ADVOCATES & ATTORNEYS LEX ONE Z YOUR LEGAL THOUGHTPioneer Urban Land and Infrastructure Limited &...
Transcript of ADVOCATES & ATTORNEYS LEX ONE Z YOUR LEGAL THOUGHTPioneer Urban Land and Infrastructure Limited &...
KING STUBB & KASIVA
ADVOCATES & ATTORNEYS LEXZONE YOUR LEGAL THOUGHT
BANKIG AND FINANCE NEWSLETTER October 2019 | Series 28.2
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Banking and Finance Bytes Homebuyers cannot be made to wait indefinitely for
possession of the property
Now the aggrieved homebuyers can approach both
NCDRC and State RERA: Delhi HC
Lis Pendens may be a bar under Section 9 of the IBC
but cannot be a subject matter of Section 7
Maintainability of a suit filed by a person claiming
the title by adverse possession
Homebuyers cannot be made to wait indefinitely for
possession of the property
-Akshay Ramesh, Associate.
National Consumer Disputes Redressal Commission, New
Delhi (“NCDRC”), in the recent case of Mr. Alok Kumar vs
M/s Golden Peacock Residency1, disposed of the appeal
against the Flat Buyer.
NCDRC stated that purchasers cannot be made to wait
indefinitely for the possession of the building unit, and
has directed real estate developer, Golden Peacock
Residency Pvt. Ltd., to refund INR. 4.12 crore with interest
to the homebuyers.
In this order, which came on a complaint filed by Mr. Alok
Kumar under Section 21 (a) (i) of the Consumer
Protection Act, 986 ('the Act”) against the developer
Golden Peacock Residency Pvt. Ltd. (Developer) and the
construction company Homestead Infrastructure
Development Pvt. Ltd., Mr. Alok Kumar submitted that he
was residing in Tokyo, Japan and was looking for
accommodation in India when he saw the Developer's
advertisement of a residential project "Michael
Schumacher World Tower" in Sector 109, Gurgaon.
He argued that after being lured by the advertisement, he
booked an apartment in the residential project in 2012,
and paid a total amount of INR 4,12,98,926 in 2015. He
also pleaded that he had obtained a home loan of INR
2,64,24,926 at 10.10 % per annum in order to make the
payment to the Developer.
1
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI CONSUMER CASE NO. 1315 OF 2018 http://cms.nic.in/ncdrcusersWeb/GetJudgement.do?method=GetJudgement&caseidin=0%2F0%2FCC%2F1315%2F2018&dtofhearing=2019-09-06
According to the 'Flat Buyer's Agreement’ executed
between the Developer and Mr. Alok Kumar, the
possession of the apartment was agreed to be delivered
within 36 months with an additional grace period of six
months from the date of execution of the agreement,
which concluded on 19th August 2016.
It was stated by Mr Alok Kumar that construction work by
the Developer had stopped in 2015. The Developer
informed Mr Alok Kumar that the work had slowed down
since the contract with Homestead Infrastructure, the
construction company, stood terminated. Even so, Mr.
Alok Kumar has assured possession in terms of the
agreement, upon completion of balance work by a new
construction company.
Despite repeated assurances, the construction work
wasn't completed even by 2018, that is when Mr. Alok
Kumar visited the site and found it locked. More than 6
months had passed since the extended date of possession
and yet an exact date of delivery was not allotted by the
Developer. Finally, the complainant issued a legal notice
to the Developer as well as to the construction company,
seeking the exact date of possession of the apartment,
but the same was received back with postal remarks
"refused" and "left".
Unable to get any effective response from both, the
developer or the construction company, Alok Kumar
approached NCDRC in July 2018, seeking a refund of
money paid for purchasing the apartment. Mr. Alok
Kumar's complaint was admitted by the NCDRC on 24th
July, 2018.
The NCDRC,upon consideration of the available
information, held that “the contractual terms of the
Agreement ex-facie one-sided, unfair, and unreasonable,
and incorporation of such one-sided clauses in an
agreement constituted an unfair trade practice as per the
Consumer Protection Act, 1986.” The Commission also
observed that the Complainant, Mr. Alok Kumar could not
be made to wait indefinitely for possession of the unit, as
the construction is yet to be completed, even after a
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period of more than 6 years has lapsed from the date of
booking
In view of the above, the Developer was directed to
refund INR. 4,12,98,926 with interest to Mr. Alok Kumar,
till the date of realisation. The NCDRC Bench said that the
interest was awarded for the interest paid by the
complainant on the home loan availed, and for also
undergoing 'mental agony and monetary loss'.
Furthermore, the Commission also imposed costs of INR
25,000 on the Developer, and disposed of the appeal.
