Property disputes may shift to commercial courts

NEW DELHI: The government is contemplating shifting all property-related disputes to commercial divisions under high courts once they are set up. The government plans to set up at least 50-60 commercial courts in the country across the country.

A bill to create commercial divisions in high courts to decide on high value commercial disputes and another seeking increase in the pecuniary jurisdiction of Delhi High Court is pending in Parliament. On Wednesday, Rajya Sabha deferred passage of the Delhi pecuniary jurisdiction bill asking the government to bunch it together with the commercial courts bill.

The commercial courts bill provides for key amendments that include setting a time limit of 90 days for delivery of judgment after conclusion of arguments besides powers to the courts to impose “exemplary costs against defaulting parties for willful failure to disclose all documents”.

Once the bill is passed by Parliament, it will lead to setting up of at least 50-60 commercial courts across the country or about two to three courts in each state. The bill also provides for appellate division benches in high courts which will hear appeals from commercial courts.

These courts will have judges with expertise and experience in commercial disputes and may get a fixed tenure of two years so that continuity is maintained. The bill provides for “training and continuous education of judges” by the national and state judicial academies.

Recently, the Law Commission had submitted a report to the government on commercial courts where it had expanded on its earlier report and sought empowering all HCs to set up commercial divisions under its jurisdiction to exclusively deal with such disputes.

The commercial divisions so far are restricted to only a few HCs. Long pendency of commercial disputes is seen as one of the major problems for India not getting foreign investments. The World Bank had in a recent report ranked India 142 among 189 countries on the index of ‘Ease of Doing Business’. The reason was largely the pendency of cases in courts and non-implementation of judicial reforms.

3 FIRs filed against Unitech for delay in delivering project

Developers had promised possession by 2011-end

Three first information reports have been registered against Unitech Limited, a leading real estate developer, following separate complaints for prolonged delay in completion of its residential project in Sector 33 here.

The project, The Residences with 1,320 flats, was launched in May 2009 and the developer was to give possession of the flats by the end of 2011. However, the flat holders who have paid more than 90 per cent of the cost are yet to get possession.

Manish Kumar, Vinod Baxla and Shipra Chabbra filed separate FIRs at the Gurgaon Sadar police station late on Tuesday evening alleging that Unitech had collected over Rs.548 crore from the flat holders and diverted the fund to its commercial project, which was up and running in Sector 48. They have implicated the promoters of the company and the top management of the Unitech under Sections 420/406/409//120B of the Indian Penal Code with the Economic Offences Wing.

Gurgaon Police Commissioner Navdeep Virk has appointed an investigation officer and investigations are likely to begin soon. Mr. Virk has also directed Unitech promoters and officials to hold a meeting with the flat holders immediately to address their concern.

Besides the inordinate delay, Unitech Limited has also been accused of using poor quality construction material. Mr. Kumar, in his complaint, has accused the company of using sub-standard quality materials and for not sharing the quality test certificates despite complaints with the company several times. “It is also a matter of record that the company has been regularly announcing its new projects from time to time and by adopting the same modus operandi has been cheating numerous families. It is also submitted that as per the audited accounts of the company published in the public domain, it has a sound financial health,” reads the FIRs by Mr. Kumar.

“The conduct of the company can also be ascertained from the fact that till date it has purposely and with mala fide intentions not renewed its statutory licences from the various authorities that are warranted in order to construct group housing complexes as it was procured initially just to start the construction so that money can be extracted from the families,” the FIR further reads.

The majority of the residential projects launched in 2008 in Gurgaon are running far behind schedule and the agitations by flat holders have become routine. In the present case, it was after the flat holders called upon Haryana Agriculture Minister O.P. Dhankar and sought his intervention that the police swung into action.

Transforming Commercial Dispute Resolution

Transforming Commercial Dispute Resolution

he enactment of an Act to amend the Arbitration and Conciliation Act and passing the Commercial Division of High Courts Bill will change the face of commercial dispute resolution

Most judicial systems undergo periods of high pendency and delay in dispensation of justice which are usually followed by a realisation from within and give rise to widescale legislative reforms. While it was the Lord Woolf Report and the Chief Justice’s Working Committee Report that spurred such a change in the U.K. and Hong Kong, the Justice A.P. Shah-led Law Commission Reports numbered 246 and 253 could potentially be what the Indian commercial dispute resolution system has been waiting for. These reports suggest widescale reforms by suggesting the enactment of an Act to amend the Arbitration and Conciliation Act, 1996, and a “Commercial Division and Commercial Appellate Division of High Courts and the Commercial Courts Act” (Commercial Divisions Bill/Act), respectively.

In pursuance of its ‘ease of doing business’ propaganda and an overall attempt to attract investors, the Bharatiya Janata Party government is set to introduce these two bills in the budget session of Parliament. If passed and implemented, these enactments are likely to change the face of commercial dispute resolution in India.

