07. July

If a mortgaged property has been sold by Borrower to Third Party, then the Third Party has to face the consequences | Prior to execution of the Agreement to Sale, the Third Party should have verified the contents and validity of the transaction – Sri G. Gopala Rao Vs. The Authorized Officer, Union Bank of India – DRAT Kolkata

In this case, the mortgage was created on 01.03.1996 and Agreement to Sale was dated 28.03.1998.

Hon’ble DRAT Kolkata held that it is settled proposition of law that any transaction subsequent to the mortgage would always be subject to the mortgage of deed. It could not be disputed that mortgage was created in favour of the Bank prior to Agreement to Sale. If Agreement to Sale was executed by the borrower fraudulently in favour of the Appellant, then Appellant has to face the consequences. Prior to execution of the Agreement to Sale, he should have verified the contents and validity of the transaction but there is nothing on record to that extent. Since the Agreement to Sale is subsequent to the mortgage Deed, all the actions would be subject to the mortgage. Bank has first charge over the secured assets.

If a mortgaged property has been sold by Borrower to Third Party, then the Third Party has to face the consequences | Prior to execution of the Agreement to Sale, the Third Party should have verified the contents and validity of the transaction – Sri G. Gopala Rao Vs. The Authorized Officer, Union Bank of India – DRAT Kolkata Read Post »

Applicability of section 36(2) of Arbitration and Conciliation Act, 1996 to Execution Proceeding initiated under section 36(1) and power of Executing as well as Appellate Court to stay the Execution Proceeding during pendency of an Appeal preferred under Section 37 – Birla Institute of Management & Technology (BIMTECH), Gothapatna, Bhubaneswar Vs. Fiberfill Interiors & Constructions, U.P. – Orissa High Court

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Applicability of section 36(2) of Arbitration and Conciliation Act, 1996 to Execution Proceeding initiated under section 36(1) and power of Executing as well as Appellate Court to stay the Execution Proceeding during pendency of an Appeal preferred under Section 37 – Birla Institute of Management & Technology (BIMTECH), Gothapatna, Bhubaneswar Vs. Fiberfill Interiors & Constructions, U.P. – Orissa High Court Read Post »

Writ Petition against order passed under Section 14(1) of the SARFAESI Act filed by Borrower, having an effective and alternative remedy under Section 17 by filing an appeal before the DRT, is not maintainable – Madasamy Vs. The Authorized Officer/Chief Manager, Canara Bank – Madras High Court

A Writ Petition is filed by Borrower challenging the order passed by the CJM by which, an Advocate Commissioner was appointed for taking physical possession of the property and hand over to the secured creditor.

Hon’ble Madras High Court referring judgments in Union Bank of India v. Satyawadi Tondon and Ors. (2017) ibclaw.in 81 SC and South Indian Bank Ltd. and Ors. v. Naveen Mathew Philip and Anr, (2023) ibclaw.in 47 SC and held that the Writ Petition is not maintainable.

Writ Petition against order passed under Section 14(1) of the SARFAESI Act filed by Borrower, having an effective and alternative remedy under Section 17 by filing an appeal before the DRT, is not maintainable – Madasamy Vs. The Authorized Officer/Chief Manager, Canara Bank – Madras High Court Read Post »

Whether the Court can extend the mandate of an Arbitrator after its termination if the application under Section 29A of Arbitration and Conciliation Act, 1996 is filed post-termination – Ashok Kumar Gupta Vs. M.D. Creations and Ors. – Calcutta High Court

In this judgment, Hon’ble Kolkata High Court clarifies following issues:

(i) Whether section 29A of the Arbitration Act debars an application from being filed after the termination of mandate of the Arbitrator?
(ii) Whether the court’s powers to extend the mandate is taken away if the application for extension is filed post-termination?
(iii) Whether the Rohan Builders ratio operates as a binding precedent on this Court?
(iv) The effect of the 176th Report of the Law Commission of India on the Arbitration and Conciliation (Amendment)Bill, 2001, which ultimately resulted in introduction of Section 29-A, by the Amending Act of 2016, to the 1996 Act
(v) The purpose of Section 29-A of the Arbitration Act.

