Category: Legal Consulting

THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2018

THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2018

Amendment to Sec. 2 of  The Arbitration and conciliation act 1996 – a New clause  (Ca) is included – ‘(ca) “arbitral institution” means an Arbitral institution designated by the Supreme Court or a High Court under this Act;’;

Amendment of sec. 11  –

Under sce.11(3a)- The High court and Supreme Court judges shall have the power to designate arbitral institutions form time to time. If no Arbitral Institutions are provided the High court shall maintain a panel of Arbitrators for discharging the functions of Arbitral Institutions.

  • Concerned Chief Justice shall do the Panel of Arbitrators shall be reviewed from time to time.
  • In the case of International  Commercial Arbitration the designated Arbitral Institution appointed by the supreme court shall appoint the Arbitrators and in cases other than International Arbitrations the Arbitral Institutions designated by the High court shall appoint the Arbitrators.
  • An application made for the appointment of Arbitrators shall be disposed off within 30 days of service of notice to opposite party.
  • The Arbitral Institution shall determine the fees of Arbitral Tribunal as per schedule Fourth. This shall not be applicable for International Arbitrations and International Commercial Arbitrations where the fees has been already fixed by parties.

Amendment of sec 23- A claim statement and defense shall be completed within a period of six months of the Arbitrators receiving notice of the appointment.

Amendment of sec 29A- Award in the Arbitration cases shall be made within 12 months form the date of completion of pleadings, Except International Commercial Arbitration..

New Sec 42A is inserted- This section provides that all the proceedings of the Arbitration shall be kept confidentially except the Award that needs to be enforced and executed.

New sec 42B inserted – This sections provides that no suit or proceedings shall lie against the Arbitrators while any action is done in good faith.

Sec.43 A to sec 43 J – Provides for the Establishment and incorporation of Arbitration Council of India,  Composition of Council, Duties and Functions of the Council,  Appointment of experts and Constitution of committees, General norms for grading Arbitral Institutions, Norms of Accreditation, Depository of Awards, Power to make regulations by  council.

Thus under the Amendment act the Arbitration will be having a separate council and Institutions like any other Authorities and will be functioning as per these provisions.

New Sec 87 inserted – Unless the parties Agrees, the Amendments made to Arbitration and conciliation Amendment act 2015 – shall not apply – If the Arbitral proceedings have commenced before the Commencement of the Amendment act 2015, the court proceedings in relation to such arbitral proceedings whether such proceedings are commenced before of after the Amendment act 2015,

It shall apply only to Arbitral Proceedings and court proceedings commenced on or after the commencement of Amendment act 2015 came into force.

A new Eighth Schedule is inserted specifying the Qualifications, Experience and Norms of such Arbitrator to be appointed under the act.

section 26 of the Arbitration and conciliation Amendment act 2015  has been Omitted with effect from 23rd October 2015.

EFFECT OF NON-REGISTRATION OF PARTNERSHIP FIRMS

Indian Partnership Act

Section “69 Effect of non-registration-

(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.

(3) The provisions of subsections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect – (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or (b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1909, to realise the property of an, insolvent partner.

Under Section 69(1), a suit, inter alia to enforce right arising from a contract cannot be filed by a person Suing as a partner in a firm against the other partners of the firm unless the firms registered. Under sub-section (3) any other proceeding to enforce a right a arising from a contract by a person suing as a partner against the other partners of an unregistered Firm is also barred. Since the right to resort to arbitration flows from the contract between the parties contained in the partnership deed, a suit or any other proceeding by a partner to enforce this term in the contract against the other partners would, therefore, normally be barred under the first part of sub- section (3) of Section 69. (Vide Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. [AIR 1964 SC 1882 infra]). Subsection (3) in its later part, however, carves out certain exceptions to the bar contained in sub-sections (1), (2) and the first part of sub section(3).

Under sub-section (3)(a) this bar will not affect the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm or any right or power to realise the property of a dissolved firm.

