Category: Litigation Legal

ENFORCEMENT DIRECTORATE PERMITTED TO ATTACH THE ASSETS OF JP MORGAN TO THE EXTENT OF MONEY DIVERTED FROM AMRAPALI HOMEBUYERS

 

Last year Supreme court has ordered for the cancellation of RERA Registration of Amrapali group, as there were huge complaints of Diversion of the money paid by Homebuyers. Nearly 42000 flat buyers were waiting for possession of the flats after payment of huge amount of sale consideration. Nether the development was done nor flat was handed over to the Homebuyers.  Thus Home Buyers group has approached the Supreme Court in this regard.

In the meanwhile there were also allegations that the Amrapali group has diverted the Money to JP Morgan. The Supreme court has kept an embargo to the ED as to not to attach the assets of JP Morgan. That know the ED has provided Sufficient document in support of diversion of funds from Amrapali group to JP Morgan through the account. Hence Supreme Court has given permission to Enforcement Directorate (ED) which has identified that an amount of Rs.187 crores has been diverted to JP Morgan by Amrapali group from the amount paid by Amrapali Homebuyers in violation of Foreign Exchange Management Act & FDI Norms.

GOVT. PROPOSES ONE MORE AMENDMENT TO IBC EXTENDING THE TIME LINE TO 1 YEAR PERIOD  IN VIEW OF COVID-19 AND EVEN MSME’S TO BE COVERED UNDER IBC WITH NEW LAWS.

The Central govt. has put forward to do some more Amendments to IBC laws in view of the Economic impact of COVID-19 Lockdown and Business shut down. The Central govt. is likely to do more changes to IBC Amending the laws that any default in the COVID-19 emergency situation shall not be treated as Default apart from increasing the threshold of the claims limit form 1 Lakh Rupee to 1 Crore Rupees. The amendment will be brought into effect that no new cases shall be filed against any company for a period of one year instead of 6 months that was done earlier.

Though central Govt. is trying to put all its efforts to give a new lifeline for the companies, and brining in major changes in the laws. How will this really impact the Economy of the country? The answer for this is not clear, because the lock down is relaxed, Industries of all categories have started functioning will the Economy gain and take back the position as it existed PRE COVID stage is again uncertain. Because the 50 days lock down not only put back the Economy of the Country to a Whole new start along with loss of Jobs, common man does not have earnings, small business are striving hard to gain back the position and sustain in the business. Unless until the common man has got the capacity to spend easily all these efforts may not give expected results. As every person and every Businesses have to start from a New beginning.

The Govt. proposes to bring MSME’S under the IBC code with new Amendments to protect the Industries and the lifeline of small Business to labor class.

This action though is taken to protect the Industries there are chances that intentional defaults also get protected with new Amendments which will be a open way to hurt the Economy again.

We have to wait for the Positive things to happen to every human being to Survive and then only the Industries can sustain leading to the Economic development of the country.

KARNATAKA LAND REFORMS (AMENDMENT) ACT, 2020 WHAT DOES THE AMENDMENT TO KARNATAKA LAND REFORMS (AMENDMENT) ACT, 2020, MEANS TO INDUSTRIES?

In Karnataka, No person or Company or Trust or any authorized person cannot purchase agriculture lands unless he is an Agriculturist. Thus any one who wants to purchase an Agriculture land must be an Agriculturist unless it is specified under the Exemptions mentioned under sec.109. AS such govt. has the power under sec.109 of Karnataka Land Reforms Act to exempt the and land/s from the applicability of provisions such as sec.63, 79A, 79B & 80 and those lands can be used for Industrial Purpose, Educational Purpose, Temples,  Housing projects, for Horticulture purpose including Floriculture and have specified units for each category under the provisions.

Prior to amendment any one who wants to set up an Industry in Karnataka, shall eb able to get an extent of 20 units only, by way of the Amendment to KLR act in 2020, govt has doubled the extent of land that can be utilized for Industries as 40 units. This change will give more land utilization capacity to the Industries and expand and Improve the production, utilization of land, labor and resources available to lead to more employment opportunities and growth in the economy of the state & country. (Unit” means [one acre (40.47 ares)] of A Class land)

Further to this the Purpose of Industrial development also includes Mining of Minor minerals, whether specified or Non-Specified and also includes the Stone Crushing activities under the Karnataka regulation of stone crushers act,2011. Thus it gives an open way to reopen the stne crushing Industries which were stopped since some time.

