The real estate sector has been facing a multitude of challenges and disputes, especially post-GST implementation. This often leaves buyers, promoters, and developers entangled in legal battles seeking redressal for various grievances. Post the implementation of GST, consumer courts have witnessed a surge in real estate disputes. Complaints against developers have surged post-GST implementation, regarding issues of hidden costs, poor quality work, ownership delays, illegal construction, and contract violations.
In analyzing the legal landscape, it becomes evident that the jurisdiction of consumer forums, such as the National Consumer Disputes Redressal Commission (NCDRC), extends to adjudicating disputes arising from deficiencies in real estate services. Section 2(o) of the CP Act[1] defines 'service,' encompassing construction activities undertaken by developers. Furthermore, Section 2(g) of the CP Act defines “deficiency” as any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
These provisions are often used by the consumer forum to award compensation to aggrieved purchasers falling within the category of “consumer” under clause 2(d) of the CP Act. For instance, the Supreme Court, in the case of Lucknow Development Authority v. M.K. Gupta[2], affirmed that inordinate delays in delivering possession constitute a deficiency in service, awarding compensation to the purchasers. Also, the court in Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor[3] held that interest on compensation shall accrue from the dates of deposits made by the consumer and not from the date of the last deposit, ensuring restitution for delays.
However, the intricacies surrounding the award of compensation, particularly in the form of compound interest, necessitate a nuanced understanding of legal principles and precedents. Furthermore, the introduction of GST has introduced additional complexities in real estate transactions, with issues such as tax implications, valuation methodologies, and contractual terms coming under scrutiny. Consumer forums are confronted with disputes ranging from excessive GST levies to contractual terms that are perceived as one-sided and oppressive to consumers.
One of the contentious issues in real estate disputes pertains to the award of compensation, particularly in the form of compound interest, under the Consumer Protection Act, 1986 (CP Act)[4]. Supreme court in a case of M/s Suneja Towers Private Limited & Anr. v. Anita Merchant[5] stated that Compound Interest cannot Be Awarded Casually As Compensation by Consumer Forums in Real Estate Disputes. The Court further clarified that compound interest can be awarded in situations after taking into account relevant factors which would include uncertainties of the market and several other imponderables. After placing reliance on appropriate provisions of CPA, the Court highlighted that the Forum is empowered to grant punitive damages as per the proviso to Section 14(1)(d) of the Consumer Protection Act of 1986, (Act) if it deems fit.
In this case, the purchaser Anita Merchant (respondent) booked three residential flats of a residential project, namely Siddharth Shila Apartments at Ghaziabad. Respondent made payment up to 6th installment but, defaulted thereafter and did not make the remaining payment despite numerous reminders. She later issued a notice to the appellants M/s Suneja Towers Pvt. Ltd. (Siddharth Shila Apartments), stating that even after 16 years, the possession has not been delivered. To which the they replied stating that there was only provisional allotment and no agreement as such was executed between the parties.
Moreover, the allotment had been canceled due to default on the purchaser’s part. Consequently, a cheque of Rs. 10,68,031/- was sent as a refund to them. The District Forum dismissed the complaints on the grounds of lack of jurisdiction. State Commission was approached which based on Manjeet Kaur Monga v. K.L. Suneja[6], (‘Dr. Monga’s Case’), directed respondents to refund the amount deposited by the respondent with ‘compound interest at the rate of 14% from the date of deposit’. National Commission was approached which dismissed the petition and refused to interfere with State Forum’s judgement. Therefore, the consumer approached the Supreme Court.
Sc held that Dr. Monga’s Case pertained to claiming compensation under the MRTP Act, whereas the present case was related to claiming compensation under the Consumer Protection Act, of 1986. Hence, Dr. Monga’s Case cannot be read in support of the principle that compensation under the Consumer Protection Act, of 1986 could also be in the form of compound interest. The Act of 1986 has empowered the Consumer Forums to direct payment of compensation to the consumers for any loss or injury suffered due to the negligence of the opposite party. However, there is no hard and fast rule as to how much interest should be granted and it would depend on the facts and circumstances of each case. Claim for compensation by way of compound interest is to be declined if it does not have any nexus with the commercial realities of the prevailing market as has been held in IREO Grace Realtech (P) Ltd. v. Abhishek Khanna,[7] (‘Ireo Grace’). The Court observed that to determine the compensation, the Consumer Forum must examine the time value for money along with an in-depth and thorough analysis of all the facts and material surrounding factors, including realities and uncertainties of the market. As far as the award of compound interest in the instant case was concerned, SC noted that the same was without examining any factor which has led to serious inconsistencies. The State Commission straightaway jumped to the conclusion of awarding compound interest at the rate of 14%, without considering the refund Rs. 10,68,031/- on 08.11.2005 by the respondents, and without even specifying the period of such operation of compounding of interest. The Court viewed that if at all compounding of interest is allowed, that could not run beyond 08.11.2005, at least in regard to the said sum of Rs. 10,68,031/-, and the said interest does not exceed the amount of Rs. 2,48,52,000/-, which has already been received by the respondent pursuant to the order passed by the Court. Considering the peculiar circumstances of the case, as an extraordinary measure, the respondent was allowed to retain the received amount.
This judgment highlighted one of the most significant issues faced by the consumer courts while awarding compensation in real estate disputes under the Consumer Protection Act, of 1986. It clarifies that compound interest should not be awarded casually by consumer forums and must be grounded in the specifics of each case, considering market realities and the time value of money. This judgment emphasizes the necessity for a detailed and nuanced evaluation of all relevant factors before deciding on compensation. It also reinforces the consumer forums' mandate to ensure that awards are fair and proportionate, balancing the interests of both consumers and developers in real estate transactions. This ruling provides clearer guidelines, ensuring that compensation decisions are not arbitrary and are based on sound legal and economic principles.
