Media Coverage

the limitation act

Does The Limitation Act Apply to The Insolvency and Bankruptcy Code?

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Does The Limitation Act Apply to IBC?

The Apex Court of India in the case of Seth Nath Singh & Anr vs. Baidyabati Sheoraphuli Co-operative Bank Ltd & Anr has observed that an applicant under Section 7 of the Insolvency and Bankruptcy Code can claim the benefit of Section 14 of the Limitation Act, 1963 (“Limitation Act”), In respect of proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act).


Section 14 of the Limitation Act enables the period of bona fide proceedings in a court without jurisdiction to be excluded. In other words, the rule permits the time spent litigating before a venue with no jurisdiction to be excluded from the limitation period.

New Law-The period of limitation for making an application under Section 7 or 9 of the Insolvency and Bankruptcy Code is 3 years from the date of accrual of the right to sue, that is, the date of default. “There can be little question that Section 14 applies to an application under Section 7 of the IBC,” the court said. It is reaffirmed, at the risk of repetition, that the IBC does not preclude the application of Section 14 of the IBC.”

It states that there is no rule that the exclusion of time under Section 14 of the Limitation Act is available only after the proceedings before the wrong forum terminate.

The court further observed, “In our considered view, keeping in mind the scope and ambit of proceedings under the IBC before the NCLT/NCLAT, the expression ‘Court’ in Section 14(2) would be deemed to be any forum for a civil proceeding including any Tribunal or any forum under the SARFAESI Act.”

Impact on the industry

The Law will only protect those who are vigilant and not the negligent ones. The Insolvency and Bankruptcy Code is progressive legislation that is intended to improve the efficiency of insolvency and bankruptcy proceedings in India.

However, many details on the IBC’s implementation need to be worked out in the regulations, and its success will depend to a large extent on how quickly a high-quality cadre of insolvency resolution professionals will emerge and on whether the time-bound process for insolvency resolution will be adhered to in practice.

The IBC has brought a plethora of changes to insolvency laws in India and aims to reduce the number of bad loans that have saddled the economy over the last few years.

Ultimately time will tell if the IBC will prove to be an effective instrument in expediting India’s insolvency procedure, with many other bankruptcy resolution processes in the works. The ultimate goal of an application under Section 7 or 9 of the IBC is to use the Insolvency Resolution Process to resolve a “debt.”

In either case, since the Corporate Debtor’s default is the cause of action for filing an application, whether under Section 7 or Section 9 of the IBC, and the provisions of the Limitation Act 1963 have been applied to proceedings under the IBC, there is no reason why Section 14 or 18 of the Limitation Act would not apply for calculating the period of limitation.


In circumstances where financial creditors launched SARFAESI proceedings, the judgment cannot be regarded as blanket authority to file an application under Section 7 of the IBC to plead Section 14 of the Limitation Act.

In the current instance, the Calcutta High Court stopped the SARFAESI proceedings due to a lack of jurisdiction, which is a condition under Section 14 for the exclusion of time. In circumstances where the SARFAESI procedure has not been halted for lack of jurisdiction, the verdict may not be relevant.


Tags: apex court of india, insolvency and bankruptcy code, limitation act 1963, the limitation act, security interest act 2002, baidyabati sheoraphuli co operative bank, limitation act

doctrine of frustration

Could Doctrine of Frustration Be Used As a Rescue Card For Lease Agreements?

By Real Estate, Media Coverage No Comments

Doctrine of Frustration

The globe has come to a halt as a result of the covid-19 epidemic. However, the virus-induced countrywide lockdown has had far-reaching consequences for enterprises all over the world, as well as a negative impact on contractual ties, particularly those between a lessor and a lessee.

These extraordinary times have brought to light the awful condition in which individuals find themselves. Notably, numerous workers are already facing unemployment and wage reductions as a result of the stoppage of commercial activity; also, individuals are concerned about not being able to pay their rent. 