This amendment  makes it clear that all such lands which are approved by govt. with approval of state Highlevel clearance committee or State level single window clearance committee formed under the provisions of the Karnataka Industries Facilitation Act, 2002.

Further the company who has purchased the land with permission as mentioned above shall after utilization of the land for specific purpose for which it was purchased, it cannot use the land for the specified purpose for various reasons beyond its control than the said land with govt. permission for the utilization of the said land for same purpose. Thus this way the amendment gives a long way for the Industries to set up production along with the way ahead to get back the money invested in case if the Industry is not able to run for any reasons for which it was put up.

This amendment gives a boost for Industrial investment & development in the state further also contributes to the State & National Economy.

DISASTER MANAGEMENT ACT 2005

The Central govt. has brought in force the Disaster management act, 2005 due to COVID-19 Lockdown situation in the country to manage and handle the situation in a very strict manner to protect the health and well being of the citizens of the Country.

When the Disaster management act, 2005 was in force govt. has issued certain orders as to not to cause any damages. Certain orders such as the the Employers, Industries, companies shall pay the full salary, wages to the employees and laborers without any deduction. The landlords shall not ask the tenants to vacate the house, P.G, or any accommodation spaces as rents are not paid in the lockdown situation and it does not amounts to default under the eyes of law. Along with these certain specified orders like maintaining hygienic conditions in and around the house, to wear masks, maintaining social distances from the other people, staying away from the huge crowds, total travel ban etc were brought in force to curb the menace of the COIVD-19 spread &  to maintain the health of general public throughout the country.

With the Lockdown 4 in force in the country and While 80 % of the lock down restrictions have been eased by the Central govt from 18th May 2020, the above orders issued in pursuance of COVID-19 attack have also been  eased and except few restrictions others all have been removed as soon as the Lockdown restrictions have been eased in the country. Thus from know onwards the Employers, companies or industries shall not be under the obligation to pay full salary, allowances, & wages to its employees, labors etc., Thus all actions taken from 18.05.2020 will be valid and will not be covered as protection under the Disaster Management act 2005 which was made available during the complete lock down situation.

EFFECT OF LABOR LAW AMENDMENT, 2020 Due to COVID 19 Lockdown Situation world wide and the shut down of all kinds of Business operation for a period of 50-60 days has given a tremendous impact on the Economy of the country overall. The govt. of India is trying hard & putting efforts to bring back the Economy. In this regard and support the Industries to bring back the Economy of the country, Central & Several state govts. have suspended the operation of labor laws in the country for a period of 3 years. Though the effort is made to bring back the Economy of the country to running position. The Effect of Abolition of Labor laws in this crisis may hit the country much harder than the COVID 19 impact. India is a country where nearly 500 millions work in the labor category and in the unorganized sectors. The Effect of the Amendments are the labor has to work more and earn less without safety. The Amendment of labor law leads to the Exploitation of the workers and labors leads to a situation that was in existence prior to the Indian Independence Era of a Kind of Inhuman Attitude towards labor and also violates the fundamental Right guaranteed under Art.19 of the Indian Constitution. The labors will be in a situation that they will not get the justice as envisaged under the Independent Indian Era. It may bring back again the situation of strikes and more of Trade Unions coming up in support of the cause of labors also which may give rise to the issues that the workers will not be attending to work and cause economic stagnation again. This is an Injustice on the part of labors. To protect the industries & Businesses the govt. is taking a long & wrong way ahead. The Principle of Survival of the Fittest applies, One who can influence the govt. can Survive. Thus the amendment to labor laws is taking away the rights of labors with whom the Industries & Business run and grow in all the ways.