[1] Consumer Protection Act, 1986
[2] 1994 AIR 787
[3] 2022 SCC OnLine SC 416
[4] Consumer Protection Act, 1986
[5] 2023 SCC OnLine SC 443
[6] (2018) 14 SCC 679
[7] (2021) 3 SCC 241
India Being the Fifth Largest Economy and Highest Population-Based Economies in the World.[1] With an estimated GDP of more than ₹293.90 lakh crore generated by a population of over 1 billion, India is expected to grow at 7.6.% in 2023-24, making its economic growth the fastest among major economies.[2] To make itself a compelling investment destination, India has made various efforts to ease the trade and business regime, including promoting a favorable business climate and improving infrastructure. Total FDI inflows in the country in FY 2023-24 stood at $971.521 billion (April 2000 to December 2023), and total FDI equity inflows were $666.477 billion (April 2000 to December 2023), according to the Department of Promotion of Industry and Internal Trade, Government of India.[3]
India which is making endeavors to make its economy vibrant by making itself an attractive business destination is sure to make dispute resolution efficient and expeditious. In order to ease the doing of business, India has been actively promoting arbitration as an effective means of dispute resolution. Arbitration offers several advantages that contribute to India's economic growth and make it an attractive investment destination. It acts as an alternative to the already overburdened court system of the country which might lead to delays and pendency in resolving disputes, something that business entities might prefer to avoid. Arbitration is already a widely recognized neutral and efficient method of resolving commercial disputes in international business transactions. Promoting arbitration, creates a favorable environment for foreign investors and multinational companies, thereby encouraging foreign direct investment (FDI) and economic growth. Another aspect that makes arbitration a preferred mode of dispute resolution is the enforceability of the awards. Arbitral awards are generally easier to enforce across jurisdictions compared to court judgments as they are backed by international conventions like the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which India is a party along with other 171 states. This enforceability aspect makes arbitration an attractive option for parties involved in cross-border transactions. Arbitration also provides liberty to the parties to choose arbitrators. Hence, they can choose arbitrators with specific expertise in the subject matter of the dispute, leading to more informed and specialized decision-making compared to traditional court proceedings. As a result of this, an emerging trait in new-age contracts can be witnessed wherein arbitration and/or mediation clauses are included to ensure cost and time-efficient mechanisms for the resolution of disputes.
Section 29A of the Arbitration and Conciliation Act, 1996 (“Act”) inserted via the Amendment Act of 2015 which came into effect on 23.10.2015, introduces a time limit for the completion of arbitration proceedings. It prescribes a statutory period of twelve months for the completion of proceedings from the date the arbitral tribunal enters upon reference.
Thereafter, this prescribed time limit was amended via the Amendment Act of 2019 which came into force on 30.08.2019 and the statutory limit was set as twelve months from the date of completion of pleadings with an option of another extension of six months by mutual consent of the parties.
However, another flexibility is provided under sub-section (4) wherein the parties can file an application to the court for an extension if the award is not passed in terms of Section 29A(1) or within the extended period.
Whether Section 29A and the provisions set out therein are applicable to international as well as domestic commercial arbitrations alike became a bone of contention. Another issue that emerged was whether the amended provision which came into effect on 30.08.2019 will be applied retrospectively or prospectively.
This issue is put to rest by the Supreme Court of India (“Supreme Court”) in its recent judgment in Tata Sons Pvt. Ltd. v. Siva Industries and Holding Ltd and Ors.[4] wherein the court held that the time limit of twelve months provided under the amended Section 29A (1) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) for rendering an award is not applicable to ‘international commercial arbitrations’
Article 29A[5] in its true and original form sets out that…….”The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:
Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23
Tata Sons Private Limited ("Applicant"), Tata Tele Services Limited ("TTSL"), and NTT Docomo Inc. ("Docomo") entered into agreements wherein Docomo acquired equity shares of TTSL from Siva Industries and Holdings Ltd. ("Respondent No. 1"). The Applicant, TTSL, Docomo, and Respondent No. 1, along with C. Sivasankaran (promoter and guarantor of Respondent No. 1, "Respondent No. 2"), executed an inter se agreement according to which the Respondents can acquire TTSL's shares proportionately if Docomo exercised its sale option. Disputes arose between Docomo and the Applicant, leading to an arbitral award directing the Applicant to acquire Docomo's TTSL shareholding. Pursuant to this, the Applicant called upon the Respondents to acquire Docomo's shares under the inter se agreement. Disputes ensued between the Applicant and Respondents, resulting in the matter being referred to arbitration. The applicant issued a notice of arbitration to the first respondent and to the second respondent (a foreign party, being a resident of Seychelles) and nominated an arbitrator but the respondents did not appoint their nominee arbitrator despite the service of the arbitration notice.
The applicant filed a petition before the Supreme Court under Section 11(6) of the Arbitration and Conciliation Act[6] for the constitution of an arbitral tribunal in international commercial arbitration. The Supreme Court had exclusive jurisdiction to entertain the arbitration petition since the proposed arbitration between the applicant and the respondents, of whom the second respondent is a foreign party, was an international commercial arbitration in terms of Section 2(1)(f)[7] of the Arbitration Act. As Respondent No. 2 was a foreign party, the Supreme Court appointed Mr Justice S N Variava as a sole arbitrator.
The arbitrator entered upon the reference on 14 February 2018. On 21 March 2018, during a preliminary meeting, the parties agreed to a six-month extension for rendering the award, if the arbitral proceedings could not be completed within a period of twelve months commencing from the date the arbitral tribunal entered reference. Hence, the time to deliver the award stood extended until 14 August 2019.
During the pendency of the arbitral proceedings, IDBI Bank Ltd initiated insolvency proceedings against the first respondent under the Insolvency and Bankruptcy Code 2016. Hence, by an order of the National Company Law Tribunal, Chennai a moratorium was placed on all proceedings against the first respondent, including the arbitral ones. However, the moratorium was lifted on June 3, 2022. The extension of six months agreed upon by the parties expired on 14 August 2019.
