contents · 2020. 3. 14. · macquarie bank limited vs shilpi cable technologies ltd..... 274 b.k....
Post on 28-Aug-2020
2 Views
Preview:
TRANSCRIPT
Economic Laws – Elective paper – CASE STUDIES
CA A.K.S. Krishnan M.Com, FCA 1
Contents CASE STUDY 1 – RERA & Competition Act ......................................................................... 6
CASE STUDY 2 – FEMA, RERA, PMLA, IBC & Benami .................................................... 16
CASE STUDY 3 – PMLA & Competition.............................................................................. 26
CASE STUDY 4 – PMLA, FEMA & Benami ......................................................................... 36
CASE STUDY 5 – FEMA, IBC, RERA, & Benami ................................................................ 47
CASE STUDY 6 – IBC & FEMA ............................................................................................. 58
CASE STUDY 7 – Competition .............................................................................................. 70
CASE STUDY 8 - Competition ............................................................................................... 78
CASE STUDY 9 - IBC .............................................................................................................. 92
CASE STUDY 10 – FEMA & Benami................................................................................... 105
CASE STUDY 11 – FEMA & PMLA .................................................................................... 117
CASE STUDY 12 – IBC & Competition .............................................................................. 127
CASE STUDY 13 – RERA & Benami ................................................................................... 134
CASE STUDY 14 – FEMA & PMLA .................................................................................... 145
CASE STUDY 15 – IBC & Competition .............................................................................. 154
CASE STUDY 16 - Benami.................................................................................................... 163
CASE STUDY 17 – FEMA, RERA & Benami ...................................................................... 170
CASE STUDY 18 - Competition ........................................................................................... 183
CASE STUDY – 19 – IBC ....................................................................................................... 195
CASE STUDY – 20 – IBC ....................................................................................................... 200
CASER STUDY – 21 – IBC .................................................................................................... 204
CASE STUDY 22 – Competition Act ................................................................................... 207
CASE STUDY 23 - FEMA ...................................................................................................... 210
CASE STUDY 24 – FEMA ..................................................................................................... 213
CASE STUDY – 25 – PMLA .................................................................................................. 215
CASE STUDY 26 - Benami & FEMA ................................................................................... 218
CASE STUDY 27 – RERA & PMLA ..................................................................................... 231
CASE STUDY 28 – IBC & Competition Act ....................................................................... 243
RECENT CASE LAWS .............................................................................................................. 254
COMPETITION ACT ............................................................................................................... 254
Mahindra Electric Mobility Limited & Ors. vs. CCI & Another ......................................... 254
Competition Commission of India vs M/s Fast Way Transmission.................................... 255
Economic Laws – Elective paper – CASE STUDIES
CA A.K.S. Krishnan M.Com, FCA 2
Rajasthan Cylinders and Containers Limited vs UOI .......................................................... 257
Umar Javeed and Google LLC ............................................................................................... 259
House of Diagnostics LLP and Esaote Asia Pacific Diagnostic Pvt. Ltd ............................ 260
Anti competitive conduct in the Dry-Cell Batteries Market in India .................................. 261
Fx Enterprise Solutions India Pvt. Ltd. and Hyundai Motor India Limited ...................... 263
CCI vs Bharti Airtel Ltd ......................................................................................................... 264
Real Estate (Regulation & Development) Act, 2016 .............................................................. 266
M/s M3M India Pvt. Ltd. & Anr. v. Dr. Dinesh Sharma & Anr ........................................... 266
Jatin Mavani vs Rare Township Pvt. Ltd. ............................................................................. 267
Lavasa Corporation Limited vs Jitendra Jagdish Tulsiani .................................................. 267
Neelkamal Realtors Suburban Pvt. Ltd. and anr vs UOI ..................................................... 269
Simmi Sikka v. M/s Emaar MGF Land Ltd. .......................................................................... 270
Insolvency & Bankruptcy Code, 2016 ..................................................................................... 272
Swiss Ribbons Pvt. Ltd. & Anr. V. Union of India & Ors. ................................................... 272
Pioneer Urban Land and Infrastructure Ltd and Anr vs Union of India ........................... 273
Macquarie Bank Limited vs Shilpi Cable Technologies Ltd................................................ 274
B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates ................................. 276
State Bank of India vs. V. Ramakrishnan .............................................................................. 276
Mobilox Innovations Private Limited vs. Kirusa Software Private Limited ...................... 278
K. Sashidhar vs. Indian Overseas Bank & Ors ..................................................................... 279
Prevention of Money Laundering, 2002 .................................................................................. 281
Directorate of Enforcement v. Deepak Mahajan .................................................................. 281
M/s. PMT Machines Ltd. vs The Deputy Director, Directorate of Enforcement, Delhi ..... 282
B.K. Singh vs Suraj Pal @ Chacha .......................................................................................... 283
Chhagan Chandrakant Bhujbal vs. Union of India and Ors ............................................... 284
Dalmia Cement Bharat Ltd. Vs State of AP, Hyderabad ..................................................... 286
Financial Intelligence Unit-IND vs Corporation Bank......................................................... 287
Smt. K. Sowbaghya vs Union of India .................................................................................. 289
B. Rama Raju v. Union of India ............................................................................................. 290
J. Sekar and others v. ED ........................................................................................................ 291
Foreign Exchange Management Act, 2002 .............................................................................. 293
IDBI Trusteeship Services Limited v. Hubtown Ltd ............................................................ 293
Cruz City I Mauritius Holdings v. Unitech Limited ............................................................ 294
Economic Laws – Elective paper – CASE STUDIES
CA A.K.S. Krishnan M.Com, FCA 3
NTT Docomo Inc. v. Tata Sons Ltd ....................................................................................... 295
Venture Global v. Tech Mahindra ......................................................................................... 297
Mr. S. Bhaskar vs Enforcement Directorate FEMA .............................................................. 298
Union of India & Ors vs M/s Premier Limited ..................................................................... 299
Vodafone International Holding (VIH) v. Union of India (UOI) ........................................ 301
Kanwar Natwar Singh vs Director Of Enforcement & Anr ................................................. 303
S.K. Sinha, Chief Enforcement Officer vs Videocon International Ltd. .............................. 304
Prohibition of Benami Property Transactions Act, 1988 ....................................................... 307
