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E X P E R T P A N E L

Prof. Madabhushi Sridhar Former Central InformationCommissioner, New Delhi

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Editor-in-Chief

PBA Srinivasan contents

A D V I S O R Y B O A R D

Dr. Justice AR Lakshmanan Former Chairman

Law Commission of India

Amarjit Singh Chandhiok Former Additional

Solicitor General of India

Justice R. S. Sodhi Retired Delhi High Court Judge

Dr. Lalit Bhasin President - Society of Indian Law Firms

Badrinath DurvasulaVice President & General Counsel,

HCC Ltd.

REGULARS

PAGE 08

The apex court has been going through a sea of developments on all

fronts. Right from administrative aspects to the headcount, there's a

lot happening up there. Are we moving in the right direction? Or is it

all nothing but a heavy baton ready to be passed over?

16 TRIBUTEArun Jaitley - His Role in Law, Law Making& Legal ProfessionDr. Lalit Bhasin, President - SILF & BAI, authors his tribute for the

legendary leader the nation had. It is indeed impossible to honour and

acknowledge the contribution of the 'GST Man' as they say not only in

terms of his portfolio but even to niche domains like law. Have an

interesting read through.

25 ACCOLADESManoj K Singh, Awarded with ‘SpecialRecognition for Service to the LegalProfession’ at Achiever’s Awards 2019Singh & Associates’ (S&A) Founding Partner, Manoj K Singh, was

recognized and awarded with ‘Special Recognition for Service to the

Legal Profession’ at Achiever’s Awards 2019 organized by Legal

League Consulting held at Taj Mansingh, New Delhi, India. He was

felicitated for his support for the legal profession. Read on to know

more.

29 SPECIALACC Supports In-house Professional Privilegein France, EuropeThe Association of Corporate Counsel (ACC), a global legal

association representing more than 45,000 in-house counsel employed

by over 10,000 organizations in 85 countries, has announced its

support of the recommendations of that report, specifically as they

regard in-house legal professional privilege. A detailed write up with

more on the development.

52 VINTAGE LANE63 COFFEE BREAK64 TAROT TALKS66 SNIPPETS68 BUZZ SQUARE72 JOBS ARENA74 CAPSULES77 EVENT CALENDAR78 TRIVIA

tête-à-tête

36MANJAREE CHOWDHARYExecutive Director and GeneralCounsel, Maruti Suzuki India

ASHU KANSALPartner, Adhita Advisors

expertspeak

KARAN KOHLIAssociate,Adhita Advisors

44

AMIT ANANDCorporate Counsel SpecialistAdvisor, NTT DATA

counselcorner

42

India's Judicial Brass: 34 Judges. Over 50,000 Cases.Do Numbers Matter?

CUTTING EDGE

Page 07_Layout 1 10/3/2019 5:40 PM Page 7

n the last decade or so, the

real estate companies have

seen some incredible highs,

followed by some

preposterous lows. Many real

estate players have experienced their fair

share of rags to riches story, while some have

seen the reverse. The real estate sector has

seen over the past couple of years falls of

giants of the industry with companies such as

Jaiprakash Associates and its affiliates, the

most famous being Jaiprakash infrastructure

Limited go under insolvency, the entire

Amrapali Group going copout and also facing

criminal sanctions not only from enforcement

agencies but also from the Hon’ble Supreme

Court of India, Cosmic Structures Limited

going into liquidation, Parsavnath Developers

going under insolvency among many many

others. While some of the companies have

fallen due to corruption/ diversion of funds

by the management of the company who was

supposed to be protecting the interest of the

company, while on the other hand some of

the companies have felt the brunt of change

of the government or change in the policies/

laws by the legislature.

Taking into context the curious case of

Jaypee Group, which in 2013-14 had assets

worth 10 lack crores rupees, spanning

businesses across cement industry to thermal

energy and most of all the real estate/

infrastructure industry. However, in the

aftermath of the nationwide slow down in the

real estate sector which saw huge declines in

the value of wealth in the sector, Jaypee

Group had to sell of 1/5th of its group assets

to bring down its debt which still after the

sale still stood at about 61,000 crores. At the

start of the 21st century Jaypee group

invested around 60,000 Crores in the real

estate, power and cement sector and saw

revenues of its companies such as Jaypee

Power ventures Limited and JP Associates

Limited grow at 26.92% & 32.08%

respectively, between 1999-2000 and 2014-15.