Now the aggrieved homebuyers can approach both
NCDRC and State RERA: Delhi HC. --Gokul. L, Associate.
The recent judgment of the High Court of Delhi has
created a great relief for the aggrieved homebuyers
because now they can approach both National Consumer
Disputes Redressal Commission (NCDRC) and the State
RERA. This development in Indian real estate arose due
to the recent verdict, dated September 4, 2019 held by
the division bench of the High Court of Delhi (High Court)
in M/s M3M India Private Limited & Anr v. Dr Dinesh
Sharma & Anr (CM (M) 1244 of 2019 & CM APPL 38052-
38053 of 2019)2 along with other connected matters. The
court held that remedies to homebuyers under the
Consumer Protection Act, 1986 (“CPA”) and the Real
Estate (Regulation and Development) Act, 2016 (“RERA”)
are concurrent. This judgment allows homebuyers
aggrieved by errant developers to choose between
redressal authorities established under the CPA or the
RERA.
Various developers challenged the order passed by the
NCDRCbefore the High Court of Delhi, wherein, the
NCDRCheld that the remedies provided under the CPA
and RERA are concurrent and the jurisdiction of the
forums/ commissions constituted under the CPA isn’t
ousted by RERA, particularly Section 79 of the RERA.
2 http://lobis.nic.in/ddir/dhc/PRJ/judgement/05-09-
2019/PRJ04092019CMM12442019.pdf 3 Company Appeal (AT) (Insolvency) No. 1021 of 2019 https://nclat.nic.in/Useradmin/upload/6195188245d933d9ce5f27.pdf
Based on discussion held by the Supreme Court in
Pioneer Urban Land and Infrastructure Limited & Anr v.
Union of India & Ors (Writ Petition (Civil) No 43 of 2019),
the High Court arrived at an unequivocal finding that
remedies available under the CPA and RERA to the home
buyers are concurrent and there is no ground for
interference with the view taken by the National
Commission in the judgment impugned before the High
Court. Thus, the High Court dismissed the petitions filed
by the petitioners.
On the contrary, the High Court in its order didn’t deal on
the aspect of whether the jurisdiction of Civil Courts
which is barred under Section 79 of RERA, applies to
Consumer Forums or not. There are various special
statutes that contain provisions akin to Section 79 of the
RERA where the jurisdiction of civil courts is barred and
exclusive jurisdiction is conferred on the authorities
established under the enactment.
Lis Pendens may be a bar under Section 9 of the IBC
but cannot be a subject matter of Section 73 -Dhivya, Associate.
National Company Law Appellate Tribunal, New Delhi
while hearing Company Appeal (AT) (Insolvency) No. 1021
OF 2019 filed by the Promoter of M/s Pashupati Jewellers
(Corporate Debtor) against the order dated 20.09.2019
passed by the Adj. Authority (NCLT), Spl. Bench New
Delhi. Hon'ble Appellate Tribunal relying on the findings
of the Hon'ble Supreme Court in the matter of
Innoventive Industries Ltd vs ICICI Bank & Anr. (2018) 1
SCC 407: whereby Supreme Court had observed “27.
The scheme of the IBC is to ensure that when a default
takes place, in the sense that debt becomes due and is
not paid, the insolvency resolution process begins.
‘Default’ is defined in Section 3(12) as non-payment of a
debt once it becomes due and payable, which includes
non-payment of even a part thereof or an instalment
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amount. For the meaning of ‘debt’, we have to go to
Section 3(11), which tells us that a debt means a liability
of obligation in respect of a ‘claim’ and for the meaning
of ‘claim’, we have to go back to Section 3(6) which
defines “claim” to mean a right to payment even if it is
disputed. The Code gets triggered when the ‘default’ is
INR one lakh or more (Section 4).
The corporate insolvency resolution process may be
triggered by the corporate debtor itself or a financial
creditor or an operational creditor. A distinction is made
by the IBC between debts owed to financial creditors and
operational creditors. A ‘financial creditor’ has been
defined, under Section 5(7), as a person to whom a
financial debt is owed and ‘financial debt’ is defined in
Section 5(8) as a debt which is disbursed against the
consideration for the time value of money. As opposed to
this, an ‘operational creditor’ means a person to whom
an operational debt is owed and an ‘operational debt’
under Section 5(21) means a claim in respect of the
provision of goods or services.
28. When a financial creditor triggers the process, Section
7 becomes relevant. Under the Explanation to Section
7(1), default is in respect of a financial debt owed to any
financial creditor of the corporate debtor — it need not
be a debt owed to the applicant financial creditor. Under
Section 7(2), an application is to be made under sub-
section (1) in such form and manner as is prescribed,
which takes us to the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016.
