MANISH KUMAR v. UNION OF INDIA AND ANOTHER

37Copy pinpoint37. She sought to distinguish the judgment of this Court in Sansar Chand Atri v. State of Punjab and another22, which was relied on by the petitioners on the basis that this Court in the said case, only frowned upon creating a class within a class without rational basis. In this case, there was a rational basis for creating a sub-class. Differential treatment is also contemplated under UNCITRAL Legislative Guide and the B Guidelines.

38Copy pinpoint38. There is no basis in the contention that the amendments go against the law laid down in Pioneer (supra). The question involved in the said case was not whether there can be a different treatment to the real estate allottees for the purpose of initiating CIRP. Secondly, it is C pointed out that the Legislature is free to make laws to deal with problems that manifest with experience. The numerical threshold was felt necessary with experience and recommendations of an Expert Committee. There has been a manifold increase of claim petitions filed by single or handful of allottees resulting in an already overburdened Adjudicating Authorities D being flooded with such petitions. The amendment is consistent with the Pioneer (supra) judgment. The uniqueness of the allottees as a class of financial creditors, has been recognized in Pioneer (supra). The fact that they constituted a distinct and separate class of financial creditors meriting distinct treatment, has been approved in Pioneer (supra). The minimum threshold requirement is a procedural requirement. There is no deviation from Pioneer (supra) in a manner which is irreconcilable with it. The legislation, being an economic measure, free play in the joints, must be accorded to the Legislature. The impugned amendment is reasonable, minimal and proportionate. The data gathered by the respondent discloses that between June, 2016 and 5th June, 2018, there were 253 cases filed by allottees in the N.C.L.T.. However, between 6th June, 2018 and 28th December, 2019, as many as 2201 cases were filed by the allottees. Thereafter, pursuant to the Ordinance between December 29th, 2019 and August 26th, 2020, there is a sharp fall, as, nearly in eight months, only 130 cases were filed. It is pointed out that the argument, based on estoppel and malice against the Legislature, is untenable. There can be no estoppel against the Legislature and the decision of this Court in Union of India and others v. Godfrey Philips India Ltd.23, is relied on. The concept of transferred malice is alien in the field of legislation. In this regard, reference is placed on decisions of 22 (2002) 4 SCC 154 H 23 (1985) 4 SCC 369

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this Court in K. Nagaraj and others v. State of A.P. and another24 A and State of Himachal Pradesh v. Narain Singh25.

39Copy pinpoint39. The right to file an application under Section 7 is a statutory right and it can be conditioned. Reliance is placed on judgment of this Court in Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the City of Ahmedabad and others26. There is no inherent or absolute right to file an application under Section 7 of the Code. The Legislature is well within its power to impose conditions for the exercise of such statutory rights. It is further contended that the third proviso inserted in Section 7(1) does not affect any vested right of the creditors who have already filed applications for initiating CIRP. A vested right has been the subject matter of several decisions. In this regard reliance is placed on the following judgments: i. Howrah Municipal Corporation and others v. Ganges Rope Co. Ltd. and others27; ii. Arcelormittal India Private Limited v. Satish Kumar Gupta D and others 28; iii. Swiss Ribbons Private Limited and another v. Union of India and others29; iv. Karnail Kaur and others v. State of Punjab and others30; E v. Committee of Creditors of Essar Steel India Limited Through Authorised Signatory v. Satish Kumar Gupta and Others 31.

40Copy pinpoint40. Mere right to take advantage of a statute is not a vested right. In this regard, the following case law is relied upon: F i. Director of Public Works and another v. Ho Po Sang and Others 32;

24 (1985) 1 SCC 523 25 (2009) 13 SCC 165 26 (1999) 4 SCC 468 G 27 (2004) 1 SCC 663 28 (2019) 2 SCC 1 29 (2019) 4 SCC 17 30 (2015) 3 SCC 206 31 (2019) SCCONLINE SC 1478 32 [1961]3 WLR 39 H

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A ii. M.S. Shivananda v. Karnataka State Road Transport Corporation and others33; iii. Lalji Raja and Sons v. Hansraj Nathuram34; iv. Kanaya Ram and others v. Rajender Kumar and others35;

41Copy pinpoint41. The third proviso is enacted to protect the collective interests of others in a class of creditors. Before admission of the application for insolvency, no vested right accrues in favour of the allottee. The amendment, therefore, cannot be said to have retrospective application in a manner that impairs vested rights. Prior to admission, there is no vested right. Insistence on compliance with the new provisos cannot be C regarded as having retrospective operation taking away vested rights. It is done to avoid needless multiplicity and to ensure that no single allottee would be able to achieve admission and its consequences, without having a threshold of his compatriots on board.

42Copy pinpoint42. Placing reliance on judgment of this Court, in Garikapati D Veeraya(supra), it is contended that even a vested right can be taken away by the Legislature, if a subsequent enactment so expressly provides or if it so by necessary implication. A minimum threshold requirement is a common feature of class action litigation. There are several legislations which provide for a minimum threshold in order to initiate class action. E Section 245 of the Companies Act, 2013 and 241 of the said Act are relied upon. Sections 397 and 398 of the Companies Act, 1956, read with Section 399, contemplated a minimum threshold requirement for seeking relief under Sections 397 and 398. Reference is placed on the Bhabha Committee Report (Company Law Committee) in 1952. So also, is support, sought to be drawn from the judgment of this Court in J.P. F Srivastava & Sons (P) Ltd. and others v. Gwalior Sugar Co. Ltd. and others36. Under the Consumer Protection Act, this Court, rendered the judgment in Anjum Hussain and others v. Intellicity Business Park Private Limited and others37. A minimum threshold adds, authenticity and weightage to the claim in a class action, proving it to be a common G grievance and not a mere obstruction in the work of the opposite party. Reference is made to Rule 23 of Federal Rules of Civil Procedure in the 33 (1980) 1 SCC 149 34 (1971) 1 SCC 721 35 (1985) 1 SCC 436 36 (2005) 1 SCC 172 37 H (2019) 6 SCC 519

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United States, which provide for class action suits. The said Rules A contemplate numerosity, commonality, typicality and adequacy of representation. It is pointed out that joint filing was not only not alien to Section 7 but it was interwoven into its very DNA. Even as originally enacted, Section 7 contemplated joint filing by financial creditors. Uniqueness of the Code lies in the fact that the financial creditors may file an application based on a default that occurred in respect of the third-party financial creditor, who may choose not to file an application itself. At the triggering stage, an application under Section 7 partakes the character of an application in rem proceeding rather than in personam one. The impugned amendment merely extends the same rationale.

43Copy pinpoint43. It is further pointed out that Debenture Trustees are defined in Section 2(bb)of the Securities and Exchange Board of India Debenture Trustees Regulations, 1993, as a Trustee of a trust deed for securing any issue of debentures of a body corporate. Debenture is a long-term bond issued by a company or an unsecured loan that a company issues without a pledge of assets, as for example, interest bearing bond. Debenture D Trustees are registered under Chapter 2 of the said Regulations. The Regulations provide for responsibilities and duties of Debenture Trustees. In the case of a debenture-holder and other security-holder, there is a Debenture Trustee to protect their interest from the inception under SEBI.