Mangathai Ammal (Died) Through Lrs vs Rajeswari .......................................................... 307
Smt. P.Leelavathi vs V.Shankarnarayana Rao ...................................................................... 308
G. Mahalingappa vs G.M. Savitha ......................................................................................... 309
Meenakshi Mills, Madurai v. CIT .......................................................................................... 310
Sh. Amar N. Gugnani Vs. Naresh Kumar Gugnani (Through Legal Heirs) .............. 311
Pawan Kumar Gupta Vs. Rochiram Nagdeo ........................................................................ 312
Bhim Singh v. Kan Singh ....................................................................................................... 313
Valliammal (D) By Lrs vs Subramaniam & Ors ................................................................... 315
Niharika Jain W/o Shri Andesh Jain Vs Union of India ....................................................... 316
OTHER CONCEPT BASED QUESTIONS ............................................................................. 318
INSOLVENCY AND BANKRUPTCY CODE, 2016 ............................................................. 318
Sec. 4 – Application of this part ............................................................................................. 322
Sec. 5 - Definitions. ................................................................................................................. 325
Sec. 7 - Initiation of corporate insolvency resolution process by financial creditor. ......... 327
Sec. 8 & 9 - Insolvency resolution by operational creditor .................................................. 332
Sec. 10 - Initiation of corporate insolvency resolution process by corporate applicant .... 337
Sec. 11 - Persons not entitled to make application. .............................................................. 338
Sec. 12 - Time-limit for completion of insolvency resolution process ................................ 339
Sec. 14 – Moratorium .............................................................................................................. 340
Sec. 17 - Management of affairs of corporate debtor by interim resolution professional. 342
Sec. 18 – Duties of Interim Resolution Professional ............................................................. 343
Sec. 22. Appointment of Resolution professional ................................................................. 344
Sec. 27 - Replacement of resolution professional by committee of creditors ..................... 345
33. Initiation of liquidation .................................................................................................... 347
34. Appointment of liquidator and fee to be paid ................................................................ 348
Economic Laws – Elective paper – CASE STUDIES
CA A.K.S. Krishnan M.Com, FCA 4
53. Distribution of proceeds from the sale of liquidation assets ........................................ 352
55 - Fast Track Corporate Insolvency Resolution Process ................................................... 355
59. Voluntary winding up of corporates .............................................................................. 356
SAMPLE MCQ FROM IBC .................................................................................................... 361
FOREIGN EXCHANGE MANAGEMENT ACT, 1999 ........................................................ 367
Sec. 2 - Residential Status ....................................................................................................... 367
Sec. 5 - Current account transaction ...................................................................................... 372
Sec. 6 – Capital Account transaction ..................................................................................... 384
Sec. 7 – Exports rules .............................................................................................................. 392
Sec. 8 & 9 - Repatriation ........................................................................................................ 397
Sec. 11 - 13 Penalty .................................................................................................................. 398
Sec 12 - Inspection ................................................................................................................... 399
Sec. 14 – 16 Adjudication ........................................................................................................ 400
Sec. 19 - Appeal ....................................................................................................................... 401
SAMPLE MCQ QUESTIONS FROM FEMA......................................................................... 403
PREVENTION OF MONEY LAUNDERING ACT, 2002 ..................................................... 407
Why PMLA ............................................................................................................................. 407
Sec. 2 – Definition ................................................................................................................... 407
Sec. 3 & 4 - Punishment ......................................................................................................... 410
Sec. 8 – Attachment of property ............................................................................................ 413
Sec. 12 – Obligation of banking companies .......................................................................... 413
Sec. 25, 26, 42 – Appellate Tribunal ....................................................................................... 415
Sec. 43- 47 – Special Court ...................................................................................................... 417
Sec. 45. Offences to be Cognizable and Non Bailable .......................................................... 418
Sec. 57. Letter of request to contracting state in certain cases ............................................. 418
Sec. 63. Punishment for false information or failure to give information, etc .................... 420
70. Offences by companies ..................................................................................................... 420
SAMPLE MCQ QUESTION FROM PMLA .......................................................................... 422
COMPETITION ACT, 2002 ........................................................................................................ 424
Definitions ............................................................................................................................... 424
Sec. 3 - Anti-competitive agreements .................................................................................... 427
Sec. 4 - Abuse of dominant position ...................................................................................... 433
Sec. 5 - Combination ............................................................................................................... 435
Economic Laws – Elective paper – CASE STUDIES
CA A.K.S. Krishnan M.Com, FCA 5
Sec. 8 Composition of Commission ....................................................................................... 436
Sec. 10 - Term of office of Chairperson and other Members ............................................... 436
Sec. 11 - Resignation, removal and suspension of Chairperson and other members ........ 439
Sec. 12 - Restriction on employment of Chairperson and other Members in certain cases .................................................................................................................................................. 440
Sec. 15 -Vacancy, etc. not to invalidate proceedings of Commission ................................. 441
Sec. 19 - Inquiry into certain agreements and dominant position of enterprise ................ 441
Sec. 36 - Power of Commission to regulate its own procedure ........................................... 442
CA AKS KRISHNAN – ECONOMIC LAWS
CA FINAL - GROUP 2 – ELECTIVE PAPER –
ECONOMIC LAWS 6D
QUESTION BANK BOOK
SAMPLE PAGES
IN AKS KRISHNAN YOU TUBE PAGE
FEW CASE STUDIES GIVEN INTHIS PDF
ALSO DISCUSSED
WHATSAPP 940512888- CA AKS
KRISHNAN FOR PURCHASE OF BOOK –
HARD COPY / VIDEO LECTURES
CA AKS KRISHNAN – ECONOMIC LAWS
CASE STUDY 1 – RERA & Competition Act
Mr. Bhanu Pratap Taneja is a leading real estate developer based in Delhi. In the last decade,
his company Garvit Bhoomi Developers Pvt. Limited having registered office in Bhikaji Cama
Place, New Delhi, had successfully developed four housing projects – two in Gurgaon and
one each in Jaipur and Lucknow. They had a robust management team. Having been the name
behind developing more than five thousand luxurious apartments with modern amenities,
they had the reputation of delivering the projects well within the promised time.
