Section 138 of Negotiable Instruments Act, 1881 (“NI Act”)- Not mentioning date of service of demand notice is not fatal to the caseOn 14th June 2021, the Allahabad High Court has held that a complaint for dishonour of cheques cannot be dismissed merely because it does not mention the date on which the demand notice was served upon the alleged defaulter/ drawer. Further, the Court held that at the stage of summoning, the Magistrate has only to see whether prima facie is made out or not. It was held that the cause of action arises under Clause (c) of the proviso to section 138 of the NI Act from the date of sending the first notice and not reminders issued thereafter.Read More…
Can a stock broking company be termed as financial service provider?- NCLAT to examine
In the recent order passed by the Hon’ble National Company Appellate Tribunal, New Delhi (“NCLAT”), the question of law i.e. whether a stock broking company should be considered as a Financial Service Provider under Section 3(16) of the Insolvency and Bankruptcy Code, 2016 and should be kept out of the purview of the Insolvency and Bankruptcy Code, 2016 (“IBC”)? was considered.
Appellant has submitted that NCLT, Ahmedabad has taken such contrary view to the earlier precedents and catena of judgements given by other benches of NCLT and NCLAT. The Counsels for the Appellant relied on the NCLT, Hyderabad Bench judgement passed in the matter Praveen Kumar Mundra V. CIL Securities Ltd, where it was held that the Stoking Broking Company is a financial service provider as it is regulated by SEBI, it deals with financial products i.e., securities and imparts financial services under Section 3(16) of the IBC. Hence, it should not be considered as the Corporate Person as stated under the Section 3(7) of the IBC. Thus, the insolvency proceedings of a stock broking company are not covered under the purview of IBC.
The Hon’ble NCLAT in this matter issued notice to the Respondents and will hear the matter on 5th July 2021.
Read More…UNION CABINET APPROVED THE MODEL TENANCY ACTThe Union Cabinet chaired by the Prime Minister has approved the Model Tenancy Act (“MTA”) for circulation to all states and union territories. The MTA will provide the uniform legal framework with respect to rental housing across the country.
The main aim of MTA which has been highlighted by the legislature is to create a vibrant, sustainable and inclusive rental housing market in the country. Some of the relevant features of MTA are as follows:
- Obligation upon tenant to pay enhanced rent if he/she refused to vacate after tenancy period expires;
- Security deposit shall be capped to two months’ rent in case of residential tenancy;
- Establishment of rent authority to regulate renting of premises;
- Rent Courts/tribunal to dispose cases/appeals within a period of sixty days.
Read More…Liquidation of corporate debtor based on the sole decision of related parties financial creditors could be fatal for the existence of the corporate debtor: NCLATAn appeal was filed before NCLAT challenging the order of NCLT whereby the liquidation order was passed on the basis of resolution adopted by Committee of Creditors of INCAB Industries Limited.
One of employee of the company challenged the said order on the grounds that two companies who were made part of committee were owned and managed by one of the directors of INCAB Industries Limited who resigned before the initiation of resolution proceedings. Thus the said creditor are related party financial creditors. The appellant also sought removal of resolution professional who allegedly working in connivance with majority of creditors of company.
NCLAT while allowing the appeal and directing the removal of resolution professional held that the Constitution of the Committee of Creditors violates the proviso to Section 21 (2) of the I & B code 2016 read with 12(3) of CIRP Regulations.
The appellate tribunal observed that “Therefore, the Constitution of the creditors’ committee is a nullity in the eye of law that vitiates the entire CIRP. An order for liquidation of corporate debtor based on the sole decision of related parties financial creditors could be fatal for the existence of the corporate debtor, cannot be sustained.”Read More…Probe by private agency appointed by insurance companies cannot replace the police investigation – NCDRCNational Consumer Disputes Redressal Commission (NCDRC) imposed a cost of one lakh rupees upon the respondent along with a direction to the insurance company to settle the claim of complainant with 9% interest. In the present case, husband of the complainant had obtained a life insurance policies wherein suicidal death was provided as an exclusion from the policy.
Subsequently, insured person suffered an unnatural death and his heir approached the insurer company seeking their claim out of the policy taken by the deceased. Insurance company rejected the claim on the ground that death of the deceased by placing reliance on report of its agency which suggested the suicidal death. On the contrary, the investigation reports consisting of DD entry, inquest, post mortem and policy inquiry report found that death was caused due to accident. Aggrieved by the denial of claim, heirs of deceased filed a complaint before state commission and the same was dismissed by the commission.
In the appeal, NCDRC observed that “The State Commission erred in placing reliance principally on the report of a private agency engaged by the Insurance Co. and ignoring the complete spectrum of evidence in the matter, especially the DD entry, Inquest, Post Mortem Report and Police Inquiry Report.”Read More…Cannot pass orders imposing loan moratorium amid second wave- Supreme Court
Supreme Court dismissed a petition seeking various relief in the form of fresh loan moratorium, extension of time period under the restructuring scheme and temporary cease on the declaration of non-performing asset by the bank due to the rise of second of wave of COVID-19.
While dismissing the petition, the Court observed that financial reliefs and other measures are in the domain of government and relates to policy matter and it is up to the government of India to assess the situation and take appropriate decisions.
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