44Copy pinpoint44. As far as absence of information, so far as debenture holders are concerned, necessary information regarding them is available in the public domain, under Section 88(1)(b) and Section 88(1)(c) of the Companies Act, 2013, which obliges every company to maintain a register of its debenture holders and security holders. A penalty for non- compliance is contemplated under Section 88(5). Section 95 of the Companies Act, 2013 provides that registers, required to be maintained by the Company under Section 88, shall be kept in the registered office. Without payment of fees, the register is open to inspection by any member, debenture holder or other security holder. Extracts and copies of such registered can be obtained. Reference is also made to Rule 4 of the Companies (Management and Administration) Rules, 2014, which contemplates a separate register in Form - FMG-II for debenture holders. It contains all details of the debenture holder, including the e-mail id, address, etc.. Thus, there is a reservoir of information available for complying with the requirement under the first proviso.

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45Copy pinpoint45. As regards the allottees are concerned, the submission, is as follows: Reference is made to Section 19 of RERA. Thereunder, Section 19(9) obliges every allottee of a real estate project to participate towards the Association of Allottees. Section 11 (4)(e) B of RERA also obliges the Promoter to enable the formation of such an Association. RERA compels the constitution of such an Association, prior to the allotment. This is for the reason that an Association plays an important role during the development of the project. It is pointed out that under Section 8 of RERA, upon lapse of or revocation of the registration, the Authority is obliged C to take such action, as it may deem fit, including the carrying out of the remaining development works. The Association of allottees have been given the right of first refusal for carrying out the remaining development works. Section 11(4) contemplates the obligations to be discharged by the Promoter towards the D Association. Reference is also made to Section 4(2)(c) of RERA. Under Section 17 of the RERA, the Promoter is to execute a registered conveyance in regard to the undivided proportionate title in the common areas to the Association of the allottees. Physical possession of the common areas is to be handed over to the Association of the Allottees. Under Section 31 of RERA, the E Association can file complaint with the Authority. Apart from this, it is also pointed out that under Section 11(1)(b), the Promoter is bound to create a webpage on the website of the RERA Authority and enter thereon the quarterly up-to-date list of the number and the types of the plots/apartments as may be booked.

46Copy pinpoint46. Shri Sajan Poovayya, learned senior Counsel who appears on behalf of respondent no. 4 in Writ Petition No. 191 of 2020, which is a builder, also supported the Union. The second proviso, he contends is a logical and legitimate method to strike a fair balance between all stakeholders. It makes the Code workable. The object of the Amendment G Act is to prevent the use of the Code for an extraneous purpose and not to shield and protect an errant real estate developer. He has referred to the facts pertaining to his client by way of an example of the misuse which has happened under the earlier regime. He drew support from paragraph-41 of the judgment in Pioneer H (supra). Second proviso is an independent provision to made the Code

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workable. He drew our attention to paragraph-43 of this court in 1985 1 A SCC 591. As regards the information, he also pointed out Section 11 of RERA, pointing to the information which is available in public domain. Illustratively, he drew our attention to the Haryana Real Estate Regulatory Authority, (Gurugram, Quarterly Progress Report Regulations), 2018, under which the format provides various details which include the names of the allottees and the date of booking, inter alia. He also points out that there is no unfair discrimination. CHALLENGE TO PLENARY LEGISLATION; GROUNDS

47Copy pinpoint47. The grounds on which plenary law can be challenged are well established. In the first two decades decisions of this Court unerringly point to three grounds which render legislation vulnerable. A law can be successfully challenged if contrary to the division of powers, either the Parliament or the State Legislature usurps power that does not fall within its domain thus, rendering it incompetent to make such law. Secondly, a law made contravening Fundamental Rights guaranteed under Part III D of the Constitution of India would be visited with unconstitutionality and declared void to the extent of its contravention. Needless to say, a law within the meaning of Article 19 of the Constitution would remain valid qua a non-citizen (see in this regard The State of Gujarat and others v. Shri Ambica Mills Ltd., Ahmedabad and Others38). Thirdly, apart from E Fundamental Rights, the supremacy of the Constitution vis-a-vis the ordinary legislation, even when the law is plenary legislation, is preserved with a view that legislation must be in conformity with the other provisions of the Constitution.

48Copy pinpoint48. While on breaches of the Fundamental Right, furnishing a F plank of attack against plenary law, it is necessary to notice a challenge to law under Article 14, was essentially confined to the law, being class legislation. In other words, a law, if it manifested reasonable classification for treating different persons or things differently, the law would pass muster. Interestingly, even while the theory of reasonable classification had come to be proclaimed in the first year of the Republic, and what is G more followed in State of West-Bengal v. Anwar Ali39, the following doubts were expressed by Justice Vivian Bose:

38 (1974) 4 SCC 656 39 AIR 1952 SC 75 H

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A “82. I can conceive of cases where there is the utmost good faith and where the classification is scientific and rational and yet which would offend this law. Let us take an imaginary cases in which a State legislature considers that all accused persons whose skull measurements are below a certain standard, or who cannot pass a given series of intelligence tests, shall be tried summarily B whatever the offence on the ground that the less complicated the trial the fairer it is to their sub-standard of intelligence. Here is classification. It is scientific and systematic. The intention and motive are good. There is no question of favouritism, and yet I can hardly believe that such a law would be allowed to stand. But C what would be the true basis of the decision? Surely simply this that the judges would not consider that fair and proper. However much the real ground of decision may be hidden behind a screen of words like ‘reasonable’, ‘substantial’, ‘rational’ and ‘arbitrary’ the fact would remain that judges are substituting their own judgment of what is right and proper and reasonable and just for D that of the legislature; and up to a point that, I think, is inevitable when a judge is called upon to crystallise a vague generality like article 14 into a concrete concept. Even in England, where Parliament is supreme, that is inevitable, for, as Dicey tells us in his Law of the Constitution: E “Parliament is the supreme legislator, but from, the moment Parliament has uttered its will as law-giver, that will becomes subject to the interpretation put upon it by the judges of the land, and the judges, who are influenced by the feelings of magistrates no less than by the general spirit of the common law, are disposed F to construe statutory exceptions to common law principles in a mode which would not commend itself either to a body of officials, or the Houses of Parliament, if the Houses were called upon to interpret their own enactments.” But the following caveat by the learned Judge is worth noticing: G “83. This, however, does not mean that judges are to determine what is for the good of the people and substitute their individual and personal opinions for that of the government of the day, or that they may usurp the functions of the legislature. That is not their province and though there must always be a narrow H margin within which judges, who are human, will always be

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influenced by subjective factors, their training and their tradition makes the main body of their decisions speak with the same voice and reach impersonal results whatever their personal predilections or their individual backgrounds. It is the function of the legislature alone, headed by the government of the day, to determine what is, and what is not, good and proper for the people of the land and they must be given the widest latitude to exercise their functions within the ambit of their powers, else all progress us barred. But, because of the Constitution, there are limits beyond which they cannot go and even though it falls to the lot of judges to determine where those limits, lie, the basis of their decision cannot be whether the Court thinks the law is for the benefit of the people of not. C Cases of this type must be decided solely on the basis whether the Constitution forbids it.” (Emphasis supplied)