In the beginning of the year 2015, they launched another project in Indirapuram, UP by the
name Omega Capetown Residency in which 1000 residential units consisting of 2BHK and
3BHK apartments were to be developed. They were to be completed in all respects by January
2018 and delivered to the consumers by that date. This project was being carried on smoothly
when the Real Estate (Regulation and Development) Act, 2016 came to be enacted w.e.f. 1st
May, 2016. Section 3, which was enacted later w.e.f. 1st May 2017. Since Omega Capetown
Residency consisted of 1,000 residential units, it was required to be registered and so the
company submitted the requisite documents with concerned authorities.
As the application for registration was found to be complete in all respects, the Omega
Capetown Residency Project was granted registration by RERA (UP) within the statutory
period and was provided with a registration number including a log-in ID for assessing the
website of the Authority and to create webpage.
In the meantime, Mr. Taneja was approached by some of the influential developers that an
understanding had been reached among them to control the price of apartments to be built by
them. However, because of legal tangles such understanding could not be brought into
writing and it was also not intended to be enforced by legal proceedings. Mr. Taneja did not
agree to the proposal because even though the understanding was not in writing and it was
not intended to be enforceable by legal proceedings, it was still illegal as per the Competition
Act, 2002. This revelation made by Mr. Taneja discouraged the intending developers and they
desisted from being a party to this proposal.
Mr. Taneja’s son Garvit, who was a commerce graduate and holder of law degree, had a
college friend Rohit whose father Mr. Dev Kumar dealt in sale, purchase and renting of
properties under the title ‘Dev Property Dealers’ from the Yusuf Sarai market. Since Rohit had
joined his father’s business, it was thought prudent to convert the existing proprietary
business into a registered partnership firm titled as ‘Dev & Sons Property Dealers’. Because
of the enactment of Real Estate Act, Rohit consulted his friend Garvit regarding its
implications in case of real estate agents. Accordingly, the firm was got registered as real estate
agent with the help of Garvit’s legal advisor.
Further, Garvit made a proposal to Rohit and his father that they could associate themselves
with his Omega Capetown Residency, a registered RERA project in Indirapuram for
facilitating sale of apartments which they readily accepted. Garvit also cautioned them that as
per the Act, since their firm was now a registered real estate agent they were not supposed
to facilitate sale/purchase of any plot, apartment or building in a real estate project being
CA AKS KRISHNAN – ECONOMIC LAWS
sold by the promoter in any planning area, if such project was not registered with RERA of
the concerned State.
In addition, Garvit’s legal advisor told them that as required by Section 10, a registered real
estate agent would maintain and preserve proper books of accounts and other necessary
documents. Further, such agent would not involve himself in any unfair trade practice like
making a false statement regarding services to be provided by him. He would also not permit
the publication of any advertisement whether in any newspaper or otherwise of services that
were not intended to be offered. Besides, the agent would also have to help the intending
buyers in getting the required information and documents to which they were entitled, at the
time of booking of any property.
Rohit had a friend Tarun whose father Dr. Sreenivas Sharma was a surgeon in a government
hospital and was residing in a rented government flat in the hospital campus itself. He had an
intense desire to have a luxurious flat of his own. Tarun had joined IBM after doing MBA from
IIFT, New Delhi. So, with the combined salary of both, they decided to buy a flat. Tarun
contacted Rohit to help him in searching a suitable apartment for his family. In turn, Rohit
informed him that one particular 3BHK flat at an ideal location was available in Omega
Capetown Residency in Indirapuram as the original allottee had withdrawn from the scheme;
otherwise the booking under this project was already full. Dr. Sharma got interested in the
information and went to the Omega Capetown Residency along with his family to see the
concerned apartment. He liked its strategic location and gathered more information regarding
sanctioned plan, layout plan along with the other specifications, etc. He then asked for stage-
wise time schedule of completion of the project and also enquired regarding provision of
water, sanitation and other amenities. Since, Rohit personally knew Garvit and his father Mr.
Taneja - the promoters of the project - Dr. Sharma and his family had a lively and fruitful
meeting with them. Subsequently, he and his son jointly entered into an agreement for sale
with the promoters of the project and made payment of 75% of the cost of the apartment, while
remaining 25% of the cost was to be paid at the time when the apartments were ready for
occupation.