Whether the Court can extend the mandate of an Arbitrator after its termination if the application under Section 29A of Arbitration and Conciliation Act, 1996 is filed post-termination – Ashok Kumar Gupta Vs. M.D. Creations and Ors. – Calcutta High Court Read Post »

Only when a pending suit relating to a commercial dispute is transferred to the Commercial Division, the provisions of Commercial Courts Act, 2015 will apply and till such time, the mandatory time period of 120 days for filing written statement would not apply – Dish TV India Ltd. Vs. Gulf DTH FZ LLC and Ors. – Delhi High Court

Hon’ble Delhi High Court held that:

(i) Only when a pending suit relating to a ‘commercial dispute’ is transferred to the Commercial Division, the provisions of Commercial Courts Act will apply and till such time, the mandatory time period of 120 days for filing written statement would not apply.
(ii) Till the time the present suit was converted into a commercial suit, it continued to be an ordinary civil suit.
(iii) Once, the suit pertaining to a ‘commercial dispute’ has not been filed as a commercial suit before the commercial division, the said suit cannot automatically be treated as a commercial suit unless a competent court declares the same to be a commercial suit and directs conversion of the suit into a commercial suit.
(iv) The provisions of the Commercial Courts Act, including the time period for filing of the written statement, would apply from the date on which the suit was converted to a commercial suit.
(v) The present suit would qualify as a pending suit and in terms of Section 15 of the Commercial Courts Act, was required to be transferred to the Commercial Division of this Court.

Only when a pending suit relating to a commercial dispute is transferred to the Commercial Division, the provisions of Commercial Courts Act, 2015 will apply and till such time, the mandatory time period of 120 days for filing written statement would not apply – Dish TV India Ltd. Vs. Gulf DTH FZ LLC and Ors. – Delhi High Court Read Post »

CIRP under Section 7 of IBC on default in repayment of Security Deposit which was converted into debt – Sukhkarta Medicose Vs. Greater Kailash Hospitals Pvt. Ltd. – NCLT Indore Bench

An agreement was executed between the parties to use and run the business of pharmacy by Financial Creditor in the premise owned by the Corporate Debtor. The financial creditor has deposited security deposit. Further, the financial creditor terminated the agreement between the parties and asked for the repayment of the security deposit held by the corporate debtor. The Corporate Debtor proposed to treat the security deposit as a loan taken by the corporate debtor and to start the repayment.

Hon’ble NCLT Indore Bench admits the CIRP filed under Section 7 of IBC.

CIRP under Section 7 of IBC on default in repayment of Security Deposit which was converted into debt – Sukhkarta Medicose Vs. Greater Kailash Hospitals Pvt. Ltd. – NCLT Indore Bench Read Post »

Existence of an arbitration agreement in case of transaction between Buyer and Seller through Intermediary Online Platform – Pacific Foods Vs. Krest Enterprises – Delhi High Court

Hon’ble Delhi High Court held that while the question of the existence of an arbitration agreement requires the prima facie satisfaction of the Court, the final adjudication of this question is best left to the arbitral tribunal. The terms and conditions filed by the respondents, appear to be the terms and conditions which applied to the relationship between the Red Basil platform and its subscribers. Terms and conditions make it clear that the transaction is between the buyer and the seller, for which Red Basil is merely acting as the intermediary. Therefore, there prima facie exists an arbitration agreement, to which both parties have assented by exchange of electronic communications, and that the arbitration clause has been invoked in accordance with law.

