Juris Prime.

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  • RECENT TAX CHANGES IMPACTING THE REAL ESTATE SECTOR : –

    RECENT TAX CHANGES IMPACTING THE REAL ESTATE SECTOR : –

    AN ESSENTIAL GUIDE

     

    The Indian real estate sector is witnessing a series of crucial changes in direct tax laws and the introduction of domestic transfer pricing regulations. These updates, introduced through recent notifications, amendments, and circulars, have significant implications for developers, investors, and builders. As these changes reshape tax compliance requirements, staying informed and proactively managing these obligations is critical to avoiding penalties, interest, and legal disputes.

    This article outlines the major tax changes impacting the real estate sector, their effective dates, and the steps that industry stakeholders should take to ensure compliance.

    Recent Direct Tax Changes Affecting Real Estate

    1. TDS on Purchase of Immovable Property (Section 194-IA)

    Effective from April 1, 2023, a key amendment under Section 194-IA of the Income Tax Act requires that TDS at 1% be deducted on the total consideration for the purchase of immovable property exceeding ₹50 lakhs. This means that all charges related to the transaction, such as maintenance fees, parking fees, and club memberships, are included in the taxable value, not just the base property price.

    Why this matters:

    • Buyers are responsible for deducting TDS on the full consideration amount, including any ancillary charges. Failure to deduct TDS on the total value could lead to penalties and interest charges.
    • Developers should clearly outline and break down additional costs in their agreements to avoid confusion and ensure that buyers comply with the new TDS obligations.

    Actionable Point:   
              Both buyers and developers must carefully review sale agreements to ensure that TDS is deducted on the full value of the transaction, including all additional charges. Proper structuring of contracts is essential to avoid non-compliance issues.

     

    1. Capital Gains Exemption Limit (Section 54/54F) – Introduction of ₹10 Crore Cap

    A significant change to Sections 54 and 54F of the Income Tax Act, effective from April 1, 2023, has introduced a ₹10 crore cap on the capital gains exemption. Earlier, taxpayers could claim exemptions on capital gains without any upper limit by reinvesting the proceeds into residential property. The new amendment restricts the amount of exemption available to ₹10 crores.

    Why this matters:

    • High-net-worth individuals (HNIs) who sell high-value properties and reinvest the proceeds in another residential property will be impacted by this change. Capital gains above ₹10 crores will now be taxable, which was not the case earlier.
    • Developers catering to luxury residential projects should be aware of the potential impact this change may have on high-value buyers, who will need to adjust their tax planning strategies.

    Actionable Point:    
              Property sellers, especially HNIs, must plan their capital gains reinvestments carefully. Exceeding the ₹10 crore limit will trigger capital gains tax liability, which could significantly impact post-sale cash flows. Developers should guide their clients in understanding these tax implications.

     

    1. Taxation of Joint Development Agreements (JDAs) – Capital Gains Taxable at the Time of Agreement (Section 45(5A))

    Effective from April 1, 2023, Section 45(5A) mandates that capital gains arising from Joint Development Agreements (JDAs) are taxable at the time of signing the agreement, regardless of when possession is handed over or consideration is received. Previously, capital gains were taxable upon project completion or transfer of ownership, but this change shifts the liability to the year the agreement is executed.

    Why this matters:

    • Landowners entering into JDAs will now face capital gains tax at the time of signing the agreement, even if they do not receive immediate monetary consideration or possession of the built-up property. This creates a need for immediate tax planning and could result in cash flow mismatches.
    • Developers must account for this tax burden in their agreement terms and payment schedules, as landowners may require compensation to cover their tax liabilities upfront 
    • Actionable Point:    
       Landowners and developers should evaluate the tax implications of JDAs  and structure agreements to manage the upfront tax liability. Consulting a tax advisor early in the process is essential to ensure the agreement is tax-efficient and compliant with the new regulations.

    Introduction of Domestic Transfer Pricing in Real Estate

    The domestic transfer pricing (DTP) regulations apply to real estate companies engaged in intra-group transactions. These rules ensure that transactions between related parties, such as intra-group land sales, loans, and services, adhere to the arm’s length principle, meaning they must be priced as if they were between unrelated parties in the open market.

    Key Scenarios for Domestic Transfer Pricing in Real Estate:

    1. Intra-Group Services: Real estate companies often provide services such as construction, marketing, or management across different group entities. These services must now be priced at arm’s length to comply with DTP rules.
    2. Intra-Group Land Sales or Transfers of Development Rights: When land or development rights are transferred between group entities, the fair market value must be applied to the transaction to ensure compliance with DTP regulations.
    3. Intra-Group Loans: Financial arrangements, such as loans between related entities within a real estate group, must be priced based on market interest rates and properly documented to avoid tax disputes.