49Copy pinpoint49. The seed of this idea had a muted growth. It was in the decision of this Court in E.P. Royappa v. State of Tamil Nadu and Another40 D that this Court laid bare a new dimension in the majestic provisions of Article 14. This Court took the view that arbitrariness and fairness are sworn enemies. The guarantee of Article 14 is not confined in other words to it being a prohibition against equals being discriminated against or unequals being treated alike. State action must be fair and not arbitrary E if it is to be pass muster in a court of law. It is essentially following the dicta laid down as aforesaid that this Court in the case of Shayara Bano v. Union of India41, wherein one of us (Justice Rohinton F. Nariman), speaking for the majority, held as follows: “101. It will be noticed that a Constitution Bench of this Court F in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India [Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India, (1985) 1 SCC 641 : 1985 SCC (Tax) 121] stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challenge against plenary legislation. This being the case, there is no rational distinction G between the two types of legislation when it comes to this ground of challenge under Article 14. The test of manifest arbitrariness, therefore, as laid down in the aforesaid judgments would apply to 40 (1974) 4 SCC 3 41 (2017) 9 SCC 1 H

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A invalidate legislation as well as subordinate legislation under Article

14. Manifest arbitrariness, therefore, must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary. We are, therefore, of the view that arbitrariness in the sense of manifest arbitrariness as pointed out by us above would apply to negate legislation as well under Article 14.” (Emphasis supplied)

50Copy pinpoint50. This view, namely, that be it a plenary law if it is found to be manifestly arbitrary it become vulnerable has been followed in the following decisions, among other judgments: (1) Navtej Singh Johar and Others v. Union of India and Others 42; (2) Joseph Shine v. Union of India43; D (3) Justice K.S. Puttuswamy and Others v. Union of India and Others 44. (4) Hindustan Construction Company Ltd. and Others v. Union of India and Others45.

51Copy pinpoint51. Yet another ground recognised by this Court is that a law, be it the offspring of a Legislature, it falls foul of Article 14 if it is found to be vague – (see in this regard Shreya Singhal v. Union of India46). It must be elaborated and we must remember that the case involved overturning Section 66A of the Information Technology Act which purported to create a criminal offence, the ingredients of which were found to be vague.

52Copy pinpoint52. While, on the basis, furnished under law, for impugning the plenary legislation, we may notice two grounds, which have been urged before us by some of the petitioners. It has been urged that the law was created by way of pandering to the real estate lobby and succumbing to their pressure or by way of placating their vested interests. Such an 42 (2018) 10 SCC 1 43 (2019) 3 SCC 39 44 (2017) 10 SCC 1 45 AIR 2020 SC 122 46 H (2015) 5 SCC 1

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argument is nothing but a thinly disguised attempt at questioning the law of the Legislature based on malice. A law is made by a body of elected representatives of the people. When they act in their legislative capacity, what is being rolled out is ordinary law. Should the same legislators sit to amend the Constitution, they would be acting as members of the Constituent Assembly. Whether it is ordinary legislation or an amendment to the Constitution, the activity is one of making the law. While malice may furnish a ground in an appropriate case to veto administrative action it is trite that malice does not furnish a ground to attack a plenary law [See in this regard K. Nagaraj and others v. State of Andhra Pradesh and another47 and State of Himachal Pradesh v. Narain Singh48]. C

53Copy pinpoint53. Yet another ground which has been urged in these cases is that when this Court decided Pioneer (supra) the Union of India defended the amendment to the Code which included the insertion of the explanation to Section 5(8)(f) of the Code. It was this explanation which made it clear that home buyers would be financial creditors. All grounds urged by the financial creditors were fiercely countered by the very same D Union of India by contending that the home buyers are financial creditors and what is more, there existed sufficient safeguards against abuse of power by the individual home buyers. What is contended before us by some of the petitioners is that the supreme legislature is in such circumstances estopped by the principle of promissory estoppel from enacting the impugned enactment.

54Copy pinpoint54. A supreme legislature cannot be cribbed, cabined or confined by the doctrine of promissory estoppel or estoppel. It acts as a sovereign body. The theory of promissory estoppel, on the one hand, has witnessed an incredible trajectory of growth but it is incontestable that it serves as an effective deterrent to prevent injustice from a Government or its agencies which seek to resile from a representation made by them, without just cause [See in this regard Union of India and others v. Godfrey Philips India Ltd.49 – Paragraph-13].

47 (1985) 1 SCC 523 48 (2009) 13 SCC 165 49 (1985) 4 SCC 369 H

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A UNRAVELLING THE WORKING OF THE CODE AS REGARDS CORPORATE DEBTOR

55Copy pinpoint55. The Code was passed by Parliament in the year 2016 however, under Section 1(3) provisions were to come into force on such day as the Central Government was to appoint. The provisions of the Code B stand enforced from 2017.

56Copy pinpoint56. Part II of the code applies to matters relating to Insolvency and Liquidation of Corporate Debtors where the minimum amount of default is Rupees One crore as it stands [Section 4]. Under Section 6 of the Code when any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself is permitted to initiate the corporate insolvency resolution process (hereinafter referred to as CIRP) in respect of the corporate debtor in the manner provided under Chapter II. Chapter II consists of Section 6 to Section 32A. Section 7 (1) provides that a financial creditor by himself or joining with other financial creditors or any other person on behalf of the financial creditor as may be notified by the Central Government may file an application under Section 7 for initiating the CIRP before the adjudicating authority when a default has occurred. The adjudicating authority defined in Section 5(1) of the Code is the NCLT constituted under Section 408 of the Companies Act 2013. The unamended Section 7(1) read as follows: “7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.” Explanation - For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.”

57Copy pinpoint57. The three impugned provisos which we have already noted and which have been inserted vide the impugned amendment have been sandwitched in between the provisions of sub-section (1) and the explanation. Sub- section 2 of Section 7 provides that the financial creditor shall make the application which shall be in such manner and form and accompanied by such fee as may be prescribed.

58Copy pinpoint58. Section 3(26) defines the word ‘prescribed’ as meaning prescribed by rules made by the Central Government. Section 239, inter alia, confers power on the Central Government to make rules for carrying out the provisions of the Code. Accordingly, the Insolvency and

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Bankruptcy (Application to Adjudicating Authority) Rules, 2016 came to be made and were enforced from 1.12.2016. Rule 4 reads as under: “4. Application by financial creditor.—(1) A financial creditor, either by itself or jointly, shall make an application for initiating the corporate insolvency resolution process against a corporate debtor under section 7 of the Code in Form 1, accompanied with documents and records required therein and as specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (2) Where the applicant under sub-rule (1) is an assignee or transferee of a financial contract, the application shall be accompanied with a copy of the assignment or transfer agreement and other relevant documentation to demonstrate the assignment or transfer. (3) The applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor. (4) In case the application is made jointly by financial creditors, they may nominate one amongst them to act on their behalf.”