This article is focused on assessing the applicability of the doctrine of frustration with regard to lease agreements and the manner in which Indian Courts have dealt with the same. To minimize disagreements, a lease agreement should be created with the tenant’s individual needs in mind. Most significantly, all financial risks should be defined and distributed between the parties.

However, if a dispute emerges, the lessee’s evacuation must be carried out in accordance with the law. The two possible scenarios that may come up in court are Frustration of contracts under the Indian Contracts Act (ICA), 1872; and Force Majeure under, section 108 (e), Transfer of Property Act (TOPA), 1882.

 Frustration of contracts

The theory of frustration of contract, as set down in Section 56 of the Indian Contracts Act (ICA), 1872, states that if the contract’s fulfillment becomes impossible, the contract is considered frustrated. Changes in settings and events might lead to performance impossibilities.

Furthermore, the relationship between a lessor and a lessee involves a unique dynamic unlike other parties of a contract. In this situation, the transaction involves the transfer of an interest in a property, therefore, the principal law governing the transaction is the Transfer of Property Act (TOPA), 1882. 

As stated in UP State Electricity Board v. Hari Shankar Jain 1979 SCR (2) 355, it is a well-established legal principle that a specific statute takes precedence overboard legislation. Even so, the connection between the lessor and the lessee is contractual. As a result, we can use the Indian Contract Act (ICA), 1872 as long as it does not affect the status of the parties’ relationship.

 Regardless of the fact that the doctrine of frustration is applicable to lease agreements since the relationship between the parties determines the remedies available in case of a dispute, it is imperative to make a query into the nature of such a relationship.

In Sushila Devi And Anr vs Hari Singh And Ors [1971 SCR 671] & Raja Dhruv Dev Chand vs Harmohinder Singh & Anr [1968 SCR (3) 339] the court distinguished a lease agreement from the lease itself. 

As a result, if one of a lease agreement’s responsibilities has been rendered impossible, the lease agreement’s requirement has been frustrated. It is important to remember, however, that the lease is separate from other forms of contracts, and that it cannot be declared void on its own.

 In light of the above judgments, despite the hard-hitting reality of the pandemic affecting all, it can be observed that the doctrine of frustration could be claimed only for certain obligations. 

However, it would not come to the rescue of the lessees from payment of the lease, given that the Transfer of Property Act (TOPA), 1882 provides for similar situations.

It is the special legislation governing leases and thereby, the provisions of the Act would supersede the application of the provisions of the Indian Contract Act (ICA), 1872.


Tags: rescue card, lease agreements, doctrine of frustration, lease extension agreement, tenant lease agreement, rental agreement, rental lease agreement, lease contract

asian market

Asian Market Becomes a Thriving Platform for IPOs

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Asian Market

The exponential expansion of initial public offerings in the Asian market has made the market appealing to a variety of start-ups. This IPO boom may be linked to a flow of money, ultra-low interest rates, and surging stock markets, among other things. Traditionally, only large corporations would choose to go public.

However, as times have changed, consumers’ and enterprises’ purchasing and selling procedures have been redefined, and as a result, start-up enterprises are poised to enter the market via an initial public offering (IPO).

These start-up IPOs are capable of acting as a catalyst and spur things to a new level as it has also evidently enhanced the confidence of giants like Flipkart to finally head for an IPO. Indeed, the market is becoming a thriving platform for IPOs. Nonetheless, the bubble may burst when the demand is not at its peak.

The path hereafter could be arduous for start-ups looking to go public as success would not be defined depending on the number or the projections demonstrated, but the decisions shall be made factoring in the robust market and business fundamentals.

The same was also witnessed in Uber’s case where the stock went public at $41.57 per share and surged as high as $46.38 on 28.06.19, but then began to struggle and reached a low of $21.33 on 20.03.20, thereon, it eventually recovered. Nevertheless, it can be observed that anyone who purchased the shares while it opened, is currently sitting on a loss of approximately 25% over a space of just 14 months.