A few months after booking the apartment, Dr. Sharma got a notice from the promoters of
Omega Capetown Residency that due to unforeseen circumstances they were not in a position
to complete the project and needed the allottees’ consent for transferring of their majority
rights and liabilities to another reputed developer M/s. Sai Developers Pvt. Limited of New
Delhi. In case any of the allottees was not agreeable to this proposal he could get his money
refunded. Since Dr. Sharma was very much attached to the location of the flat, he accepted the
proposal after enquiring with Rohit and his father. He also learnt that 95% of the allottees had
already given their written permission. Further, the Authority had given its written approval
to the proposal for transfer and completion of Project by M/s. Sai Developers Pvt. Limited. Dr.
Sharma was also assured by Mr. Bhanu Pratap Taneja, the erstwhile promoter with whom he
had earlier interacted satisfactorily, that all the pending obligations would be fulfilled by the
new developer and in no case the date of completion of the project would be extended;
otherwise it would attract penalty. It was also disclosed by Mr. Taneja that the new promoter
CA AKS KRISHNAN – ECONOMIC LAWS
would rectify any structural defect if it occurred within a period of five years from the date of
handing over the possession of the apartments. Dr. Sharma, thus felt relieved.
M/s. Sai Developers completed the project on time and received Completion Certificate from
the Competent Authority. As per the agreement for sale, Dr. Sharma made payment of the
remaining 25% of the cost. Thereafter, he received Occupancy Certificate and took physical
possession of the apartment well before two months since the allottees were supposed to take
physical possession within statutory period of two months from the issue of Occupancy
Certificate. He was also given other necessary documents and plans, including that of
common areas. He also became a member of the RWA formed by the allottees. In the
meantime, the promoter executed a registered conveyance deed in favour of each of the
allottees along with the undivided proportionate title in the common areas to the RWA.
I. Multiple Choice Questions
1. Registration of a real estate project shall not be required –
(a) where the area of land proposed to be developed does not exceed five hundred square
meters or the number of apartments proposed to be developed does not exceed eight.
(b) where the area of land proposed to be developed does not exceed five thousand square
meters or the number of apartments proposed to be developed does not exceed eighty.
(c) where the area of land proposed to be developed does not exceed two hundred fifty square
meters or the number of apartments proposed to be developed does not exceed four.
(d) where the area of land proposed to be developed does not exceed three hundred square
meters or the number of apartments proposed to be developed does not exceed three.
2. Who is required to submit a copy of duly obtained approvals and commencement
certificate for getting the project registered with RERA:
(a) Allottee
(b) Promoter
(c) Real Estate Agent
(d) None of the above
3. A registered real estate agent shall -
(a) Facilitate the sale/purchase of any plot, apartment or building, being sold by the promoter
in any planning area, which is registered with the Authority;
(b) maintain and preserve prescribed books of account, records and documents;
(c) not involve himself in any unfair trade practices
(d) All of the above.
4. The promoter is required to rectify any structural defect if it occurs within a period of -----
years from the date of handing over the possession of the apartments to allottees –
(a) Two years
(b) Three years
(c) Four years
(d) Five years
CA AKS KRISHNAN – ECONOMIC LAWS
5. Registration of on-going project for which completion certificate is yet to be received is
mandatory -
(a) Yes, if the area of land (developed or to be developed) exceeds five hundred square meters
or the number of apartments (developed or to be developed) exceeds eight.
(b) No, irrespective of the area of land or the number of apartments
(c) Can’t say
(d) None of the above
6. A real estate developer can leave the project mid-way by selling that project to another
developer if he has taken a written approval of ---------- of allottees along with approval of the
Authority.
(a) 2/3rd
(b) 1/3rd
(c) 3/4th
(d) 1/4th
7. The time limit within which an allottee is required to take physical possession of the
apartment after issue of occupancy certificate is -
(a) one month
(b) two months
(c) three months
(d) four months
8. A certificate certifying that the real estate project has been developed according to the
sanctioned plan, layout plan and specifications as approved by the competent authority under
the local laws is called -
(a) Commencement Certificate
(b) Completion Certificate
(c) Occupancy Certificate
(d) None of the above
9. The flat purchased by Dr. Sharma jointly with his wife Mrs. Neelima Sharma though funded
by him would be held as ‘benami transaction’ under the Prohibition of Benami Property
Transactions Act, 1988 -
(a) Yes
(b) No
(c) Can’t say
(d) None of the above
10 As per the Competition Act, 2002 ‘Agreement’ includes any arrangement or understanding
or action in concert:
(a) Whether or not, such arrangement, understanding or action is formal or in writing; or
CA AKS KRISHNAN – ECONOMIC LAWS
(b) Whether or not such arrangement, understanding or action is intended to be enforceable
by legal proceedings.
(c) Whether or not, such arrangement, understanding or action is formal or in writing; or
whether or not such arrangement, understanding or action is intended to be enforceable by
legal proceedings.
(d) None of the above.
II. Descriptive Questions
1. (i) Examine the following given aspects with reference to the allottee in the situation given
in the case study :
(a) Rights exercised by Dr. Sharma as an allottee.
(b) Duties fulfilled by Dr. Sharma as an allottee.
(c) Right which was not exercised by him and duty which was not required to be fulfilled by
Dr. Sharma.
(ii) The promoters of Omega Capetown Residency transferred majority of rights and
liabilities to Sai DeveIopers Pvt Ltd. for the completion of the project. Advise as to the validity
of such transfer of a real estate project to a Sai Developer’s Pvt Ltd in the case study?