59Copy pinpoint59. Rule 8 contemplates withdrawal of application. It reads as follows: E “8. Withdrawal of application — The Adjudicating Authority may permit withdrawal of the application made under rules 4, 6 or 7, as the case may be, on a request made by the applicant before its admission.” F

60Copy pinpoint60. It must be noticed that Rules 6 and 7 deal with applications by operational creditors and corporate applicants respectively. Rule 10 (1) (2) and (3) read as follows: “10. Filing of application and application fee — (1) Till such time the rules of procedure for conduct of proceedings G under the Code are notified, the application made under sub-section (1) of section 7, sub-section (1) of section 9 or sub-section (1) of section 10 of the Code shall be filed before the Adjudicating Authority in accordance with rules 20, 21, 22, 23, 24 and 26 of Part III of the National Company Law Tribunal Rules, 2016. H

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A (2) An applicant under these rules shall immediately after becoming aware, notify the Adjudicating Authority of any winding-up petition presented against the corporate debtor. (3) The application shall be accompanied by such fee as specified in the Schedule.”

61Copy pinpoint61. Form 1 is the application prescribed in relation to an application to be filed by the financial creditor. It reads as follows: “FORM 1 (See sub-rule (1) of rule 4) C APPLICATION BY FINANCIAL CREDITOR(S) TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER CHAPTER II OF PART II UNDER CHAPTER IV OF PART II OF THE CODE. [*strike out whichever is not applicable] D (Under section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016) [Date] E To, The National Company Law Tribunal [Address] From, F [Names and addresses of the registered officers of the financial creditors] In the matter of [name of the corporate debtor] Subject: Application to initiate corporate insolvency resolution process in the matter of [name of the corporate debtor] under G the Insolvency and Bankruptcy Code, 2016. Madam/ Sir, [Names of the financial creditor(s)], hereby submit this application to initiate a corporate insolvency resolution process in H

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the matter of [name of corporate debtor]. The details for the A purpose of this application are set out below: Part-I

PART-II D

PARTICULARS OF THE CORPORATE DEBTOR

1. NAME OF THE CORPORATE DEBTOR

2. IDENTIFICATION NUMBER OF CORPORATE DEBTOR E

3. DATE OF INCORPORATION OF CORPORATE DEBTOR

4. NOMINAL SHARE CAPITAL AND THE PAID-UP SHARE CAPITAL OF THE CORPORATE DEBTOR AND/OR DETAILS OF GUARANTEE CLAUSE AS PER MEMORANDUM OF ASSOCIATION (AS APPLICABLE) F

5. ADDRESS OF THE REGISTERED OFFICE OF THE CORPORATE DEBTOR

6. DETAILS OF THE CORPORATE DEBTOR AS PER THE NOTIFICATION UNDER SECTION 55(2) OF THE CODE-

(i) ASSETS AND INCOME G (ii) CLASS OF CREDITORS OR AMOUNT OF DEBT (iii) CATEGORY OF CORPORATE PERSON (WHERE APPLICATION IS UNDER CHAPTER IV OF PART II OF THE CODE)

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A Part-III

B Part-IV

Part-V PARTICULARS OF FINANCIAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] D

1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR.

ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY)

E 2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER)

3. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD)

4. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY) F

5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A COPY)

6. A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT INFORMATION COMPANY (ATTACH A COPY)

7. COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY) G

8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF DEFAULT

I, hereby certify that, to the best of my knowledge, [name of proposed insolvency professional], is fully qualified and H

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permitted to act as an insolvency professional in accordance with A the Insolvency and Bankruptcy Code, 2016 and the associated rules and regulations. [Name of the financial creditor] has paid the requisite fee for this application through [state means of payment] on [date]. Yours sincerely, B

C Instructions Please attach the following to this application: Annex I Copies of all documents referred to in this application. Annex II Written communication by the proposed interim resolution professional as set out in Form 2. Annex III Proof that the specified application fee has been paid. Annex IV Where the application is made jointly, the particulars specified in this form shall be furnished in respect of all the joint applicants along with a copy of authorisation to the financial creditor to file and act on this application on behalf of all the applicants.”

62Copy pinpoint62. The schedule prescribes the fees which is contemplated under Rule 10(3). It, inter alia, provides that for an application by a financial creditor (whether solely or jointly a sum of Rupees Twenty-five thousand). Sub-section 3 of Section 7 provides that financial creditor along with the application shall furnish record of the default recorded by the information utility or all such other record or evidence before as may be specified. The word ‘specified’ has been defined in Section 3 (32) as meaning specified by regulations made by the Board and the term ‘specify’ is to be construed accordingly. G

63Copy pinpoint63. Section 7(3) (b) requires the financial creditor who makes the application to furnish the name of the Resolution Professional proposed as an Interim Resolution Professional (hereafter referred to as “RP” and “IRP” respectively). Section 5(27) defines the word ‘Resolution Professional’ for the purpose of Part 2 to mean an insolvency professional H

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A appointed to conduct the CIRP and includes an interim resolution professional. In turn Section 3(19) defines ‘insolvency professional’ as the person enrolled under Section 206 with an insolvency professional agency as its member and registered with the Board as an insolvency professional under Section 207. Sub-Section (5) of Section 7 proclaims that when adjudicating authority is satisfied that a default has occurred and the application under sub-section is complete and that there is no disciplinary proceedings pending against the proposed resolution professional, it may by order admit an application. Inter alia on the ground that default has not occurred, it is open to adjudicating authority to reject the application. If rejection is intended, the proviso obliges the adjudicating authority to issue a notice to rectify any defect in the application (this is for the reason that under sub-Section 5 apart from there being no default, if there is any disciplinary action against the proposed resolution professional, the application is liable to be rejected) This is apart from the application being otherwise defective. The application is to contain other information as may be specified under regulations by the Code. D The adjudicating authority is required by the letter of the law and indeed we may say so, in accordance with the spirit to ascertain within 14 days of the receipt of the application if there is any default from the records of information utility or on the basis of other evidence made available by the financial creditor under sub-section (3) [In Pioneer (supra), the period E has been understood as directory]. ‘Information utility’ has been defined in Section 3(21), as a person who is registered with the Board as information utility under Section 210. The word ‘Board’ has been defined in Section 3(1) to be the ‘Insolvency and Bankruptcy Board of India’ which is established under sub-Section (1) of Section 188.

64Copy pinpoint64. Section 7(6) declares that the CIRP shall commence from the date of admission of the application under sub-section (5).

65Copy pinpoint65. Section 8 read with Section 9 deal with application for initiation of the CIRP by an operational creditor. Section 10 deals with an application by the corporate applicant. The word Corporate applicant is G defined to refer to the corporate debtor and other entities associated with it. More about it at a later stage. It is thereafter that law giver has in Section 11 proscribed applications which should otherwise be maintainable. This is a provision in which we will devote more time later on in this judgement. Section 12 places the time limit. Section 12 has a marginal note which is to the following effect: H

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“12. Time-limit for completion of insolvency resolution process.- A (1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. (2) The resolution professional shall file an application to the B Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of seventy-five per cent. of the voting shares. C (3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty D days by such further period as it thinks fit, but not exceeding ninety days: Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once. E Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor: Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.”