With the wind in its sail , Jaypee group

decided to bid to bring Formula One Grand

Prix racing in India. Along with the upcoming

Formula One Track, it also envisioned to build

44 | Lex WITNESS | September 2019 A Lex Witness Privileged Partners Initiative

expertspeak

C-124, Basement Floor, Lajpat

Nagar - I, New Delhi - 110024

T: 011- 45551603

E: ashu@adhitaadvisors.com

W: www.adhitaadvisors.com

n Ashu Kansal & Karan Kohli

I

The Rise and Fall of Real

Estate Powerhouses -

Whom to Blame?“When you blame others, you give up your power to change.”

-Dr. Robert Anthony

Page 44-47_Layout 1 9/29/2019 12:57 PM Page 44

September 2019 | Lex WITNESS | 45A Lex Witness Privileged Partners Initiative

expertspeak

a cricket stadium with a total capacity of

around 1 lack people, a tennis stadium

and five townships on the Noida- Greater

Noida Expressway. However, due to

various reasons, its flagship Yamuna

Expressway Project, could not realize its

potential return due to reasons such as

power shortage in the state of Uttar

Pradesh, the lack of transmission

facilities which meant that even petrol

pumps could not be installed along the

expressway. Another key factor affecting

the Jaypee group was the change of the

state government from the Bahujan

Samaj Party under the aegis of which all

of the plans were cleared to the

Samajwadi Party who did not conquer

with the plans of the Jaypee Group. The

newly elected Samajwadi Party due to

reasons best known to them, did not

think of Formula One as a prudent

investment as a result of which the idea

of having a Grand Prix failed after its

second installment causing not only huge

losses to the Jaypee group but also to the

state exchequer as well due to the

potential taxes/ revenue the Formula One

Grand Prix would have brought to the

state of Uttar Pradesh. Combined with

the losses from their flagship

infrastructure projects and the loss from

the failed Formula One Project, Jaypee

Group is facing multifarious litigation all

over the country, however, the promoters

of the Jaypee Group are doing everything

in their power to reduce the debts of its

affiliates companies by selling of its

assets but what transpires of the various

companies of Jaypee Group is yet to be

seen. This is one instance in which

change in state legislation has led to the

downfall of the entire group.

On the other hand, there are instances

of widespread fraud, deceit,

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46 | Lex WITNESS | September 2019 A Lex Witness Privileged Partners Initiative

expertspeak

mismanagement, siphoning of the funds

by the management of the company who

was entrusted to protect the interest of

not only the company but also of its

investors such as in the case of Amrapali

Group. The Hon’ble Supreme Court of

India in Writ Petition (C) 940/ 2017 in

Bikram Chatterji vs. Union of India vide

order dated 23.07.2019 has vide the

detailed order relying upon the forensic

accounting report of the Amrapali Group

has found great illegality in the working

and functioning of the management of

the Amrapali Group with its statutory

auditors. This is a case in which despite

government sanctions and law in place,

still the management of the group has

been able to manipulate its books of

accounts to get additional funding from

financial institutions and also from

investors/ home buyers and the same

funds have been used by the management

of various companies forming the

Amrapali Group for their personal gains.

Then there is also a curious and

interesting case of Supertech Limited

which launched its most luxurious

project- SuperNova. However, soon after

the company has got all of the requisite

permissions from the state bodies and

had raised about 50% construction, the

Hon’ble National Green Tribunal (‘NGT’)

ordered that no construction is

permissible within 5 kms radius of the

Okhla Bird Sanctuary and the complete

construction of the project came to a

grinding halt. However, the company

filed an Appeal before the Hon’ble

Supreme Court of India, which was

pleased to set-aside the order of the

Hon’ble NGT and Supertech was allowed

to carry on its construction. In this case

despite no fault of the builder/ developer

the complete project came to a standstill

and the builder was facing the wrath of

the investors/ homebuyer. However, the

Hon’ble Supreme Court came to the

rescue of the builder.

