Highlights:

Corporate Brief 

• Circular dated 10.07.2024 issued by the Reserve Bank of India regarding Remittances to IFSCs under the Liberalised Remittance Scheme.
• Notification dated 16.07.2024 issued by the Ministry of Corporate Affairs notifying the Companies (Appointment and Qualification of Directors) (Amendment) Rules, 2024.
• Notification dated 16.07.2024 issued by the Ministry of Corporate Affairs notifying the Nidhi (Amendment) Rules 2024.
• Circular dated 07.2024 issued by Securities and Exchange Board of India (SEBI) regarding Enabling Credit Rating Agencies (CRAs) to undertake rating activities under IFSCA.
• Master Directions dated 30.07.2024 issued by Reserve Bank of India (RBI) regarding Cyber Resilience and Digital Payment Security Controls for non-bank Payment System Operators. 

Real Estate Brief 

• Press note dated 19.07.2024 issued by Uttar Pradesh RERA (“UP RERA”) mandating promoters publish project QR codes in every brochure & advertisement.
• Order dated 29.07.2024 issued by UP RERA regarding the upgradation of the current Quarterly Progress Reports (“QPRs”) facility.
• Order dated 30.07.2024 issued by Maharashtra RERA (“Maha RERA”) mandating builders to disclose the proposed amenities and facilities in the Agreement for Sale.

Intellectual Property Rights Brief

• Adidas AG attained protection for its trademark ‘ADIDAS’ in a Trade Marks Infringement matter. [ADIDAS AG versus Keshav H Tulsiani & ORS; The High Court of Delhi; [CS(COMM) 582/2018, I.A. 14215/2019, I.A. 334/2020)]
• On the basis of the concept highlighting an ‘Incidental trademark and copyright”, an appeal has been filed against an order that has been passed by the learned Commercial Court concerning the logo. [Kathakaar Films Production House versus Shane Ali & Ors; The High Court of Delhi; FAO (COMM) 95/2024]
• An appeal filed for the refusal of a Patent Application for E-Cigarettes. [Phillip Morris Products SA versus Assistant Controller of Patents and Design.; The High Court of Delhi; (COMM.IPD-PAT) 40/2024 & I.A. No. 32207/2024]
• The Department for Promotion of Industry and Internal Trade issued a notification on 01.07.2024 regarding the Draft Trade Marks (Holding Inquiry and Appeal) Rules, 2024 for comments.

NCLT Brief

• Whether an application filed under Section 65 IBC be dismissed on the ground that the same was filed before the admission of Section 7 IBC application?

Litigation Brief

Key Factors for Valuing Land Compensation: Insights from the Hon’ble Supreme Court of India.

 Corporate Brief

 Circular dated 10.07.2024 issued by the Reserve Bank of India regarding Remittances to IFSCs under the Liberalised Remittance Scheme.

• The Reserve Bank of India issued a circular dated 10.07.2024 regarding remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS).
• As per the circular it has been decided that Authorised Persons may facilitate remittances for all permissible purposes under the LRS to IFSCs for the following:
  • Availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs; and
  • All current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through a foreign currency account held in IFSCs.
• For the aforesaid purposes, resident individuals are permitted to open FCAs in IFSCs.
• The circular also mentions that the Master Directions on LRS are being updated to reflect the changes brought about by this circular. 

Notification dated 16.07.2024 issued by the Ministry of Corporate Affairs notifying the Companies (Appointment and Qualification of Directors) (Amendment) Rules, 2024.

• The MCA on 16.07.2024 issued a notification notifying the Companies (Appointment and Qualification of Directors) (Amendment) Rules, 2024. These rules came into effect from August 01, 2024.
• As per the amendment, in case an individual desires to update their personal mobile number or the e-mail address, as the case may be, they shall update the same by submitting e-form DIR-3 KYC only, on or before 30th September of the financial year.
• Further, if an individual intends to update their personal mobile number or the email address again at any time during the financial year in addition to the updation allowed as above, they shall update the same by submitting e-form DIR-3 KYC on payment of fees of five hundred rupees.

Notification dated 16.07.2024 issued by the Ministry of Corporate Affairs notifying the Nidhi (Amendment) Rules 2024.