Existence of an arbitration agreement in case of transaction between Buyer and Seller through Intermediary Online Platform – Pacific Foods Vs. Krest Enterprises – Delhi High Court Read Post »

Whether maintenance charges and interest free maintenance security (IFMS) paid by Allottees/Homebuyers to Developer will fall under the ambit of the definition of Financial Debt under Section 5(8) of IBC, 2016 – ILD Owners Welfare Association Vs. ALM Infotech City Pvt. Ltd. – NCLT New Delhi Bench

Hon’ble NCLT New Delhi Bench held that:

(i) In The Verandas Apartment Owners Association Vs. Saluja Construction Company Ltd. (2023) ibclaw.in 214 NCLT, wherein it has been held that the amount in question does not qualify as a financial debt.
(ii) Further, the NCLT Hyderabad Bench, while dealing with a case on similar facts in the case of Vasathi Anandi Owners Welfare Association v. Vasathi Housing Limited (2023) ibclaw.in 956 NCLT vide Order dated 24.11.2023 held that the present application is not maintainable and the Applicant shall not fall within the meaning of Financial Creditor under section 5(7) of the IBC.
Hon’ble NCLT agrees with the view taken by NCLT, Hyderabad Bench and therefore hold that the amount in question the maintenance and Interest Free Maintenance Security (IFMS) does not amount to financial debt within the meaning of Section 5(8) of the Code. Therefore, the present application filed under Section 7 of the IBC is not maintainable.

Whether maintenance charges and interest free maintenance security (IFMS) paid by Allottees/Homebuyers to Developer will fall under the ambit of the definition of Financial Debt under Section 5(8) of IBC, 2016 – ILD Owners Welfare Association Vs. ALM Infotech City Pvt. Ltd. – NCLT New Delhi Bench Read Post »

Can a third-party non-signatory to an arbitration agreement be included in the arbitral proceedings? – RBCL Piletech Infra Vs. Bholasingh Jaiprakash Construction Ltd. (BJCL) and Ors. – Delhi High Court

Hon’ble Delhi High Court held that one of the common circumstances in which a non-signatory can be included in an arbitral proceeding is where the said non-signatory and one of the signatories to the arbitration agreement are part of one “group of companies” – often known as the “Group of Companies” doctrine. It is not, however, where the non-signatory is part of the same group of companies to which the signatory belongs, that alone the non signatory can be co-opted in the arbitral proceedings. One of the circumstances which would justify the inclusion of a non-signatory to an arbitration agreement in arbitral proceedings is a contractual relationship which makes a non-signatory also responsible to one extent or the other to the obligations towards the claimants.

Can a third-party non-signatory to an arbitration agreement be included in the arbitral proceedings? – RBCL Piletech Infra Vs. Bholasingh Jaiprakash Construction Ltd. (BJCL) and Ors. – Delhi High Court Read Post »

The use of the word “in”, in the expression “in part performance of the contract” under Section 53A of Transfer of Property Act, 1882 merely connotes a nexus between the taking of possession of the property by the transferee and the contract which envisages transfer of the property – Sharad Bhansali and Anr. Vs. Mukesh Aggarwal and Anr. – Delhi High Court

Hon’ble Delhi High Court held that the taking of possession of the property is only to be “in part performance of the contract”. Section 53A does not, either expressly or by necessary implication, require the taking of possession to be simultaneous with the execution of the Agreement to Sell, or even immediately pursuant thereto. The use of the word “in”, in the expression “in part performance of the contract” merely connotes a nexus between the taking of possession of the property by the transferee and the contract which envisages transfer of the property. If, therefore, the transferee, in the case of an Agreement to Sell, acquires possession of the property forming subject matter of the Agreement to Sell, consequent upon its execution, Section 53A would ipso facto apply, even if the acquisition of possession is not simultaneous with, or immediately following, the execution of the Agreement to Sell.

The use of the word “in”, in the expression “in part performance of the contract” under Section 53A of Transfer of Property Act, 1882 merely connotes a nexus between the taking of possession of the property by the transferee and the contract which envisages transfer of the property – Sharad Bhansali and Anr. Vs. Mukesh Aggarwal and Anr. – Delhi High Court Read Post »

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