    Why this matters:

    • Real estate companies with multiple entities must ensure that all intra-group transactions are properly documented and priced at market value. Non-compliance with DTP regulations could result in transfer pricing adjustments, penalties, and litigation.
    • Documentation requirements are stringent under DTP, requiring companies to maintain proper records of pricing, terms of transactions, and benchmarking to justify the transfer pricing applied.

    Actionable Point:    
              Real estate developers and investors operating through multiple group entities must conduct a thorough review of intra-group transactions to ensure they comply with domestic transfer pricing regulations. Proper documentation, benchmarking studies, and pricing policies should be in place to mitigate the risk of tax audits and disputes.

     

    Key Takeaways for Real Estate Stakeholders

    The recent changes in direct taxation and the application of domestic transfer pricing rules introduce new layers of complexity for the real estate sector. Developers, landowners, and investors must take immediate action to review their tax strategies and ensure compliance with these updates to avoid penalties, interest, and prolonged tax disputes.

    Action Points for Real Estate Stakeholders:

    1. Review all property transactions and agreements to ensure compliance with the updated TDS and capital gains rules.
    2. Plan capital gains tax carefully, particularly for high-value property sales and JDAs, to avoid unexpected tax liabilities.
    3. Ensure intra-group transactions comply with domestic transfer pricing regulations by maintaining proper documentation and pricing practices.
    4. Consult tax professionals early to structure deals and transactions in the most tax-efficient manner and to avoid compliance issues.

     

    Staying informed and compliant with these new rules is crucial to avoiding costly tax challenges. By adapting to these regulatory changes, real estate companies can safeguard their profitability and maintain smooth operations.

     

  • ANNUAL TAX DUE DILIGENCE

    ANNUAL TAX DUE DILIGENCE

    Introduction

    In today’s evolving tax landscape, businesses face increasing scrutiny from tax authorities, and penalties for non-compliance can be crippling. Annual Tax Due Diligence is a critical service that ensures your business is fully compliant with tax laws, minimizes tax risks, and uncovers tax-saving opportunities. Through proactive and thorough reviews of your tax filings, transactions, and structures, you safeguard your company against penalties, enhance financial planning, and maintain stakeholder trust.

     

    Why Annual Tax Due Diligence Matters

    Tax regulations are becoming more stringent, and the cost of non-compliance is rising. Annual Tax Due Diligence offers an in-depth review of your tax matters, ensuring you stay ahead of tax authorities and avoid costly penalties. It covers Direct Taxes, Indirect Taxes, Transfer Pricing, and Comprehensive Tax Diligence, depending on your business needs.

    Key Benefits:

    1. Risk Mitigation: Identify and minimize tax risks before they escalate.
    2. Tax Savings Opportunities: Uncover deductions, credits, and restructuring strategies to reduce tax liabilities.
    3. Proactive Compliance: Stay compliant with evolving tax laws, reducing the risk of audits or penalties.
    4. Investor and Stakeholder Confidence: Demonstrate a clean, compliant tax position to investors, partners, and regulators.
    5. Enhanced Financial Planning: Get clarity on future tax liabilities, leading to better cash flow and financial management.

     

    The Real Cost of Non-Compliance

    Non-compliance with tax laws doesn’t just lead to tax liabilities—it also opens the door to hefty penalties and reputational damage.

    Examples of Tax Penalties:

    1. Corporate Income Tax Penalties:
      • Interest on Delayed Payment: Interest at 1% per month (12% annually) for delays in paying tax.
      • Penalties for Under-reporting Income: Penalties of up to 50-200% of the tax due can be imposed for misreporting or concealing income.
      • Total Potential Cost: For example, underreporting an income of INR 1 crore could lead to a penalty of INR 50 lakhs to INR 2 crores.
    2. GST Penalties:
      • Interest on Late Payment: 18% annual interest on unpaid GST.
      • General Penalty: Penalty of INR 10,000 or the amount of tax due, whichever is higher.
      • Incorrect Input Credit Claims: Penalties of up to 100% of the claimed amount.
    3. Transfer Pricing Penalties:
      • Failure to Maintain Documentation: Up to 2% of the value of international transactions.
      • Concealment of Income (due to transfer pricing adjustments): Penalties of up to 200% of the tax due on the concealed income.

    Impact of Penalties:

    • Not only do financial penalties hurt your bottom line, but they also cause reputational damage and strain relationships with regulators and investors. Proactively managing these risks through annual due diligence ensures long-term sustainability.