• The MCA on 16.07.2024 issued a notification notifying the Nidhi (Amendment) Rules 2024. The notification adds a proviso to Rule 4 Sub-Rule 5 of the Nidhi Rules 2014 stating that a company shall not use the words “Nidhi Limited” in its name unless it is so declared under Section 406 of the Companies Act, 2013. 

Circular dated 19.07.2024 issued by Securities and Exchange Board of India (SEBI) regarding Enabling Credit Rating Agencies (CRAs) to undertake rating activities under IFSCA. 

• SEBI vide circular dated 19.07.2024, to enable CRAs to undertake rating activities in the International Financial Services Centre- Gujarat International Finance Tech-city (IFSC-GIFT City), has added the International Financial Services Centres Authority (IFSCA) to the list of financial sector regulators/ authorities.
• In line with the above provision, it is specified that the ratings undertaken by a CRA under the guidelines of IFSCA shall be under the purview of IFSCA. Accordingly:
  • Any issue arising from the activities of such SEBI registered CRAs in the IFSC shall be dealt with by IFSCA under the powers exercisable under Sections 12 and 13 of the IFSCA Act and regulations and subsidiary instructions made thereunder.
  • IFSCA shall be responsible for dealing with complaints, enforcement actions and furnishing information to third parties, including statutory or judicial bodies, concerning the services provided by the CRAs in the IFSC.
• The circular shall be applicable with immediate effect.

Master Directions dated 30.07.2024 issued by Reserve Bank of India (RBI) regarding Cyber Resilience and Digital Payment Security Controls for non-bank Payment System Operators.

• The RBI has published the Master Directions on Cyber Resilience and Digital Payment Security Controls for non-bank Payment System Operators, covering robust governance mechanisms for the identification, assessment, monitoring and management of existing and emerging information systems and cyber security risks. The Directions also cover baseline security measures for ensuring system resiliency as well as safe and secure digital payment transactions.
• In order to provide adequate time to non-bank PSOs to put in place the necessary compliance structure the Directions prescribe a phased implementation approach.
• The Directions prescribe for inter alia (i) governance controls for cyber security preparedness, risk assessment and monitoring; (ii) baseline information security measures and controls including provisions related to inventory management, identity and access management, network security, security testing,vendor risk management, data security, BCP, cloud security etc.; (iii) Digital payment security measures/ controls.
• For more details visit: Master Directions on Cyber Resilience and Digital Payment Security Controls for non-bank Payment System Operators

Real Estate Brief

Press note dated 19.07.2024 issued by Uttar Pradesh RERA (“UP RERA”) mandating promoters to publish project QR codes in every brochure & advertisement.

As per the press note dated 19.07.2024, UP RERA has introduced a technological mechanism to increase transparency and accountability in the real estate sector. Under this new mechanism, every real estate project registered with the UP RERA authority shall be assigned a unique QR code. By scanning this QR code, buyers can access comprehensive details about the project directly from UP RERA portal and verify the information provided by the promoter in advertisements.

The said press note issued by UP RERA mandates all promoters to include QR codes in every project-related document and advertisement. This mandate covers not only promotional materials but also essential documents like booking forms and Builder-Buyer Agreements (BBAs) etc.

Order dated 29.07.2024 issued by UP RERA regarding the upgradation of the current Quarterly Progress Reports (QPRs) facility.

Vide the order dated 29.07.2024, UP RERA has simplified and upgraded the existing facility for filing of Quarterly Progress Reports (“QPR”) of the projects in UP.

The said order dated 29.07.2024 interalia provides that –

1. No late fees will be charged from the date of uploading of Occupation Certificate (O.C.) or Completion Certificate (C.C.) for the project.
2. Promoters cannot apply online for an extension of the project’s registration unless all previous quarters’ QPRs are up to date.
3. If set target of any project is completed prior to the scheduled date, they will be automatically reflected as ‘Activity 100%’ to benefit stakeholders and no QPR would be required for such projects.
4. A ‘Save as Draft’ option will be available on every page of the QPR in place of ‘save option’, allowing promoters to make changes before final submission. Once submitted, a confirmation message saying ‘QPR Submitted’ will be displayed to the promoter.

The said order dated 29.07.2024 can be accessed  At the following weblink:

https://www.up-rera.in/pdf/order-qpr.pdf

Order dated 30.07.2024 issued by Maharashtra RERA (“Maha RERA”) mandating project developers to disclose the proposed amenities and facilities in the agreement for sale.

