NCLT admits insolvency plea against Parsvnath Landmark, appoints an interim resolution professional

The NCLT admitted an insolvency petition filed by 3 homebuyers against Parsvnath Landmark Developers for inordinate delay in La Tropicana project and non-refund of their payment. 

NCLT admits insolvency plea against Parsvnath Landmark, appoints an interim resolution professional

New Delhi: The National Company Law Tribunal (NCLT) has given its approval to start the insolvency proceedings against realty firm Parsvnath Developers’ subsidiary, which is developing a housing project in the national capital. The NCLT, Delhi, has admitted an insolvency petition filed by three homebuyers against the subsidiary firm - Parsvnath Landmark Developers - for inordinate delay in the development of this project and non-refund of their payment.

The tribunal appointed Yash Jeet Basrar as an interim resolution professional (RP) to run the corporate insolvency resolution process of Parsvnath Landmark Developers.

A two-member bench of the NCLT, headed by president justice M.M. Kumar, has directed that all the personnel connected with the Parsvnath Landmark Developers, erstwhile directors, promoters or any other person associated with the management must cooperate with the RP in managing the affairs of the company.

The tribunal has also directed that “in case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else the interim resolution professional/resolution professional would be at liberty to make appropriate application" before it for passing an appropriate order.

The NCLT has directed the Registrar of Companies to update “the status of ‘corporate debtor’ and specific mention regarding admission of this petition must be notified" on its portal.

The tribunal direction came over a petition filed by Alka Agarwal and two others, who had booked flat at La Tropicana project of Parsvnath Landmark Developers at Khyber Pass in Delhi for a consideration of Rs10.93 crore.

According to the flat buyer agreement executed between the parties on 1 October 2009, Parsvnath Landmark Developers was to hand over the possession within 36 months from the date of commencement of construction with grace period of six months.

However, even after the expiry of more than nine years, construction of the said flat has not been commenced so far. The buyer has several communications with the company either to hand over the flat or return the money with interest as per the agreement.

The counsel for Parsvnath Landmark Developers did not participate in the hearing.

However, in a written submission filed by its authorised representative, it said that the application was not maintainable and delay was on account of various clearances and the matter of issue of ownership of the said land is still pending before the Delhi High Court.

It further said that in the flat buyer agreement, it was agreed that the construction of the flat would likely to be completed within 36 month of commencement of construction on receipt of sanction of building plans and all other requisite approvals for construction. It also conceded that the buyers are not financial creditors.

Rejecting the company’s submission, NCLT said, “The amount has been raised from the petitioners/allottees under a real estate project. In such a situation not only the debt has a commercial effect of borrowings and come within the scope of ‘financial debt’, but also the petitioners are covered by the definition of expression ‘financial creditor’.

NCLT said, “It is confirmed that applicants-financial creditors had disbursed the money to the respondent corporate debtor as consideration for purchase of a residential flat. Though a considerable long period has lapsed, even the principal amount disbursed has not been repaid by the respondent corporate debtor".

As per the provision of clause 11 of the flat buyer’s agreement, it has committed a default, the tribunal added. “It is accordingly held that respondent corporate debtor has committed default in repayment of the outstanding financial debt which exceeds the statutory limit of Rs1 lakh. Thus, the application warrant admission as it is complete in all respect. Accordingly, in terms of Section 7 (5) (a) of the Code, the present application is admitted," said NCLT. Many NCR-based developers, including Jaypee Infratech, Amrapali and an arm of The 3C Company, are facing bankruptcy proceedings as per the direction of the NCLT.


(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed)

E-Commerce Websites with Active Participation in Selling Process Can’t Claim Immunity Provided To Intermediaries, Says High Court

E-Commerce Websites with Active Participation in Selling Process Can’t Claim Immunity Provided To Intermediaries, Says High Court

‘E-commerce websites and online marketplaces ought to operate with caution if they wish to enjoy the immunity provided to intermediaries.’