Applicant filed an interlocutory application contending that as a result of the amendment of Section 29A of the Arbitration and Conciliation Act, 1996, with effect from 30 August 2019, the arbitration proceedings before the sole arbitrator should, be allowed to automatically continue in view of the amendment of the statute.
The Applicant was basically seeking the continuation of the arbitral proceedings, arguing that the amended Section 29A rendered the time limit for international commercial arbitrations inapplicable retrospectively.
Respondent No. 2 however contended that accepting the Applicant's arguments would imply the statutory time limits under Section 29A is entirely inapplicable to international commercial arbitrations.
The Supreme Court allowed the application and held that the time limit for passing an arbitral award under amended Section 29A of the Arbitration and Conciliation Act is not applicable to international commercial arbitrations.
Regarding the criticism of Section 29A of the Arbitration Act as it stood prior to its
amendment by the international arbitral institutions on the ground that the provision allowed intervention by the court for extending the limit for rendering an award in international commercial arbitrations, the court noted that the amendment of Section 29A of the Arbitration Act in 2019 is intended to meet the criticism. The amendment being remedial in nature should be applicable to all pending arbitral proceedings as on the effective date i.e., 30 August 2019. It carves out international commercial arbitrations from the rigour of the timeline of six months time limits envisaged in Section 29A of the Arbitration Act.
The expression “in matters other than an international commercial arbitration” makes it abundantly clear that the timeline of twelve months which is stipulated in the substantive part of Section 29A(1), as amended, does not apply to international commercial arbitrations. This is further reaffirmed in the proviso to Section 29A(1) which stipulates that the award in the matter of international commercial arbitration “may be made as expeditiously as possible” and that an “endeavor may be made to dispose of the matter within a period of 12 months” from the date of the completion of pleadings.
Hence, an international commercial arbitration, the arbitral tribunal is required to endeavour, that is, make an effort to render the arbitral award within a period of twelve months or in a timely manner.
In domestic arbitration, Section 29A(1) stipulates a mandatory period of twelve months for the arbitrator to render the arbitral award. In contrast, the substantive part of Section 29A(1) clarifies that the period of twelve months would not be mandatory for international commercial arbitration. Hence, post amendment, the time limit of twelve months as prescribed in Section 29A is applicable to only domestic arbitrations and the twelve-month period is only directory in nature for an international commercial arbitration.
To answer, whether the amended Section 29A would apply prospectively or retrospectively, the court placed reliance on the Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd,[8] and held that Section 29A was procedural in nature. Procedural law establishes a mechanism for determining the rights and liabilities of a party and a machinery for enforcing them.[9] Generally, procedural laws are presumed to be retrospective, unless there is a clear indication that such was not the intention of the legislature,[10] or the procedural law imposes new obligations qua transactions already concluded or creates new rights or liabilities.[11] Since the 2019 Amendment Act does not contain any provision evincing a legislative intent making the application of the amended provision perspective, the time limit prescribed under the amended Section 29A will apply retrospectively to all pending arbitral proceedings from its effective date i.e., August 30, 2019.
Consequently, the Supreme Court concluded that the sole arbitrator is empowered to pass appropriate procedural directions for extension of time while endeavoring to expeditiously conclude the arbitration.
As a consequence of this judgment, the long-debated confusion has been put to rest. It has been made clear by the Apex Court that the twelve-month time limit as prescribed in Section 29A is applicable only to domestic arbitrations and is a directory for international commercial arbitration.
[1] Clear tax, “World GDP Ranking 2024 List” (April 29 2024), available at https://cleartax.in/s/world-gdp-ranking-list
[2] MoSPI, “Second Advance Estimates Of National Income 2023-24, Quarterly Estimates Of Gross Domestic Product For The Third Quarter (October-December) Of 2023-24” (29 February 2024), available at https://www.mospi.gov.in/sites/default/files/press_release/PressNote_onGDP_SAE_Q3_FRE_SRE_TRE01032024.pdf
[3] Invest India, “Why India?” (May 08, 2024), available at https://www.investindia.gov.in/why-india
[4] Miscellaneous Application No 2680 of 2019 in Arbitration Case (Civil) No 38 of 2017
[5] Arbitration and Conciliation Act, 1996
[6] Arbitration and Conciliation Act 1996
[7] "international commercial arbitration" means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is—
(i) an individual who is a national of, or habitually resident in, any country other than India; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii)an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv) the Government of a foreign country;
[8] (2018) 6 SCC 287
[9] Thirumalai Chemicals Ltd v. Union of India (2011) 6 SCC 739
[10] Jose Da Costa and Anr. v. Bascora Sadasiva Sinai Narcornim, (1976) 2 SCC 917; Gurbachan Singh v.
Satpal Singh (1990) 1 SCC 445; Rajendra Kumar v. Kalyan (D) by Lrs, (2000) 8 SCC 99
[11] Hitendra Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602
The Supreme Court, in response to a curative petition filed by the Delhi Metro Rail Corporation (DMRC) challenging a previous judgment, declared that the decision to overturn the Division Bench's ruling and restore the arbitral award constituted a miscarriage of justice.[1] As a result of this latest happening, DMRC will not have to pay ₹7687-crore arbitral award to DAMPEL. The initial Division Bench decision, based on Section 34 of the Arbitration and Conciliation Act, provided that the arbitral award was flawed.[2] However, the Supreme Court, under Article 136 of the Constitution, upheld the validity of the award. Initially, the review petition of DMRC against the judgment of the Supreme Court was dismissed.[3] Now, the events have taken a dramatic term wherein, the SC has corrected its mistake in a curative petition filed to cure the defects of its earlier judgment in the same case. The Court emphasized the importance of adhering to established legal principles and cautioned against the routine use of curative jurisdiction to revisit arbitral awards. Consequently, the Court reverted the parties to their pre-judgment positions and discontinued execution proceedings related to the arbitral award. With this, the arbitral award which asked DMRC to pay ₹7687 crore to DAMPEL will not come into effect.