Therefore, although the partnership firm may be unregistered, one partner can sue other partners for dissolution of the firm and for accounts. The words “to sue” used in sub-section (3)(a) cannot be construed narrowly to refer only to suits for dissolution of partnership and accounts. The exception contained in sub-section (3)(a) applies not merely to sub-sections (1) and (2) but also to the first part of sub-section (3) which deals with proceedings other than suits. Therefore, in order that subsection (3)(a) would apply to all these provisions, the words “to sue” section (3)(a) must be understood as applying to any proceedings for dissolution of partnership or for accounts of a dissolved firm or to realise the property OF a dissolved firm. This proceeding may be either by way of a suit or it can even be a proceeding under the Arbitration Act to secure these rights through arbitration. [Vide Prem Lata (Smt)] & Anr. v. M/s IsharDass Chaman&Ors. (1995 2 SCC 145), a judgment to which one of us was a party.] Therefore, an arbitration clause in a partnership deed of an unregistered partnership can be enforced for the purpose of securing, inter alia, a dissolution and accounts of the partnership or for enforcing any right or power for obtaining the property of a dissolved firm.

APPLICABILITY OF ARBITRATION AND CONCILIATION ACT 1940 AND ARBITRATION AND CONCILIATION ACT 1996.

In a peculiar case, where the parties under the agreement have agreed for the applicability of Arbitration and Conciliation Act, 1940, while the agreement was done after the Arbitration and conciliation Act 1996 had come in force.

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.4664 OF 2018

(Arising out of SLP (Civil) No.14589 of 2016)

Purushottam s/o Tulsiram Badwaik ……Appellant

VERSUS

Anil & Ors. ..…. Respondents

The SLP was filed as regards the issue under which provisions of the Arbitration act, the dispute has to be decided and which Act shall be applicable, when the parties in their agreement have agreed to refer to the Arbitration and Conciliation act 1940, while the agreement was done very well after the Arbitration and Conciliation act 1996 was in force.

HELD- In view of the Arbitration and Conciliation act 1996 and repeal provisions at Sec 85 – The provisions- The correct approach, according to us, would be in promoting the object of implementing the scheme of alternative dispute resolution as was rightly submitted in MMTC Ltd. (Supra). It would be farfetched to come to the conclusion that there could be no arbitration at all. As is clear from MMTC Ltd. (Supra) what is material for the purposes of the applicability of 1996 Act is the agreement between the parties to refer the disputes to arbitration. If there be such an arbitration agreement which satisfies the requirements of Section 7 of 1996 Act, and if no arbitral proceeding had commenced before 1996 Act came into force, the matter would be completely governed by the provisions of 1996 Act. Any reference to 1940 Act in the arbitration agreement would be of no consequence and the matter would be referred to arbitration only in terms of 1996 Act consistent with the basic intent of the parties as discernible from the arbitration agreement to refer the disputes to arbitration.

Viewed thus, the High Court was not right in observing that there could be no arbitration at all in the present case. In situations where the relevant clause made reference to the applicability of “the provisions of the Indian Arbitration Act and Rules made thereunder” as was the case in MMTC Ltd. (Supra), on the strength of Section 85(2)(a) the governing provisions in respect of arbitral proceedings which had not commenced before 1996 had came into force would be those of 1996 Act alone. On the same reasoning even if an arbitration agreement entered into after 1996 Act had come into force were to make a reference to the applicable provisions of those under Indian Arbitration Act or 1940 Act, such stipulation would be of no consequence and the matter must be governed under provisions of 1996 Act. An incorrect reference or recital regarding applicability of 1940 Act would not render the entire arbitration agreement invalid. Such stipulation will have to be read in the light of Section 85 of 1996 Act and in our view, principles governing such relationship have to be under and in tune with 1996 Act. As observed earlier, the requirements of “arbitration agreement” as stipulated in Section 7 of 1996 Act stand completely satisfied in the present matter nor has there been any suggestion that the agreement stood vitiated on account of any circumstances in the realm of undue influence, fraud, coercion or misrepresentation. In the circumstances, the attempt must be to sub-serve the intent of the parties to resolve the disputes by alternative disputes resolution mechanism. The High Court was, therefore, completely in error.

We therefore set aside the judgment and order passed by the High Court and accept the appeal preferred by the appellant. The matter will have to be dealt with by the trial court in terms of Section 8 of 1996 Act. The parties shall appear before the trial court on 14th May, 2018 for effectuating the arbitration agreement.

