observed in the current intra-court appeal that an appeal shall only lie for the orders that are enumerated in Order XLIII of the CPC, 1908. The judgment of the Apex Court in Kandla Export Corporation & Ors. vs. OCI Corporation & Ors. has been looked upon wherein the scope of an appeal under Section 13 (1A) of CC Act which is controlled by its proviso has been looked upon.<\/p>\n The main objection raised by the Respondent i.e., Oriental Insurance Company Ltd. is regarding the maintainability of the abovementioned appeal, which is not maintainable under Section 13 (1A) of the CC Act. The appellant i.e., HP Cotton Textile Mills filed a petition under Section 36 of the A&C Act before Hon\u2019ble Delhi High Court for the enforcement of the arbitral award, but the petition was dismissed which led to the present intra-court appeal.<\/p>\n It has been reckoned by the Division bench of Delhi High Court that an appeal would lie with the Delhi High Court\u2019s Commercial Appellate Division, against a judgment or order of the Commercial Courts. In contradiction to it, as per the proviso to Section 13(1A), an appeal shall only lie from orders that are specifically enumerated under Order XLIII of the CPC, as amended by the Commercial Courts Act and Section 37 of the A&C Act. Thus, the order passed by a single judge is not appealable under Section 37 of the A&C Act.<\/p>\n The contentions made by the Appellant was that the proviso to Section 13(1A) of the Commercial Courts Act is not restricted and must be read in an expansive manner, placing the reliance on the judgment of the Co-ordinate Bench of Delhi High Court in D&H India Ltd. v. Superon Schweisstechnik India Ltd (2020) which ruled that orders passed by the Single Judge while exercising its commercial jurisdiction, which were not passed under the provisions of the CPC, cannot be left out from the scope of Section 13(1A) of the Commercial Courts Act.<\/p>\n By analyzing both the contrary judgments and giving more light to the Apex Court\u2019s decision and placing reliance on it, the appeal of the appellant was dismissed by this Hon\u2019ble Bench of Delhi High Court.<\/p>\n \u201cBuilder\/Developers cannot backout of the promises and assurances made in a brochure\/advertisement\u201d: Hon\u2019ble Supreme Court <\/strong><\/span><\/p>\n The Hon’ble Supreme Court of India in \u2018Debhashis Sinha & Ors. vs. R. N. R. Enterprise Rep. by its Proprietor\/Chairman\u2019 [2023 SCC OnLine SC 120], has observed that a Builder\/Developers cannot backout of the promises and assurances made in a brochure\/advertisement, and must adhere to mandatory statutory provisions applicable including obtaining of Completion Certificate.<\/p>\n In the instant case, the Hon\u2019ble Supreme Court has granted relief to owners of 36 flats in a housing complex at Kolkata. In 2008, the aggrieved flats owners had filed their complaint against Developers i.e RNR Enterprise Builders before the Hon’ble National Consumer Disputes Redressal Commission (NCDRC). According to the allegations of the flats owners, the Developer of the housing complex had failed to provide the amenities\/facilities i.e. playgrounds, community hall-cum-office room, 33-feet wide concrete road, and supply of water from the Kolkata Municipal Corporation (KMC) as per the brochure\/advertisement, and had further failed to furnish and provide the Completion Certificate to the flat owners, which is a statutory obligation as per the Rules of the KMC Act.<\/p>\n It was contended by the flat owners that in spite of the flat owners having paid the complete amount as per market value, and execution of the legal conveyance deed in favor of the flat owners, the Developer had failed to obtain the Completion Certificate. However, the Hon\u2019ble NCDRC after considering the pleadings of the flat owners and the Developers, observed that the flat owners were not be able to established their claim. The Hon’ble NCDRC observed \u00a0after reading of section 403 of the KMC Act, 1980 makes it clear that it was incumbent on both the developers as well as the flats owners to not occupy the premises in the absence of the completion certificate, both violated the law; as such, no deficiency were attributed to the flats owners.<\/p>\n Accordingly, the flat owners preferred the instant appeal before the Hon\u2019ble Supreme Court . Wherein, the bench consisting of Justices S. Ravindra Bhat and Justices Dipankar Datta, pointed that out the indifferent approach of the Hon\u2019ble NCDRC, and observed that the findings of the Hon\u2019ble NCDRC were inaccurate. The Hon\u2019ble Supreme Court continued to observe that it was the duty of the Hon\u2019ble NCDRC to set things right. The Hon\u2019ble Supreme Court observed that although the flats owners had taken possession of the flats in the absence of a completion certificate, it does not form grounds to forfeit their rights to claim such amenities\/facilities as promised as per the brochure\/advertisement and not to direct the Developers to apply and obtain the aforesaid certificate, which is mandatorily required by law. The Hon\u2019ble Supreme Court also observed that the impugned order of the Hon\u2019ble NCDRC was far too casual and the Developers are guilty of “unfair trade practice” within the meaning of Section 2(1)r of Consumer Protection Act, more over they failed to comprehend as to what the Hon\u2019ble NCDRC meant when it observed that the flat owners “ought to have known what they were purchasing”. The Hon\u2019ble Supreme Court also observed that after the sale of the property most commonly the jurisdiction will lie under of the consumer forum as per the Consumer Protection Act.<\/p>\n The Hon\u2019ble Supreme Court, after the combined reading of Sections 430, 390, and 394 of The KMC Act, clearly states that it is the Developers who are under obligation to obtain the completion certificate, with no duty of the flat owner to apply for the same. The ruling bench, however, did not provide any compensation to the flat owners on the matter of their demand for monetary compensation.<\/p>\n The remand is directed only to ensure that the Developers of the Housing Complex fulfill the promises made in their brochure or advertisement, and to address any deficiencies required by the law.<\/p>\n ***<\/span><\/p>\n \n","protected":false},"excerpt":{"rendered":" Highlights: Corporate Brief Circular dated 04.01.2023 issued by RBI on Foreign Investment in India- Rationalisation of reporting in Single Master […]<\/p>\n","protected":false},"author":2,"featured_media":4235,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":"","_links_to":"","_links_to_target":"_blank"},"categories":[24,31],"tags":[41],"_links":{"self":[{"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/posts\/3029"}],"collection":[{"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/comments?post=3029"}],"version-history":[{"count":0,"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/posts\/3029\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/media\/4235"}],"wp:attachment":[{"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/media?parent=3029"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/categories?post=3029"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zeus.firm.in\/wp-json\/wp\/v2\/tags?post=3029"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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Corporate Brief<\/em><\/strong><\/span><\/h3>\n
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\u00a0<\/em><\/strong>Real Estate Brief<\/em><\/strong><\/span><\/h5>\n
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NCLT Brief<\/em><\/strong><\/span><\/h3>\n
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Litigation Brief<\/em><\/strong><\/span><\/h3>\n