CPC 1908- ISSUE AND SERVICE OF SUMMONS: ORDER V and Section 27-32

ISSUE AND SERVICE OF SUMMONS: ORDER V

Introduction:

After the plaint is filed, the summon is issued by the court to appear in the court to defend it.

The intimation which is sent to the other party (defendant) is called summons. The provision

related to summons are given in Section 27-32 and Order V of CPC.

Summons is an authoritative call from the court to attend the court at a specified place and at

a specified time. The summons as contemplated in Rule 1 is for the attendance of the

defendant. It says that once a plaint is admitted the court is required to send the notice of such

admission to the defendant and then for the purpose of his appearance and to answer (reply)

the allegations made against him in the plaint. The summons are served on the defendant.

This appearance and answer (in the form of a Written Statement) must be made within 30

days from the date of service of summons (being duly received) and may be extended to

further such period as may be granted by the court not beyond 90 days from such service.

Therefore, further 60 days’ extension may be granted, if the case requires.

This does not mean that no further extension may be granted after the period of 90 days is

over, but it must be made only in exceptional circumstances, if the defendant satisfies the

court of an exceptional cause for not appearing and that he was not negligent.

It is not necessary to issue summons when the defendant is in the court at the time of

presentation of the plaint and admits the claim.

Generally, a summons must contain:

i. Reason (Purpose) for sending it,

ii. Signature of the Judge and seal of the court,

iii. Specified date of appearance of the defendant,

iv. Copy of plaint,

v. Appropriate directions.

This order must be read with Section 27-32 of CPC, 1908.

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Section 27: Summons to Defendants

Section 27 of CPC stipulates that where a suit has been duly instituted by filing a plaint, the

first duty of the court is to issue summons calling on the defendant to appear and answer the

claim and such summons may be served in a manner prescribed in the rules mentioned in

Order V of the first schedule and on such day not beyond 30 days from the date of the

institution of the suit.

Section 28: Service of summons where defendant resides in another state

Section 28 of CPC provides for a situation when the summons is to be sent to a defendant

who is residing in a different state and also provides for the requirement to such process

thereon. It simply says that the summons to be served in an another state must be sent for

service through the court of that state and it will so be served according to the rules in force

in the state in which it is sent to. The court to which it is sent must serve it as it is issued by

that court and return it to the court issuing it along with the proceedings therein.

Section 29: Service of foreign summonses

Section 29 provides for the situation when any of the following courts:

1. Civil or Revenue court to which Civil Procedure Code does not apply.

2. Civil or Revenue court established by the authority of Central Government outside

India.

3. Civil or Revenue court outside India to which this section would apply.

has issued certain summons and is intended to be served in the territory to which Civil

Procedure Code applies. It provides that it may be sent to the courts to which Civil

Procedure Code applies and may be severed by them as if it was issued by such courts.

Section 30: Power to order discovery and the like.

Subject to such conditions and limitations as may be prescribed, the Court may, at any time,

either of its own motion or on the application of any party,-

(a) make such orders as may be necessary or reasonable in all matters relating to the delivery

and answering of interrogatories, the admission of documents and facts, and the discovery,

inspection, production, impounding and return of documents or other material objects

producible as evidence;

(b) issue summonses to persons whose attendance is required either to give evidence or to

produce documents or such other objects as aforesaid;

(c) order any fact to be proved by affidavit.

Section 31: Summons to witness

This provision provides that if a summon is to be sent not to a defendant to appear and

answer the plaint but to any person including defendant for the purpose of giving evidence or

to produce documents or other material objects, then such summons must be sent as

according to Sections 27, 28, 29 and if the person does not comply with the direction

provided in the summons, Section 32 shall apply.

Section 32: Penalty for default If the summons is sent under Section 30 by the court and the person to whom it is sent does

not comply with the orders, the court may in consequence compel the attendance of the

person to whom a summons has been issued under Section 30.

Order V Rule 2 talks about that when summon is to be sent then it is necessary to annexed a

copy of plaint with it.

Order V Rule 3: Court may order defendant or plaintiff to appear in person:

The Court shall order the defendant and the plaintiff to appear on the same day as specified,

in person, if it is so required.

Order V Rule 4: No party to be ordered to appear in person unless resident within local

limits

Q. When can a party be asked to appear personally?

No party will be ordered to appear personally unless

1. He resides within local limits of courts’ jurisdiction.

2. Where he resides within 50 miles from the court-house, or

3. Beyond such jurisdiction but within 200 miles from the court and where 5/6th distance

can be covered by Railways or steamers or other public conveyance.

There are certain provisions where there is an exemption from personal appearance, such as

1. Section 132, in case of certain women like Pardanashin lady,

2. Section 133, in case of other person like President, Vice-President, etc.

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Order V Rule 5: Summons to be either to settle issues or for final disposal

The summons may be issued for settlement of issues or for final disposal of the suit and the

court shall at the time of issuing the summons specify for what purpose summons are being

issued and it must contain a direction accordingly.

The Court of Small Causes shall issue summons for final disposal only.

Order V Rule 6: Fixing day for appearance of defendant

The following factors should be looked into while fixing the date for appearance1. The current business of the court,

2. The place of residence of the defendant,

3. Time necessary for service of summons,

4. Sufficient time to enable defendant to prepare his defence.

Order V Rule 7: Summons to order defendant to produce documents relied on by him

It shall be ordered to the defendant in the summons to produce all the document or copies

thereof specified in Order VIII Rule 1 A to produce on which he intends to rely in his

support.