LIST OF LABOR LAWS IN INDIA

Factories act 1948,

Contract labor (Abolition & Regulation) act 1970

Shops & commercial establishments act

Minimum wages act 1948

Payment of wages act 1936

Employees provident fund act 1952

The Workmen’s compensation act 1923

Employees state insurance act 1948

Industrial disputes act 1947

Industrial Establishment standing orders act 1946

The Apprentice act 1961

Maternity benefits act

Payment of Bonus act

Payment of gratuity act

Rights of persons with disabilities act

Trade union act

Unorganized workers social security act

Mines act

Child labor act

Cine workers & cinema theatre workers act

The Building & other Construction workers cess act

Bonded labor system(abolition)act 1976

Equal remuneration act 1976

Weekly holidays act

Plantation labor act

The Motor transport workers act

Beedi & cigar workers act

The inter-state Migrant workmen act

Sale promotion employees act

Employment exchange (Compulsory Notification of vacancies) act

Labor laws(Exemption from furnishing returns & maintaining registers by certain establishment act) 1988

Limestone & Dolomite mines labor welfare fund act

Iron ore, Manganese ore, Mines & chrome ore Mines labor welfare fund act,

SUPREME COURT TAKES UP SUO MOTO ACTION TO FASTEN THE CHEQUE BOUNCE CASES

Cheques are instruments issued in the process of Business transactions between two people or between the Companies for the financial transactions in respect of the buying and selling of the products and services. There are several cheques that have been used and issued in the business transactions sometimes also a way to defraud the other party to the transaction. Due to this business also run in loss. There are several cheque bounce cases going on in the court for several days and sometimes it takes years together as the party who has issued the cheque will either be dragging the case on one or the other ground or will try to avoid the further proceedings of the case to secure himself from the situation and to avoid the payment which was issued got default. Thus there are several cheque bounce cases pending before the courts of Magistrate, Highcourt and even supreme courts. Thus the Supreme court taking into consideration of all these issues has taken up the Suo Moto Writ petition to fasten the proceedings of the cheque Bounce cases and which is pending for hearing before the Supreme Court.

In view of the Cheque being used regularly in the Business transactions and later Business running in loss have huge impact on the business community and even the economy of the country. Thus Supreme court has requested RBI to come up with a new formats of Cheque to mention the purpose of the cheque used in the financial transactions.

Hope the best things come out of this and that helps the Public in large and also run the Business financial transactions successful.

CAN U INVOKE THE IBC CODE DUE TO IMPACT OF COVID 19 LOCKDOWN?   AMENDMENT OF IBC,(INSOLVENCY AND BANKRUPTCY AMENDMENT)ACT,2020- IMPACT OF COVID 19 LOCKDOWN.

 

The Ministry of Corporate and Finance Affairs, passed an Amendment to IBC,(Insolvency and Bankruptcy Amendment)Act,2020. And the act to come into effect from the date of Notification issued In the Official Gazzette.

As per the new amendments passed by the central Govt. in the course of Lock down and Shut down of Business operations nationwide/Worldwide due to COVID-19 pandemic effect. The IBC code itself cannot be invoked for the resolution process for a period of 6 months ie., certain provisions of the IBC Code such as sec.5,7,8,14, 29A etc., have been suspended for a period of 6 months and this change will be even for the IBC proceedings already initiated but the matter is pending for admission or no IRP/RP have been appointed prior to the amendment act shall not proceed further for a period of 6 months. But the Amendment does not give clarity on the cases which are already filed, admitted in NCLT and IRP/RP appointed for the Resolution process which have been going through the Process of resolution.

Apart from the certain important provisions of the act being kept under suspension, the amendment has also increased the limit of amount fromRs.1,00,000/- (Rupees one lakh) to Rs.1,00,00,000/- Rupees One crore to approach the IBC for resolution. It means, if your (Operational Creditor or Financial Creditor) claim against any corporate debtor is upto or within the limits of Rs.1,00,00,000/- (Rupees one Crore), you cannot approach NCLT for Resolution against the Corporate debtor.

The amendment of sec.11 permits for claims by one corporate debtor against other corporate debtor. In case if there are any claims by the one corporate debtor against another corporate debtor then such claims can be made by such corporate debtor against whom any such Insolvency proceedings are being initiated under the code.

