STATUS OF THE CLAIM MADE BY AN ALLOTTEE OF A PROPERTY AGAINST THE DEVELOPER OF SUCH PROPERTY

By Preksha Dugar, under the aegis of Vinod Kothari & Company

Introduction:

Delays in delivering possession by housing developers after receiving the consideration for the same to the respective allottees, has become a prominent issue in the recent times. The issue of the delays has been highlighted owing to the fact that despite incurring the complete expenditure for the apartments or flats, the allottees are rendered helpless financially when the huge sums of money spent by them are with the developers who are either insolvent or incapable of delivering the possession of such apartments or flats even after passage of years beyond the agreed date of delivery. The insolvency of the developer leaves the individual or the entity, which is the allottee in a disadvantageous position with the developer unjustifiably gaining while the interests of the allottee are prejudiced. Read more

Amendment in SAST and ICDR in line with the Insolvency Code.

By Rohit Sharma (resolution@vinodkothari.com)

Introduction

That any Act or Statute evolves and gaps in it are removed while the same become effective and is implemented – is a known theory.

With the implementation of the Insolvency and Bankruptcy Code, 2016 (“IBC” or “Code”) and with passing days of such implementation, the gaps in the Code / linked statutes are being realized and accordingly corresponding amendments are being brought. Read more

Home buyers breathe a sigh of relief

By Vallari Dubey, (resolution@vinodkothari.com)

IBBI amends CIRP Regulations to include claims of other creditors

IBBI has taken a step towards making positive changes in the Insolvency and Bankruptcy Board of India (‘the Code’). The amendments being brought to Regulations pertaining to Corporate Insolvency Resolution Process, provides a relief to home buyers, who are stuck in the depth of undelivered or unfinished houses. With the aid of the amendments, such home buyers can now proceed to file their claims to the Resolution Professional under the Code. Read more

Special Powers of Supreme Court against Inherent Powers of NCLAT under IBC, 2016 Insolvency application allowed to be withdrawn post admission, by Dheeraj Sharma

Introduction                                                                            

The Supreme Court of India vide its order dated July 24, 2017, in the case of Lokhandwala Kataria Construction Private Limited v. Nisus Finance and Investment Managers LLP[1](Civil Appeal No. 9279 Of 2017), used its special powers under Article 142 of Constitution of India to allow the two organisations to withdraw from insolvency proceedings and settle their Read more

TPP Rules Amended: MCA issues second amendment

The Ministry of Corporate Affairs (“MCA”) vide its Notification No. G.S.R. 1119(E) dated December 7, 2016 issued the Companies (Transfer of Pending Proceeding) Rules, 2016 (‘TPP Rules, 2016’) in exercise of the powers conferred under section 431 (1) and (2) of the Companies Act, 2013 (‘Act, 2013’) read with section 239 (1) of the Insolvency and Bankruptcy Code, 2016 (‘Code’). Read more

Small Companies to be now put on Fast Track Insolvency, by Barsha Dikshit

Insolvency and Bankruptcy Board of India (‘IBBI’) vide notification number IBBI/2017-18/GN/REG 012 dated 14th June, 2017 [1]has come up with Fast track Insolvency regime for small companies by introducing the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 (‘Fast Track Regulation’) and has appointed 14th June, 2017 as the enforcement date. On the very same day Ministry Read more

Interpretation of the word “Dispute” – Resolution application by the operational creditors, by Nitu Poddar

For filing application under the Insolvency and Bankruptcy Code, 2016 (IBC), the operational creditor has to serve a prior 10 days demand notice to the corporate debtor. The corporate debtor can either make payment on receipt of such demand notice or bring to the notice of the operational creditor existence of dispute, if any, and record of pendency of the suit or arbitration proceedings filed before the receipt of such notice. In case payment has already been made, the corporate debtor should send back the proof of such payment to the operational creditor.   Read more

Meeting of Committee of Creditors – Insolvency Code , by Nitu Poddar

Practice makes a man perfect and the same practice (read: implementation) makes a law seamless. Insolvency and Bankruptcy Code, 2016 along with its allied rules and regulation is just a year old technically (and around 5 months old effectively) and surely there are gaps which are being detected during implementation. Read more

IBC (Removal of Difficulties) Order

Author: Vallari Dubey

The Government on 24th May 2017 released the Insolvency and Bankruptcy Code (Removal of Difficulties) Order, 2017 making additions in the Eighth Schedule of the Code, which originally amends the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (SICA), in order to clarify the matter in view of the repeal of the Sick Industrial Companies (Special Provisions) Act, 1985, substitution of clause (b) of section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 and omission of sections 253 to 269 of the Companies Act, 2013. We discuss in detail the order brought and its effect.

