Model Form of Agreement to be entered into between Promoter and Allottee under RERA

Registration of agreement for sale:

As per Section 13(1) of the Real Estate (Regulation and Development) Act, 2016, (RERA) promoter has to enter into a written agreement for sale with the allottee and also has to register the said agreement.

Form of Agreement for Sale:

Section 13(2) of RERA states that agreement for sale should be as per the form prescribed in MahaRERA rules and it should specify the particulars of development of the project.

Rule 10 (1) of MahaRERA Rules states that agreements for sale shall be in conformity with the provisions, rules and regulations made there under and shall be in accordance with the model form of agreement.

Modification in the terms of Agreement for sale:

A promoter can modify the terms of agreement for sale but it should be in conformity with the provisions of RERA and rules and regulations made thereunder. (Rule 10(1) of MahaRERA rules)

Conclusion:

Recently, a complaint was filed by Ms. Deepa Mansbadar wherein it was alleged that the draft form of agreement for a sale was not as per provisions of RERA and its rules and also was in variance from the conditions of the allotment letter.

Respondent argued that there was no violation of terms and conditions of the allotment letter signed between the parties. Also the complainant failed to establish that the agreement was not as per model form of agreement prescribed under RERA and its rules and regulations.

MahaRERA disposed off the complaint saying that the complainant failed to show that agreement was in contravention of the RERA provisions and ordered the complainant to execute sale agreement.

The copy of the order can be downloaded from the following link:

https://maharera.mahaonline.gov.in/Upload/PDF/Deepa%20Avinash%20and%20Mansabdar%20Vs%20Runwal%20Homes%20Private%20Limited.pdf

Filing of Complaints and Jurisdiction of the Authority under RERA

Who can file a complaint under RERA?

As per Section 31 of the Real Estate (Regulation and Development) Act, 2016 read with Rule 6 of Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal etc.), any aggrieved person having any interest in the project can file a complaint with the Authority or adjudicating officer.

Aggrieved Person under RERA:

As per explanation provided for sub-section (1) of Section 31, “Person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.

Thus, any aggrieved person belonging to any association of allottees or voluntary consumer association registered under any law for the time being in force can file a complaint under RERA.

Reason for filing of complaint under RERA:

Complaint can be filed for any violation or contravention of the provisions of the Act or the Rules and Regulations made thereunder, against any promoter, allottee or real estate agent as the case maybe.

Forms and fees for filing of complaints:

·         Form A to be filed by any aggrieved person having any interest in the project accompanied with a fee of Rs. 5,000/-

·         Form B to be filed by an allottee, to claim compensation under Sections 12, 14, 18 and 19 of RERA accompanied by fee of Rs. 5,000/-

Filing complaint with Appellate Tribunal:

·         Form C to be filed for appeal to appellate tribunal against the order of the Authority.

Conclusion:

Recently, a complaint was filed by Mr. Ishtekhar Yusuf Shaikh against Dhruva Woolen Mills Pvt. Ltd. for violation of Section 4 of RERA and Rule 3(2)(c) and 3(2)(e) of Maharashtra Registration Rules, 2017. In that MahaRERA was of the view that since the complainant was not an aggrieved person, he had no locus standi to file the complaint. Also, the authority has no jurisdiction to hear Public Interest Litigation (PILs) filed before it.

The authority examined the complaint filed by Mr. Ishtekhar and directed the respondent promoter to rectify the discrepancy for which the complaint was filed.

The copy of the order can be downloaded from the following link:

https://maharera.mahaonline.gov.in/Upload/PDF/Order%20of%20Istekhar.pdf

Disqualification of Directors

The Ministry of Corporate Affairs (MCA) has notified the list of directors who are disqualified as per Section 164(2)(a) of Companies Act, 2013.

As per Section 164(2)(a) of the Companies Act, 2013, directors of the companies which have not filed financial statements or annual returns for continuous period of three financial years (i.e. for 2014, 2015 and 2016) have been declared as disqualified for a period of five years from the date on which the company fails to file financial statements and annual returns i.e. till 31^st October, 2021.

Impact of the disqualification of directors:

·         A person cannot be appointed or re-appointed as director of that company or any other company for a period of five years from the date on which the company fails to file financial statements and annual returns for a continuous period of three financial years.

·         The office of the director shall become vacant if he incurs the disqualification specified in Section 164 of Companies Act, 2013. (Section 167)

·         The Auditor’s report shall state whether any director is disqualified from being appointed as director under Section 164(2) of Companies Act, 2013.

·         A director cannot be appointed as first director in case of incorporation of company if he is disqualified under Section 164(1) of Companies Act, 2013.