     

    SERVICE OFFERINGS:

    1. Direct Tax Due Diligence:
    • Comprehensive review of corporate income tax compliance, ensuring all deductions, exemptions, and tax-saving strategies are maximized.
    • Risk identification related to under-reporting, non-compliance, or misreporting of income.
    • Fee Range: Starting from 1.0 lakh, depending on the size of your business.
    1. Indirect Tax Due Diligence (GST, VAT, etc.):
    • Detailed examination of GST compliance, input tax credit claims, and filing accuracy.
    • Ensure compliance with indirect tax regulations to avoid interest, penalties, or unnecessary audits.
    • Fee Range: Starting from 1.0 lakh,, based on complexity and revenue.
    1. Transfer Pricing Due Diligence:
    • In-depth review of intercompany transactions and transfer pricing documentation.
    • Ensure compliance with arm’s-length principles and avoid transfer pricing adjustments.
    • Fee Range: Starting from 1.5 lakhs, depending on the scope of international transactions.
    1. Comprehensive Tax Due Diligence (All Services Combined):
    • A full-scale tax review, covering direct tax, indirect tax, and transfer pricing.
    • This holistic approach ensures every aspect of your tax compliance is in order, minimizing risks and maximizing tax efficiency.
    • Fee Range: Starting from 3.0 lakhs, tailored to your business’s needs.

     

    The Due Diligence Process:

    1. Initial Review: We begin by assessing your business’s financial statements, tax filings, and transactions.
    2. In-depth Analysis: Our experts conduct a thorough review, identifying any risks, discrepancies, or opportunities for tax savings.
    3. Reporting & Recommendations: We provide a detailed report with actionable steps to ensure compliance and tax optimization.
    4. Ongoing Support: Post-review, we offer ongoing advisory services to ensure you remain compliant with the latest tax regulations.

     

     

    Why Choose Us for Annual Tax Due Diligence?

    When it comes to tax compliance and risk management, it’s crucial to go beyond day-to-day operations. While your internal team or existing tax professionals manage routine tax filings and compliance, engaging an independent third-party review offers a fresh, unbiased perspective, and ensures your tax strategy is robust, accurate, and future-proof. Here’s why you should choose our Annual Tax Due Diligence service:

    1. Objective Perspective:
      • Internal tax professionals are deeply embedded in the business, and certain risks or practices may go unnoticed or normalized over time. An independent third party provides an unbiased and fresh perspective, conducting a more thorough and critical examination of all tax matters to identify hidden risks and opportunities.
    2. Specialized Expertise:
      • Our team specializes in conducting tax due diligence across various industries. With sector-specific knowledge and the latest regulatory updates, we can identify tax risks, potential savings, and compliance gaps that may be overlooked by in-house teams or regular consultants.
    3. Conflict of Interest Avoidance:
      • By using an independent third party, you eliminate the risk of conflict of interest. Internal teams or regular advisors may lack the incentive or ability to highlight risky tax practices. We ensure that tax compliance and risk identification are performed without any internal bias or pressure, safeguarding your business from potential oversights.
    4. Thorough Risk Identification:
      • Unlike internal teams that may have competing responsibilities, our independent service focuses solely on identifying tax risks and improvement areas. We ensure that no stone is left unturned, especially when it comes to tax optimization and risk management.
    5. Regulatory & Investor Confidence:
      • A third-party tax review enhances your credibility with regulators, investors, and stakeholders by demonstrating a proactive, transparent approach to tax management. It signals your commitment to compliance and optimal tax practices, strengthening your reputation in the market.
    6. Supplementing Existing Work:
      • We work alongside your internal team and existing professionals, providing an additional layer of scrutiny and assurance. This approach enhances your overall tax strategy, helping to identify hidden tax-saving opportunities that may not be readily visible within your internal processes.
    7. Proactive Risk Management:
      • Tax laws are evolving, and it’s critical to stay ahead. Don’t wait for tax authorities to catch you off guard. With our due diligence service, you can be proactive, safeguarding your business from penalties and audits before they happen.
    8. Tailored Solutions:
      • Our services are customized to meet the specific needs of your business, whether you’re an SME, a large corporation, or a multinational. We tailor our approach to fit your size, complexity, and industry requirements, ensuring that your tax compliance is thorough and optimized.

    Engaging us for Annual Tax Due Diligence ensures that your business is safeguarded from tax risks, benefits from fresh insights, and is equipped to handle evolving regulations. With our specialized expertise, objective review, and tailored solutions, we provide the proactive management necessary for both compliance and cost savings, while enhancing trust with regulators and stakeholders.

    Conclusion

    In today’s dynamic tax environment, proactive management through Annual Tax Due Diligence ensures that your business remains compliant, avoids costly penalties, and takes advantage of tax-saving opportunities. By addressing potential risks before they escalate, you safeguard your financial future and strengthen your business’s foundation.