Provisions before the Order

The Insolvency and Bankruptcy Code, 2016 (“Code”) came into effect from 28th May 2016 amending the relevant provisions of several existing laws in India in order to modify them in line with the new Code. All such modifications were made in form of different schedules forming part of the Code. One such important amendment is that to the provisions of SICA. Whereby, Section 252 allowed the amendment to SICA to smoothly transfer the proceedings as provided in the Eight Schedule from the purview of SICA to the Code. Accordingly, following has been provided in the Eight Schedule:

“In section 4, for sub-clause (b), the following sub-clause shall be substituted, namely—

 ” (b) On such date as may be notified by the Central Government in this behalf, any appeal preferred to the Appellate Authority or any reference made or inquiry pending to or before the Board or any proceeding of whatever nature pending before the Appellate Authority or the Board under the Sick Industrial Companies (Special Provisions) Act,1985 (1 of 1986) shall stand abated:

 Provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 within one hundred and eighty days fromthe commencement of the Insolvency and Bankruptcy Code, 2016 in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016: Provided further that no fees shall be payable for making such reference under Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or inquiry stands abated under this clause.””

 Additions made by virtue of the Order

The Order has added two more provisos in addition to the existing ones:

“Provided also that any scheme sanctioned under sub-section (4) or any scheme under implementation under sub-section (12) of section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall be deemed to be an approved resolution plan under sub-section (1) of section 31 of the Insolvency and Bankruptcy Code, 2016 and the same shall be dealt with, in accordance with the provisions of Part II of the said Code: 

 Provided also that in case, the statutory period within which an appeal was allowed under the Sick Industrial Companies (Special Provisions) Act, 1985 against an order of the Board had not expired as on the date of notification of this Act, an appeal against any such deemed approved resolution plan may be preferred by any person before National Company Law Appellate Tribunal within ninety days from the date of publication of this order.”

Impact and Analysis

The first proviso that has been added provides for treatment of a scheme sanctioned under Section 18(4) of SICA and for the purpose of monitoring the implementation of that sanctioned scheme under Section 18(2) of SICA. With the immediate effect of this Order, following shall be effective:

  1. All the sanctioned schemes shall be deemed to be an approved resolution plan under Section 31(1) of the Code.
  2. And for the purpose of monitoring and implementation the same shall be dealt with the provisions of the Code set out to deal with approved resolution plans.

The second proviso provides for changes with respect to appeal. Accordingly, the statutory period within which an appeal was allowed under the Sick Industrial Companies (Special Provisions) Act, 1985 against an order of the Board had not expired as on the date of notification of this Act, an appeal against any such deemed approved resolution plan may be preferred by any person before NCLAT within 90 days from the date of publication of this order.

To understand this arrangement, one shall go back to the provisions of time-limit set out in SICA 1985, relevant extract of which is:

  1. Appeal: – (1) Any person aggrieved by an order of the Board made under this Act may, within forty-five days from the date on which a copy of the order is issued to him, prefer an appeal to the Appellate Authority:

Provided that the Appellate Authority may entertain any appeal after the said period of fortyfive days but not after sixty days from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.

 Moreover, the validity of the appeal in the Order is in relation to the date of notification of SICA 2003, which is 25th November 2016.

 The above arrangement is explained in the below mentioned table:

Days to Appeal under SICA 1985 till 1st January Appeal under SICA 1985 Appeal under the Code to NCLAT Time-limit to file appeal with NLAT
Within 45 days Valid Valid Within 90 days of 24th May 2017
Withing 105 days Valid with sufficient cause Valid Within 90 days of 24th May 2017
Beyond 105 days Not valid Not valid N/A

Looking at the intention, it is understandable that a window of 90 days without any further extension has been provided to keep the intention of justice in mind and in the statutory stream, while everything is being transferred to the newly established Insolvency and Bankruptcy Code, 2016.