In an important judgment dealing with the violation of trade mark rights by e-commerce platforms and the extent of protection/exemption enjoyed them; the Delhi High Court has held that when an e-commerce company claims exemption under Section 79 of the Information Technology Act, it ought to ensure that it does not have an active participation in the selling process.

The presence of any elements which shows active participation could deprive intermediaries of the exemption, Justice Prathiba M Singh observed while decreeing a suit against Darveys.com filed by Christian Louboutin.

The main contention raised by the defendant Darveys.com in this case was that they are protected under Section 79 of the Information Technology Act, 2000, as they are ‘intermediaries’. Section 2(w) of the IT Act includes online-market places in the definition of intermediaries.

The court, after referring to international and Indian case laws on the subject, observed that while the so-called safe harbour provisions for intermediaries are meant for promoting genuine businesses which are inactive intermediaries, and not to harass intermediaries in any way, the obligation to observe due diligence, coupled with the intermediary guidelines which provides specifically that such due diligence also requires that the information which is hosted does not violate IP rights, shows that e-commerce platforms which actively conspire, abet or aide, or induce commission of unlawful acts on their website cannot go scot-free.

The court added that when an e-commerce website is involved in or conducts its business in such a manner, which would see the presence of a large number of elements enumerated above, it could be said to cross the line from being an intermediary to an active participant and in such a case, the platform or online marketplace could be liable for infringement in view of its active participation.

It added that e-commerce websites and online marketplaces ought to operate with caution if they wish to enjoy the immunity provided to intermediaries. “So long as they are mere conduits or passive transmitters of the records or of the information, they continue to be intermediaries, but merely calling themselves as intermediaries does not qualify all e-commerce platforms or online market places as one,” the judge said.

Referring to provisions of the Information Technology (Intermediaries Guidelines) Rule, 2011, the court said the guidelines would not offer protection to any ‘intermediary’ that have ‘conspired’, ‘abetted’ or ‘aided’ or ‘induced the commission’ of an unlawful act. “It cannot be argued that anyone who complies with the guidelines is automatically not conspiring, abetting, aiding or inducing commission of an unlawful act. Following the guidelines may in certain cases satisfy that the online market place is behaving as an intermediary but the same is not conclusive. What is lawful or unlawful depends on the specific statute being invoked and the Guidelines cannot be considered as being exhaustive in their manner of application to all statutes,” the court said.

The court gave an illustration is this regard and said: “Thus, for illustration purpose, any online market place or e-commerce website, which allows storing of counterfeit goods, would be falsifying the mark. Any service provider, who uses the mark in an invoice thereby giving the impression that the counterfeit product is a genuine product, is also falsifying the mark. Displaying advertisements of the mark on the website so as to promote counterfeit products would constitute falsification. Enclosing a counterfeit product with its own packaging and selling the same or offering for sale would also amount to falsification. All these acts would aid the infringement or falsification and would therefore bring the e-commerce platform or online market place outside the exemption provided under Section 79 of the IT Act.”

Tough for directors to give up ID nos

Mumbai: Once you have obtained a director identification number (DIN), it sticks to you like a shadow and — barring limited circumstances — you cannot voluntarily surrender it. Several corporate law experts hold that former directors, who have no wish to continue on other boards, should be allowed to surrender their DIN. Ongoing compliance is especially challenging for erstwhile foreign directors.

A recent news item that the government has decided to deactivate the DINs of as many as 21 lakh directors was followed by a frenzy of messages on social media groups. The reason? After September 15, which was initially set as the last day for the KYC compliance, several top political leaders and a few Bollywood superstars had their DIN deactivated. TOI verified this and also noted that these individuals were no longer directors on the board of any company, including those once promoted by them.

A few days later, the government gave defaulting directors another chance — KYC details can now be filed by October 5, with a fee of Rs 500 (reduced from Rs 5,000). According to industry watchers, this extension may get a lukewarm response.

Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014, is restrictive when it comes to surrender of a DIN (see graphic). J Sundharesan, founder of a firm of practising company secretaries, points out, “As regards voluntary surrender, a DIN holder can do so only if he/she has never been associated as a director in any company and the said DIN has never been used for filing of any document with any authority.” But such instances are rare, and holding a DIN comes with its annual KYC filing obligations and intimation of any change in particulars such as address.

“Some individuals may have obtained a DIN in specific circumstances which no longer apply, such as acting as a first director to facilitate company incorporation. Or by a foreign national on secondment as an MD to India for a limited duration, who may now have moved on, or by a director of a company which has been liquidated. Even if these individuals have no intention to act as directors in other Indian companies, under current law they all still need to make filings and maintain their DINs,” explains Bharat Varadachari, partner and national leader (global compliance) at EY India.

While the annual form is to be e-filed, both Varadachari and Sundharesan say that erstwhile foreign directors face greater compliance challenges, such as notarisation of identification documents.

“If an individual chooses not to be a director, he/she should have the ability to surrender DIN and all formalities that go alongside. Perhaps here a distinction should be made in regards to executive and non-executive directors. Of course, DIN records would exist to take care of past activities,” says Simone Reis, leader (M&A) at law firm Nishith Desai Associations.

But there are practical issues. “Once DIN is surrendered, the corporate affairs ministry’s database may show no past association with any companies and stakeholders like creditors, shareholders, foreign investors, various authorities will face challenges in identifying directors in companies where non-compliance or frauds have occurred. An option like keeping the DIN dormant or inactive for filing can be considered,” suggests Vedashri Bhilare, partner at GHV & Co, a firm of practising company secretaries.

On the flip side, Shankar Jaganathan, CEO at Cimply Five Secretarial Services, does not view the inability to surrender as a material issue. Holding a DIN does not prevent anyone from undertaking other roles, is his take.

Big haircut for lenders as NCLT okays resolution plan for Orchid Pharma

The Chennai bench of the National Company Law Tribunal (NCLT) has approved the resolution plan submitted by US-based investor Ingen Capital Group LLC for Chennai-based pharmaceutical manufacturer Orchid Pharma Ltd, following which the management will be constituted under the control of the new investor. Orchid's lenders may take a haircut and would receive around Rs 10 billion out of the total Rs 32 billion outstanding, according to sources close to the development.

The company today informed the exchanges that the resolution plan by Ingen Capital Group was approved by the NCLT on September 17 under the Insolvency and Bankruptcy Code, 2016.

Ingen has to pay the amount in 30 days and settle the banks by that time. A consortium of 24 banks has lent a total of over Rs 32 billion to the drug maker. Apart from this liability, there are amounts due from Orchid to its employees and other outstanding payments as well.

"The Banks will have to take a haircut and may be able to recover Rs 10 billion out of the total outstanding," said a source on condition of anonymity. The Board of Directors will be formed after the amount is paid to the banks, to take over the management from the Resolution Professional.

The Committee of Creditors (CoC) considered the resolution plan of Ingen Capital Group, an alternate asset manager with expertise in infrastructure, energy and healthcare, in its meeting on June 4.

The plan received an affirmative vote of 78.64 per cent of the CoC by value in its favour, said a company filing with the exchanges today.

The NCLT had issued an order to appoint an IRP to take charge of the management of the pharmaceutical firm, with effect from August 17, 2017. The company said in a regulatory filing that the Order issued by the NCLT, Chennai Bench, admitted a petition filed by an operational creditor Lakshmi Vilas Bank. The company was among the 28 large corporate defaulters in RBI's second list, and which were referred to the NCLT.

The company had sold its generic injectables business to Hospira Healthcare, a US-based company that was later acquired by Pfizer, in 2009 for a consideration of $400 million (Rs 18.50 billion as per the then prevailing exchange rate). At the end of August 2012, the company announced the sale of its carbapenem and penicillin API manufacturing facility in Aurangabad along with the related R&D unit in Chennai and product pipeline to Hospira for a consideration of $200 million (around Rs 11.50 billion then).