    As the famous proverb goes, “A stitch in time saves nine.” This perfectly encapsulates the essence of annual tax due diligence—by addressing tax issues early, you prevent larger problems down the road, saving both time and money while protecting your business from unnecessary risks.

    Now is the time to act—ensure your business is fully prepared for any tax challenges ahead..

     

     

    Author :  V S MALLIK

    Advocate : Tax Litigation & Strategic Advisory Services

    JURIS PRIME LAW SERVICES

  • ARBITRATION AND IBC PROCEEDINGS CANNOT PROCEED CONCURRENTLY

    ARBITRATION AND IBC PROCEEDINGS CANNOT PROCEED CONCURRENTLY

    Comp. App (AT) (CH) (INS.) No. 246 / 2021

    KK Ropeways Limited

    VS

    M/s. Billion Smiles Hospitality Private Limited

     

    KK Ropeways Limited (“Operational Creditor”) entered into Lease Deed for the leasing of a shop situated at “Savoy Green”, Bengaluru (“Leased Property”) for operating a “Food Court” under the name and style of “UPSOUTH” to Billion Smiles Hospitality Private Limited (“Corporate Debtor”). The parties agreed to arbitration proceedings in case of any dispute with regard to the lease deed. The Corporate Debtor failed to pay the lease rentals and as a last resort for recovery of the said sum the Operational Creditor initiated arbitration proceedings. An Ex-parte Award was passed in favour of the Operational Creditor on November 29, 2018. The Corporate Debtor aggrieved by the award preferred an appeal, before the Hon’ble High Court, Delhi as per the provisions of the Arbitration and Conciliation Act, 1996 assailing the Award.

     

    In this backdrop of a pending appeal before the Hon’ble Delhi High Court, Operational Creditor approached Hon’ble National Company Law Tribunal, Bengaluru Bench (“NCLT”) for initiation of the Corporate Insolvency Resolution Process (“CIRP”) of Corporate Debtor with the sole intent to recover the amount awarded by the Arbitral Award amounting to Rs. 26,33,022/-. The NCLT dismissed the application filed by the Operational Creditor and relied on the judgment passed by Hon’ble Supreme Court in K. Kishan v. Vijay Nirman Co. (P) Ltd., (2018) 17 SCC 662. The NCLT held that the application filed under IBC Code is not maintainable when the arbitral award in question is disputed by way of an appeal under the Arbitration and Conciliation Act, 1996 and the said appeal is pending. Aggrieved by the order passed by NCLT, Operational Creditor preferred an appeal before the Hon’ble National Company Law Appellate Tribunal, Chennai (“NCLAT”).

     

    The Primordial question that aroused for determination during the instant appeal, was “whether the application filed by the Operational Creditor for initiation of CIRP is per se maintainable, for the purpose of “Executing the Award?”

     

    While deciding the matter NCLAT expanded the scope of dispute to mean and include raising a “Dispute” before a “Court of Law” or an “Arbitral Tribunal” prior to receipt of “Notice” and stated that an Arbitral Award if it is challenged in accordance with the provisions of the Arbitration and Conciliation Act, 1996 is a dispute in existence and falls within the preview of the definition of dispute. Thus, NCLAT held that Arbitration proceedings and IBC proceedings cannot proceed concurrently and dismissed, as the appeal sans merits.

     

    References

    1. Hon’ble NCLAT, Chennai in KK Ropeways Limited vs M/s. Billion Smiles Hospitality Private Limited Comp. App (AT) (CH) (INS.) No. 246 / 2021
    2. Hon’ble Supreme Court in K. Kishan v. Vijay Nirman Co. (P) Ltd., (2018) 17 SCC 662.
    3. Hon’ble Supreme Court, in Gujarat Urja Vikas Nigam Ltd Vs. Mr. Amit Gupta and others (2021) SCC Online, SC 194
    4. Section 34 of the Arbitration and Conciliation Act, 1996
    5. Section 5(6), 9 of the Insolvency and Bankruptcy Code, 2016

     

    By CS Sakshi Jain, Senior Associate- Corporate and Commercial Laws, and Ms. Lavanya Ravi, Intern

     

    Note: This article is not intended to create an attorney-client relationship and is intended for general information purposes only. You are advised not to act or rely on any information in this document and consult a professional legal services provider before acting on the same.