2. In the given case study Omega Capetown Residency has got itself registered under the Real
Estate Regulatory Authority, as it consisted of 1,000 residential units. However, if Omega
Capetown Residency consisted of only 250 residential units, then was it necessary to get itself
registered under the Real Estate (Regulation and Development) Act, 2016: if yes, name the
various important documents and declarations which are required to be submitted by a ‘real
estate developer’ while registering a project with the Real Estate Regulatory Authority (RERA)
having only 250 residential units and not 1,000 residential units.
3. Mr. Bhanu Pratap Taneja was approached by some of the influential developers to join their
association so as to reach an understanding whereby they could inflate the price of the
apartments built by them. Even though the deal was in favour of Mr. Bhanu Pratap Taneja, he
rejected the proposal from other developers. In the light of the provisions of the Competition
Act, 2002, discuss whether the decision of Mr. Bhanu Pratap Taneja is lawful?
CA AKS KRISHNAN – ECONOMIC LAWS
Solution:
1. (a) [Hints: Refer Section 3 of the Real Estate (Regulation and Development) Act, 2016]
2. (b) [Hint: Refer Section 4 (2) (c) of the Real Estate (Regulation and Development) Act, 2016]
3. (d) [Hint: Refer Section 10 of the Real Estate (Regulation and Development) Act, 2016]
4. (d) [Hint: Section 14 (3) of the Real Estate (Regulation and Development) Act, 2016]
5. (a); [Hint: Refer Section 3 of the Real Estate (Regulation and Development) Act, 2016. It may
not be mandatory in a particular State if the State has granted exemption to such on-going
project]
6. (a); [Hint: Section 15 of the Real Estate (Regulation and Development) Act, 2016. It is to be
noted that if a consumer or his family holds more than one unit in the project then he will be
considered as one consumer only]
7. (b); [Hint: Refer Section 19 (10) of the Real Estate (Regulation and Development) Act, 2016]
8. (b); [Hint: Refer Section 2 (q) of the Real Estate (Regulation and Development) Act, 2016]
9. (b); [Hint: Refer Section 2 (9) (iii) of the Prohibition of Benami Property Transactions Act,
1988]
10. (c). [Hint: According to Section 2 (b) of the Competition Act, 2002, ‘Agreement’ includes
any arrangement or understanding or action in concert:
(i) Whether or not, such arrangement, understanding or action is formal or in writing; or
(ii) Whether or not such arrangement, understanding or action is intended to be enforceable
by legal proceedings.]
II. ANSWERS TO DESCRIPTIVE QUESTIONS
1. (i) (a) With reference to Section 19 of the Real Estate (Regulation and Development)
Act, 2016, Dr. Sharma, as an allottee, exercised the following rights:
(I) Obtained the information relating to sanctioned plans, layout plans along with the
specifications as approved by the competent authority.
(II) Demanded to know stage-wise time schedule of completion of the project, including the
provisions for water, sanitation, electricity and other amenities.
(III) Claimed physical possession of the said apartment.
(IV) Obtained the necessary documents and plans, including that of common areas, after
getting the physical possession of the apartment from the promoter.
(b) With reference to Section 19 of the Real Estate (Regulation and Development)
Act, 2016, Dr. Sharma, as an allottee, fulfilled the following duties:
CA AKS KRISHNAN – ECONOMIC LAWS
(i) Made necessary payments within the time as specified in the agreement for sale.
(ii) Became a member of the RWA formed by the allottees.
(iii) Took physical possession of the apartment within a period of two months from the issue
of Occupancy Certificate.
(iv) Participated towards registration of the conveyance deed of the apartment.
(c)
(i) With reference to Section 19 of the Real Estate (Regulation and Development) Act, 2016, Dr.
Sharma, as an allottee, did not exercise the following right:
The right to claim the refund of amount paid along with prescribed rate of interest. It was so
because the promoter was able to give possession of the apartment in accordance with the
terms of agreement for sale.
(ii) With reference to Section 19 of the Real Estate (Regulation and Development) Act, 2016,
Dr. Sharma, as an allottee, was not required to fulfill the following duty:
The duty to pay interest at prescribed rate for delay in making any payment. It was so because
he had made the payments in accordance with the terms of agreement for sale.
(ii) As per section 15 of the Real Estate (Regulation and Development) Act, 2016, a promoter
is permitted to transfer his majority rights and liabilities in respect of a real estate project to a
third party.
The provisions given below are to be adhered to by the promoter for transfer:
(a) Obtain prior written consent from two-third of allottees. Such consent will not include the
consent given by the promoter.
(b) Also obtain prior written approval of the Authority.
Note: It is to be ensured that such transfer shall not affect the allotment or sale of the
apartments, plots or buildings, as the case may be, in the real estate project developed by the
promoter.
(i) After obtaining the required consent of both allottees and the Authority, the new promoter
shall be required to independently comply with all the pending obligations under the
provisions of the Act or the rules and regulations made thereunder.
(ii) The new promoter is also required to comply with the pending obligations as per the
agreement for sale entered into by the erstwhile promoter with the allottees.
(iii) Further, the new promoter must note that any transfer so permitted shall not result in
extension of time to him to complete the real estate project.
CA AKS KRISHNAN – ECONOMIC LAWS
Note: In case of default, he shall be liable to the consequences for delay, as per the provisions
of the Act or the rules and regulations made thereunder.
Since in the given case study , 95% of the allottees had already given their written permission.