66Copy pinpoint66. Coming to sub-Section 2, the CIRP is to be completed within 180 days from the date of admission of the application to initiate the H

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A process. As far as an application by a financial creditor is concerned, the date of admission is the date of the order admitting the application. Under sub-Section (2) however if the Committee of creditors by a vote of 66 per cent of the voting share instructs the RP to extend the period of CIRP beyond 180 days, the RP is bound to file an application. The adjudicating authority on receipt of the application can extend the period B of 180 days for a maximum period of 90 days. Such extension can be granted only once. With effect from 16.8.2019, two provisos have been inserted. The provisos were added in fact as noted in paragraph-74 of the Essar Steel (supra) to overcome what was laid down in (2019) 2 SCC 1 decided by this Court 04.10.2018. In the latter decision in C Arcellormittal (supra), this Court purported to hold that the time taken in legal proceedings must be excluded. Under the first proviso, the CIRP has to be mandatorily completed within a period of 330 days from the insolvency commencement date. This period of 330 days is to include any extension granted under sub-Section (3) by the Adjudicating Authority and also the time taken in legal proceedings in relation to the resolution process of the corporate debtor. However, in Committee Creditors of Essar Steel (supra), this Court struck down the word ‘mandatorily’ as being manifestly arbitrary and in violation of Article 19 (1)(g) and proceeded to hold as follows: “…The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or F Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate 10-12-2020 (Page 69 of 85) debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which G the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal H to extend time beyond 330 days. Likewise, even under the newly

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added proviso to Section 12, if by reason of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to further extend time keeping the aforesaid parameters in mind. It is only in such exceptional cases that time can be extended, the general Rule being that 330 days is the outer limit within which resolution of the stressed assets of the corporate debtor must take place beyond which the corporate debtor is to be driven into liquidation.”

67Copy pinpoint67. At this juncture, it must be noted that under the first proviso inserted by the amendment dated 16.08.2019, reference to the period of C 330 days is made with regard to the insolvency commencement date. The insolvency commencement date has been defined in Section 5(12). Section 5(12) reads as follows: “5(12) “insolvency commencement date” means the date of admission of an application for initiating corporate insolvency D resolution process by the Adjudicating Authority under sections 7, 9 or section 10, as the case may be.” There was a proviso but it stands omitted by Act 1/2020 (with effect from 28/12/2019). E

68Copy pinpoint68. In this regard, it is to be noticed that the scheme appears to be that the name of the RP to act as the IRP is to be indicated in the application. While admitting the application under Section 7(5), the adjudicating authority is to appoint the proposed resolution professional. In fact, Section 16(2) of the Code contemplates such appointment. We may refer to Section 12A which was inserted with effect from 6.6.2018. F Section 12A reads as follows: “12A. Withdrawal of application admitted under section 7, 9 or

10. – The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety G per cent voting share of the committee of creditors, in such manner as may be specified.”

69Copy pinpoint69. The above provision dealing with withdrawal of application after admission may be contrasted with Rule (8) which apparently deals with withdrawal before admission. H

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70Copy pinpoint70. Section 16 of the Code, however, indicates that the adjudicating authority shall appoint an interim resolution professional within 14 days from the insolvency commencement date. We have already noted the definition of the words ‘insolvency commencement date’ as the date of admission. Section 13 contemplates steps to be taken upon admission under Section 7, inter alia. B

1. A moratorium contemplated under Section 14 is to be declared.

2. A Public announcement of the initiation of the CIRP and inviting claims against the corporate debtor is to be made.

3. The appointment of the IRP- the appointment is to be done in C the manner as provided in Section 16. The announcement is to be made immediately after the appointment of resolution professional.

71Copy pinpoint71. Section 14 deals with moratorium.

D “14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: - (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution E of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing off by the corporate debtor 1 Ins. by Act No. 26 of 2019, sec. 4 (w.e.f. 16-8-2019). 2 Ins. by Act No. 26 of 2018, sec. 9 (w.e.f. F 6-6-2018). 20 any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction G of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d)the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. Explanation.-For the purposes of this sub-section, it is hereby H clarified that notwithstanding anything contained in any other

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law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period. (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified. (3) The provisions of sub-section (1) shall not apply to (a) such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; F (b) a surety in a contract of guarantee to a corporate debtor. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: G Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.” H

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72Copy pinpoint72. It will be noticed that while Section 6 read with Section 7 contemplates that a financial creditor may move the application individually, he may also move the application jointly with other financial creditors. Even if a single financial creditor was to be the applicant, after the appointment of the interim resolution professional, the applicant ceases to be in seisin of the lis. The provisions of Section 17 is to be B noticed. It reads as follows: “17. Management of affairs of corporate debtor by interim resolution professional. - (1) From the date of appointment of the interim resolution professional, - C (a) the management of the affairs of the corporate debtor shall vest in the interim resolution professional; (b) the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional; D (c) the officers and managers of the corporate debtor shall report to the interim resolution professional and provide access to such documents and records of the corporate debtor as may be required by the interim resolution professional; (d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution professional. (2) The interim resolution professional vested with the management of the corporate debtor, shall- (a) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other documents, if any; (b) take such actions, in the manner and subject to such restrictions, as may be specified by the Board; G (c) have the authority to access the electronic records of corporate debtor from information utility having financial information of the corporate debtor; (d) have the authority to access the books of accounts, records H and other relevant documents of corporate debtor available with

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government authorities, statutory auditors, accountants and such other persons as may be specified; and (e) 2 [be responsible for complying with the requirements under any law for the time being in force on behalf of the corporate debtor.”

73Copy pinpoint73. Section 17 contemplates that the management of the affairs of the corporate debtor will vest with the IRP. This takes effect from the date of the appointment of the interim resolution professional. Furthermore, the powers of the Board of Directors who are partners of the corporate debtors shall stand suspended.

74Copy pinpoint74. Virtually, the entire control of the management including all the acts and authority indicated in sub-section 2 is to be carried out by interim resolution professional and authority exercised by him. Section 18 details the duties of the IRP. It reads as follows: “18. Duties of interim resolution professional. – D The interim resolution professional shall perform the following duties, namely: - (a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to E – (i) business operations for the previous two years; (ii) financial and operational payments for the previous two years; (iii) list of assets and liabilities as on the initiation date; and F

(iv) such other matters as may be specified; (b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and 15; G (c) constitute a committee of creditors; (d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee of creditors; H

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A (e) file information collected with the information utility, if necessary; and (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including – (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority: (g) to perform such other duties as may be specified by the Board. E Explanation. – For the purposes of this 1 section, the term “assets” shall not include the following, namely: - (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; F (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator.”