  • REVENUE RECORDS – NOT A PROOF OF OWNERSHIP OF THE PROPERTY

    REVENUE RECORDS – NOT A PROOF OF OWNERSHIP OF THE PROPERTY

    P. Kishore Kumar v. Vittal K. Patkar [2023 INSC 1009]

    1030420115150148291judgement20-nov-2023-505234  

    In an appeal filed before the Hon’ble Supreme Court, in Civil Appeal No. 7210 of 2011 by P. Kishore Kumar against Vittal K. Patkar, the Hon’ble Supreme Court held that – “…revenue records are not documents of title.” It also reaffirmed its earlier decision passed in Sawarni vs. Inder Kaur and Ors stating that mutation of name in the revenue records will not create or extinguish any title in the property but will only enable the person to pay the land revenue.

  • CLARITY IN TRADEMARK TUSSLE BETWEEN GLEMARK AND SUN PHARMA VIS-À-VIS THE MARKS – ISTAMET AND INDAMET

    CLARITY IN TRADEMARK TUSSLE BETWEEN GLEMARK AND SUN PHARMA VIS-À-VIS THE MARKS – ISTAMET AND INDAMET

    Sun Pharma Laboratories Limited

    VS

    Glenmark Pharmaceuticals Limited

     

    In the year 2010, Sun Pharma’s predecessor applied for the wordmark “ISTAMET” which was later assigned to Sun Pharma on July 06, 2022. Sun Pharma was using the word ISTAMET since 2011 as an exclusive licensee for selling its medicines. Sun Pharma’s predecessor Merck Sharp & Dohme Corp applied for a wordmark in India in the year 2010 under class 5, the same was opposed by a third party and the matter is still pending disposal. While things stood, Glenmark applied for registration of “INDAMET” as a trademark on a “proposed to be used” on December 11, 2020, which is currently opposed. The medicine sold by Glenmark was for treatment of asthma whereas Sun Pharma’s medicine was for management of diabetes and both applied under the same class 5.

     

    While deciding the matter, the Hon’ble High Court, Delhi stated that the only difference between the two words is with regard to “ST” and “ND” thus “INDAMET” is deceptively similar to the “ISTAMET”, both structurally and phonetically. When seen from the perspective of a common man, there are high chances of confusion and deception which may arise. The Hon’ble Court reiterated the judgement passed by the Hon’ble Supreme Court in Cadilla Healthcare v. Cadilla Medicines, (2001) 5 SCC 73 and wherein it was held that – the test of deceptive similarity in relation to pharmaceutical products must be applied to, stringently, keeping public interest paramount. The Hon’ble Court further stated that the differentiation due to packaging and the manner of its usage cannot be considered for determining the difference between both the medicines and the similarity in the words shall be looked into and shall be given primary importance. Furthermore, Sun Pharma’s registration of the mark ISTAMET for the specific use for management of diabetes, should not be construed narrowly and it is necessary to take the end user’s perspective in relation to the pharmaceutical goods.

     

    Another important point that was taken into consideration while determining the matter was the date since both Companies were using the respective marks. Sum Pharma was using the mark since 2011 and Glenmark had applied on a “proposed to be used” basis thus Sum Pharma’s mark was already in use for a significant period and now if Glenmark’s mark was allowed it would cause serious confusion in the minds of the common people.

     

    The Hon’ble Court concluded that it is essential to grant an injunction to be issued in the current case to prevent Sun Pharma from such irreparable injury and to protect public health. The Hon’ble Court restrained Glenmark and all its related parties from manufacturing, offering for sale, selling, displaying, advertising, or marketing any pharmaceutical or medicinal preparations that bear the contested mark “INDAMET” or any other mark that is confusingly similar to Sun Pharma’s registered mark “ISTAMET XR CP” or is identical to it.

     

    1. Sun Pharma Laboratories Limited vs Glenmark Pharmaceuticals Limited, CS(COMM) 711/2022 & I.As. 20492-20493/2022, 1306/2023
    2. Cadilla Healthcare vs. Cadilla medicines, (2001) 5 SCC 73
    3. United Biotech Pvt. Ltd. vs. Orchid Chemicals & Pharmaceuticals Ltd. & Ors., 2012 SCC OnLine Del 2942.
    4. Stiefel Laborataries vs. Ajanta Pharma Ltd., 2014 SCC OnLine Del 3405;
    5. M/s South India Beverages vs. General Mills Marketing Inc., 2014 SCC OnLine Del 1953.
    6. Novartis AG vs. Crest Pharma, 2009 SCC OnLine DEL 4390

     

    By CS Sakshi Jain, Senior Associate- Corporate and Commercial Laws, and Ms. Janvita Thatha, Intern

     

    Note: This article is not intended to create an attorney-client relationship and is intended for general information purposes only. You are advised not to act or rely on any information in this document and consult a professional legal services provider before acting on the same.