Moreover, similar to the housing scheme boom in the USA back in the early 2000s, the rise of IPOs also has an equal chance of fading. Thus, multiple start-ups are still sitting on the fence about their decision of listing IPOs due to this very reason.

In the light of the same, it can be observed that the guidelines implemented by the Security and Exchange Board of India (SEBI) under prerequisites preceding listing have taken some stringent measures to protect companies and their shareholders from bearing the brunt of a probable failure. Under the rules, it mandatorily requires definite disclosures on field-tested strategies, dangers, benefits, and where cash will be spent.

This is in terms of the fact that an IPO is considered a way for ordinary people to participate in a company’s growth narrative, as opposed to well-heeled funds and financial organizations, which have complete access. Moreover, the regulator has prohibited retail investors to participate in more than 10% of the IPO’s issue size which is primarily because most the new IPOs are more often than not bleeding losses.

Therefore, the data shown by companies must be far more tangible and cannot be based on mere valuations of accepted accounting standards.

Even if the boom bubble collapses, the regulatory board’s safeguards ensure that damage control will be relatively painless. Apart from that, it’s also likely that having a larger perspective and focusing on the larger picture can help. Institutional investors will be among the first to jump on board the new wave.

Inevitably, the future lies in the hand of technology, and with the rising interest of retail investors. Internet start-ups can formulate a better development for themselves.

Thus, the future of IPO seems optimistic, but the regulatory board will have to continue being a watchdog, as the surge is in contrast to the present economy. In the light of the same, the RBI has time and again
warned the public of its fatal repercussions.


Tags: asian world market, asian global market, asian market, south asian market, today asia market, the asian market

flexible pathway

A Flexible Pathway for Deferred Considerations

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Navigating Deferred Consideration under FEMA

India is becoming one of the world’s fastest-growing economies and foreign investment destinations, thanks to its population boom. In the country’s developing economy, both direct/capital and indirect/portfolio play a critical role. Likewise, the role of RBI is central in ensuring the enforcement of deferred payment/considerations which is often the cornerstone of international capital investment

A situation when the buyer of services/goods makes the payment for the goods/services he brought earlier. The payment made some time after the actual exchange takes place and not simultaneously with the actual exchange is defined as deferred payment. International capital investment and the exchange of goods and services rely upon deferred payments as one of the fundamental bases. 

Thereby, for deferred payments to be successful, the concerned country’s government and financial agencies must have adequate and efficient enforcement capacities. In India, the Reserve Bank of India (RBI) is the country’s central bank as well as the chief financial enforcement agency having a significant role in dealing with foreign exchange as well as foreign investment in India.

The present article will seek to understand the RBI’s restrictions on deferred considerations or its restrictions on deferred payment.

The Master Circular for External Commercial Borrowings and Trade Credits contains procedural instructions for deferred payment agreements. Trade credits include both supplier’s and buyers’ credit and are defined as payments made after six months from the date of shipment for a period of fewer than three years. However, the most important policy document dealing with the issue is the FEMA Act, 1994 (Foreign Exchange Management Act).

This establishes the methods and guidelines, as well as the legal framework, for dealing with foreign exchange management by the country’s financial institutions. It’s also worth noting that the Act establishes methods and standards for delayed payments between residents and non-resident Indians.

It specifically mentions, that for the deferred payment to take place, the concerned companies should apply and get approval from the RBI before the actual implementation. 

However, a key issue is that it is sometimes difficult for the affected parties to acquire clearance, mostly due to a lack of time, as obtaining clearance from the relevant authorities typically needs a set period of time, which further adds to the length of the process. Secondly, some amount of bureaucracy and red-tapism is associated with the procedures, and the possibility of undue interference from the concerned authorities is often pertinent. 

As a consequence, prior to the Act’s revision in 2016, there was much less foreign investment in the nation. The change to the Act permits anyone involved in the transactions to make a delayed payment for 18 months or 25% of the total sum without needing clearance from the country’s top financial enforcement authority.