DATA PROTECTION LAWS

In the global information economy, personal data have become the fuel driving much of current online activity. Every day, vast amounts of information are transmitted, stored and collected across the globe enabled by massive improvements in computing and communication power. Some broadband packages of today are 36,000 times faster than what dial-up Internet connections could offer when the first Internet browser was introduced two decades ago. In developing countries, online social, economic and financial activities have been facilitated through mobile phone uptake and greater Internet connectivity. The transborder nature of the Internet as well as the speed and sheer volume of communications pose problems to cyber security such as those related to the identification, investigation, jurisdiction, criminalization and prosecution of those who commit security and data breaches. In this environment, security of information is a concern for governments, businesses and consumers alike.

Protecting data and privacy rights online is a significant and increasingly urgent challenge for policymakers.

Data protection regulation is high on the political agenda at the time of writing, as evidenced by a number of current developments.

  • The United Nations in 2015 appointed a Special Rapporteur on the right to privacy.
  • The European Union is finalizing a new General Data Protection Regulation to replace the European Directive on Data Protection, which has been a prominent source of regulation for twenty years.
  • Data protection has been included in several international trade agreements.
  • Data protection regulation has been considered in several high profile court cases in relation to national surveillance issues.
  • Numerous countries are drafting new data protection laws or are reviewing existing ones.
  • The European Union and the United States have re-negotiated a long standing cross- border data protection agreement (the former EU-US Safe Harbor Framework, now to be known as the EUUS Privacy Shield).
  • Several global and regional organizations have issued (or are developing) multiparty agreements and/or guidelines on data protection.

Article XIV ( c) (ii) of the WTO’s General Agreement on Trade in Services (GATS) permits trade restrictions

that are necessary for “the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts”, specifying that “such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services”.

Article XIV of the WTO General Agreement on trade in Services. Article 14.11 allows restrictions on cross border transfers if they satisfy four requirements:

(i) the law must be necessary “to achieve a legitimate public policy objective” – this appears to be very straightforward requirement;

(ii) the law must not be “applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination

(iii) the law must not be “a disguised restriction on trade”; and

(iv) the law must “not impose restrictions on transfers of information greater than are required to achieve the objective”.

This is a very high level provision that recognizes the positive aspects of data protection regulation.

However, it is also well recognized that if data protection regulations go ‘too far’ they may have a negative impact on trade, innovation and competition. While the potential need to control cross-border flows of data for privacy purposes is clear, the application of such controls in an increasingly interconnected world is very challenging. ICT developments, such as cloud services, are making things even more complex, with processing entities not necessarily aware about where data are located.

RAJASTHAN HC ISSUES STAY ON REAL ESTATE REGULATORY AUTHORITY

Rajasthan HC in Grj Distributors and Developers private limited Vs Union of India, through secretary, Govt. Of India-

Rajasthan HC issued stay order on 31.7.2018 staying the execution of the orders passed by the Real Estate Regulatory authority. Thus the order passed by the RERA authority could not have been executed.

The Division Bench of the Rajasthan High Court has clarified further that the order as under:

“Taking into consideration the peculiar facts of this case, we stay execution of the orders passed by the Real Estate Regulatory authority, till next hearing date.”

It is on this ground that the Real Estate Regulatory authority and even the tribunal is proceeding with the hearing of the case other than the cases where interim order has been passed by the court.

The issue was raised as to whether the Real Estate Regulatory authority/Tribunal can hear the matter without it proper constitution. A period of one year has been given under the act for its constitution. but there is no proper authority set up even after the expiry of one year period. A period of one year has been given under the act for its constitution.

That even after the period of one year given under the act No action for it was initiated by the state govt. according to the state govt. the provisions of the Act for constitution of the authority or the Tribunal within a period of one year is directory in nature. The court said that the period of one year is directory or mandatory would be decided in the writ petition. Since the constitution of the Authority and the tribunal is in question, they should not undertake hearing till the matter is decided. As there is code of conduct imposed by the Election commission in the state that needs to be decided.

Therefore till then hearing in all the cases would be deferred by the authority as well as the tribunal so that it can be taken up by the duly constituted Authority and Tribunal.