  • Can a claim be filed after the Resolution Plan is approved by the CoC :

    Can a claim be filed after the Resolution Plan is approved by the CoC :

    RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr.[
     Civil Appeal No. 5590 of 2021]

    RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr.
    Court : Supreme Court of India
    Facts : The Appellant and the Corporate Debtor (CD) entered into an agreement for the development of land. However, the Appellant being aggrieved of CD misconduct of advertising the project on his own name without mentioning the name of the Appellant sought remedy through Arbitration. In the Arbitration proceedings an award was passed in the favour of the Appellant however an appeal was filed by the Corporate Debtor against the award.

    Issue : Whether the appellant’s claim pertaining to an arbitral award, which is in appeal under Section 37 of the Arbitration Act, is liable to be included at a belated stage – i.e. after the resolution plan has been approved by the COC.

    Judgement :The Hon’ble Court held that It is undisputed that the process followed by Resolution Professional was not flawed in any manner, except to the extent of whether an efforts should have been made by Resolution Professional to locate the liabilities pertaining to the said award from the records of the Corporate Debtor. If we analyse the aforesaid plea, it is quite obvious that Resolution Professional did what could be done to procure the Corporate Debtor’s records by even moving an application under Section 19 of the IBC. That it was not fruitful is a consequence of the Corporate Debtor not making available the material. It is thus not even known whether there was a reflection in the records on this aspect or not
    It also held that mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. As described above, in Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta & Ors. [2019] ibclaw.in 07 SC, the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.
  • NCLT Hyderabad approves Resolution Plan for M/s Galada Powers and Telecommunications Ltd.

    NCLT Hyderabad approves Resolution Plan for M/s Galada Powers and Telecommunications Ltd.

    The Hon’ble National Company Law Tribunal, Hyderabad has nodded its approval for the Resolution Plan of Rs. 42.13 Crore submitted by M/s. Amrutha Constructions Pvt. Ltd. for revival of M/s. Galada Power and Telecommunications Ltd. The Resolution Plan was earlier approved by the Committee of Creditors with 100% voting share. Accordingly, the Resolution Professional filed an application under Section 30(6) of IBC before the NCLT, seeking approval of the Resolution Plan.
    The Resolution Plan proposes to pay to the creditors as follows:
    • Financial Creditors an amount of 29.32 Crores as against an admitted claim of Rs. 2107.28 Crores
    • The Workmen of the Corporate Debtor are to be paid Rs. 17.83 Lakhs as against an admitted claim of Rs. 18.26 Lakhs
    • The Operational Creditors such as the Government will be paid Rs. 8.62 Lakhs as against an admitted claim of Rs. 345.01 Lakhs
    • The Employees of the Corporate Debtor are to be paid Rs. 31.19 Lakhs as against an admitted claim of Rs. 71.16 Lakhs
    • While the other Operational Creditors are to be paid Rs. 3.11 Lakhs as against an admitted claim of Rs. 124.30 Lakhs.
    https://www.livelaw.in/ibc-cases/nclt-hyderabad-bench-galada-power-telecommunications-resolution-plan-amrutha-constructions-231201

    APPEAL UNDER POSH Act, 2013 TO BE FILED BEFORE LABOUR COURTS/ TRIBUNALS – TELANGANA

    POSH_GoThe Labour Employment Training and Factories (LABOUR-II) Department vide its G.O.Ms No. 23 dated August 11, 2023, empowered various Labour Courts and Industrial Tribunals situated in the State of Telangana as a Competent Authority to hear an appeal against the recommendation(s)/ order(s) passed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal Act), 2013 (“POSH Act, 2013”). Now any person aggrieved by the recommendation(s)/ order(s) passed under the POSH Act, 2013 can prefer an appeal before Labour Courts/ Tribunal for speedy disposal of matters.

    ATTENTION – DEVELOPERS/ OWNERS/ LENDERS

    The Telangana State Real Estate Regulatory Authority, Hyderabad, (“TSRERA”) has received various complaints for delay in the development of the Project by the Developers/ owners by mis-utilizing the funds received for some other purpose. Thus, TSRERA vide its Circular No. 989/TSRERA/2023 dated September 04, 2023 (“Circular”), issued directions to Developers, Owners, Lenders, etc., with respect to the utilization of monies borrowed/ received against Development Projects in Telangana. Now pursuant to said direction the Developers, Owners, Lenders, Chartered Accountants, etc., are required to inter alia comply with the following:
    • The entire amount borrowed for a Project shall be deposited in a separate designated account by the Borrower/ Developer/ Owner;
    • The monies from the separate designated account shall be withdrawn and utilized for the development of the relevant Project only by the Developer/ Owner;
    • The Lenders shall disburse the loan amount into the separate designated account of the Project only and not to any other account;
    • The Chartered Accountant shall certify whether the amounts borrowed has been deposited in separate designated account of the Project or not;
    • In case of amounts borrowed prior to issuance of the said circular, the Borrower/ Developer/ Owner shall ensure that the same is deposited into a separate designated account of the Project by 30.11.2023.
  • THE GOVERNMENT IS PUT UNDER STRICT ACTION BY THE HON’BLE SUPREME COURT FOR LAPSES IN COMPLIANCE WITH POSH ACT, 2013