But if the amount is more or the time period exceeds 18 months then the concerned parties are required to apply and obtain approval from the RBI to proceed with the transaction.

The modification, however, restricted in scope, is a measure taken by both the government and the country’s central bank to attract more foreign investment and improve the country’s ranking in the Ease of Doing Business Index. The current modification seeks to add flexibility to the FEMA Act by filling up the gaps left by the previous version.

The aforementioned revision is an improvement, as it eliminates the requirement to seek RBI permission in some cases now that PE funds have more freedom. The RBI has made a step in the direction of buyer protection in cross-border transactions. Along with providing a systematic roadmap for the Indian Mergers and Acquisitions landscape as already in place with other investor states.

It has all happened with the introduction of flexibility in the deferred purchase consideration mechanism but earlier, the deferment of purchase consideration was not permitted under the automatic route for a maximum period of only 6 months.


Tags: international capital investment, capital international investors, international capital group, capital group international equity, flexible pathway

dhfl insolvency case

Analyzing DHFL Insolvency Case

By Cases, Media Coverage No Comments

DHFL Insolvency Case

On May 25, 2021, a panel of the National Company Law Appellate Tribunal (NCLAT) comprised of Justice A.I.S. Cheema and Mr. V.P. Singh stayed an order from the NCLT’s Mumbai bench. The order directed the creditors of Dewan Housing Finance Corp, to consider a  settlement offer from its promoter Mr. Kapil Wadhawan in the DHFL insolvency case which is considered to be one of the largest failures of any Non- Banking Finance Company(NBFC) and Corporate governance failure.

Brief Facts of the DHFL Insolvency Case

The key facts of the case are that SEBI launched an investigation into Dewan Housing Finance Ltd after an accusation was made by an internet portal (DHFL). They hired an outside audit company to look into and evaluate DHFL’s finances.

Due to such probes by multiple credit agencies, the long-term credit ratings of DHFL were downgraded. On 30th May 2019, DHFL conveyed to the stock exchange its inability to publish its 4rth Quarterly report. It also delayed the payment of commercial papers of Rs 950 crores. 

As of 6th July 2019, DHFL had public deposits of only Rs 6,188 crores which fell from a staggering amount of Rs 10,166 crores in 2018. The consortium of banks and credit agencies led by SBI formulated a Debt Resolution plan, but the plan failed, thus RBI moved DHFL to NCLT for insolvency proceedings. On 29th November 2019 RBI filed an application for  Initiation of Corporate Insolvency Resolution Process against DHFL under IBC, 2016.

On 19th May 2021 NCLT’s Mumbai Bench had directed that the settlement offer of Rs 91,158 crore from DHFL’s former promoter should be placed for consideration and voting before the Committee of Creditors(COC). The COC also filed a separate appeal with NCLAT against the Mumbai Bench’s order.

Contentions by the Counsels

On behalf of the COC, Solicitor General Tushar Mehta argued against the NCLT judgment of May 19th, 2019. He added that neither the NCLT nor the COC has the authority to issue such an order.

Section 29A of IBC, 2016 states that “A person shall not be eligible to submit a resolution plan if such person, or any other person acting jointly or in concert with such person” Section 29A also prohibits a promoter who is classified as a non-performing asset in the Company. Dr. Abhishek Manu Singhvi, Sr. 

Advocate for the Resolution applicant also contended that the proposal by  Piramal Capital and Housing Finance Ltd. was approved by CoC and RBI also showed no objection. The counsel for Wadhawan informed the court that the underlying goal of Wadhawan’s settlement offer was to maximize the value that creditors would get.


The NCLAT decided that the case needed to be heard and stayed the NCLT ruling, but added that the appellant’s pending status would not prevent the NCLT from ruling on Piramal Capital’s offer for DHFL. The Case next will be taken on 25th June 2020.