An order bearing number 57/2024 dated 30.07.2024 was issued by Maha RERA requiring project developers to include the details of amenities and facilities they plan to provide, along with the proposed handover date for these amenities and facilities, in the agreement for sale.

As per the said order dated 30.07.2024, Developers are required to include the following in the agreement for sale:

1. Facilities and Amenities: A detailed list of all proposed facilities and amenities (e.g., swimming pool, gym, tennis court) that will be provided in the building, common areas, or layout, etc as the case maybe.
2. Size and Location of Amenities: Precise information about the size and location of open spaces within the plot or layout, along with the proposed handover date of such open spaces, etc. to the common organization of allottee(s) or federation of common organizations.
3. Lift Details: Specifics about the number of lifts, their type, capacity and the speed of the lift in terms of the number of passengers.

Further, the said order also mandates that all of the above details must be documented in the format annexed to the said order as Annexure ‘1’ and are required to be the part of the agreement for sale, consistent with the registration Form-A and the architect certificate (Table 1) under “Common Areas, Facilities, and Amenities”.

Intellectual Property Rights Brief

Adidas AG attained protection for its trademark ADIDAS in a Trade Marks Infringement matter.

[ADIDAS AG versus Keshav H Tulsiani & ORS; The High Court of Delhi; (CS(COMM) 582/2018, I.A. 14215/2019, I.A. 334/2020)]

This matter highlights the core defence claimed by the Defendant against its adoption of the trademark “Adidas” (“impugned mark”) for a textile business. The Defendant claimed that there was no intention of deception on his part for the use of the impugned mark. The argument behind the alleged bona fide adoption revolved around the love and affection for his sister. The Defendant relied on the argument that, in Sindhi, “ADI” means an elder sister, whereas the word “DAS” means, a devotee. The words on joining together would spell “ADIDAS”, showing love and devotion for his sister. However, in support of this argument, the Defendant failed to present any substantive evidence, while Adidas’ prior claim to the mark “ADIDAS” was already established.

The Court also observed that the Plaintiff’s house mark “Adidas” was established in India in 1971 and has valid registrations in numerous classes ever since. Whereas, the impugned mark which was registered under Class 24 for textile goods, was cancelled from the Trade Marks Register in 2018, while the other trademark applications for the impugned mark have been opposed by the Plaintiff.

The Defendant’s other main argument pertaining to the delay in filing of the suit by the Plaintiff against him was dismissed by the Court, acknowledging the measures taken by Adidas through the time including the Trade Mark Oppositions and Cancellation Application.

The Court, therefore, rejected the claims made by the Defendant and granted an interim injunction in favour of the Plaintiff.

On the basis of the concept highlighting an ‘Incidental trademark and copyright”, an appeal has been filed against an order that has been passed by the learned Commercial Court concerning the logo .

[Kathakaar Films Production House versus Shane Ali & Ors; The High Court of Delhi; FAO (COMM) 95/2024]

The Appellant has filed the present appeal against an order dated 15.05.2024 (“impugned order”) passed by the learned Commercial Court in CS (COMM) No.388/2024, captioned Shane Ali & Anr. v. Kathakaar Films Production House & Others, – a trademark and copyright infringement suit that was filed by the present Respondent in light of a deceptively similar logo being used by the present Appellant. The learned Commercial Court had prima facie found the matter to be in favour of the present Respondent.

The Appellant stated that there was no trademark infringement and that the trademark was not used as a trademark but was merely depicted in a scene. While this stands, it stated for the copyright allegation that its use in the movie is only incidental. As such, there is no copyright or trademark infringement.

Eventually, the parties agreed on the inclusion of a disclaimer as an interim arrangement. With this, the Court modified its earlier order and also directed the modification of the impugned order issued by the Commercial Court so that the trailers or any related videos could be telecast on social media platforms, subject to the display of the disclaimer.

The matter will be heard next on January 16, 2025.

An appeal filed for the refusal of a Patent Application for E-Cigarettes. 