RERA Karnataka orders Refund of money with interest

RERA Karnataka orders Refund of money with interest

Recently RERA Karnataka In some of the cases against the Builder/Developer who has defaulted in handing over the constructed  house, Villa and Apartment the  Aggrieved home Buyers have approached the RERA Karnataka Seeking for cancellation of Agreement and Refund of the amount with interest as per RERA provisions.

The home buyers have entered into agreement with the builder/developer in the year 2014-15 and as per the Agreed terms the builder/developer was supposed to handover the possession of the homes within a period of 24 months from the date of Agreement and the hard truth was like any other builder/developer here also there was a default of the builder/Developer and he has not handed over the possession to home buyers who have paid 70 to 80 % of the amount to purchase the home. In the meanwhile there was a dispute between the Builder/Developer and the landowner, the Builder having entered into a registered JDA has defaulted even with the landowners and the quality of construction was very bad that the building would have collapsed within few years of the construction as construction activity was not carried out properly. thus the landowners have got stay in the court. the construction has come to a standstill with no development in the project. Thus the home buyers who had entered into agreement with the Builder/developer came asking for cancellation of Agreement with Builder/Developer and to refund the amount with interest. The RERA Karnataka has after hearing the case issued the orders for refund of the amount with interest at the rate of 10.25% interest on the amount paid by the home buyers.

Procedure in a civil suit to determine the objections raised on the payment of court fees.

Procedure in a civil suit to determine the objections raised on the payment of court fees.

In a civil suit filed by the plaintiffs, the defendants in the usual course of filing their objections/written statement raise an objection that the court fee paid in insufficient or the court fees in not paid properly. in this regard a question arose and the Full bench of High Court of Karnataka has answered how to determine the court fees in a case where there is an objection on the payment of court fees. the question was:

“As to whether, by virtue of sec 11 of the Karnataka court fees and suit valuation act, 1958, when an issue of valuation and court fees is raised on the objections of defendants, the same is invariably required to be tried as a preliminary issue and before taking evidence on other issues?”

The court has held that as per Sec.11(2)&(5) of the act, the determination shall be taken by the court before the evidence is recorded on the merits of the claim in its discretion and such discretion shall be conditioned by requirements of rule 2 Or 14 of CPC. In our view, if the court  finds that the question of valuation and or court fees as raised by the defendant relates to the jurisdiction of the court as it may try such an issue first and before the evidence is recorded on the merits of the claim: and in other eventualities the court may examine such a question of valuation and/or court fees, but not necessarily as preliminary issue of before the evidence on the other issues.

Unsigned Arbitration Agreements not invalid in all cases: SC

Unsigned Arbitration Agreements not invalid in all cases: SC

Section 7(4) only further adds that an arbitration agreement would be found in the circumstances mentioned in the three sub-clauses that make up Section 7(4). This does not mean that in all cases an arbitration agreement needs to be signed.’…

Supreme Court in Caravel Shipping services pvt ltd.., VS  M/s Preimer Sea foods Exim pvt ltd.,

a document styled as “Multimodal Transport Document/Bill of Lading” dated 25.10.2008. This Bill of Lading states that the Consignor/Shipper is one M/s Premier Seafoods Exim Private Limited of Kerala, and that Caravel Shipping Services Private Limited, who is the appellant before us, is the agent who facilitates transport. The very opening Clause of the Bill of Lading specifies:

“In accepting this Bill of Lading the Merchant expressly agrees to be bound by all the terms, conditions, clauses and exceptions on both sides of the Bill of Lading whether typed, printed or otherwise.”

The Respondent filed a Suit being O.S. No. 9 of 2009 before the Sub-Judge’s Court in Kochi to recover a sum of Rs.26,53,593/- in which the Bill of Lading was expressly stated to be a part of cause of action. Soon after the Suit was filed, an I.A. being I.A. No. 486 of 2009 was filed by the appellant under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) in which it was pointed out to the Court that an arbitration clause was included in the printed terms annexed to the Bill of Lading.

The law in this behalf, in Jugal Kishore Rameshwardas vs. Mrs. Goolbai Hormusji, AIR 1955 SC 812, is that an arbitration agreement needs to be in writing though it need not be signed. The fact that the arbitration agreement shall be in writing is continued in the 1996 Act in Section 7(3) thereof. Section 7(4) only further adds that an arbitration agreement would be found in the circumstances mentioned in the three sub-clauses that make up Section 7(4). This does not mean that in all cases an arbitration agreement needs to be signed. The only prerequisite is that it be in writing, as has been pointed out in Section 7(3).