    THE GOVERNMENT IS PUT UNDER STRICT ACTION BY THE HON’BLE SUPREME COURT FOR LAPSES IN COMPLIANCE WITH POSH ACT, 2013

    CIVIL APPEAL No. 2482 of 2014

    In the matter of Aureliano Fernandes
    vs
    State of Goa and Ors.

    Order date – May 12, 2023

    Facts of the case:

    • Aureliano Fernandes was appointed as a Lecturer at Goa University in the year 1996 hence was deemed to be a government officer. Several complaints were submitted by girls against Aureliano Fernandes alleging physical harassment and to enquire into the matter a Complaint Committee (“Committee”) was formed by the University.
    • The Committee served a notice to Aureliano Fernandes to appear and provide his submissions as to why no action shall be initiated against him. The Committee met 18 times during the span of 39 days and various submissions were exchanged between the Committee and Aureliano Fernandes wherein in one of the letters Aureliano Fernandes had also requested additional time to submit his reply through his attorney.
    • The Committee rejected his request to appoint an attorney and proceed further with the inquiry. Since Aureliano Fernandes failed to appear in person the Committee submitted its report to the Executive Council recommending for dismissal of service of Aureliano Fernandes and declaring him as disqualified from future employment under Rule 11(IX) of the Central Civil Services (Classification, Control and Appeal) Rules, 1964 (“CCS Rules”).
    • While the Executive Council was conducting the inquiry, the University pleaded that the Committee shall be deemed to be an inquiry authority and the report submitted by the Committee shall be taken on record. The Executive Council accepted the plea of the University and dismissed Aureliano Fernandes from service and declared him as disqualified from future employment.
    • Aggrieved by the order passed by the Executive Council, Aureliano Fernandes filed an appeal before the Hon’ble High Court. The High Court upheld the decision of the Executive Council and dismissed the appeal filed by Aureliano Fernandes. Hence, aggrieved by the order passed by the Hon’ble High Court, Aureliano Fernandes has filed the present Petition before the Hon’ble Supreme Court.

    Issues:

    • Whether the Complaints Committee will be deemed to be an inquiry authority for the purposes of the CCS Rules?
    • Whether the principles of natural justice were followed by the Committee and the Council while conducting an inquiry/ trial?

    Relevant Provisions:

    Rule 14 of the CCS (CCA) Rules stipulates the procedure for imposing major penalties and is extracted below

    • (1) No order imposing any of the penalties specified in clauses (v) to (ix) of Rule 11 shall be made except after an inquiry held, as far as may be, in the manner provided in this rule and rule 15, or in the manner provided by the Public Servants (Inquiries) Act, 1850 (37 of 1850), where such inquiry is held under that Act.
    • (2) Whenever the disciplinary authority is of the opinion that there are grounds for inquiring into the truth of any imputation of misconduct or misbehaviour against a Government servant, it may itself inquire into, or appoint under this rule or under the provisions of the Public Servants (Inquiries) Act, 1850, as the case may be, an authority to inquire into the truth thereof.
    • Provided that where there is a complaint of sexual harassment within the meaning of rule 3 C of the Central Civil Services (Conduct) Rules, 1964, the Complaints Committee established in each Ministry or Department or Office for inquiring into such complaints, shall be deemed- to be the inquiring authority appointed by the disciplinary authority for the purpose of these rules and the Complaints Committee shall hold, if separate procedure has not been prescribed for the Complaints Committee for holding the inquiry into the complaints of sexual harassment, the inquiry as far as practicable in accordance with the procedure laid down in these rules.”

    Judgement:

    The Hon’ble Supreme Court while allowing the appeal filed by Aureliano Fernandes, held that the Complaints Committee appointed by the University would be deemed to be an inquiry officer under CAA Rules. Further, the Hon’ble Supreme Court held that the Complaints Committee failed to follow the procedure laid down under CAA Rules for conducting an inquiry and has also failed to follow the principles of natural justice. Further, the Hon’ble Supreme Court directed the Complaints Committee to complete the inquiry within three months by following the due procedure warranted under law.