List of disqualified directors can be downloaded from the following link:

http://www.mca.gov.in/MinistryV2/disqualifieddirectorslist.html

Right of the allottees to claim amount from the Developer

As per Section 18(1) of the Real Estate (Regulation and Development) Act, 2017, the allottee has a right to claim the amount paid by him to the promoter in respect of any apartment/plot/building.

Circumstances under which the allottee can claim refund of amount:

·         If the promoter fails to give possession of the apartment/plot/building in accordance with the terms of agreement of sale, duly completed by the date specified therein, or

·         If the promoter discontinues his business as a developer due to:

o   suspension or revocation of registration, or

o   Any other reason

Allottee has the following options in case of above mentioned circumstances:

·         The allottee can withdraw from the project, or

·         The allottee can continue with project

·         If the allottee withdraws from the project:

o   Allottee can claim, the amount paid by him in respect of that apartment/plot/building, without affecting any other remedy available; and,

o   Interest @ 2% above the prevalent Highest Marginal cost of lending rate of State Bank of India prevailing on the date on which the amount becomes due and;

o   Compensation as may be decided by the Adjudicating Officer appointed for the purpose, after giving the person concerned a reasonable opportunity of being heard.

·         If the allottee continues with the project:

o   Can claim interest at 2% above the prevalent Highest Marginal cost of lending rate of State Bank of India for every month of delay till the handing over of the possession.

Conclusion:

Recently, a complaint was filed under Section 18 of RERA by Kamlesh Ailani against Ekta Parksville Homes Pvt. Ltd. In that the parties amicably settled their dispute and the complainants received full amount of their advance payment and their claim was fully satisfied.

The copy of the order can be downloaded from the following link:

https://maharera.mahaonline.gov.in/Upload/PDF/Kamlesh%20vs%20Ekta.pdf

OPPORTUNE TIME FOR SMEs

·         Raising funds by way of SME IPOs can be gauged from the facts that 72 SME IPOs have been    launched so far from different states of India in 2017.

·         As per the facts, Gujarat is the state which has raised funds of around Rs. 373.47 crores (31 IPOs), which is the highest among all other states around the country followed by Maharashtra, Rajasthan, Madhya Pradesh and Delhi.

·          SME capital market complements the industrial ecosystem by providing a platform to raise growth capital with organised corporate structure and basic architecture of corporate governance.

·         To sum up, SMEs across India raised Rs. 847 crores through 72 IPOs in 2017.

·         This is opportune time for SMEs to unlock value by coming out with IPO.

Source: Economic Times.

MCA UPDATES

1.      It is advised by Ministry of Corporate Affairs (MCA) that the forms w.r.t. Name availability (INC-1) and Incorporation of companies (INC-7/SPICe-INC-32/URC-1/INC-12) should not be filed by the directors:

•           Who have not filed financial statements or annual returns for any continuous period of 3 financial years; and

•           Who are associated with struck off companies.

Forms filed by such Directors shall be rejected summarily by the Central Registration Centre (CRC).

Further, attention is drawn to the provisions of Section 7(5) and 7(6) which, inter alia, provide that furnishing of any false or incorrect particulars of any information or suppression of any material information shall attract punishment for fraud under Section 447.

Attention is also drawn to the provisions of Section 448 and 449 which provide for punishment for false statement and punishment for false evidence respectively.

2.      Ministry of Corporate Affairs (MCA) had earlier issued notification amending Companies (Appointment and Qualification of Directors) Rules, 2014. In the said notification, MCA had amended Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 exempting from appointing independent directors for following classes of unlisted public companies:

·         joint ventures,

·         wholly owned subsidiary and

·         Dormant company.

Now MCA has issued a circular with respect to the above notification clarifying the meaning of joint venture for the purpose of availing exemption under Rule 4.

It is clarified that joint venture would mean a joint arrangement, entered into in writing, whereby the parties that have joint control of the arrangement, have rights to the net assets of the arrangement.

CONSOLIDATED FDI POLICY, 2017

Department of Industrial Policy and Promotion (DIPP) have issued the new circular on Consolidated FDI Policy for the year 2017 on 28 August 2017. The present consolidation subsumes and supersedes all Press Notes/Press Releases/Clarifications/Circulars issued by DIPP, which were in force as on 27 August 2017 and reflects the FDI Policy as on 28 August 2017.

I.                      Major Amendment - Foreign Investment Promotion Board (FIPB) which was abolished by Government has been given effect in the Consolidated FDI Policy, 2017.

                  Pursuant to above, Chapter 4 of policy which earlier had constitution of FIPB was replaced by introduction of Competent Authorities for sectors/activities requiring Government approval.

                  Definition of Competent Authority is also newly inserted which is as follows:

                  ‘Competent Authority’ means the concerned Administrative Ministry/Department empowered to grant government approval for foreign investment under the extant FDI Policy and FEMA Regulations.