Hon’ble Supreme court has held that the Arbitration agreement need not necessarily be a signed document to invoke the arbitration clause of the agreement. it prerequisites that the agreement shall be in writing.

CONDITIONAL GIFT DEED AND CANCELLATION

The Hon’ble supreme court has held that a conditional gift deed and its cancellation is valid while the condition of such a gift deed is not satisfied.

Question was: whether a document styled as gift deed but admittedly executed for consideration, part of which has been paid and the balance promised to be paid, can be treated as formal document or instrument of gift. Another related question is whether a gift deed reserving the right of the donor to keep possession and right of enjoyment and enforceable after the death of the executant is a gift or a will.

A purported gift deed was executed by Donor in favor of the done, in consideration that the done will take care of her and her husband. further gift deed also clearly mentioned that the gift would take effect after the death of herself and her husband.

later on Donor who had executed the gift deed has cancelled by executing the cancelation of a gift deed. A suit came to be filed seeking for declaration of such cancellation as null and Void and to declare the donee as having right over the property under gift deed.

Under sec. 122 to 126 of Transfer of Property act 1882, mentions Gift Deed and Circumstances of gift deed. Under sec.126 of the act, Donor and donee may agree that on certain specified event the gift shall take place and such gift shall be revocable. as such in the present case as it is very clear that the Gift deed shall take place only after the death of the donor and her husband, thus it’s a revocable and gift to take place on happening of specified event.

A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be cancelled.

A conditional gift only becomes complete on compliance of the conditions in the deed. That there was no completed gift of the property in question by the Donor to the Donee and the Donor was within her right in cancelling the deed.

RERA V/s Consumer Protection Act Vs Insolvency And Bankruptcy Code 2016

RERA V/s Consumer Protection Act Vs Insolvency And Bankruptcy Code 2016

Real Estate (Regulation and Development) Act, 2016 (RERA):
A recently promulgated legislation, RERA seeks tocurb the shortcomingsof respective Ownership Acts prevailing in each state. A centre enacted legislation, RERA seeks to provide uniform laws throughout the states, for protecting the interest of home buyers and seeks to increase transparency in functioning of construction companies and reduce the chances of default or misappropriation of funds by Builders.

RERA provides for establishment of following authorities/Tribunals:
1.Real Estate Regulation Authority (“RERA Authority”) in each state;
2.Real Estate Appellate Tribunal in each state.
It seeks to provide for establishment of authorities/tribunals for providing mechanisms to flat purchasers/home buyers for expeditious Redressal of complaints under the Act.
It basically and broadly provides for remedy for following breaches/contraventions by Promoter/Real Estate Agent:
1.Inviting/Offering for sale etc. without registration of project by Promoter/Developer;
2.Acting as agent or inducing/facilitating purchase by Home Buyer without registration as Real Estate agent or project being registered with Real Estate Authorities;
3.Any unfair practice being adopted by Promoter/Developer/Real Estate Agent;
4.Violation of terms and conditions by Promoter/Developer subject to which approval granted by Competent Authority;
5.Adoption of fraudulent practice by Promoter/Developer;
6.Violation of any provisions of the Act/Rules/Regulation.

Consumer Protection Act, 1986 (CPA):
CPA enacted to provide speedy Redressal mechanism to”CONSUMERS”under the CPA by establishments of Forums at District, State and National level. CPA only applies in case of CONSUMER alleges Unfair Trade Practice or Deficiency with respect to Goods or Services. Each of the terms are well and broadly defined under the Act. The home buyers were also included within the purview of the Act by interpreting the word “Services” under the Act to include construction, since construction is also a service.Otherwise transactions in Immovable Properties are outside the ambit of CPA since they are not goods within the meaning of the Act. Hence transaction relating to sale /exchange of Immovable Properties, specific performance of the same, claim for damages for non-performance of agreement of sale is outside the purview of CPA since Immovable Properties are not “goods” within the meaning of the CPA.