75Copy pinpoint75. It will be noticed that amongst his duties, is the duty to constitute G a Committee of Creditors. The constitution of the committee of creditors and the method of voting and the extent of the same are found detailed inter alia in Section 21. Since much may turn on the said provision we refer to the same: “21. Committee of creditors. – H

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(1) The interim resolution professional shall after collation of all A claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. (2) The committee of creditors shall comprise all financial creditors of the corporate debtor: B Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors: C Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed], prior to the insolvency commencement date. (3) Subject to sub-sections (6) and (6A), where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them. (4) Where any person is a financial creditor as well as an operational creditor – (a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor; (b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor. (5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer. H

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A (6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility provide for a single trustee or agent to act for all financial creditors, each financial creditor may- (a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share; (b) represent himself in the committee of creditors to the extent of his voting share; (c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or (d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally. (6A) Where a financial debt— (a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors; (b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors; (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share. (6B) The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and

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(ii) under clause (b) of sub-section (6A) shall be as specified which shall be form part of the insolvency resolution process costs. (7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A). (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified. (9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process. D (10) The resolution professional shall make available any financial information so required by the committee of creditors under sub- section (9) within a period of seven days of such requisition.” Section 22 (1) and (2) read as follows: “22. Appointment of resolution professional. – E (1) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors. (2) The committee of creditors, may, in the first meeting, by a majority vote of not less than sixty-six per cent of the voting F share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional.” Section 23 reads as follows: G “23. Resolution professional to conduct corporate insolvency resolution process.– (1) Subject to section 27, the resolution professional shall conduct the entire corporate insolvency resolution process and manage H

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A the operations of the corporate debtor during the corporate insolvency resolution process period: Provided that the resolution professional shall continue to manage the operations of the corporate debtor after the expiry of the corporate insolvency resolution process period, until an order approving the resolution plan under sub-section (1) of section 31 or appointing a liquidator under section 34 is passed by the Adjudicating Authority. (2) The resolution professional shall exercise powers and perform duties as are vested or conferred on the interim resolution professional under this Chapter. (3) In case of any appointment of a resolution professional under sub-sections (4) of section 22, the interim resolution professional shall provide all the information, documents and records pertaining to the corporate debtor in his possession and knowledge to the resolution professional.”

76Copy pinpoint76. Section 24 deals with the meeting of committee of creditors. Now that resolution professional has been appointed, as contemplated under Section 22, Section 24(2) declares that all the meetings of the committee of creditors shall be convened by resolution professional. E Section 25 speaks about the duties of the resolution professional. Section 25(2),(h) and (i) read as follows: “25(2) (h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations F of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans. (i) present all resolution plans at the meetings of the committee of creditors.”

77Copy pinpoint77. Section 25A, which was inserted with effect from 06.06.2018 will be separately dealt with. No doubt, Section 27 contemplates that a committee of creditors may at any time during the CIRP replace the resolution professional as provided in the section. Section 28, no doubt, constrains the resolution professional in regard to the matters provided therein. The approval of the committee of creditors is required in such H

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matters. It includes making any change in the management of corporate debtor and its subsidiary (Section 28(j)). Section 30 contemplates that resolution applicant may submit a resolution plan. The ‘resolution applicant’ has been defined in sub-section 25 of Section 5 which reads as follows: “5(25) “resolution applicant” means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of section 25.” The resolution plan has been defined in Section 5 (26). The same reads as under: C “5(26) “resolution plan” means a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II. Explanation.- For removal of doubts, it is hereby clarified that a resolution plan may include provisions for the restructuring of the corporate debtor, including by way of merger, amalgamation and demerger.”

78Copy pinpoint78. The resolution professional has to examine each resolution plan received by him on the basis of the invitation made by the resolution professional under Section 25(h) and ascertain whether the plan is in conformity with the various criteria mentioned in Section 30(2) of the Code. The matter is thereafter put up by the resolution professional before the committee of creditors. All resolution plans which conform with the conditions in sub-section (2) of Section 30 are, in fact, to be placed before the committee of creditors. The committee of creditors may approve the resolution plan after considering its feasibility and viability, the manner of distribution proposed, which may take into account the hurdles, priority amongst creditors as laid down in sub-section(1) of Section 53 including the priority and the value of security interest of secured creditors and such other requirements as may be specified by the Board. There are other details with which we are not concerned in G Section 30. Section 31 requires approval of the resolution plan by the adjudicating authority. It reads inter-alia as follows: “31. Approval of resolution plan. –

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A (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub- section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, B any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan: C Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.” The scope of these provisions have been dealt with in the decision of this Court in Essar Steel India Limited vs. Satish Kumar Gupta and Ors. and (2019) 2 SCC 1 among other decisions authored by one of us (Justice R.F. Nariman).

79Copy pinpoint79. Sub-section (2) of Section 31 enables the adjudicating authority to reject the resolution plan. Section 31 (3) contemplates that after the approval of the resolution plan that the moratorium order passed by the adjudicating authority under Section 14 shall cease to have effect. Section 32A will be separately dealt with.

80Copy pinpoint80. Section 33, which is in Chapter III in Part II, compels announcing the death knell of the corporate debtor. That is if, before the expiry of insolvency resolution process period or the maximum period permitted which is CIRP under Section 12, inter alia, a resolution plan is not received or though received is rejected by the adjudicating authority, then under Section 33, order is to be passed. The curtains are wrung down on the insolvency resolution process. The corporate debtor goes into liquidation. The adjudicating authority is bound to pass an order requiring corporate debtor to be liquidated as provided in chapter III Part II. Section 33(2) contemplates that before the confirmation of the resolution plan if the committee of creditors so approved by not less than 66% of the voting decide to liquidate the corporate debtor, the adjudicating authority is to pass the liquidation order. Section 33(5) may be noticed at this stage:

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“33 (5) Subject to section 52, when a liquidation order has been A passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. B An explanation has been added to Section 33(2)of the Code. “Explanation - For the purpose of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after constitution under sub-section (1) of Section 21 and before the confirmation of the C resolution plan, including at any time before the preparation of the information memorandum.” THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 AND ITS SCHEME (HEREINAFTER REFERRED TO AS ‘RERA’, FOR D SHORT).

81Copy pinpoint81. The Real Estate Regulation and Development Bill was introduced in the Rajya Sabha in 2013. Noticing the fact that though the Consumer Protection Act, 1986 is available as a Forum in the real estate market for the buyers, the recourse is only curative and is not adequate E to address all the concerns of the buyers and promoters in the said sector, it was felt that there should be a central legislation in the interest of effective consumer protection, uniformity and standardization of business practices and transactions in the real estate sector. The Bill was passed by both the Houses of Parliament and received the assent of the President F of India on the 25.03.2016. By 01.05.2017, the provisions of the Act came into force, even though, certain Sections have come into force earlier on 01.05.2016.

