By Dr. K.Shivaram
Senior Advocate | Rahul K. Hakani | Shashi Bekal
Advocates
1. Home-buyer –
Cannot invoke IBC – Recovery of RERA award [Insolvency and Bankruptcy Code,
2016, S. 3(10), S. 5(7) S. 7, S. 65; Real Estate (Regulation and Development)
Act, 2016, S. 40]
Sh. Sushil Ansal vs. Ashok Tripathi &
Ors. Company Appeal (AT) (Insolvency) No. 452 of
2020 (NCLAT) Date of order: 14th August, 2020
Bench:
Bansi Lal Bhat J. (Acting Chairperson), Anant Bijay Singh J. and Dr. Ashok
Kumar Mishra
FACTS
The respondents are two house allottees who
booked flats with the appellant (Ansal Builders). As per the agreements, the
appellant had undertaken to complete the project within a period of two years
from the initiation of construction in 2015. However, on account of not
fulfilling the terms as per the agreement, the respondents approached the Uttar
Pradesh RERA where they were awarded a decree of Rs. 73 lakhs. Further, RERA
also issued recovery certificates against the builders. The respondent
allottees sought recourse under IBC for the recovery of their dues.
HELD
The three-member Bench held that as per
section 7 of the IBC as amended by the 2020 Amending Act, to make an
application under IBC it requires a minimum of 100 buyers or 10% of all
home-buyers, whichever is lower.
Further, the respondents have not approached
the Adjudicating Authority in the capacity of ‘allottees of a real estate
project’, therefore they cannot be brought within the meaning of ‘financial
creditors’. They can only be construed to be decree-holders on account of
non-payment of principal amount along with penalty as decreed by UP RERA.
Therefore, a decree-holder, though covered by the definition of ‘creditor’ u/s
3(10) of IBC, does fall within the definition of a ‘financial creditor’ across
the ambit of section 5(7) of the IBC and should have taken steps for filing an
execution case in the Civil Court.
2. Co-operative
Societies – Part of Constitutional Scheme – Unnecessary interference to be
avoided [Maharashtra Co-operative Societies Act, 1961, S. 77, S. 80, S. 152;
Constitution of India]
Rambujarat
Ramraj Chaurasia vs. State of Maharashtra WP-ASDB-LD-VC 220 of 2020 (Bom) (HC) Date of order: 2nd September,
2020 Bench: Ujjal Bhuyan J. and Abhay Ahuja J.
FACTS
The petitioner is the Chairman of Vidhisha
Shantiniketan CHS Ltd. and the petition has been filed challenging the order of the Dy. Registrar, Thane (Respondent No. 2) directing a bank to
not allow the petitioner to operate the Society’s bank account and to allow another member, as assigned by the
Respondent No. 2, to operate the same.
The Society had imposed a penalty on one Mr.
Ramesh Mankar. Aggrieved by the penalty, he had approached the Respondent No. 2
who had given certain directions to the petitioner, failing which the
Respondent No. 2 would appoint an Administrator. Pursuant thereto, and on
account of inaction, Respondent No. 2 dissolved the Managing Committee of the
Society and appointed an Administrator.
The Society appealed before the Divisional
Joint Registrar, Co-operatives, Respondent No. 3, who quashed and set aside the
order of the Respondent No. 2 on 20th May, 2020. However, Respondent
No. 2, via a communication dated 14th July, 2020 directed the bank
to allow the Administrator, as appointed by him, to operate the accounts.
HELD
The Court held that the Society shall be
jointly managed under the Chairmanship of the petitioner and the Respondent No.
6 Administrator only for day-to-day affairs till the disposal of the appeal
before the Respondent No. 3. Further, that co-operative societies are now part
of the Constitutional scheme as co-operative societies have been inserted in
the Constitution of India as Part IX B by way of the Constitution (97th
Amendment) Act, 2011 w.e.f. 15th February, 2012. Therefore,
co-operative societies should have the necessary space and autonomy to function
and develop to their full potential. Interference in the affairs of
co-operative societies should be avoided unless there is serious statutory
breach or compelling necessity.
3. Unpaid
instalment – As per agreement – Not an operational debt [Insolvency and
Bankruptcy Code, 2016, S. 5(21), S. 9]
Brand Realty Services Ltd. vs. Sir John
Bakeries India Pvt. Ltd. (IB) 1677(ND) of 2019 (NCLT) (Del.) Date of order: 22nd July, 2020 Bench: Mr. K.K. Vohra and Mr. Abni Sinha
FACTS
Sir John Bakeries India Pvt. Ltd. (the
corporate debtor) approached Brand Realty Services Ltd. (the operational
creditor) for investment and consultancy services vide an agreement in
November, 2014. The agreement was further ratified in 2018. As per the new
agreement, the corporate debtor agreed to pay the outstanding sum of Rs. 33
lakhs via post-dated cheques. However, the corporate debtor then requested the
operational creditor to hold on and not deposit the cheques and that the
payment would be met via RTGS. However, that never happened either.