Further, the Authority had given its written approval to the proposal for transfer and
completion of Project by M/s. Sai Developers Pvt. Limited in compliance with the
requirements given in the said provisions. Such transfer of a real estate project to a Sai
Developer’s Pvt Ltd. is valid.
2. According to proviso to section 3 of the Real Estate (Regulation and Development) Act,
2016, projects that are on going on the date of commencement of the Act, and for which the
completion certificate has not been issued, the promoter of the project are required to make
and application to the concerned Authority for the registration of the said project within a
period of 3 months from the date of commencement of the Act.
Further, the section provides that no registration of real estate project shall be required where
the area of land proposed to be developed does not exceed 500 square meters or the number
of the apartments proposed to be developed does not exceed 8 inclusive of all phases.
Hence, the Act requires registration of on-going projects where completion certificate was yet
to be obtained as well as new projects, if the area to be developed exceeded 500 sq. mtrs. or
apartments to be built under the project exceeded eight. Thus, registration of Omega
Capetown Residency was must with the Real Estate Regulatory Authority of UP (RERA, UP),
as consisted of 1,000 residential units.
Further, even if Omega Capetown Residency consisted of only 250 residential units (i.e. more
than 8 units), it will be compulsory to get itself registered under the Act. The process of
registering a project with the Real Estate Regulatory Authority (RERA) which consists of 1,000
units or 250 units is same which is given under section 4 of the Act.
With reference to Section 4, various important documents and declaration required to be
submitted while registering a project with RERA are as under:
• Details of the project such as name, address, type, names and photographs of the promoters,
etc.
• Details of the project which were already launched by the real estate developer in the
preceding 5 years and their present status.
• Approvals and commencement certificates obtained from the competent authority for each
phase of the project separately.
• Sanctioned layout plan, the development plan for the project and details of basic facilities
being made available like drinking water, electricity etc.
• Proforma of allotment letter, agreement for sale and conveyance deed to be signed with the
consumers.
CA AKS KRISHNAN – ECONOMIC LAWS
• Location of the project with clear demarcation of the land for the project.
• Number, type and carpet areas of units to be sold.
• The details of open areas if any like terraces, balconies etc.
• Details of associated engineers, contractors, architects and intermediaries in the project.
• a declaration, duly supported by an affidavit, stating the following important matters:
o that the promoter has a legal title to the land and it is free from all encumbrances along with
legally valid documents;
o the time period required for completion of the project;
o that seventy per cent. of the amount realised from the allottees, from time to time, shall be
deposited in a separate escrow account and shall be used only for the purpose of completion
of project;
o that the promoter shall get his accounts audited within six months after the end of every
financial year by a chartered accountant in practice; and shall take all the pending approvals
on time from the competent authorities; etc.
3. According to section 2(b) of the Competition Act, 2002, ‘Agreement’ includes any
arrangement or understanding or action in concert:
(i) Whether or not, such arrangement, understanding or action is formal or in writing, or
(ii) Whether or not such arrangement, understanding or action is intended to be enforceable
by legal proceedings.
Further, section 2(c) of the Competition Act, 2002, "Cartel" includes an association of
producers, sellers, distributors, traders or service providers who, by agreement amongst
themselves, limit, control or attempt to control the production, distribution, sale or price of,
or, trade in goods or provision of services.
An association for the welfare of the trade or formed for any other purpose not mentioned in
the aforesaid definition will not be a cartel Thus, it is only when an association, by agreement
amongst themselves, limits control or attempts to control the production, distribution, sale or
price of, or, trade in goods or provision of services, that it will be a cartel.
Hence, an agreement which prohibits an enterprise or person or their association for entering
into an agreement in respect of production, supply, distribution, storage, acquisition or
control of goods or services, which causes or is likely to cause an appreciable adverse affect
on competition. Such agreements entered in contravention of the above are void. These
agreements are presumed to have an appreciable adverse affect on competition.
CA AKS KRISHNAN – ECONOMIC LAWS
Here, in the given situation, the agreement between Mr. Bhanu Pratap Taneja and other
builders would have fallen into the ambit of section 2(b) and 2(c) of the Competition Act,
2002 as the aim of the association was to increase the price of the apartments. Thus, such an
association would be void.
CA AKS KRISHNAN – ECONOMIC LAWS
CASE STUDY 16 - Benami
Mr. Mukesh Kumar, a wealthy merchant, having inherited his business from his forefathers,
ran a reputed jewellery shop titled as M/s. Kumarsons Jewarat in Dariba Kalan at old Delhi.
He had two daughters Reena and Ritika who were married and happily settled. He also had
three sons. Customers from far and near came to his shop to purchase gold ornaments, gold
coins and other items made of gold and silver. He then thought of expanding his business and
thereby purchased a shop on ground floor in up-scale South Extension area of South Delhi.
The payment of Rs. 3.20 crore was made by cheque and title deeds of the property were
registered in his name after making payment of appropriate stamp duty.
The eldest son Dheeraj Kumar managed the jewellery shop in old Delhi while the second son
Prashant Kumar helped him in new shop opened at South Extension. The youngest son Ronit
Kumar was undergoing a two-year jewellery designing course from Manchester Metropolitan
University, UK.
Mr. Mukesh Kumar was desirous of purchasing a residential property in New Friends Colony,
a high-end area of South Delhi. For this purpose, he engaged a property dealer and within a
month was able to finalise a house on ground floor. It was registered in his name and payment
towards purchase consideration, stamp duty etc. to the extent of Rs. 7.20 crore was made by
cheque. After purchasing the property he felt content and happy that he was the owner of a
property which was situated in a prime area of Delhi. He spent some funds in renovating the
bungalow, furnished it properly and thereafter gave it on lease to a nationalized bank for the
purpose of Guest House where bank’s officials visiting Delhi could be accommodated.