82Copy pinpoint82. We may advert to the following definition clauses. Section 2(b) defines ‘advertisement’, as follows: G “2(b) “advertisement” means any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner H

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A such plot, building or apartment or to make advances or deposits for such purposes;”

83Copy pinpoint83. Section 2(c) defines ‘agreement for sale’, as follows: “2(c) “agreement for sale” means an agreement entered into between the promoter and the allottee;” B

84Copy pinpoint84. Section 2(d), which is at the centerstage of the controversy, defines the word ‘allottee’, which reads as follows: “2(d) “allottee” in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has C been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent;”

85Copy pinpoint85. As can be seen, the word ‘allottee’ includes, plot, apartment or building. The words ‘apartment’ and ‘building’ are defined. Section 2(e) defines the word ‘apartment’ and it reads as follows: “2(e) “apartment” whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified;”

86Copy pinpoint86. Section 2(j) defines the word ‘building’ and it reads as follows: “2(j) “building” includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial or for the purpose of any business, occupation, profession or trade, or for any other related purposes;” Section 2(s) defines ‘development’ and it reads as follows: “2(s) “development” with its grammatical variations and cognate expressions, means carrying out the development of immovable

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property, engineering or other operations in, on, over or under the land or the making of any material change in any immovable property or land and includes redevelopment;’’ ‘Development works’ is defined in Section 2(t) and it reads as follows: “2(t) “development works” means the external development works and internal development works on immovable property;” The word ‘promoter’ is defined in 2(zk) and it reads as follows: “2(zk) “promoter” means,— (i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or D (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or E (iii) any development authority or any other public body in respect of allottees of— (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or (v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other H

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A name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or (vi) such other person who constructs any building or apartment for sale to the general public. Explanation.—For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different person, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified under this Act or the rules and regulations made thereunder;” Section 2(zn) defines ‘real estate project’, it reads as follows: “2(zn) “real estate project” means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto;”

87Copy pinpoint87. Section 3 prohibits any promoter from advertising, marketing, etc. or even inviting persons to purchase any plot, apartment or building in any real estate project or part of it without there being registration. F Sub-Section (2), however, exempts certain projects from the requirement of registration and it reads as follows: “3(2) Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required— (a) where the area of land proposed to be developed does not G exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases: Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred H

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square meters or eight apartments, as the case may be, inclusive A of all phases, for exemption from registration under this Act; (b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act; (c) for the purpose of renovation or repair or re- B development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project. Explanation.—For the purpose of this section, where the real estate project is to be developed in phases, every such C phase shall be considered a stand alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.” Section 7 contemplates revocation of registration. It is relevant to note Section 7(1), which reads as follows: D “7(1) The Authority may, on receipt of a complaint or suomotu in this behalf or on the recommendation of the competent authority, revoke the registration granted under section 5, after being satisfied that— E (a) the promoter makes default in doing anything required by or under this Act or the rules or the regulations made thereunder; (b) the promoter violates any of the terms or conditions of the approval given by the competent authority; (c) the promoter is involved in any kind of unfair practice or irregularities. Explanation.—For the purposes of this clause, the term “unfair practice means” a practice which, for the purpose of promoting the sale or development of any real estate project adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:— (A) The practice of making any statement, whether in writing or by visible representation which,— (i) falsely represents that the services are of a particular standard or grade; H

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A (ii) represents that the promoter has approval or affiliation which such promoter does not have; (iii) makes a false or misleading representation concerning the services; (B) the promoter permits the publication of any advertisement or B prospectus whether in any newspaper or otherwise of services that are not intended to be offered; (d) the promoter indulges in any fraudulent practices.” We may also further notice Section 7(3). It read as follows: C “7(3) The Authority may, instead of revoking the registration under sub-section (1), permit it to remain in force subject to such further terms and conditions as it thinks fit to impose in the interest of the allottees, and any such terms and conditions so imposed shall be binding upon the promoter.” D We may further bear in mind Section 8 and it reads as follows: “8. Obligation of Authority consequent upon lapse of or on revocation of registration.—Upon lapse of the registration or on revocation of the registration under this Act, the Authority, may consult the appropriate Government to take such action as it may deem fit including the carrying out of the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority: Provided that no direction, decision or order of the Authority under this section shall take effect until the expiry of the period of appeal provided under the provisions of this Act: Provided further that in case of revocation of registration of a project under this Act, the association of allottees shall have the first right of refusal for carrying out of the remaining development works.”

88Copy pinpoint88. Section 11 deals with the functions and duties of a promoter and is of considerable importance, and it reads as follows: “11. Functions and duties of promoter —(1) The promoter shall, upon receiving his Login Id and password under clause (a) of sub-section (1) or under sub-section (2) of section 5, as the case H

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may be, create his web page on the website of the Authority and enter all details of the proposed project as provided under sub- section (2) of section 4, in all the fields as provided, for public viewing, including— (a) details of the registration granted by the Authority; (b) quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked; (c) quarterly up-to-date the list of number of garages booked; (d) quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate; (e) quarterly up-to-date status of the project; and (f) such other information and documents as may be specified by the regulations made by the Authority. D (2) The advertisement or prospectus issued or published by the promoter shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto. E (3) The promoter, at the time of the booking and issue of allotment letter shall be responsible to make available to the allottee, the following information, namely:— (a) sanctioned plans, layout plans, along with specifications, approved by the competent authority, by display at the site F or such other place as may be specified by the regulations made by the Authority; (b) the stage wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation and electricity. G

(4) The promoter shall— (a) be responsible for all obligations, responsibilities and functions under the provisions of this Act or the rules and regulations made thereunder or to the allottees as per the H

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A agreement for sale, or to the association of allottees, as the case may be, till the conveyance of all the apartments, plots or buildings, as the case may be, to the allottees, or the common areas to the association of allottees or the competent authority, as the case may be: Provided that the responsibility of the promoter, with respect to the B structural defect or any other defect for such period as is referred to in sub-section (3) of section 14, shall continue even after the conveyance deed of all the apartments, plots or buildings, as the case may be, to the allottees are executed. C (b) be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws or other laws for the time being in force and to make it available to the allottees individually or to the association of allottees, as the case may be; (c) be responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease, and certifying that all dues and charges in regard to the leasehold land has been paid, and to make the lease certificate available to the association of allottees; (d) be responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees; (e) enable the formation of an association or society or co- operative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable: Provided that in the absence of local laws, the association of allottees, by whatever name called, shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in the project; (f) execute a registered conveyance deed of the apartment, plot or building, as the case may be, in favour of the allottee H

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along with the undivided proportionate title in the common areas to the association of allottees or competent authority, as the case may be, as provided under section 17 of this Act; (g) pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees, as the case may be, which he has collected from the allottees, for the payment of outgoings (including land cost, ground rent, municipal or other local taxes, charges for water or electricity, maintenance charges, including mortgage loan and interest on mortgages or other encumbrances and such other liabilities payable to competent authorities, banks and financial institutions, which are related to the project): Provided that where any promoter fails to pay all or any of the outgoings collected by him from the allottees or any liability, mortgage loan and interest thereon before transferring the real estate project to such allottees, or the association of the allottees, as the case may be, the promoter shall continue to be liable, even after the transfer of the property, to pay such outgoings and penal charges, if any, to the authority or person to whom they are payable and be liable for the cost of any legal proceedings which may be taken therefor by such authority or person; (h) after he executes an agreement for sale for any apartment, plot or building, as the case may be, not mortgage or create a charge on such apartment, plot or building, as the case may be, and if any such mortgage or charge is made or created then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment, plot or building, as the case may be; (5) The promoter may cancel the allotment only in terms of the agreement for sale: Provided that the allottee may approach the Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause. H

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A (6) The promoter shall prepare and maintain all such other details as may be specified, from time to time, by regulations made by the Authority.”