A curative petition is a legal remedy available in the Indian judicial system to rectify a gross miscarriage of justice that may have occurred due to an error in the judgment of the Supreme Court. It is the last judicial resort available for redressal after the exhaustion of all other legal remedies. A curative petition can only be filed after a review petition against the Supreme Court's judgment has been dismissed. It is heard by a bench of the three senior-most judges of the Supreme Court, along with the judges who delivered the impugned judgment, if available.
The concept of the curative petition was introduced by the Supreme Court of India in the case of Rupa Ashok Hurra vs. Ashok Hurra and another[4], wherein the court was addressing the question of whether an aggrieved party could seek relief against the final judgment or order of the Supreme Court, even after the dismissal of a review petition. The objectives of the curative petition are two-fold: to prevent miscarriage of justice and to deter the abuse of the legal process.
The constitutional basis for the curative petition is provided by Article 137 of the Indian Constitution, which grants the Supreme Court the power to review any judgment or order pronounced by it in matters concerning laws and rules made under Article 145. According to the procedure, a curative petition can be filed within 30 days from the date of the judgment or order, after the dismissal of a review plea against the final conviction.
For a curative petition to be entertained, the petitioner must demonstrate that there was a violation of the principles of natural justice and that they were not allowed to be heard by the court before the order was passed. It is emphasized that curative petitions should be rare exceptions rather than regular occurrences.
If the Bench determines at any stage that the petition lacks merit, it may impose penalties on the petitioner. A curative petition can be rejected by the bench at any stage if it lacks substantive merit or fails to demonstrate a violation of natural justice.
The Supreme Court of India holds special powers endowed by the Constitution, as the apex judicial body in the nation. Article 131, confers exclusive original jurisdiction to adjudicate disputes arising between the Centre and one or more States, or among States themselves, about legal rights. Additionally, Article 136 bestows discretionary jurisdiction upon the Supreme Court, empowering it to grant special leave to appeal from any judgment, decree, or order issued by any court or tribunal within India, except military tribunals and court-martials. Furthermore, the Court exercises advisory jurisdiction under Article 143, whereby the President of India can seek the Court's opinion on specific matters of law. The Supreme Court can initiate contempt proceedings under Articles 129 and 142 to punish for contempt of itself, either suo motu or upon petition by others. Article 145 empowers the Supreme Court to formulate rules governing its practice and procedure for reviewing judgments, determining costs, granting bail, staying proceedings, and conducting inquiries, subject to the President's approval. Through these diverse powers, the Supreme Court plays a pivotal role in upholding the rule of law and dispensing justice across the Indian judicial landscape.
Recently, the Supreme Court of India utilized its "extraordinary powers" through a curative petition to reverse its previous judgment whereby it upheld an arbitral award ordering the Delhi Metro Rail Corporation (DMRC) to pay nearly Rs 8,000 crore to Delhi Airport Metro Express Private Limited (DAMEPL).
A partnership between DMRC and DAMEPL was entered into to construct, operate, and maintain the Delhi Airport Metro Express. However, disputes arose, leading to DAMEPL terminating the agreement in 2013, citing safety concerns and operational issues.
The arbitration panel ruled in favor of DAMEPL, directing DMRC to pay nearly Rs 8,000 crore. DAMEPL pursued the matter with the Supreme Court, which initially upheld the arbitral award in 2021. However, in the recent judgment, the Supreme Court ruled in favor of DMRC, citing a "fundamental error" in its previous judgment.
It ordered the refund of amounts deposited by the petitioner and any amount paid as part of coercive action. However, the court emphasized that the use of curative jurisdiction should not become routine, cautioning against opening floodgates for excessive court intervention in arbitral awards.
The judgment criticized the 2021 verdict of the Supreme Court, which upheld an Arbitral Tribunal’s award, as a grave miscarriage of justice. It described the decision as a misappreciation of law and facts, resulting in the restoration of a patently illegal award. The bench pointed out that the division bench of the Delhi High Court had provided more than adequate reasons to conclude that the arbitral award suffered from perversity and patent illegality.
The Supreme Court's curative jurisdiction allows it to rectify gross miscarriages of justice even after the dismissal of a review petition. The jurisdiction aims to prevent abuse of the court's process and remedy serious injustices. In the case of Rupa Ashok Hurra vs. Ashok Hurra, the court emphasized that justice should prevail over the principle of finality of judgments in exceptional cases where declining to reconsider a judgment would perpetuate irremediable injustice. The court outlined that a curative petition may be entertained to prevent abuse of process and correct miscarriages of justice, including violations of natural justice or situations where there's a risk of bias. However, the court noted that the grounds for entertaining a curative petition cannot be exhaustively enumerated.
Section 34 of the Arbitration Act allows courts to set aside arbitral awards on specific grounds, including conflicts with public policy or patent illegality. Patent illegality arises when the arbitrator's decision is irrational, perverse, or beyond the scope of their authority. Courts have endorsed the principle that arbitral awards can be set aside if they violate fundamental principles of natural justice or contravene the arbitration statute. The judgment on setting aside or refusing to set aside an arbitral award under Section 34 is appealable under Section 37 of the Arbitration Act. However, the Supreme Court's jurisdiction under Article 136 to grant Special Leave to Appeal against decisions rendered in appeal under Section 37 is discretionary and exceptional. The Court must interfere sparingly and only when exceptional circumstances exist, ensuring that the correct tests are applied to assail the award.
The Court pointed out the Tribunal's failure to consider vital evidence, such as the joint application to CMRS and the CMRS certificate, and its inability to reconcile inconsistencies in the evidence presented.