Time flew by. Encouraged by the loyalty of the customers he entered into diamond jewellery
business also at his South Extension shop. He entrusted this section independently to his
second son Prashant Kumar.
During the course of the years, he accumulated lots of funds which he wanted to invest safely
with a view to earn higher returns. He, therefore, consulted his close friend Mr. Roopesh Dutt
who was a practicing lawyer. He advised him to purchase properties in UP or Rajasthan
because investment in properties was a safe bet and over a period of time it would give higher
returns also. Mr. Dutt also told Mr. Mukesh regarding existence of the Benami Transactions
(Prohibition) Act, 1988 which was recently renamed as the Prohibition of Benami Property
Transactions Act, 1988 (PBPT Act). The re-naming of the Act was done by enacting the Benami
Transactions (Prohibition) Amendment Act, 2016 with effect from 1st November, 2016. He
also apprised him of that benami transaction provisions were attracted to any property,
shares, debentures, fixed deposits and bank accounts if they were held by one person for
another who actually paid for the transaction. Anyway, he purchased a plot in Greater
NOIDA for Rs. 65 lacs in the name of his wife Mrs. Rama Devi by paying lesser amount of
stamp duty as a relaxation was given to the women. His wife was a homely lady with a
religious bent of mind. Her time was spent in running the house and looking after the needs
of her family. In her spare time she used to read religious books.
CA AKS KRISHNAN – ECONOMIC LAWS
His youngest son Ronit, who also did a part time job in the hospitality sector besides studying
for his jewellery designing course in the UK used to remit his savings into his NRE Account
maintained in India. As Mr. Mukesh Kumar was always enterprising in nature, he was
contemplating to use those funds also for investment in property. Ronit was also agreeable to
this proposition. They searched for a suitable property in Dwarka area of Delhi. As luck would
have it, their neighbour Mr. Narain had a society flat in Dwarka which he wanted to sell. Mr.
Mukesh Kumar came to know of this fact and arranged a visit to the flat along with his two
sons. It was an east-facing flat and they liked the location. By this time Ronit had also come to
India for a short duration. The matter was discussed at length and all agreed to pay Rs. one
crore and ten lacs to Mr. Narain being the amount demanded by him. To fund Rs. 1.10 crore,
Ronit contributed Rs. 10 lacs from his NRE account while his elder brothers Dheeraj and
Prashant agreed to pay Rs. 20 lacs each. Dheeraj arranged funds by taking pre-mature
payment of his two fixed deposits kept in the bank while Prashant sold his quoted shares in
NSE. They managed to procure a cheque of Rs. 30 lacs from somewhere while remaining Rs.
30 lacs were paid in cash by Mr. Mukesh Kumar. The property got registered for Rs. 80 lacs
jointly in the names of all the three brothers and accordingly stamp duty was paid.
Mr. Mukesh Kumar still had lot of spare funds for investments but such funds were not shown
as his income from business while filing the income tax returns from time to time. He had a
trusted cook by the name Rampal in his family who would follow the instructions of his
master tooth and nail without judging the consequences of following such instructions. Mr.
Mukesh Kumar was keen to purchase another property in Rajasthan with a view to rent it out
to some wealthy person. His close friend Mr. Vinay Seth informed about availability of a
commercial property in Jaipur. After negotiations with the owner, he purchased the same for
Rs. 52.45 lacs in the name of Rampal who could barely sign without knowing the import of
signing the documents. Mr. Mukesh Kumar was of the opinion that he would get the property
transferred in his name from Rampal after some time. Within no time the property was let out
to an influential person at a handsome rent.
I. Objective Type Questions (2 marks each)
Select the most appropriate answer from the options given for each question:
1. Mr. Ram, a NRI, purchased a flat for Rs. 30, 00, 000 and paid 20,00,000 in by account payee
cheque of his own account and rest in cash. The registry was done at a value of Rs. 20,00,000
which was paid by cheque. State the correct statement in the light of the given facts:
(a) Said transaction is benami transaction due to Registry made on partial price of the
property.
(b) Due to partial payment of cash, the said transaction is benami transaction.
(c) Mr. Ram paid the consideration and owned the property in his name , so it is not a benami
transaction.
(d) Both (a) & (b)
2. Benami Property is -
(a) any property which is not the subject matter of a benami transaction.
CA AKS KRISHNAN – ECONOMIC LAWS
(b) any property which is the subject matter of a benami transaction and also includes the
proceeds from such property.
(c) any property which is not the subject matter of a benami transaction and also does not
include the proceeds from such property.
(d) None of the above
3. A person who finances the deal in respect of benami property:
(a) is not the beneficial owner of the property
(b) is the beneficial owner of the property
(c) is not the possessor of the property
(d) None of the above
4. How much of the property purchased in Dwarka could be considered as Benami Property:
(a) Rs. 30 lacs
(b) Rs.60 lacs
(c) Rs. 80 lacs
(d) Rs. 1.10 crore
5. Benamidar is -
(a) a fictitious person who does not make payment
(b) a person in whose name the benami property is transferred or held but he does not make
payment
(c) a person who lends his name but does not make any payment.
(d) All of the above
6. Beneficial Owner is -
(a) a person, whether his identity is known or not, for whose benefit the benami property is
held by a benamidar.
(b) a person, who is benamidar and holds the property.
(c) Both (a) and (b)
(d) person who is valid legal holder of the property.