                  Following is the list of sectorwise introduction of Competent Authority:

S. No.	Activity/ sector	% for which approval is sought	Administrative Ministry/ Department
(i)	Mining (Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities)	Upto 100%	Ministry of Mines
(ii)	Defence :	beyond 49% wherever it is likely to result in access to modern technology or for other reasons to be recorded
	a) Items requiring Industrial Licence under the Industries (Development & Regulation) Act, 1951, and/or Arms Act, 1959 for which the powers have been delegated by Ministry of Home Affairs to DIPP		Department of Defence Production, Ministry of Defence
	b) Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959		Ministry of Home Affairs
(iii)	Broadcasting : a.       Terrestrial Broadcasting FM(FM Radio) b.      Up-linking of ‘News & Current Affairs’ TV Channels	Upto 49%	Ministry of Information & Broadcasting
(iv)	Print Media: a.       Publishing of newspaper and periodicals dealing with news and current affairs b.      Publication of Indian editions of foreign magazines dealing with news and current affairs	Upto 26%
	c.       Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. d.      Publication of facsimile edition of foreign newspapers	Upto 100%
(v)	Civil Aviation: (a) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (b) Regional Air Transport Service	Beyond 49%	Ministry of Civil Aviation
(vi)	Satellites	Upto 100%	Department of Space
(vii)	Telecommunication	Beyond 49%	Department of Telecommunications
(viii)	Private Security Agencies	beyond 49% and up to 74%	Ministry of Home Affairs
(ix)	Trading (Single brand, Multi brand and Food Product retail trading) : a.       Single Brand Product Retail Trading	Beyond 49%	Department of Industrial Policy & Promotion
	b.      Multi Brand Retail Trading	Upto 51%
(x)	Applications for foreign investment into a Core Investment Company or an Indian company engaged only in the activity of investing in the capital of other India Company/ies	Upto 100%
(xi)	Banking: a.       Public Sector b.      Private Sector	Upto 20% beyond 49% and up to 74%.	Department of Financial Services
(xii)	Pharmaceuticals (Brownfield )	Beyond 74%	Department of Pharmaceuticals

In addition to above sectorwise bifurcation, competent authorities were also defined for following activities requiring approval:

(i)	FDI proposals by Non-Resident Indians (NRIs) requiring approval of the Government	Department of Industrial Policy & Promotion
(ii)	Export Oriented Units requiring approval of the Government
(iii)	Applications relating to issue of equity shares under the FDI policy under the Government route for import of capital goods/machinery/equipment (excluding second-hand machinery)
(iv)	Applications relating to issue of equity shares for pre-operative/pre-incorporation expenses (including payments of rent etc.)
(v)	Financial services activities which are not regulated by any Financial Sector Regulator or where only part of the financial services activity is regulated or where there is doubt regarding the regulatory oversight.	Department of Economic Affairs
(vi)	Applications involving investments from Countries of Concern which presently include Pakistan and Bangladesh, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time	Ministry of Home Affairs

II.                Sectorwise limits Amendment:

Sr No.	Sector	Before		After
1	(1)Teleports(setting up of up-linking HUBs/Teleports); (2)Direct to Home (DTH); (3)Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability); (4)Mobile TV; (5)Headend-in-the Sky Broadcasting Service(HITS)	% of Equity/ FDI Cap	Entry Route (With Conditions)	% of Equity/ FDI Cap	Entry Route (With Conditions)
		100%	Automatic up to 49% Government route beyond 49%	100%	Automatic Route
2	Cable Networks(Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))	100%	Automatic up to 49% Government route beyond 49%	100%	Automatic Route
3	Airports (Existing Projects)	100%	Automatic up to 74% Government route beyond 74%	100%	Automatic Route
4	(a) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (b) Regional Air Transport Service	49% FDI (100% for NRIs)	Automatic	100%	Automatic up to 49% (Automatic up to 100% for NRIs) Government route beyond 49%
5	Private Security Agencies	49%	Government	74%	Automatic up to 49% Government route beyond 49% and up to 74%
6	Pharmaceuticals (Brownfield)	100%	Government	100%	Automatic up to 74% Government route beyond 74%

III.             Modification in conditions of following sector:

a.       Activities under Non-Banking Finance Companies (NBFC) was replaced by other financial services and conditions for FDI in such sector were also amended.

b.      Definition of manufacturing amended and included trading sector through e-commerce.

c.       There were amendments in notes provided under Single Brand Product Retail Trading.

d.      Amendment to conditions of Agriculture

e.       Under other conditions of Civil aviation, definition of cargo was removed.

f.        Amendment in other conditions of Infrastructure Company in the Securities Market.