Orchid is said to be the first export-oriented unit in the domestic pharmaceutical industry, post liberalisation. The company had a strong presence in cephalosporin antibiotic APIs, oral finished dosage formulations, generic injectables, carbapenem and penicillin formulations, and non-penicillin and non-cephalosporin medicines. In 2008 there were reports of a takeover threat from Ranbaxy Group, through its arm Solrex Pharmaceuticals.
Source : business-standard

Omaxe chairman Rohtas Goel dragged to NCLT by younger brother

Realty group Omaxe and its chairman Rohtas Goel have been dragged to the National Company Law Tribunal by his younger brother Sunil Goel, alleging mismanagement into the affairs of the company. Sunil Goel, who was removed as a joint managing director last year, also sought his reinstatement and also prayed for a status quo ante of the company on September 27, 2017. Omaxe group has termed the allegations of Sunil Goel as “false and frivolous”.

The Chandigarh bench of NCLT heard the matter on September 19 and did not grant any stay. It has posted the matter on November 16 for hearing. The NCLT has observed that the petitioner has only 1.84 per cent stake in Omaxe and sought a special waiver under Section 244 of the Companies Act to be eligible to file such a matter.

“No ground for interim stay. The petitioner shall collect the notices from the registry and send the same immediately to the respondents No.1 to 15 by speed post at the registered office address of Omaxe along with the copy of petition and the entire paper book as well as at the email address available on the master data of the company and by speed post to rest of the respondents and file affidavit of service along with copy of postal receipts, tracking report and copy of email at least five days before the date fixed,” it said.

In his petition, Sunil Goel has asked NCLT to declare that his elder brother Rohtas “is acting in oppressive manner against him” and remove him from the post of chairman-cum managing director of the company. He has also requested NCLT to declare his elder sibling “guilty of misappropriation and misutilisation of funds” of Omaxe.

Sunil has also asked that an independent person be appointed as chairman, besides freezing of sale and alienating assets of the company. Meanwhile, Omaxe said in a statement, “We state that false and frivolous allegations have been raised by Sunil Goel in the Company Petitions filed before the NCLT, Chandigarh and as the matter is sub-judice, the same will be dealt with in accordance with law.”

Pay PF dues before repaying creditors, NCLT tells liquidator of Precision Fasteners

MUMBAI: In a significant order for employees of bankrupt companies, the National Company Law Tribunal has ordered the resolution professional handling liquidation of Mumbai-based Precision Fasteners to pay up employee dues to provident fund organisations before repaying creditors.

“The right of all other creditors over the assets of the company is a property right, whereas workmen dues, more specially PF dues of workmen, are interwoven with the Right to Life,” said the order of the Mumbai bench of NCLT.

This order is a shot in the arm for employees of those bankrupt companies, which have not paid for workers’ employment benefits.

NCLT member judges B S V Prakash Kumar and Ravikumar Duraisamy have also directed the resolution professional to pay the provident fund dues from the liquidation estate before distribution the liquidation estate of the corporate debtor to the claimants.

“It is not treated as a claim on par with other creditors, it is in fact treated as an asset of the workmen lying with corporate debtor,” the order said.

Employees' Provident Fund Organisation (EPFO) had earlier attached assets of Precision Fasteners for not depositing the provident fund money.

NCLT’s Mumbai chapter had admitted the company for insolvency proceedings in November last year. With the committee of creditor approving no resolution plan, the company went into liquidation. Divyesh Desai, who was appointed as the resolution professional, donned the role of liquidator.

Precision Fasteners had for long defaulted in depositing provident fund of its employees working at three company locations, including Kalwa in Thane, Silvassa in Vashi, Greater Mumbai, and Mahad in Vapi, Gujarat. Then, EPFO attached its plots in Kalwa, the three assets.

Later, the liquidator wrote a letter to the provident fund body in March, requesting it to release the attachments as those assets were part of liquidation estate.

While telling the provident fund organisation to vacate the plots, the NCLT bench said, “The liquidator shall pay the dues that are payable under the head of provident fund/pension funds/gratuity fund, earmarking it as asset of the workmen and pay off the same….”