Insolvency and Bankruptcy Code, 2016 (IBC):
IBC was one of the most successful piece of legislation promulgated by the Parliament to provide a uniform code for Insolvency Resolution of all persons whether Individual, Partnership Firm or Corporate entity. It contains different chapters for Insolvency of different types of persons. For Corporate Entities it provides for Corporate Insolvency Resolution Process (CIRP)for 6 months to provide an opportunity to revive the Corporate Entity if Financial Creditors of the Company by requisite majority so agree by approving Resolution Plan and to prevent further erosion of capitaland if possible to appreciate the capital of the Company.If CIRP fails, the Company goes into liquidation and liquidation in done in the manner provided in the IBC.

By virtue of recent amendment in August 2018, the Allottees of project are considered and are deemed to be Financial Creditors within the meaning of the Act. Hence they are entitled to maintain Insolvency Application and in case of admission of Insolvency Application by other Creditors, Financial or Operational, are entitled to participate and vote in meeting of Committee of Creditors that is constituted.

Comparing Remedy Under Rera Vs Cpa Vs Ibc On Certain Parameters From Home Buyers Perspective:

Sr.No. Basis RERA CPA IBC
Time RERA has been formed recently and it takes on an average couple of years for Redressal of Grievances. It takes about 5-6 Years for Redressal of Grievance or adjudication of dispute by Consumer Forum. It takes about 6 Months for adjudication of Insolvency Application and to admit the same by Adjudicating Authority.
Who can file A Purchaser/Home Buyer or prospective purchaser/Home Buyer offered flat can file Complaint irrespective of the fact that such person is Corporate Entity or Individual. A Consumer i.e. a person who satisfies the requirement under Section 2(d) of CPA can file complaint. Thereby only a person, typically Individual who enters into agreement for purchase of Flat can file complaint when he purchases the same for his individual use and residence. Since by recent amendment in August 2018, the Allottee of Project is considered a Financial Creditor,any person whether an Individual or Corporate Entity can file an Insolvency Application under Section 7 of IBC. Also allottee who is competent to file Application in my view can be both purchaser under Redevelopment or existing tenant/owner/occupant of Flat/Apartment.
Application/Complaint to be filed before whom Complaint is to be filed before Real Estate Regulatory Authority established in each state by respective State government where the project is situated. Complaint is to be filed before Consumer Forum having territorial and pecuniary Jurisdiction to hear Complaint. Insolvency Application is to be filed before Adjudicating Authority i.e.
a)National Company Law Tribunal having territorial jurisdiction over the place where registered office of Corporate entity is situated in case of Corporate Entities;
b)Debt Recovery Tribunal in the territorial jurisdiction of which individual resides, carries on business or personally works for gain.
Appellate Structure under the Act. Real Estate Regulatory Authority;
B.Real Estate Appellate Tribunal;
C.High Court;
D.Supreme Court.
a)District Forum;
b)State Forum;
c)National Forum;
d)Supreme Court.
*A writ petition under Article 226 & 227 can be preferred in exceptional circumstances against the decisions of the Forums.
a.National Company Law Tribunal;
b.National Company Law Appellate Tribunal;
c.Supreme Court.
*A writ petition under Article 226 & 227 can be preferred in exceptional circumstance’s against the decisions of the Company Law Tribunals.
Accessibility There are typically as of now, one or two Real Estate Regulatory Authority offices in each state which has constituted the Authority under the Act. District Forums are established in every district of the State. Furthermore State Commission presides in capital of each state and sometimes has benches in other parts of the State. National Commission presides at Delhi and has circuit benches in various parts of the Country which are rotating. NCLT is typically constituted for each state andpresides at one place in the state or one NCLT is commonly empowered and is having jurisdiction over two states.
Execution/Reliefs provided Real Estate Regulatory Authority typically exercise its power by way of an order to impose fine, deregister the project, include the promoter in list of defaulters, direct completion of project in manner provided in consultation with State Government and pass appropriate orders incidental thereto.
*Since Home Buyers are particularly interested in completion and handing over possession of their flats, RERA Authority provides for stages wise utilisation of moneys paid by them and a separate account to be maintained for the purpose. In case of default to complete project or other non-compliances, RERA provides for various measures to complete the project and empowers the authority for the same for that home buyers are not kept in lurch. Also it tries to penalise builders by aforesaid measures so that they are prevented and discouraged from undertaking further projects when they do not have requisite resources.
The Consumer Forum has the power to execute its own orders. This makes execution of orders also an expeditious affair in comparison to regular suits or execution of orders passed by various Courts/Quasi-Judicial Forums. Also since scope of Consumer Act is limited, the relief and consequently is execution is comparatively an expeditious affair. Once, NCLT admits the Insolvency Application,IRP comes into the picture to manage the affairs of the Company and in case of failure of Corporate Insolvency Resolution Process (“CIRP”) (In case of Developer being a Corporate Entity), Liquidation would be commenced. NCLT monitors the entire process and time to time, various reports are required to be filed with NCLT.In other cases liquidation would be commenced by DRT.