    Epilogue:

    The Hon’ble Supreme Court while passing its order in the relevant matter also pressed upon failure of the State functionaries, public authorities, private undertakings, organizations and institutions to implement the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 PoSH Act in letter and spirit. The Hon’ble Supreme Court has also directed the Union Government and the State Governments to take affirmative action and make sure that the altruistic object behind enacting the PoSH Act is achieved in real terms.

    Directions:

    The Hon’ble Supreme Court has also issued directions to the UoI/ SGs/ UTs/ Ministries, Departments, Government organizations, authorities, Public Sector Undertakings, institutions, bodies, etc. to comply with the requirements of the PoSH Act, frame a procedure for submission of complaints online amongst various other directions. The Hon’ble Supreme Court has also directed UoI/ SGs/ UTs to file their affidavits within 8 weeks for reporting compliances.

    Reference:

    • Aureliano Fernandes vs State of Goa and Ors., Civil Appeal No. 2482 of 2014
    • Vishaka and Others v. State of Rajasthan and Ors., (1997) 6 SCC 241
    • Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
    • Rule 11(IX) of the Central Civil Services (Classification, Control and Appeal) Rules, 1964
    By CS Sakshi Jain, Senior Associate- Corporate and Commercial Laws
    Note: This article is not intended to create an attorney-client relationship and is intended for general information purposes only. You are advised not to act or rely on any information in this document and consult a professional legal services provider before acting on the same.
  • NCLT Hyderabad Approves Resolution Plan for Indu Projects Ltd

    NCLT Hyderabad Approves Resolution Plan for Indu Projects Ltd

    The Hon’ble National Company Law Tribunal, Hyderabad has nodded its approval for the Resolution Plan of Rs. 501 Crore submitted by a consortium of B. Subba Reddy and C. Venkateswara Reddy for revival of Indu Projects Limited. The Resolution Plan was earlier approved by the Committee of Creditors with 100% voting share.
    The Resolution Plan proposes to pay to the creditors as follows:
    • Financial Creditors an amount of Rs. 394 Crores as against an admitted claim of Rs. 3,890 Crores;
    • Workmen and Employees an amount of Rs. 1 Crore as against an admitted claim of Rs. 4.21 Crores;
    • Operational Creditors other than workmen and employees an amount of Rs. 4.9 Crores as against an admitted claim of Rs. 178 Crores;
    • Government an amount of Rs. 18,432 as against an admitted claim of Rs. 1.82 Lakhs.
    https://www.livelaw.in/ibc-cases/nclt-hyderabad-approves-resolution-plan-for-indu-projects-ltd-232294
    indu-projects-480310 (1)
  • SEBI AMENDS VARIOUS REGULATIONS FOR INSERTION OF ADR MECHANISM FOR RESOLUTION OF DISPUTES

    SEBI AMENDS VARIOUS REGULATIONS FOR INSERTION OF ADR MECHANISM FOR RESOLUTION OF DISPUTES

    The Securities Exchange Board of India (“SEBI”) vide its Circular No. SEBI/LAD–NRO/GN/2023/137 dated July 03, 2023, notified the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023. Pursuant to said Regulation it has amended the following regulations for insertion of resolution of disputes through Alternate Dispute Resolution (ADR) mechanism such as mediation and/ or conciliation and/ or arbitration:
    • SEBI (Merchant Bankers) Regulations, 1992
    • SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
    • SEBI (Debenture Trustees) Regulations, 1993
    • SEBI (Mutual Funds) Regulations, 1996
    • SEBI (Custodian) Regulations 1996
    • SEBI (Credit Rating Agencies) Regulations, 1999
    • SEBI (Collective Investment Schemes) Regulations, 1999
    • SEBI {KYC (Know Your Client) Registration Agency} Regulations, 2011
    • SEBI (Alternative Investment Funds) Regulations, 2012
    • SEBI (Investment Advisers) Regulations, 2013
    • SEBI (Research Analysts) Regulations, 2014
    • SEBI (Infrastructure Investment Trusts) Regulations, 2014
    • SEBI (Real Estate Investment Trusts) Regulations, 2014
    • SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
    • SEBI (Foreign Portfolio Investors) Regulations, 2019
    • SEBI (Portfolio Managers) Regulations, 2020
    • SEBI (Vault Managers) Regulations, 2021
    This step of SEBI will help in faster, easier, and more efficient disposal of disputes between the parties under various resolution. However, the ADR Mechanism shall be initiated post exhausting all actions for resolution of complaints including those received through SCORES Portal.
    Further, SEBI vide its Circular No. EBI/LAD–NRO/GN/2023/138 dated July 03, 2023 has repealed Securities and Exchange Board of India (Ombudsman) Regulations, 2003 which earlier dealt with a mechanism for filing any grievances against the listed entity and intermediaries regulated by SEBI.

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