The liquidator has not disputed the quantum of provident fund dues that have to be paid along with interest accrued after selling any of the assets of the company.
Source : economictimes

DAILY LEGAL UPDATES IMPORTANT DECISIONS (26.01.2018)

DAILY LEGAL UPDATES IMPORTANT DECISIONS
(26.01.2018)

Attempt to murder - Approver - No corroboration to the statement of approver - Evidence of approver not reliable so as to record a conviction - Conviction set aside. (2014(1) Criminal Court Cases 483 (P&H)

Contraband - Non-compliance of provision of S.42 of the NDPS Act - Registration of FIR and communication of FIR to S.P. - Not sufficient compliance of S.42 of the Act - Procedure provided under Cr.P.C. and NDPS Act are separate procedures, which are exclusive of one another - Compliance of one, would not infer compliance of the other - Accused acquitted. (2016(1) Apex Court Judgments 054 (S.C.)

Contraband - Proceedings initiated by Sub Inspector holding charge of SHO - Proceedings quashed irrespective of the fact that State Govt. authorised Sub Inspectors of Police and Inspectors of Police posted as SHO to exercise power u/s 42 NDPS Act as power to be exercised under the NDPS Act should be exercised in a strict sense. (2017(4) Criminal Court Cases 785 (Rajasthan)

Dishonour of cheque - Issuance of three cheques for repayment of loan - Two cheque payable at place `G' and one at place `D' - All the three cheques dishonoured - All the three cheques were issued against one transaction - Complaint regarding dishonour of all the three cheques filed at place `G' is maintainable. (2016(1)Criminal Court Cases 218 (M.P.)

Domestic Violence - Petition filed u/s 12 of the Act referred to Lok Adalat - Award of Lok Adalat - Order can be enforced in the manner provided for enforcement of orders u/s 125 Cr.P.C. (2016(1)Criminal Court Cases 220 (Kerala)

Expert opinion - Can be sought by a party who relies upon a document. (2014(1) Civil Court Cases 493 (A.P.)

Jurisdiction - Courts where consequence of an offence occur have territorial jurisdiction to try the case. (2014(1) Criminal Court Cases 413 (Rajasthan)

Maintenance u/s 125 Cr.P.C. - Decree dissolving marriage on ground of adultery - Not entitled to maintenance. (2016(1) Criminal Court Cases 094 (Madras)

Medical negligence - Consumer Forums/Courts are at liberty to reject evidence of medical expert on scrutinizing and evaluating relevant evidences and other circumstances in order to adjudicate the appropriate standard of care required in cases of medical negligence arising from administration of anesthesia. (2017(3) Apex Court Judgments 675 (S.C.)

Specific performance - Escalation of prices not a ground to deny relief of specific performance. (2017(3) Apex Court Judgments 628 (S.C.)

Suit filed against a dead person - Impleading L.R's of deceased defendant - Law as to : (1) L.R's of deceased defendant can be implead as party to the suit U.O.1.R.10 CPC; (2) O.22.R.4 CPC is not applicable as said provision applies only when a defendantdies during pendency of suit; (3) There is no impediment in filing application U.O.1.R.10 CPC after dismissal of application U.O.22.R.4 CPC; (4) Dismissal of an application as not maintainable is not a bar to file an application which is maintainable; (5) Legal heirs of deceased defendant can be added in the array of parties U.O.1.R.10 r/w S.151 CPC subject to the plea of limitation as contemplated U.O.7.R.6 CPC and S.21 Limitation Act, to be decided during course of trial; (6) Impleading of a party - Court can add any person as a party at any stage of the proceedings, if the person whose presence is necessary in order to enable the Court to effectively and completely adjudicate upon and settle all the questions involved in the suit - Avoidance of multiplicity of proceedings is also one of the objects of the said provision; (7) Wrong provision of law - Mere wrong mention of the provision in the application does not prohibit a party to the litigation from getting justice. (2017(3) Apex Court Judgments 679 (S.C.)