Analysis Of Provisions Relating To Granting Of Reliefs Under The Acts:
A.*By virtue of provisions of Proviso to Section 71(1)of RERA it is explicitly clear that a person can avail one of the two remedies, either file Complaint with RERA Authority or before appropriate Consumer Forum. This is due to the fact that in both the remedies one is seeking or can seek recovery of money along with interest, compensation and costs. It proceeds on principle of constitution under Article 20(2)of Indian Constitution provides for equitable principle “that nobody can be prosecuted and punished for the same offence twice or more times”.

B.However where different reliefs are to be sought from RERA Authority and Consumer Forum, different complaint in both the institutions is maintainable. However only two remedies which RERA can provide, apart from slightly more expeditious disposal of cases which the consumer forums are not competent are:-

i.Power to issue directions for completion of project in consultation with State Government by appointment of suitable agency;
ii.Power to include Builder/Developer in the list of defaulter and/or to prohibit it from undertaking new projects.

C.However Section 71(1) read with 72(2) of RERA makes it abundantly clear that the bar is only in respect of remedies that can be commonly obtained under both the Authorities. Hence one it always at liberty to approach RERA or Consumer Forum for remedies not availed from before in other Forum.

D.Also proviso to Section 17(2) of RERA provides for handing over possession within 30 days of obtaining occupancy certificate and execution of conveyance within 3 months of obtaining occupancy certificate. However it does not provide for deemed conveyance unlike Maharashtra Ownership of Flats Act, 1963. In RERA provisions of Section 17 read with Section 34 and Section 38 in my view, one cannot seek relief as to directions to be issued to Developer/Builder for complying with conditions for granting Occupation Certificate and obtaining grant of the same. Even in case of failure of Developer/Builder to hand over possession or grant conveyance,the RERA can only impose monetary penalty and relief in the nature of monetary interest. This is in my view due to the fact also that RERA is an “Authority” formed for limited purpose. A statute cannot be interpreted so liberally so confer power on an authority which the Act does not explicitly provide.RERA in my view is administrative authority, having regard to the scheme of the Act, though it may perform quasi-judicial or quasi legislative functions incidentally. However most decisions of RERA are administrative decisions for enabling it to carrying out its functions as administrative authority under the Act.

E.However Consumer Forums have the power to grant reliefs in the nature of directions to the Developer to provide Occupation Certificate, handover possession and grant Conveyance in favour of ultimate entity formed of flat/apartment purchasers. Since Section 14(1)(e) of CPA provides for power of Consumer Forum to issue directions “to remove the effects or deficiencies in the services in question, the word”removal of deficiency in service” would also include power to grant reliefs as aforesaid as stated previously, since construction is also “Service” within the meaning of CPA.

F.However since Home Buyer/Flat Purchaser are deemed to Financial Creditors under IBC, they can file an Insolvency Application under section 7 of IBC. However an interesting question would arise as to when would there be “Default”on the part of Developer. One has to always keep in mind that construction activity or Real Estate Projects are complex in nature, hence a holistic and equitable view of the transaction has to be taken. A number of transactions and agreements are entered into between Developer, Flat Purchaser, Owner and/or Planning Authorities. Every delay in possession than delivery date or non-observance of agreement or statutory possession cannot be construed harshly against the Developer. On admission of Insolvency Application, in case against Developer being a Company,moratorium would come into force for a period of 6 months which would lead to stay of all proceedings before every court. However same does not apply to criminal proceedings and writ proceedings as held by Hon’ble NCLAT in case of Canara Bank vs Deccan Chronicles Holdings Limited.