Under Rule 4, the application is made by a financial
creditor in Form 1 accompanied by documents and
records required therein.
Form 1 is a detailed form in 5 parts, which requires
particulars of the applicant in Part I, particulars of the
corporate debtor in Part II, particulars of the proposed
interim resolution professional in Part III, particulars of
the financial debt in Part IV and documents, records and
evidence of default in Part V. Under Rule 4(3), the
applicant is to dispatch a copy of the application filed with
the adjudicating authority by registered post or speed
post to the registered office of the corporate debtor.
The speed, within which the adjudicating authority is to
ascertain the existence of a default from the records of
the information utility or on the basis of evidence
furnished by the financial creditor, is important. This it
must do within 14 days of the receipt of the application.
It is at the stage of Section 7(5), where the adjudicating
authority is to be satisfied that a default has occurred,
that the corporate debtor is entitled to point out that a
default has not occurred in the sense that the “debt”,
which may also include a disputed claim, is not due. A
debt may not be due if it is not payable in law or in fact.
The moment the adjudicating authority is satisfied that a
default has occurred, the application must be admitted
unless it is incomplete, in which case it may give notice to
the applicant to rectify the defect within 7 days of receipt
of a notice from the adjudicating authority. Under sub-
section (7), the adjudicating authority shall then
communicate the order passed to the financial creditor
and corporate debtor within 7 days of admission or
rejection of such application, as the case may be.”
NCLAT while dismissing the petition observed that when
Adjudicating Authority being satisfied that the debt is
payable and there is default, the Adjudicating Authority is
required to admit the application and that the
Respondent – M/s Pashupati Jewellers having enclosed
the copy of the ‘Corporate Guarantee and Undertaking’
Agreement dated 7th April, 2017 instituted on e-Stamp,
issued by Government of National Capital Territory of
Delhi, it was not open to the Adjudicating Authority to
deliberate on the issue whether e-Stamp is a forged
document or not. And held that merely because a suit has
been filed by the Appellant and pending, cannot be a
ground to reject the application under Section 7 of the
I&B Code, and that the pre-existing dispute cannot be a
subject matter of Section 7, though it may be relevant
under Section 9 of the I&B Code.
Maintainability of a suit filed by a person claiming the
title by adverse possession -Latha Shanmugam, Associate
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In the case titled “Ravinder Kaur Grewal vs Manjit Kaur4”,
on August 07, 2019, Supreme Court has decided on the
questions of law, “Whether a person claiming the title by
virtue of adverse possession can maintain a suit under
Article 65 of the Limitation Act, 1963 for declaration of
title and for a permanent injunction seeking the protection
of his possession or for restoration of possession in case of
illegal dispossession” and “ Whether Article 65 of
Limitation Act, 1963 only enables a person to set up a plea
of adverse possession as a shield as a defendant and such
a plea cannot be used as a sword by a plaintiff to protect
the possession of immovable property or to recover it in
case of dispossession”.
While discussing about the adverse possession, the court
explained that to establish the adverse possession co-
existing of the three classic requirements i.e. nec-vi
(adequate in continuity), nec-clam (adequate in publicity)
and nec precario (adverse to a competitor) are necessary
and the trespassers in long possession and persons in
possession of property reserved for public use are not
considered to have adverse possession to acquire the
title.
The concept of adverse possession confers right on
possessor after the extinguishment of right on the owner
and for the person to sue for possession would indicate
that the right has accrued to him in present and not in the
future. Under Article 65, a suit can be filed for recovery
of possession based on the title within 12 years of the
start of adverse possession which means if the rightful
owner does not initiate an action for possession within
the period of limitation, his right is lost and the person in
possession acquires the title.
Further, the person in possession cannot be expelled by
another person except by due procedure of law and once
the 12 years’ period of adverse possession is over, even
the owner’s right to eject him is lost and the possession
holder acquires the right, title and interest and once the
right, title and interest is acquired it can be used as a
sword by the plaintiff and a shield by the defendant and
4 Ravinder Kaur Grewal vs Manjit Kaur, C.A. No. 7764 of 2014
if adverse possession is perfected he can file suit for
restoration of possession in case of dispossession and the
person is not remediless.
Further, the supreme court also overruled the decisions
in Gurudwara Sahab v. Gram Panchayat Village, Sithala,
State of Uttarakhand v. Mandir Shri Lakshmi Siddh
Maharaj and Dharampal (dead) through LRs v. Punjab
Wakf Board and held that the plea of acquisition of title
by adverse possession can be claimed by plaintiff under
Article 65 of the Limitation Act, 1963 to sue in case of any
infringement to the rights.
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