89Copy pinpoint89. Section 14 declares that the proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans, layout plans and specifications, as approved by the Competent Authorities.

90Copy pinpoint90. Sub-Section (2) of Section 14, reads as follows: “14. (2) Notwithstanding anything contained in any law, contract or agreement, after the sanctioned plans, layout plans and specifications and the nature of the fixtures, fittings, amenities and common areas, of the 16 apartment, plot or building, as the case may be, as approved by the competent authority, are disclosed or furnished to the person who agree to take one or more of the said apartment, plot or building, as the case may be, the promoter shall not make— (i) any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities described therein in respect of the apartment, plot or building, as the case may be, which are agreed to be taken, without the previous consent of that person: Provided that the promoter may make such minor additions or alterations as may be required by the allottee, or such minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorised Architect or Engineer after proper declaration and intimation to the allottee. Explanation.—For the purpose of this clause, “minor additions or alterations” excludes structural change including an addition to the area or change in height, or the removal of part of a building, or any change to the structure, such as the construction or removal or cutting into of any wall or a part of a wall, partition, column, beam, joist, floor including a mezzanine floor or other support, or a change to or closing of any required means of access ingress or egress or a change to the fixtures or equipment, etc. H

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(ii) any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building. Explanation.—For the purpose of this clause, the allottee, irrespective of the number of apartments or plots, as the case may be, booked by him or booked in the name of his family, or in the case of other persons such as companies or firms or any association of individuals, etc., by whatever name called, booked in its name or booked in the name of its associated entities or related enterprises, shall be considered as one allottee only.” C

91Copy pinpoint91. A similar Explanation, as found in Section 14, regarding what the word allottee means for the purpose of section 15 is found in Section

15. Section 15 deals with obligations of promoter in the case of transfer of a real estate project to a third party and Section 15(1) reads as follow: D “15. Obligations of promoter in case of transfer of a real estate project to a third party.—(1) The promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third allottees, except the promoter, and without the prior written approval of the Authority: Provided that such transfer or E assignment shall not affect the allotment or sale of the apartments, plots or buildings as the case may be, in the real estate project made by the erstwhile promoter. …” Section 17 (1) of the RERA, reads as follows: F “17. Transfer of title.—(1) The promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and hand over the physical possession of the plot, apartment of building, as the case may be, to the allottees and the common areas to the G association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws: H

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A Provided that, in the absence of any local law, conveyance deed in favour of the allottee or the association of the allottees or the competent authority, as the case may be, under this section shall be carried out by the promoter within three months from date of issue of occupancy certificate”

92Copy pinpoint92. Section 18 deals with the right of the allottee to obtain the amount given by the allottee and even compensation. It reads as follows: “18. Return of amount and compensation.—(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,— C (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this D Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided E under this Act: Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed. F (2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force. (3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.”

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Finally, Section 19 deals with the rights and obligations of an allottee and it reads as follows: “19. Rights and duties of allottees.—(1) The allottee shall be entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information as provided in this Act or the rules and regulations made thereunder or the agreement for sale signed with the promoter. (2) The allottee shall be entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the allottee in accordance with the terms and conditions of the agreement for sale. (3) The allottee shall be entitled to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall be entitled to claim the possession of the common areas, as per the declaration given by the promoter under sub- clause (C) of clause (l) of sub-section (2) of section 4. (4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder. F (5) The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter. G (6) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity H

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A charges, maintenance charges, ground rent, and other charges, if any. (7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under sub-section (6). B (8) The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee. (9) Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same. (10) Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or building, as the case may be. (11) Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building, as the case may be, as provided under sub-section (1) of section 17 of this Act.” E

93Copy pinpoint93. The Act contemplates setting-up of a Real Estate Regulatory Authority, a Central Advisory Council and the Real Estate Appellate Tribunal. Offences and penalties are provided for to give teeth to the Act. Section 71 gives the power of adjudication of compensation. Section 72 provides for the factors to be taken into consideration for adjudging the quantum of compensation or interest under Section 71. Section 79 enacts a bar of jurisdiction of the civil court in regard to any matter in which the Authority, the Adjudicating Officer or the Appellate Tribunal is empowered by the Act to determine. An injunction cannot be issued by any court or other Authority in respect of any action taken or to be taken in pursuance of the power conferred by or under the Act under the RERA.

94Copy pinpoint94. Section 85 deals with the power to make regulations. Section 85(2) reads as follows inter alia:

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“85(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely — xxx xxx xxx xxx (c) such other information and documents required under clause (f) of sub-section (1) of section 11; C (d) display of sanctioned plans, layout plans along with specifications, approved by the competent authority, for display under clause (a) of sub-section (3) of section 11; (e) preparation and maintenance of other details under sub-section (6) of section 11; D Section 88 of RERA, read as follows: “88. Application of other laws not barred.—The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.” It is also important to notice, at once, Section 89 and it reads as E follows: “89. Act to have overriding effect — The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.” F

95Copy pinpoint95. The only Act, which is repealed is the Maharashtra Housing (Regulation and Development) Act, 2012.

96Copy pinpoint96. A perusal of Section 88 reveals, on the one hand, that the provisions of the RERA, are in addition to and not in derogation of the provisions of any other law for the time being in force. At the same time, G Section 89 provides that the RERA will prevail over any other inconsistent law. The result is that while all cognate laws, which are not inconsistent with RERA will continue to operate within their own sphere, the provisions, which are, however, inconsistent with RERA, will not survive after RERA has come into force. H

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97Copy pinpoint97. In this regard, we may notice, the Delhi Apartment Ownership Act, 1986. Section 2 deals with the application of the Act and it reads as follows: “2. Application — The provisions of this Act shall apply to every apartment in a multi-storeyed building which was constructed B mainly for residential or commercial or such other purposes as may be prescribed, by— (a) any group housing co-operative society; or (b) any other person or authority,

C before or after the commencement of this Act and on a free hold land, or a lease hold land, if the lease for such land is for a period of thirty years or more: Provided that, where a building constructed, whether before or after the commencement of this Act, on any land contains only D two or three apartments, the owner of such building may, by a declaration duly executed and registered under the provisions of the Registration Act, 1908 (16 of 1908), indicate his intention to make the provisions of this Act applicable to such building, and on such declaration being made, such owner shall execute and register a Deed of Apartment in accordance with the provisions of this E Act, as if such owner were the promoter in relation to such building.”

98Copy pinpoint98. Section 3(b) defines the word ‘allottee’ as follows: “3(b) “allottee”, in relation to an apartment, means the person to whom such apartment has been allotted, sold or otherwise transferred by the promoter;”

99Copy pinpoint99. Section 3(c) defines apartment and it reads as follows: “3(c) “apartment” means a part of any property, intended for any type of independent use, including one or more rooms or enclosed spaces located on one or more floors or any part or parts thereof, in a multi-storeyed building to be used for residence or office or for the practice of any profession, or for the carrying on of any occupation, trade or business or for such other type of independent use as may be prescribed, and with a direct exit to a public street, road or highway, or to a common area leading to such street, road H

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