G.A company or corporate entity would sought to be revived in case eligible person submits a Resolution Plan and the same is approved by requisite majority of Creditors in the Committee of Creditors. On failure of the same the Company would go in liquidation. Hence after company goes under liquidation, the assets/liabilities would be liquidated in the manner provided in IBC. Flat Purchasers would have priority in discharge of its debts over other creditors and would also have a charge on the property/flat allotted to them at whatever stage of construction it might be under. In case of builder/developer being Individual or partnership firm, then same would straight away go in liquidation.

H.However, if builder is complying with provisions of RERA as to separate bank account opened for money received with respect to flat under construction, and has been unable to complete construction due to financial paucity or any other reason, he will be financial creditor only with respect to interest on amount paid from date of default till completing project or till RERA taking action to complete the project if flat purchaser does not choose to terminate the agreement.

I.However if flat purchaser chooses to terminate the agreement, then he becomes Financial Credit To the extent of payments made to Developer plus interest due from the date of default. DATE OF DEFAULT in my view would be of critical importance and it should be date on which there has been failure on part of builder to provide possession as per the agreement or date for completion of project disclosed to RERA,whichever is earlier. Default can also mean valid termination of agreement as per clauses of the binding agreement or under the provisions of any Act and DATE OF DEFAULT would mean the date from which termination is effective.

J.Insolvency Would be optional remedy, which would be only feasible if company does not have sound financial position and the same is deteriorating. As to the Applicant would have better prospects at recovering his money along with interest. It will be fruitful remedy when the Applicant only seeks to recover money invested along with interest predominantly.

K.If the Developer has sound financial position and flat purchaser seeks to obtain specific performance as to completion of the project,then filing an Insolvency Application may not be feasible option.

L.If flat purchaser is Consumer, Consumer Forum would be a great alternative remedy to obtain specific performance. However if flat purchaser is not competent to obtain relief under CPA, then Civil Courts are the only remedy he has for specific performance and compensation etc.

M.Also RERA is more effective remedy when the project is purely development project or there are large numbers of sale flats which have been sold. This is because in a pure Redevelopment Project, there are less number of tenements available for Developer to be sold and hence less moneys raised and kept in a separate escrow account to be utilized for the purpose of completion of project. Also if more number of charges or mortgages are created on the sale component , then the matter would be only more complex as banks/FI would also put forth their claim on the moneys in the Escrow Account.

Conclusion Of Above Observations And Analysis:-
a.If person is a consumer and seeks performance of statutory obligation or compensation in respect thereof, then Consumer Forum is a better and effective remedy especially in case where Developer has financial ability to pay. Also he may file a complaint with RERA to blacklist Developer and other reliefs which RERA can provide but consumer forum cannot.

b.If a person is not a consumer,then RERA would be more appropriate remedy.

c.If a person is not a consumer and seeks specific performance of statutory obligations from Developer, his only remedy would be to file a regular suit. However, for compensation and other reliefs he may approach RERA.

d.If Person, whether consumer or not, is seeking only return of his money, especially when Developers financial position is deteriorating, then Insolvency Application before NCLT would be appropriate remedy more so when its redevelopment of property that does not involve many flat in sale component.

e.Also them ore the project is closer to the verge of completion, RERA would be a more effective remedy especially if Flat Purchaser/Home Buyer desires to obtain a Flat and vice-versa coupled with the consideration that RERA can also provide compensatory reliefs.

f.Insolvency can always be availed as an alternative remedy when a Flat Purchaser feels that financial position of Developer is deteriorating and Developer will not be able to complete the project and return the money with interest to be able to prevent further deterioration. It will help to obtain recovery of maximum amount of money invested along with Interest.Completion of project may take several years due to various practical difficulties that may arise in the completion of project. Also execution of order for payment of money will not have any fruitful result if Developer does not have financial ability to pay it.

g.In terms of execution, Insolvency since being process to liquidate the assets of entity or person will be a more lucrative remedy in case there is high probability that Developer may not be in position to return the money invested.Consumer Forum since having power to enforce their own orders also provide great remedy in case where builder has completed construction but delayed possession or not complied with statutory obligation to obtain reliefs in respect of both.

h.The Flat Purchaser/Home Buyer can always initiate criminal proceedings against Developer against fraud or other criminal offences or acts committed by it.