7 Under which Act, Ronit is maintaining his NRE account-
(a) Prevention of Money Laundering Act, 2002
(b) Real Estate (Regulation and Development) Act, 2016
(c) Foreign Exchange Management Act, 1999
(d) Prohibition of Benami Property Transactions Act, 1988
8 Why does a person enter into a Benami transaction?
(a) To avoid statutory dues
(b) To avoid payment to creditors
(c) To defeat the provisions of any law.
(d) All of the above
CA AKS KRISHNAN – ECONOMIC LAWS
9 According to Section 53 of the Act who shall be punishable in the case where Mr. Mukesh
Kumar purchased property in the name of his cook Rampal:
(a) Rampal
(b) Mukesh Kumar
(c) Vinay Seth
(d) Both (a) and (b)
10 Can Mukesh Kumar get the property purchased in name of his cook Rampal, re-transferred
in his name:
(a) Yes, he can.
(b) No, he cannot.
(c) Yes, he can if Rampal agrees
(d) None of the above
II Descriptive Questions (10 marks each)
Q.1 (a) Can the property purchased by Mr. Mukesh Kumar in the name of his wife Mrs. Rama
Devi be considered as ‘Benami Property’? Justify. (6 Marks)
(b) Whether the property purchased in the name of Rampal by Mr. Mukesh Kumar can be
considered as ‘Benami Property’. State with reasons. (4 Marks)
Q.2 Identify beneficial owner and benamidar in all the above property transactions taken
place in this case study. (10 Marks)
S. No. Property Transaction at
1 South Extension
2 New Friends Colony
3 Greater NOIDA
4 Dwarka
5 Jaipur
Mr. Raj entered into a purchasing of a property in the name of his wife. This transaction was
made in consultation with his legal counsel. He suggested him various ways of nonpayment
of statutory dues levied on the transaction. Examine the following given legal situations –
Who shall be liable in the above transaction? Punishment to levied
What formality shall be required for the sanction of the punishment? (10 Marks)
CA AKS KRISHNAN – ECONOMIC LAWS
Ans:
MCQ’S
1: (c)
2 (b)
3 (b)
4 (a)
5 (d)
6 (a)
7 (c)
8 (d)
9 (d)
10 (b)
Descriptive Answers
Ans. 1(a) The property so purchased in the name of Mrs. Rama Devi, whether a ‘Benami
Property’ or not, will depend upon the facts/motive/intention of Mr. Mukesh Kumar for
purchasing property in such a way.
The property would be considered as benami property-
• If the intention to purchase property was only to save stamp duty; and
• It was intended not to give any ownership benefitto his wife.
Additionally, it is also to be proved in case of benami property that the owner of the property
was not aware of, or, denied knowledge of such ownership.
The property would not be considered as benami property-
• If the intention was to give ownership rights to Mrs. Rama Devi i.e. gifting of property to
her; and
• his wife was fully aware of purchase of property in her name by her husband.
In this case, as per the facts, the payment of lesser stamp duty is consequential to purchase of
property in the name of a woman. Hence, the property purchased on the name of Mrs. Rama
Devi is not a Benami Property.
Answer 1(b) Yes. It is certainlya case of benami property. The reasons are:
(i) The consideration for the property had not been given by Rampal though title deeds of the
property were registered in his name.
(ii) Rampal was not aware that the property was purchased in his name.
(iii) Rampal was not the real owner of the property since he did not make payment.
CA AKS KRISHNAN – ECONOMIC LAWS
(iv) The intention of Mr. Mukesh Kumar was to utilize his undisclosed funds without
involving himselfas owner of such funds and to enjoy benefits (i.e. rent) emanating from such
property.
S.
No.
Property
Transactionat Beneficial Owner Benamidar
1 South
Extension Mukesh Kumar N. A.
2 New Friends
Colony Mukesh Kumar N. A.
3 Greater
NOIDA
(i) Mukesh Kumar,
if his intention was
not to give
ownership rights to
his wife.
(i) Rama Devi
(ii) Rama Devi, if his
intention was to give
ownership rights to
his wife.
(ii) N. A.
4 Dwarka All his three sons
Benami property to extent of
Rs. 30 lacs - Fictitious person
from whom the cheque was
obtained is Benamidar.
5 Jaipur Mukesh Kumar Rampal
Answer 3
As per section 53 of the Prohibition on Benami Property Transactions Ac t, 1988, where any
person enters into a benami transaction in order to defeat the provisions of any law or to avoid
payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar
and any other person who abets or induces any person to enter into the benami transaction,
shall be guilty of the offence of benami transaction.
Whoever is found guilty of the offence of benami transaction referred to above shall be
punishable with rigorous imprisonment for a term which shall not be less than one year, but
which may extend to seven years and shall also b e liable to fine which may extend to twenty-
five per cent of the fair market value of the property.
CA AKS KRISHNAN – ECONOMIC LAWS
Accordingly, following are the answers:
(a) Mr. Raj, beneficial owner, his wife being benamidar and the legal counsel who
abets/induces Mr. Raj, to enter into a benami transaction, all the three will be liable under
section 53 .
(b) All, in the given c ase entered into a benami transaction with a motive to avoid payment
of statutory dues, are liable for rigorous imprisonment for a term which shall not be less than
one year, but which may extend to seven years and shall also be liable to fine which may
extend to twenty-five per c ent of the fair market value of the property.
(c) As per section 55, no prosecution shall be instituted against any person in respect of any
offence committed under sec tions 53 without the previous sanction of the Board(CBDT).
top related