Like Jaypee, Amrapali, Supertech there

are a number of cases in the real estate

industry where due to one reason or

another the project of the builder/

developer fails to take off which may lead

to insolvency/ bankruptcy of the builder/

developer. However, one must see that it

is not always the builder/ developer who

is to blame. In cases such as Jaypee

wherein due to change in the state

government and the state laws, led to the

associate companies of Jaypee Group

making losses and eventually being

dragged into courts by investors, home

buyers, financial institutes and state

authorities and on the brink of

insolvency. In case of Supertech wherein

due to the order of Hon’ble NGT, the

project of the builder came to a halt and

the builder despite raising about half of

the total construction was ordered to

stop the construction which led to

various investors/ home buyers

approaching the Hon’ble NCDRC seeking

refund of their monies. In cases like this

without no fault of its own, the builder is

made to suffer losses owing no fault of its

own due to change in certain by-laws of

the state government. However, when one

sees cases like Amrapali in which the

management of the various affiliate

companies of the Amrapali Group were

hands in glove with its statutory auditors

then the same also causes prejudice in

the minds of the courts all over the

country as to the working and

functioning of all the builders.

What is being seen in the past couple

of years is that there are two types of

Home buyers. One, who has invested in

his future i.e, who has invested his hard

earned money to finally fulfill his dream

of owning his/ her own home. On the

other hand, there are the investors who

had parted away with their excess

money/ savings in hope that their money

will multiply manifold. However, due to

the slowdown in the economy coupled

with demonetization & introduction of

GST, these investors have seen their

investment tumble. This has resulted in

flooding of litigation especially, before

the Hon’ble NCDRC. The Hon’ble NCDRC

has in various cases directed the builder/

developer of such projects to refund the

amounts paid by the said homebuyers

who were actually the investor along with

interest for the delay in project coupled

with litigation cost and compensation

despite the fact that the builder has

completed the construction of the said

project/ unit. That the said act not only

leads to the builder incurring losses but

also makes the investor greedy in order

to extort money from the builder despite

actually having been offered possession

by the builder.

It would be worth to say that rather

than directing the builder to repay the

entire amount paid by the home buyer/

investor along with penal interest, cost

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September 2019 | Lex WITNESS | 47A Lex Witness Privileged Partners Initiative

expertspeak

and litigation expense on the project

where possession is offered, it should be

only some compensation that should be

awarded on delay in handing over the

project. If the builder is directed to repay

the entire amount paid by the home

buyer/ investor along with penal interest,

cost and litigation expense on the project

where possession is offered, would

otherwise lead to many - many more

builders going into insolvency and most

probably into liquidation which is

detrimental for the home buyers who have

invested their lifelong savings with the

Builders in the hope of owning their own

home. That the very dream is turning into

a nightmare as some of the investors are

approaching the Hon’ble NCDRC/ other

Courts/ Tribunals to get their money back

instead of giving the chance to builders to

complete the pending projects, thereby

fulfilling home buyers lifelong dream.

It is the need of the hour it should be

looked to resolve the matters qua

builders/ developers and try as much as

possible to resolve the concerns/

difficulties in order for the builder to

complete the entire project rather than

having them and the stakeholders to face

litigation in respect of one or some

particular home buyer/ investor. The

rights of all of the stakeholders should

trump the interest of one or some

particular stakeholders. The point which

needs consideration is that in case the

builder is sent to liquidation, will the

assets of the builder be able to cover the

demand against the builder in case of

failure to complete the project.

Ashu Kansal is a Partner having more

than thirteen years of experience. His

main areas of expertise are banking and

finance laws, securitization-related

matters, recovery of debts, suits, and

arbitration matters. Apart from drafting

various pleadings, he also advises/gives

opinions and strategies to clients on

various litigation matters in various

forums including the Supreme Court,

High Courts and various other Tribunals

across the Country. He has also briefed

top Senior Counsels across the country

for multinational clients.

Karan Kohli is an Associate with the

firm and a graduate of Guru Gobind

Singh Indraprastha University (IP

University). He has been handling

complaint cases under section 138 of

the Negotiable Instruments Act, 1881 &

commercial disputes. He regularly

appears before Hon’ble High Court of

Delhi, various district courts as well as

Tribunals and Forums.

w

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