By setting aside the Division Bench's judgment, the Supreme Court effectively reinstated an award that was deemed to be patently illegal, imposing a significant and unjust burden on a public utility. Consequently, a grave miscarriage of justice ensued, warranting the invocation of the curative jurisdiction under Article 142. As a result, the curative petitions have been allowed, restoring the parties to their pre-judgment positions as per the Division Bench's decision. Execution proceedings to enforce the arbitral award are to be discontinued, and any amounts deposited by the petitioner according to the Supreme Court's judgment are to be refunded. Additionally, any amounts paid by the petitioner as a result of coercive action are liable to be restored. Supreme Court erred in interfering with the Division Bench's decision, which was based on a correct application of the law. The interference by the Supreme Court led to the reinstatement of an illegal award, resulting in a serious miscarriage of justice. Therefore, the curative petitions are allowed in the terms outlined, and any pending applications are disposed of accordingly.
[1] Curative Petition (C) Nos.108-109 of 2022
[2] DMRC v. Delhi Airport Metro Express (P) Ltd., OMP (ENF.) (COMM.) No. 145 of 2021 (DHC)
[3] DMRC v. Delhi Airport Metro Express (P) Ltd. 2024 SCC OnLine SC 522
[4] [2002] 2 S.C.R. 1006
The Supreme Court of India in Dr. Kavita Yadav v The Secretary, Ministry of Health and Family Welfare Department & Ors.[1] ruled in favor of a contractual employee who was denied maternity benefits extending beyond her contract period. The Court determined that the benefits under the Maternity Benefit Act, 1961, should continue even after the termination of her employment contract.
The appellant was employed on a contract basis from June 12, 2016, to June 11, 2017. She applied for maternity benefits on May 24, 2017, seeking leave starting from June 1, 2017. The employer granted only 11 days of maternity leave, citing the end of her contract on June 11, 2017. The appellant's claim for 26 weeks of maternity benefits under the Maternity Benefit Act, of 1961, was rejected by both the Central Administrative Tribunal and the High Court.
The reasoning adopted by the High Court while rejecting maternity benefit to the appellant in its judgment delivered on 19th August 2019 was based on Section 5 of the Maternity Benefit Act, 1961.
Section 5 of the Maternity Benefit Act, of 1961 deals with the right to payment of maternity benefits. As per the provisions of this section, every woman shall be entitled to, the payment of maternity benefits at the rate of the average daily wage for the period of her actual absence immediately preceding and including the day of her delivery and for the six weeks immediately following that day and the employer is mandated to ensure the compliance of this provision.
Explanation embedded in the section states that the average daily wage should mean the average of the woman’s wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she absents herself on account of maternity, or one rupee a day, whichever is higher.
Subclause (2) further states that no woman shall be entitled to maternity benefit unless she has actually worked in an establishment of the employer from whom she claims maternity benefit for a period of not less than one hundred and sixty days in the twelve months immediately preceding the date of her expected delivery: however, the qualifying period of one hundred and sixty days shall not apply to a woman who has immigrated into the State of Assam and was pregnant at the time of the immigration.
For the purpose of calculating the days on which a woman has actually worked in the establishment, the days for which she has been laid off during the period of twelve months immediately preceding the date of her expected delivery shall be taken into account. The maximum period for which any woman shall be entitled to maternity benefit shall be twelve weeks, ti.e., six weeks up to and including the day of her delivery and six weeks immediately following that day.
In case the woman dies during this period, the maternity benefit shall be payable only for the days up to and including the day of her death, and in case where a woman after the delivery dies, during her delivery, or during the period of six weeks immediately following the date of her delivery, the employer shall be liable for the maternity benefit for the entire period of six weeks immediately following the day of her delivery but if the child also dies during the said period, then for the days up to and including the day of the death of the child.
As per the High Court, the petitioner's reliance on Section 5(2) of the relevant Act to claim maternity benefits after her contract ended on 11.6.2017 is irrelevant. Regarding the issue of whether she was entitled to the benefit after her employment contract expired, the court noted that Section 5(1) of the Act provides for maternity benefit for the "period of her actual absence", which presupposes that for the maternity leave, the woman employee would remain present at work.
However, where the employment contract is time-bound and ends during the pregnancy or after childbirth, there is no question of her remaining "actually absent" because she would not be expected to remain present after the contract termination. As per the court, the purpose of the Act is not to extend the period of an employee's contract, and granting 180 days maternity leave despite the contract expiring a few days after leave began would be tantamount to an unintended extension of the contractual employment period.
This judgment was appealed before the Supreme Court. The issue before the Apex Court was whether a contractual employee is entitled to maternity benefits under the Maternity Benefit Act, of 1961, beyond the period of her contractual employment.
The appellant argued that under Section 5(2) of the Maternity Benefit Act, 1961, she was entitled to maternity benefits for a period of 26 weeks, as she had served more than 180 days continuously before the expected delivery date. On the other hand, the respondent-employer contended that maternity benefits should not extend beyond the contractual period of employment. They argued that the contractual term could not be notionally extended to grant full maternity benefits.
After considering the rival submission of the parties, the Supreme Court while setting aside the judgment of the High Court, ruled in favor of the appellant, directing the employer to provide full maternity benefits.
The court interpreted the provisions of the Maternity Benefit Act, 1961 and emphasized that the Act aims to protect the dignity of motherhood by ensuring a woman's employment is not terminated due to pregnancy. Further, Section 5(2) clearly grants maternity benefits to women who have worked for 180 days prior to the expected date of delivery, irrespective of the term of the contract. Further Section 5(2) of the Maternity Benefit Act, 1961 specifies eligibility criteria for maternity benefits. Court reproduced the provisions of Section 12(2)(a) of the 1961 Act[2] wherein continuation of maternity benefits which is inbuilt in the statute itself is made clear.