The suspension of IBC code was issued in the wake of COIVD 19 Lockdown situation where Business could not run and to save the companies from going on into liquidation process. As the aim of the Act is to take a course of resolution and keep the Business alive and not to close down the Business permanently.

HOW FORCE MAJEURE CLAUSE HELPS YOU IN YOUR BUSINESS CONTRACTS DURING THE COVID-19 LOCKDOWN SITUATION.

FORCE MAJEURE- means an unforeseen event or irresistible force beyond the control of any person or state, which makes it impossible to fulfill and international obligation and is a situation refered to as emergency.

We have recently seen such an emergency situation called as COVID-19, Pandemic, which is even declared by WHO,(World Health Organization) as Emergency situation.

Force majeure in any given situation is controlled by the law governing the contract, rather than general concepts of force majeure. The law of the contract often specified by a choice of law clause in the agreement, and if not is decided by a statute or principals of general law which apply to the contract.

Force majeure is a common clause in Contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, epidemic, pandemic or an event described by the legal termed as an Act of God,  prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely, but only suspend it for the duration of the force majeure.

Some causes might be like borderline cases, these must be assessed in light of the circumstances.

Any circumstances that are specifically contemplated (included) in the contract—

For example:

If you are in a Business and have entered into a Contract with the other party to perform an obligation by promising that you will be delivering certain assigned goods or services to the contracting party within a certain time bound period and due to the lockdown situation if you have not been able to conclude the contract completely by performing your part of obligations under the contract, then the other contracting party shall have a right to seek for damages against you either for late delivery or Non-performance of contract due to lock down situation of covid-19. Then How can u protect yourself from this kind of situation?

If your contract is having a Force Majeure clause as mentioned above then both the parties will be protected and you will get an exemption for this lockdown situation due to which you could not have performed your part of contract, also you can on mutual negotiation with the other contracting party seek for time extension so that the contract gets concluded between the parties.

On the hand, if your contract does not have FORCE Majeure Clause, mentioned under the agreement entered between both the parties. Then you will not have the protection as mentioned earlier. So to avoid the frustration of contract you can try to negotiate with the other party & Conclude the contractual obligations.

Therefore it is very much necessary that you should have these clauses as part o0f your Business contracts to protect oneself from the unforeseen situations.

Negotiable Instruments (Amendment) Act.

The New Amendment in Negotiable Instrument Act is applicable and effective from 01/09/2018*

Under the said amendment a new section 143 A is added which reads as under:

Section 143A:

 In the Negotiable Instruments Act, 1881 (hereinafter referred to as the principal Act), after section 143, the following section shall be inserted, namely:—

Power to direct interim compensation.

‘‘143A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant—

(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and

(b) in any other case, upon framing of charge.

(2) The interim compensation under sub-section (1) shall not exceed twenty per cent. of the amount of the cheque.

(3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.

(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973.

(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973, shall be reduced by the amount paid or recovered as interim compensation under this section.’’.

Thus if any cheque bounce case the complainant or the aggrieved party need not wait for a longer period of time to get his legally recoverable debt. A person is entitled for an interim Compensation  to an extent of 20% of the total claim amount of the cheque issued, under the provisions of the Act even when the case in under trail..

Under the said amendment a new section 148 is added which reads as under:

New section 148:

In the principal Act, after section 147, the following section shall be inserted, namely:—

Power of Appellate Court to order payment pending appeal against conviction.

‘‘148. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent. of the fine or compensation awarded by the trial Court:

Provided that the amount payable under this sub-section shall be in addition to any interim compensation paid by the appellant under section 143A.

(2) The amount referred to in sub-section (1) shall be deposited within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the appellant.

(3) The Appellate Court may direct the release of the amount deposited by the appellant to the complainant at any time during the pendency of the appeal:

Provided that if the appellant is acquitted, the Court shall direct the complainant to repay to the appellant the amount so released, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

Thus even in the case of Appeal stage in the cheque bounce cases case the aggrieved party will be entitled to get interim compensation of 20% of the total amount in addition to the 20% of the interim compensation of the total claim amount of the cheque, issued under sec. 143A, under the provisions of the Act.