 

Commercial Divisions Bill/Act

The Commercial Divisions Act introduces a commercial division in every high court having original jurisdiction (i.e. Madras, Delhi, Bombay, Calcutta and Himachal Pradesh) and commercial courts in such districts, as the Central government, in consultation with the concerned State government and Chief Justice of the concerned High Court, may establish. These specialised courts will resolve all “commercial” disputes of value of over Rs. 1 crore. Simultaneously, the jurisdictional limits of all high courts which have original side jurisdiction would be increased to Rs. 1 crore across the country. These disputes will be heard by judges who not only have a background in commercial laws but will also receive special training in this area.

The Act will have wide ramifications as the term “commercial” is widely defined and includes disputes ranging from intellectual property rights disputes to disputes arising out of joint venture agreements and proceedings in aid of arbitrations. The Bill provides for a fast track mechanism with stringent timelines. And for the first time it introduces in the Indian system the concept of a case management conference wherein a procedural order is passed prior to trial, setting out a time table (including time-bound oral arguments supplemented with written arguments) which has to be strictly adhered to. The court is given wide powers to ensure that strict compliance is enforced. Moreover, the court, too, is mandated to deliver its judgment within a period of 90 days.

The Bill adopts the “carrot and stick” approach and judiciously offers “carrots” for compliance and provides courts the power to wield the “stick” in case of delay by one of the parties. The Bill also makes mandatory the ‘cost follow the event’ regime, whereby, as a general rule, the party against whom the order/judgment is passed bears the entire cost of litigation, subject to exceptions where delaying parties, even if successful, have to bear part of the cost.

While an earlier version of this bill had been introduced during the United Progressive Alliance regime, the Bill, in the words of the Law Commission, did “not make an effort to fundamentally alter the litigation culture in India” and that the changes suggested were “cosmetic” in nature. The Rajya Sabha had raised certain valid concerns including the unworkability of some of the procedural measures suggested. The Law Commission has carefully scrutinised these objections and introduced procedures which have been internationally tested (more specifically in the U.K. and Singapore).

 

Amendments

An attempt is also being made to encourage arbitration, which is a form of alternative dispute resolution wherein private parties, usually by consent, appoint an arbitral tribunal to adjudicate on the dispute outside of the regular court system. One of the major problems that have plagued this system is excessive judicial intervention and the proposed amendments are primarily aimed at reducing such interventions.

“ One of the major problems that have plagued the system of arbitration is excessive judicial intervention, which the proposed amendments aim at reducing. ”

Today, interventions by courts happen at all stages — pre-arbitration proceedings for appointment of a tribunal and post-arbitration challenges to the award. The proposed amendments restrict the scope of pre-arbitration review to a “prima facie” review of the existence of an arbitration agreement and narrow down the scope of the challenge of an award by prohibiting an analysis on merits. Specifically, the scope of challenge to a foreign award has been greatly narrowed.

Perhaps the biggest shortfall of the present arbitration regime is the fact that a successful party in arbitration is not in a position to enjoy the fruits of its success for many years as the mere filing of a petition challenging its validity renders the arbitral award unenforceable. The Law Commission has suggested amendments to Section 36 of the Act and a losing party will henceforth have to satisfy a Court as to why it is a fit case for the arbitral award to be stayed and the Court will have powers to order the losing party to deposit part of the award sum into Court.

Another major area where the proposed amendments would make a significant difference is in relation to neutrality of the arbitral tribunal which is constituted. The Supreme Court of India, in Indian Oil v. Raja Transport, has declared a tribunal appointed by a public sector undertaking comprising its own employees to be valid subject to certain narrowly carved out exceptions. This decision is sought to be legislatively overruled by incorporating the International Bar Association guidelines on conflict of interest as a schedule to the Act.

Further, the proposed amendments suggest a more realistic interest and costs regime, permitting compound interest to be awarded and incorporating the “costs follow the event” rule as the base rule in relation to arbitration.

The investment treaty arbitral tribunal in White Industries v. Union of India has held that the Indian system does not provide “effective means” for a foreign investor to enforce its rights. The bills proposed to be introduced in the budget session not only expedite commercial dispute resolution but also effectively disincentivise initiation of frivolous proceedings.

However, enacting a law is only part of the solution; implementing it effectively by selecting the right personnel is as important. Effective implementation of the Lord Woolf report resulted in eradicating frivolous commercial litigation in the U.K. — statistics suggest that the number of litigations initiated fell by around 80 per cent. Commercial dispute resolution in our country is at its cross roads and the enactment of these laws and their implementation over the next couple of years would determine whether in India the maxim ‘Ubi jus ibi remedium’, i.e. every right has a remedy, translates into something more than a de jure principle.