Section 12(2)(a) deals with dismissal during absence or pregnancy. It protects women from wrongful deductions made in her salary by the actions of her employer. As per this section, in the case where a woman is absent from work in accordance with the provisions of the 1961 Act, her employer cannot discharge or dismiss her or give notice of discharge or dismissal and if he does so, the same would be considered unlawful. This section protects women by holding actions of the employer unlawful which are taken at her disadvantage just because she was absent as per the provisions of the 1961 Act.
As a consequence of this, if the woman is discharged or dismissed at any time during her pregnancy, she would be entitled to maternity benefits or a medical bonus. She can be deprived of maternity benefits, medical bonus or both if the dismissal is for any prescribed gross misconduct communicated to the woman in writing. Any woman deprived of maternity benefit or medical bonus or both can appeal to an appropriate authority within sixty days from the date on which the order of such deprivation is communicated to her and the decision of the authority will be final.
Based on this section, the court concluded that Section 12(2)(a) of the Maternity Benefit Act, 1961 Protects women from dismissal or discharge during pregnancy, hence the benefits would survive and continue despite the cessation of employment.
The court opined that Section 27 of the Maternity Benefit Act, 1961 Provides overriding effect to the Act over any inconsistent agreement or contract. For this reason, the High Court erred in law in holding that the appellant was not entitled to maternity benefits beyond 11th June 2017.
After placing reliance on Municipal Corporation of Delhi vs. Female Workers (Muster Roll) & Anr.[3], the Court held that maternity benefits are not co-terminus with the term of employment and can extend beyond the contractual period.
Consequently, the court noted that a combined reading of these provisions in the factual context of this case would lead to the conclusion that once the appellant fulfilled the entitlement criteria specified in Section 5(2) of the Act(180 days of service), she became eligible for full maternity benefits even if such benefits exceed the duration of her contract. Any attempt to enforce the contract duration term within such period by the employer would constitute “discharge” and attract the embargo specified in Section 12(2)(a) of the 1961 Act. The law creates a fiction in such a case by treating her to be in employment for the sole purpose of availing maternity benefits under the 1961 Act.
The Supreme Court’s judgment is pivotal in interpreting and reinforcing the provisions of the Maternity Benefit Act, 1961. The purpose of this act has always been to ease the working environment for women. A recent amendment to the act “the Maternity Benefit (Amendment) Act, 2017”[4] increased paid maternity leave from 12 weeks to 26 weeks, with not more than eight weeks preceding the expected delivery date, and introduced the possibility of working from home based on mutual agreement between the employer and the employee. This highlights the attempts made at improving women’s participation in the labor force and enhancing the quality of their employment through legislative measures, including the Code on Social Security, 2020,[5] which mandates crèche facilities in establishments with 50 or more employees and allows women to work night shifts with adequate safety measures.
The Supreme Court’s ruling is significant as it clarifies the judicial interpretation of key provisions of the Maternity Benefit Act, particularly for women engaged in non-standard contracts, such as fixed-term contracts. This decision lays a beneficial foundation for improved maternity protections at the workplace and sets a precedent for future cases, as evidenced by the Delhi High Court’s reliance on this ruling in Govt. of NCT Delhi v. Rehmat Fatima[6] to grant maternity benefits post-contract expiry. It highlights the need for employers to acknowledge the financial responsibility of extending maternity benefits beyond the contract term.
It could potentially affect cases where a woman has not started availing maternity benefits before her contract ends. This decision, thus, ensures that women who begin availing maternity benefits during their employment can continue to receive these benefits even after their contractual engagement ends, promoting fairness and addressing the genuine expectations of modern working women.
By ensuring that maternity benefits extend beyond the contractual period, the Court has aligned Indian practices with other national jurisdictions. In other countries including Croatia, Italy, Luxembourg, Somalia, and Tajikistan, the employer has a responsibility to find alternative employment to the employee after the expiry of fixed-term contracts. During the period in which alternative employment is being sought, wages are paid for three months from the day on which the fixed employment contract expires.[7]
[1] 2023 SCC OnLine SC 1067.
[2] Maternity Benefit Act, 1961
[3] (2000) 3 SCC 224
[4] PIB, “Maternity Benefit (Amendment) Act, 2017”, (13 FEB 2023), available at https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1898874#:~:text=Vide%20Section%205%20of%20the,the%20date%20of%20expected%20delivery.
[5] PIB, “Maternity Benefit (Amendment) Act, 2017”, (13 FEB 2023), available at https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1898874#:~:text=Vide%20Section%205%20of%20the,the%20date%20of%20expected%20delivery.
[6] 2024 SCC OnLine Del 1749
[7] International Labour Organisation, “Maternity and Paternity at work: law and practice across the world”, )2014), available at https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/@publ/documents/public
In times when the real estate developers face financial trouble and they are unable to finish building homes, the homebuyers are left in a tough situation. The emotional stress and financial burdens faced by homebuyers in such situations cannot be overstated. Consider the case of the Amrapali Group in India (Bikram Chatterji v. Union of India, (2019) 19 SCC 161), where the Supreme Court canceled the developer's registration and ordered the attachment of its properties to ensure the completion of unfinished housing projects and the refund of investments made by homebuyers. In this article, we explore the rights and protections available to homebuyers in insolvency proceedings.
As per the Insolvency and Bankruptcy Code, 2016 ('IBC'), homebuyers are financial creditors. A 'financial creditor' is a person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. In other words, a financial creditor is someone who’s money is not yet paid by the person who owes the repayment. Homebuyers under IBC are treated as financial creditors. Their status as operational creditors has been reversed.
Homebuyers, who have invested in residential projects but have yet to receive possession of their homes, are typically classified as financial creditors. They have already paid advance money for the possession and are awaiting the same. They are given priority in insolvency proceedings. Operational creditors are those contractors, suppliers, or service providers who have provided goods or services necessary for project construction but have not been paid.