A legal notice and a demand notice were
issued under the IBC. The corporate debtor denied any liability in the absence
of any document and said that there exists a dispute between the parties with
respect to the debt.
HELD
In order to trigger section 9 of the IBC,
i.e., application for initiation of Corporate Insolvency Resolution Process by
the operational creditor, an operational creditor is required to establish a
default for non-payment of operational debt as defined in section 5(21) of the
IBC. The application u/s 9 of the IBC was filed for the breach of the terms and
conditions of the settlement agreement between the parties and not against the
invoices raised in terms of the original agreement between them. Therefore, a
default on an instalment of the settlement agreement doesn’t come within the
purview of operational debtors.
The application was dismissed.
4. Dishonour of
cheque – Not offence against society – Can be compounded – Sentence reduced
[Negotiable Instruments Act, 1881, S. 138; Code of Criminal Procedure, 1973, S.
147, S. 386, S. 401]
Rakesh Kumar vs. Jasbir Singh and another Crl. Rev. No. 3004 of 2019 (P&H)(HC) Date of order: 11th August, 2020 Bench: Sudhir Mittal J.
FACTS
The revision petitioner is the accused. He
issued a cheque dated 22nd April, 2006 to the complainant-respondent
No. 1, which was dishonoured. Vide a judgment dated 8th July,
2016, the petitioner was convicted and sentenced to undergo rigorous
imprisonment for two years. He was also directed to pay compensation equal to
the cheque amount along with interest at the rate of 9% per annum from the date
of the cheque till the date of the judgment. An appeal against the judgment of
conviction was dismissed, leading to the present revision petition.
HELD
Sentencing is
primarily a matter of discretion as there are no statutory provisions governing
the same. Even guidelines have not been laid down to assist the courts in this
matter. Further, provisions inserted in the Negotiable Instruments Act are for
inculcating greater faith in banking transactions as the same needed more teeth
so that cases involving dishonour of cheques are reduced. Therefore, deterrence
and restoration are the principles to be kept in mind for sentencing. At the
same time, the Court cannot lose sight of the fact that the offence u/s 138 of
the Act is quasi criminal in nature. Section 147 of the Act makes the
offence compoundable notwithstanding anything contained in the Code of Criminal
Procedure, 1973. It is not an offence against society and an accused can escape
punishment by settling with the complainant. It was further held that the
cheque amount is only Rs. 4 lakhs, and the award of maximum sentence is
arbitrary. On the facts of the case, the sentence is reduced to one year and
six months.
5.
Disqualification of Director – Companies Fresh Start Scheme, 2020 –
Disqualification to be set aside [Companies Act, 2013, S. 164(2)(a)]
Sandeep Agarwal & Ors. vs. UOI &
Anr. WP No. 5490 of 2020 (Delhi) (HC) Date of order: 2nd September,
2020 Bench: Prathiba M. Singh J.
FACTS
The petition has been filed by the
petitioners, Mr. Sandeep Agarwal and Ms Kokila Agarwal, both of whom are
directors in two companies, namely, Koksun Papers Private Limited and Kushal
Power Projects Private Limited. The name of Kushal Power was struck off from
the Register of Companies on 30th June, 2017 due to non-filing of
financial statements and annual returns. The petitioners, being directors of
Kushal Power, were also disqualified with effect from 1st November,
2016 for a period of five years till 31st October, 2021 u/s
164(2)(a) of the Companies Act, 2013. Pursuant to the disqualification, their
Director Identification Numbers (DIN) and Digital Signature Certificates (DSC)
have also been cancelled. In view thereof, they are unable to carry on the
business and file returns, etc. in the active company Koksun Papers. By the
present petition, the disqualification is challenged and quashing is sought of
the impugned list of disqualified directors.
HELD
Companies
Fresh Start Scheme (CFSS) is a new scheme which has been notified on 30th
March, 2020. This Scheme was not invoked before the learned Division Bench. The
Scheme is obviously launched by the Government in order to give a reprieve to
such companies who have defaulted in filing documents; they have been allowed
to file the requisite documents and to regularise their operations, so as to
not face disqualification. The Scheme also envisages non-imposition of penalty
or any other charges for belated filing of documents.
This Scheme
provides an opportunity for active companies who may have defaulted in filing
of documents, to put their affairs in order. It thus provides the directors of
such companies a fresh cause of action to also challenge their disqualification
qua the active companies.
In view of the
fact that in the present case the petitioners are directors of an active
company Koksun Papers in respect of which certain documents are to be filed and
the said company is entitled to avail of the Scheme, the suspension of the DINs
would not only affect the petitioners qua the company, whose name has
been struck off, but also qua the company which is active.
Further,
considering the Covid-19 pandemic, the MCA has launched the Fresh Start
Scheme-2020, which ought to be given full effect. It is not uncommon to see
directors of one company being directors in another company. Under such
circumstances, to disqualify directors permanently and not allow them to avail
their DINs and DSCs could render the Scheme itself nugatory; therefore, the disqualification of the petitioners as directors is set aside.
The DINs and DSCs of the petitioners are directed to be reactivated within a
period of three working days.