Three Gurgaon realtors booked for fraud

GURGAON: Eleven First Information Reports (FIRs) have been lodged against three Gurgaon realtors on charges of cheating and fraud at various police stations in the last 24 hours, police said on Wednesday.

Five fresh FIRs have been lodged against Pal Builders at Manesar police station.

Senior officials of Vigneshwara developers, accused of cheating people, were booked for fraud. Three FIRs have been registered at Sushant Lok police station. 

Similarly, three FIRs have been registered against Unitech at Sadar police station. On February 26, more than 30 customers from Unitech’s The Residences project landed up at the Deputy Commissioner’s (DC) office to vent their grievances against Unitech during a meeting of the grievance committee formed by the state government and headed by Haryana agriculture minister O P Dhankar.

On the directions of Dhankar, DC T L Satyaprakash had ordered the filing of a complaint against Unitech and said the Economic Offence Wing (EOW) of the police will probe the matter.

Customers complained to the grievance committee that Unitech had launched ‘The Residence project’ in Sector-33, Gurgaon in May 2009 and was to deliver 1,320 homes by December 2011 as per the agreement that Unitech had entered into with buyers.

Till date, only 90 flats have been delivered and more than 90 percent of the project remains in an abandoned state.

Most of the FIRs have been registered on the different complaints under sections 467, 468, 471, 420, 406 and 34 of the Indian Penal Code (IPC).

The sections stand for preparing and using forged documents, cheating, breach of trust and common intent respectively; however no one has been arrested.

DLF to launch new housing project in Gurgaon

DLF to launch new housing project in Gurgaon

DLF will soon be launching PRIVANA. The new housing project that is located in sectors 76 & 77 Gurgaon, is nestled between the Aravallis on one side and over 500 acres of masterplan greens on the other.

This project comes as a response to the growing demand for premium and sought-after low-rise residential properties. The new project is not only ideal as a high-end residential option but also has huge value appreciation potential.

Situated in the exclusive neighbourhood of Alameda, a luxury property developed by DLF on the Greater SPR, PRIVANA is dotted with world-class amenities created to let you have your personal space with only one unit per floor. It would facilitate low density of residents with monitored entry/exit and round the clock security. Residents of PRIVANA will enjoy vibrant community life across its proposed community centre and recreational facilities.

Low-rise living now comes with ease of parking with DLF planning to offer the PRIVANA enclaves which largely comprises homes in the configuration of stilt car parking + 3 floors where the internal roads are 12m wide while the back lawns of all homes are landscaped into seamless greens about 25m wide. Each unit will have exclusive lift lobbies, with 24×7 power backup.

Talking about the USPs of the project, Vikram O Datta said apart from being the finest project in the region, it has a direct entry to a 60-metre wide sector road. With the international airport just 25 minutes away and the proposed Delhi Metro link coming to its vicinity, the project will have high and convenient connectivity. The bonus of the project’s location is the presence of four golf courses in its vicinity – ITC Classic (27 hole course), Karma Lakelands, IMT Manesar Club and Golden Greens Golf Club.

Property disputes may shift to Commercial Courts

NEW DELHI: The government is contemplating shifting all property-related disputes to commercial divisions under high courts once they are set up. The government plans to set up at least 50-60 commercial courts in the country across the country.

A bill to create commercial divisions in high courts to decide on high value commercial disputes and another seeking increase in the pecuniary jurisdiction of Delhi High Court is pending in Parliament. On Wednesday, Rajya Sabha deferred passage of the Delhi pecuniary jurisdiction bill asking the government to bunch it together with the commercial courts bill. 

The commercial courts bill provides for key amendments that include setting a time limit of 90 days for delivery of judgment after conclusion of arguments besides powers to the courts to impose “exemplary costs against defaulting parties for willful failure to disclose all documents”. 

Once the bill is passed by Parliament, it will lead to setting up of at least 50-60 commercial courts across the country or about two to three courts in each state. The bill also provides for appellate division benches in high courts which will hear appeals from commercial courts. 

These courts will have judges with expertise and experience in commercial disputes and may get a fixed tenure of two years so that continuity is maintained. The bill provides for “training and continuous education of judges” by the national and state judicial academies. 

Recently, the Law Commission had submitted a report to the government on commercial courts where it had expanded on its earlier report and sought empowering all HCs to set up commercial divisions under its jurisdiction to exclusively deal with such disputes. 

The commercial divisions so far are restricted to only a few HCs. Long pendency of commercial disputes is seen as one of the major problems for India not getting foreign investments. The World Bank had in a recent report ranked India 142 among 189 countries on the index of ‘Ease of Doing Business’. The reason was largely the pendency of cases in courts and non-implementation of judicial reforms.

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