When a company or person is unable to repay their debts, it's called a situation of insolvency. In the real estate sector, insolvency occurs when developers cannot finish projects or deliver homes within a stipulated timeline because they have run out of finances. Insolvency cases in the Indian real estate sector have affected thousands of homebuyers, which highlights the prevalence and gravity of the issue.
As a homebuyer, you are not left helpless by the legal system. You are bestowed certain rights. Here's what you're entitled to if you've bought a home from a developer facing financial problems:
Priority Status: As a homebuyer whose money is owed by a developer, you have the advantage of being prioritized to receive your money back. This special treatment was established following the landmark IDBI Bank v. Jaypee Infratech Limited 2017 LawSuit (NCLT) 5069, which granted homebuyers the position of financial creditors under the IBC.
Asset Protection: You have the right to stake a claim on any property or assets owned by the developer in order to recover your funds.
Legal Assistance: Additionally, you have the option to pursue legal action against the developer to retrieve your money, compel them to complete the construction, or terminate the agreement and receive a refund.
Regulatory Support: Government agencies like the Real Estate Regulatory Authority (RERA) in India is empowered step in to help complete the building projects or find new developers to take over, as seen in the Pioneer Urban Land and Infrastructure Ltd. and Anr. V. Union of India Writ Petition (Civil) NO. 43 OF 2019.
Delays: When a company is insolvent, it can be a lengthy process before a resolution is reached, causing delays. It is important to address these issues promptly, as seen in the Pioneer Urban Land case.
Limited Funds: In situations where there is not enough money to cover all debts, you may not receive full repayment.
Legal Expenses: The costs associated with legal proceedings can be substantial, therefore it is wise to review the risks and the costs involved. Obtaining guidance from seasoned legal professionals is key.
Market Influences: The completion of projects may be impacted by economic factors. Market is subject to various factors including cost of various raw materials, taxations, loan interest etc. It is the situation of the market which will determine the completion of the project with sufficient economic resources.
Recently, the Supreme Court in Vishal Chelani and others v. Debashis Nanda, 2023 LiveLaw (SC) 894 held that homebuyers cannot be treated different from other ‘financial creditors’ under the IBC only because they have secured favorable orders from the authority under RERA.
Court also overruled a National Company Law Appellate Tribunal (NCLAT) order which held that the beneficiary RERA orders should be treated differently from other home buyer allottees. It further stated that it is only home buyers that can approach and seek remedies under RERA – no one esle. In such circumstances, to treat a particular segment of homebuyers differently from another segment, on the ground that one had taken back the deposits with interest as ordered by RERA, would be highly inequitable.
With the rising economy of a developing nation like India, real estate sector is at an all-time boom. With the continued interest in the sector, real estate projects are also growing significantly. Hence, it becomes pertinent to know what are your rights as homebuyers. If you find yourself in a situation where your developer is facing insolvency, stay informed about the insolvency proceedings and any developments related to your housing project. Explore legal options and file appropriate claims or petitions to assert your rights as a homebuyer. Cooperate with regulatory authorities like RERA and provide all necessary documentation to support your case. It is imperative to choose the right course of action whether litigation or alternate dispute resolution to resolve the matter efficiently.
he 2018-founded Mumbai-based disputes firm White & Brief, which was started by former Ram Jethmalani junior Nilesh Tribhuvann, is going full-service and has hired two lateral partners and promoted one, with significantly more expansion pledged for the coming months and several big-name clients such as Apple and Indigo to boot.
In addition to the three salaried partners who had now joined, Tribhuvann said that another four salaried partners would be joining by March and April 2021 from top tier firms, bolting on practices such as banking and finances, taxation, infrastructure, media and entertainment and real estate.
This follows former Cyril Amarchand Mangaldas (CAM) partner Manu Varghese who has joined last week and will start and head White & Brief’s general corporate and commercial practice.
The 2007 NUJS Kolkata graduate had become a partner at CAM in 2017 and left at the end of October 2020. He specialises in corporate transactional work.
Varghese said that he was looking forward to establish the firm’s “corporate practice from the ground up”. He added: “I started my legal career at erstwhile Amarchand Mangaldas (now CAM) and my new role builds on my 13+ years of experience there, for which I am grateful to Mr & Mrs Shroff and my colleagues at CAM.
“I was also privileged to be mentored by Mr. Shashikant Bhojani and his values continue to guide me, both personally and professionally.”
CAM managing partner Cyril Shroff commented: “We wish Manu all the best.”
The second new practice area for the firm - capital markets - was started by former Link Legal India Law Services associate partner Prashaant Vikram Rajput, who had joined White & Brief in December 2020.
The 2006 Amity Law School graduate has set up the capital markets practice but also does banking and finance and some private equity, restructuring and alternative investment funds work.
Finally, in November 2020, White & Brief had promoted Bhagyashree Lembhe to associate partner; she had joined the firm in February 2020 from IndusLaw, where she was a senior associate.
The 2011 GLC Mumbai LLB grad specialises in arbitration, litigation and insolvency and bankruptcy matters, and had previously also worked at the Amarchand Mangaldas-cum-Cyril Amarchand, ALMT Legal, HSA Advocates.
White & Brief had been started in 2018 by Tribhuvann, following two years of his independent chambers’ practice after leaving the chambers of the late senior counsel Ram Jethmalani in 2016 where he had worked since 2011.
Tribhuvann is a young lawyer - he had graduated from Pune University in 2011 with a 2013 LLM from Mumbai University - but workflow had been good and he had the benefit of generations of lawyers in his family, he explained.
“I‘m a third generation lawyer, so probably that helped,” he said, noting that he had 16 (litigation) lawyers in his family.
Tribhuvann specialises exclusively on white collar crimes litigation and the practice alone had enabled him to grow the firm to around 18 fee-earners by November 2020, with healthy profits and a marquee clients.