  • A promoter cannot make a settlement offer in an insolvency case, according to Section 29A of the IBC. So the settlement offer presented by Mr. Wadhawan even though to maximize profits is against Section 29A. But in the past NCLAT has turned over the decision of NCLT involving section 29A in the case of Sterling Biotech’s case.
  • In the said case a settlement offer by promoters was accepted by the COC and Insolvency proceedings can be withdrawn at any stage as long as 90 percent of the COC gives its approval to voters. This was introduced in the newly added section 12A of IBC, 2016.
  • The Court also directed the NCLT to decide “at the earliest” the application filed by the administrator.
  • The NCLAT also highlighted that the creditors should be given more time and they did not appreciate the hurry imposed on the Administrator and the COC to accept the 2nd settlement offer.


Tags: corporate governance failure, dhfl, dewan housing finance corporation, dhfl housing finance, dewan housing, dhfl insolvency case, dewan housing finance corporation ltd, dewan housing finance dhfl, dhfl insolvency, national company law appellate tribunal, dewan housing finance

the model tenancy act 2019

Analysis of The Model Tenancy Act 2019

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The Model Tenancy Act 2019

A shelter is certainly one of life’s most basic needs. Housing shortages have become a growing concern in India as a result of the country’s rapid urbanization. People frequently choose rental property owing to a lack of resources or the incapacity to construct their own homes.

Despite the government’s goal of providing inexpensive housing, many homes are overcrowded, indicating that housing, whether owned or rented, is out of reach for a large portion of the population. In India, each state has its own tenancy legislation. The Transfer of Property Act of 1882 (TPA) is a federal statute that controls subjects not covered by state law.

For a long time in India, codified legislation created specifically for rent-related issues in real estate has been ignored. The lack of a comprehensive framework has impeded the expansion of rental housing, resulting in limited investment in India’s rental housing market. 

The past effort to codify tenancy regulations was the Draft Model Tenancy Act, 2015. However, the majority of nations failed to comply.

However, this worked as a foundation for the Ministry of Housing and Urban Affairs, which released the draft Model Tenancy Act, 2019 which aims to regulate rental housing by a market-oriented approach while trying to balance the interests of both the landlord and tenants.

The MTA was written with the interests of landowners and tenants in mind, and it establishes adjudicatory organizations to provide for quick dispute settlement. It also aims to provide a transparent and responsible rental environment for migrants, professionals, employees, students, and the urban poor, as well as foster a healthy ecology.

The development of Rent Authorities has played a crucial role in attaining the Act’s aims. Section 29 of the MTA calls for a rent authority to be appointed by an official with at least the rank of Deputy Collector. The Rent Authority has the same powers as the Rent Court, including issuing UIDs, researching disputes, conducting investigations, and imposing fines or compensations based on the merits of cases.

Sections 32 and 33 of the Act, respectively, established Rent Courts and Rent Tribunals. They have sole jurisdiction to hear and consider petitions involving conflicts between landowners and tenants, as well as matters related to and ancillary to such disputes.

The matter must be resolved within 60 days by the Rent Court or Rent Tribunal in order to be expedited. The Rent Tribunal hears appeals from the Rent Court’s orders. Furthermore, a Rent Court or Rent Tribunal order may be enforced as a civil court judgment.

As stated above, the main aim of MTA is to eliminate the fear of landlords regarding getting repossession of their premises and increase the growth of investment in the rental sector.

Keeping this view, MTA proposes to give protection to landlords by way of deducting security deposits, and eviction criteria u/s 21. Or by applying the rent authority for cutting off or withholding any essential supply or services on the premises. 

If the landlord tries to cut off/withhold service, the tenant is in the same boat. MTA not only protects landowners, but also tenants’ interests, such as succession rights, affordable housing, rights to repair and maintain adequate living conditions, return of advance/security in specific circumstances, and so on.