[Phillip Morris Products SA versus Assistant Controller of Patents and Design; The High Court of Delhi; (COMM.IPD-PAT) 40/2024 & I.A. No. 32207/2024]

The Appellant applied for a patent registration for an “aerosol-generating article with multi-material susceptor”. The application was refused by the Controller of Patents and Design stating that the invention was deemed “an invention the primary or intended use or commercial exploitation of which could be contrary public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment” under Section 3(b) of the Indian Patents Act, 1970. The Applicant challenged the Order of the Controller and filed an appeal at The High Court of Delhi under Section 117A of the Patents Act, 1970 and the same was admitted on 4th July, 2024.

The matter will be heard next on September 04, 2024.

The Department for Promotion of Industry and Internal Trade issued a notification on 01.07.2024 regarding the Draft Trade Marks (Holding Inquiry and Appeal) Rules, 2024 for comments. 

The draft rules have been issued to further amend the Trade Marks Rules, 2017 which the Central Government proposes to make in exercise of the powers conferred by section 157 of the Trade Marks Act, 1999.  The notice was issued to welcome any comments within 30 days from 01.07.2024. A few of the highlights are:

1. Any person may file a complaint in Form-I through electronic means.
2. Inquiry Process: Adjudicating Officers will issue notices, hear arguments, gather evidence (not be bound by the Bhartiya Sakshya Adhiniyam, 2023), written reasoned orders and penalties will be issued.
3. Appeal process: involves filing Form III electronically within 60 days of the adjudicating officer’s order. This followed by the reply upon the issue of notice and concluding with a reasoned order by the Appellate authority.
4. Communication: All communication will be transmitted electronically only.

The comments received from any person with respect to the said draft rules will be considered by the Central Government. The rules shall come into force on the date of its publication in the Official Gazette in due time.

    NCLT Brief

Whether an application filed under Section 65 IBC be dismissed on the ground that the same was filed before the admission of Section 7 IBC application?

The aforementioned question was duly answered in a recent judgment passed by the Hon’ble National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench dated 05.08.2024 in the matter of Devashree Developers Private Limited & others vs Aravali Cylinders Private Limited. [CA(AT)(Ins) 1406/2023]

Section 65 of Insolvency and Bankruptcy Code, 2016 (“IBC”) provides that if any person initiates the Corporate Insolvency Resolution Process (“CIRP”) or liquidation proceedings fraudulently or with malicious intend for any purpose other than for resolution of Insolvency or Liquidation, the Adjudicating Authority may impose upon such person a penalty.

Brief factual matrix:

The appeal was preferred by Appellants against the Order dated 29.08.2023 passed by the Hon’ble NCLT, New Delhi wherein an application under Section 60(5), 65 and 75 of IBC was dismissed solely on the ground that the same has been filed before the admission of the application filed under Section 7 of IBC. The Application under Section 60(5), 65 and 75 IBC was filed jointly by shareholders of Aravali Cylinders Private Limited (“Corporate Debtor”).

Furthermore, the application filed under Section 7 of IBC by, Devashree Developers Private Limited, against the Corporate Debtor for resolution of its amount of Rs. 2,31,00,000/- was also dismissed without the arguments having been addressed on the said application.

Observations and Finding of NCLAT:

The Hon’ble NCLAT while relying on the judgment passed by the Hon’ble Supreme Court in Beacon Trusteeship Limited vs Earthcon Infracon Private Limited [(2020) SCC Online SC 1233]  observed that held that the pleas of collusion for seeking initiation of CIRP proceedings of a corporate debtor  cannot be taken for the first time in an appeal before the NCLAT or the Hon’ble Supreme Court. Furthermore, the similar issue came up for consideration before the Hon’ble NCLAT in  Ashmeet Singh Bhatia vs Sundrm Consultants Private Limited & another, [(2023) SCC Online NCLAT 1423] as to whether the an application under Section 65 IBC is maintainable after filing of the application under Section 7, 9 or 10 of IBC or could be maintainable only after the admission of such an application. In the said case, it was held that the Section 65 IBC application would be maintainable after the application is filed either under Section 7,9 or 10 of IBC.

Reliance was also placed on Shree Ambica Rice Mill vs. Kaneri Agro Industries, [(2021) SCC Online NCLAT 599], wherein it was observed by the NCLAT that NCLT is obligated to investigate the nature of transaction in admitting the Section 65 IBC application in order to prevent taking undue benefit of the provisions of IBC to detriment of the rights of legitimate creditors as well as to protect the corporate debtor from being dragged into CIRP proceedings with malafide.