According to Tribhuvann, White & Brief had clients including Apple India (for whom the firm did Maharashtra-based litigation and some commercial work), pan-India work for the airline Indigo, as well as the Accor group of hotels, and intellectual property work for two pharmaceutical companies (Indian multinationals Alkem Laboratories and Flamingo Pharmaceuticals).
The steady work and revenues had enabled him to now target ultra-rapid expansion.
“Once we set up our entire operation in Bombay, well run for another year and once successful we’ll expand to Delhi and Bangalore,” he said. “We have three year expansion plans ready: in 2022, we’ll set up the entire full service law firm in Delhi, in 2023 we’ll be in Bangalore.”
There was no plan articulated beyond a three year horizon, at present, he said, but it is clear that he and the firm are not lacking ambition.
Ambitiously expanding young law firm White & Brief has added another partner and department, hiring Economic Laws Practice (ELP) associate partner Vineet Nagla to head its new taxation practice.
In January the firm had added two lateral partners from Cyril Amarchand Mangaldas and Link Legal India Law Services.
He has joined with ELP associate manager Prateek Bansal, who is now associate partner in the tax practice at White & Brief.
Nagla specialises in GST, customs, SEZ and foreign trade work, while Bansal specialises in service tax and GST litigation.
We have reached out to ELP for comment.
Founding and managing partner Nilesh Tribhuvann commented in a statement: “With Vineet and Prateek coming in, we have moved closer to our aim of transitioning into a full-service firm. We are now equipped to provide the gamut of services to our clients across the board.
“There is now a clear alignment of vision amongst the firm’s senior level members and, I see a lot of synergistic opportunities between the practice areas that we have recently added. I am glad that our expansion plans are materialising the way we have envisioned them – and there is more on the horizon in the coming year.”
In January, we had reported that Tribhuvann, who is a 2011 LLB graduate from the University of Pune and who had set up the firm in 2018, said that he was aiming to expand to Delhi and Bengaluru by 2023 and hire several lateral partners, buffeted by several solid clients and a strong work pipeline.
According to White & Brief:
Vineet Nagla has over a decade of experience in the practice areas of GST, erstwhile indirect taxes, State levies, Customs, SEZ as well as regulations under the Foreign Trade Policy. He has advised and assisted clients engaged in the real estate, services sector (especially hotels & restaurants), shipping & marine services, agri-chemicals, gems and jewellery business amongst others. Vineet is a qualified Chartered Accountant and Company Secretary […]
Prateek Bansal, who has joined the Firm as an associate partner, is a graduate of Government Law College, Mumbai and had been part of the tax team at Economic Laws Practice since 2016. Having provided advisory and litigation services to various Indian and multi-national clients on issues concerning Service tax, Customs and Foreign Trade Policy, VAT, Excise and GST, Prateek also regularly assists clients in advocacy related initiatives before various Government authorities including the Ministry of Finance, DGFT, etc. in relation to tax and other regulatory aspects.
White & Brief now has a total of 6 partners, including 2 associate partners.
An Indian firm called 'White and Brief' has said that its similarity to US firm 'White & Case' is a pure coincidence.
White and Brief is a Mumbai firm founded in 2018. Despite having a name that closely resembles White & Case, the firm is adamant that it hasn't done an Aldi and knocked-off the US firm's name.
"Although, there is a stark similarity between the name of the Firm and that of 'White & Case', this is purely coincidental and we have not derived any inspiration from the name 'White & Case' in coming up with our Firm's name," CEO Rohini Das told RollOnFriday.
When asked how the firm got its name, Das explained: "The 'White' in White & Brief stands for 'Purity, Integrity & Transparency' and 'Brief' stands for 'Dedicated Solution-Oriented, Client-Centric Service'."
Das added, "the philosophy that drives the Firm is deeply rooted in endeavouring to provide best-in-class services to the clients by a dedicated team of highly-skilled and experienced lawyers who come from the best of pedigree".
To be fair to White and Brief, it's not in the same league as this Freshfields rip-off. And based on its name and URL - www.whiteandbriefs.com - the firm is more likely to be mistaken as an underwear retailer than the US firm.
A spokesman for White & Case declined to comment. Everyone else kept their fingers crossed for a merger and the dawn of White & BriefCase.
The Mumbai-based firm now has three Partners and 25 other lawyers.
Former Cyril Amarchand Mangaldas Partner Manu Varghese and Link Legal Associate Partner Prashaant Vikram Rajput have recently joined Mumbai-based law firm White & Brief as Partners.
Mumbai-based White and Brief Advocates and Solicitors has onboarded three seniors including two partners, the law firm said in a statement.
hite and Brief has brought on board Manu Varghese as a partner. He will head general corporate and commercial practice. With experience spanning a decade, Varghese has worked across sectors including e-commerce, retail, cement, financial services, equipment manufacturing, renewable energy and information technology.
Prior to White and Brief, he was a partner in the general corporate practice of Cyril Amarchand Mangaldas.
White and Brief has also brought on board Prashaant Vikram Rajput as partner. He will head capital market practice.
With over 15 years of experience, Rajput has worked on several complex transactions involving domestic and international large companies across diverse sectors, the statement said.
Prior to White and Brief, he was with Legal India Law Services as an associate partner.
Bhagyashree Lembhe has joined White and Brief as an associate partner. She previously worked with Indus Law, HSA Advocates and Cyril Amarchand Mangaldas and has expertise in Insolvency and Bankruptcy Code and matters under the Arbitration Act.
“Within a short period, we’ve grown to a strength of three partners at the leadership level. The coming year holds a lot of promise for us and the team at the leadership level will be further strengthened to diversify into different practice areas,” said Nilesh Tribhuvann, founder and managing partner.
Set up in 2018, White and Brief now has three partners and a team of 25 members. It has two offices in Mumbai.