Thus, MTA is a positive development in India’s rental market. The creation of the new adjudicating authority will serve to relieve the pressure on the country’s courts in tenancy situations while also allowing cases to be resolved more quickly. However, it would be fascinating to watch how many states apply MTA since it is merely a model and not required by all states.


Tags: model tenancy act 2019, model tenancy act, the model tenancy act 2019, model tenancy act 2021, transfer of property act 1882, tenancy legislation, transfer of property act, tenancy act

leave and license agreement

Demarcating a Lease from a Leave and License Agreement

By Real Estate, Media Coverage 3 Comments

Lease from a Leave and License Agreement

With each passing day, the pandemic’s consequences have grown to unprecedented heights. The harshness of it has been felt most acutely in the real estate industry, where the capacity to pay rentals for both commercial and residential units has been harmed as a result of unemployment and substantial salary cutbacks.

 The fact that neither landlords, property owners, nor tenants are aware of the differences between the two agreements is worrying, as the terms “lease,” “leave,” and “license” are frequently used interchangeably in common usage. Nonetheless, though the term can be used interchangeably, the rights under both these agreements are distinctive to their own and thus, can be invoked only on circumstances arising concerning it.

When dealing with land or property, the phrase “lease” is frequently employed. As a result, it’s fairly typical to confuse a leave and license with a lease. A lease is formed when one person, under the terms of a contract, transfers or leases his property to another person for a certain length of time in exchange for a regular or lump-sum payment.

A leave and license agreement, on the other hand, is a temporary arrangement between a licensor and a licensee under which the licensee is authorized to use and occupy the licensor’s immovable property, entirely or partially, for the purpose of doing business or staying there in exchange for a specified amount of rent.

Furthermore, the rent can be determined according to their mutual agreement and must be acknowledged by both parties. As a result, the purpose of this essay is to focus on the differences between a lease and a leave and license agreement, as it is critical that both parties grasp the essence and elements of the latter.

A lease is a transfer of a right in a specified immovable property that is made with an interest in the property in favor of the lessee and that does not end with the death of the leasor or leasee.

It’s also worth noting that it’s both transferable and inheritable; as a result, it’s common to see a sub-tenancy formed by the tenant, with the tenancy continuing after the tenant’s death.  Also, a lease can come to end only according to the terms and conditions mentioned in the contract between the parties.

 Furthermore, by entering the contract in his capacity, a lessee can protect the possession. In contrast, a license is a just bare permission without any transfer of an interest to the other party which ends with the death of either the grantor or the grantee as it is a personal contract, thereby it is not transferable or heritable and can be withdrawn at the pleasure of the grantor.

Unlike the leasee, though a licensee is in possession of the property, it is not entitled to any improvement or accessions made to the property.

During these exceptional times, knowing the above-mentioned basic distinctions is especially critical, as the continuing epidemic has resulted in various lockdowns across India, with commercial spaces having to close, implying that companies are compelled to fire staff or reduce salaries.

As a result, on the one hand, this has had a significant impact on people’s ability to pay rents/licenses/compensation, and on the other side, firms that have entered into an LLA are now having difficulty paying their rents or licenses.

The government made an attempt to safeguard the parties in these agreements by recognizing the incident as a “Force Majeure event,” which is also recognized by the government as a “natural calamity,” as stipulated in the Force Majeure provision in the Manual for Procurement of Goods, 2017, and which is irrevocable and can come to the licensee’s and lessee’s rescue.

The Bombay High Court recently rejected relief to a party claiming force majeure protection because of the Covid-19 outbreak in Standard Retail Pvt Ltd v M/s G S Global Corp and Ors[1]. It was noted that the injunction would not be able to save the petitioners from their contractual responsibilities to make payments.

These challenging circumstances have increased the need for individuals to grasp their rights under these two separate accords, which need a fundamental comprehension of their aspects. Consequently, notwithstanding the ambiguity surrounding the agreements, it can be shown that their properties are distinct and may be used in a variety of scenarios.


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