Thus, in view of the aforesaid, the appeal was allowed by the NCLAT and the Order dated 29.08.2023 passed by the Hon’ble NCLT, New Delhi was set aside. The NCLAT held that the order of dismissal of Section 65 IBC application only on the ground that the application has been filed before the admission of the application under Section 7 is not sustainable. The Hon’ble NCLAT restored the Section 65 IBC application and remanded the same back to the NCLT to decide the same in accordance with law.

Conclusion:

The ratio as laid down in Beacon Trusteeship Limited (supra), Ashmeet Singh Bhatia  (supra) and Shree Ambica Rice Mill (supra) is very clear on the filing of Section 65 IBC application that the same can be filed even when the application under Section 7, 9 or 10 of IBC is pending for consideration before the NCLT. The Adjudicating Authority cannot dismiss the Section 65 IBC application only on the ground the said application has been filed before the admission of the application under Section 7, 9 or 10 of IBC.

Litigation Brief 

Key Factors for Valuing Land Compensation: Insights from the Hon’ble Supreme Court of India

New Okhla Industrial Development Authority vs. Harnand Singh (Deceased) Through LRs and Ors., 2024 SCC OnLine SC 1691 

FACTUAL MATRIX: 

The dispute involved the acquisition of 492 acres of land in Village Chhalera Bangar by the State of U.P. and NOIDA in 1991 for industrial development. Initially, the Land Acquisition Officer (LAO) awarded compensation at INR 110 per square yard based on a 1988 sale deed. Landowners sought enhancement under Section 18 of the Land Acquisition Act, 1894, resulting in compensation rates of INR 233 and INR 222 per square yard. Some landowners appealed to the High Court, which recalculated the compensation to INR 297.50 per square yard in 2007. Further enhancements were denied in 2008, and in 2010, the Court increased the compensation to INR 340 per square yard. The matter reached the Supreme Court in ‘Bir Singh vs. State of U.P. (2017)’, where compensation was increased to INR 449 per square yard. Landowners sought parity with the Bir Singh ruling, while NOIDA challenged this enhancement.

ISSUE: 

1. Whether compensation should be enhanced, and if so, to what extent? How should the quantum be calculated?
2. Whether landowners could rely on Section 28A of the 1894 Act to seek parity with Bir Singh (supra)?

OBSERVATION: 

The underlying problem was the different figures of compensation at different judicial stages. However, in Bir Singh, the Supreme Court fixed a rate of INR 449 per square yard, which was based on an error where figure 400 in sale deed pertained to area and not value of plot. This precedent did not bind but also did not compel the Court in this particular factual scenario.

Section 23(1) of the Land Acquisition Act, 1894 required evaluating compensation by considering the land’s market value at the notification date and any damages to the landowners. Although it does not precisely define “market value”, it is generally stated as what a willing buyer would pay to a willing seller. The market value needed sale exemplars that reflected genuine transactions proximate to notification date and resembled acquired land.

Three major categories of elements were identified by the court for accurate valuation of landed property:

1. Characteristics of the Land: Valuation of land is influenced by its inherent qualities such as good connectivity, optimal size and shape, availability of utilities and a favourable location thereby raising its price as compared to other less advantageous ones. Factors included accessibility, level of the land’s surface, frontage width, and the nature of the surrounding area.
2. Potentiality of the Land in Future: Land, which had potential for commercial or residential use situated near developed areas or tourist centers, was expected to appreciate. Due to expectations for future utilization and situation, such land generally commanded higher prices.
3. Sentiment on the Market: Economic crisis like recession, political unrests, speculation and real estate crashes were important factors that could impact perceived value of land at the time of valuation. Such externalities are to be considered when determining the value of land.

DECISION:                 

The court dealt with the issue of compensation by partly allowing the appeals filed by land owners and those of NOIDA. The court increased the compensation amount per square yard where this was needed, but did not change the ratio in Bir Singh or the quantum of compensation as given therein; it changed the amount from INR 340 to INR 403 per sq. yard. High Court’s prior award was reduced from INR 449 to INR 403 per sq. yard. Hon’ble Justices Surya Kant and KV Viswanathan clarified that there are three sets of factors namely; future potentiality, market sentiment and land characteristics that would guide valuation for land and assessment for compensation.

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