Order V Rule 8: On issue of summons for final disposal, defendant to be directed to

produce his witnesses

In the summons for final disposal of the suit the defendant shall be directed to produce all the

witness upon whose evidence he relies for his defence at the day fixed for appearance.

Mode of service of summons

1. Service of court [Rule 9].

2. Service by plaintiff (Dasti Summons) [Rule 9A]

3. Personal or Direct Service [Rule 10-16, 18]

4. Substituted Service [Rule 17, 19-20]- (i) without the order of the court (ii) with the

order of the court.

5. Service by Post.

Order V Rule 9: Delivery of summons by Court- This rule provides for the manner in

which the summons must be served, that if the defendant or his agent is a resident within the

jurisdiction of the court, such summons shall be served either by officer of the court known

as process server or bailiff or by such courier services as are approved by the court.

Furthermore Sub-Rule 3 provides for the manner in which the summons may be served.

The service of summons may be made by delivering or transmitting a copy to the defendant

or his duly authorised agent by:

(a) Registered Post acknowledgement due, or

(b) Speed Post or courier service approved by the High Court or the District Court, or

(c) Any other means of transmission like fax message or electronic mail service, etc.

The service of summons under this sub-rule 3 shall be made on the expenses of the plaintiff.

If the defendant is residing out of the jurisdiction of the court sending summons then such

summons shall be served according to sub-rule 3 except by registered post acknowledgement

due and provisions of rule 21 does not apply.

Where the summons if returned back to the court with the endorsement that the defendant or

his agent refused to accept the summons when tendered or transmitted to him, the court shall

declare that the summons had been duly served on the defendant.

In the following cases the court may declare deemed service of summons-

(a) The refusal or non-acceptance by the defendant,

(b) Where the summons was properly addressed, prepared and duly sent by registered post or

acknowledgement due and having been lost or mislaid and wasn’t received by the court

within 30 days from the date of issue of summons.

The High Court or the District Judge shall prepare the list of courier services.

Rule 9A: Summons given to the plaintiff for service

The types of summons provided under Rule 9A are issued by the court in addition to the

manner provided under Rule 9. In this kind of summons, the plaintiff’s is allowed to served

the summons personally to the defendant. Such summons must be sealed and signed.

The plaintiff must take the acknowledgement from the defendant and shall endorse a return

by stating the time and manner of service of original summons.

Such summons may be served by the court by a re-issue and in a normal manner.

These summon are known as Dasti Summons.

Personal or Direct Service [Rule 10-16, 18]

Rule 10 to 16 and 18 deals with the personal or direct service of summons upon the

defendant. This is an ordinary mode of service of summons.

Rule 10: Mode of Service: Service of the summons shall be made by delivering or tendering

a copy thereof signed by the judge or such officer as he appoints in this behalf, and sealed

with the seal of the court.

Rule 11: Service on several defendants- Where there are two or more defendants, service

shall be made on each of them.

Rule 12: Service to be on defendant in person when practicable, or on his agent- The

summons must be served to the defendant in person or to his authorised agent.

Rule 13: Service on agent by whom defendant carries on business- When the suit relates to

any business or work and is against a person not resident within the jurisdiction of the court

issuing summons, such summons may be served upon any manager or agent who personally

carries on such business or work and is within the local limits of the court.

Rule 14: Service on agent in charge in suits for immovable property- In a suit to obtain a

relief with respect to an immovable property or for suit for compensation over such property,

it would be sufficient that the summons is served upon the agent who is in charge of the

property.

Rule 15: Where service may be on an adult member of defendant’s family- In cases where

the summons cannot be served due to absence of defendant for a reasonable time and the

agent also is not available to receive summons, then such service may be made to an adult

member residing with the defendant. It can be served both on male or female but only on

adult member of the family. In such cases a servant is not considered the family member of

the defendant. Also when adult female members of defendants refused to receive suit

summons, a conclusion can be drawn that summons are served on defendants in view of

Order V Rule 15, CPC.

Rule 16: Person served to sign acknowledgement- The serving officer shall require the

signature of the person accepting the summons to an acknowledgement of the service

endorsed on the original summons.

Rule 18: Endorsement of time and manner of service- The serving officer in all cases where

the summons has been served under Rule 16, shall endorse or annex on the original a return

stating the time and manner of service and name or address of the person identifying the

person or witnessing the delivery.

Substituted Service [Rule 17, 19-20]

Substituted service means the service of summons by a mode which is substituted for the

ordinary mode of service of summons.

For ordering substituted service as per Order 5 Rule 20, CPC it must be shown that the

respondent/defendant is keeping out of the way for the purpose of avoiding service or that for

any other reason, the summons cannot be served in the ordinary way1

.

Publication of notice in Newspaper:- When service of notice is intended by an advertisement

in a newspaper, the Newspaper shall be a daily Newspaper circulating in the locality in which

the respondent/defendant is last known to have actually and voluntarily resided or carried on

business or personally worked for gain2

.

There are two modes of substituted service of summons:

(a) Service without the order of the court

(b) Service with the order of the court

Service without the order of the court- Order V Rule 17 lays down following circumstance

when substituted service can be made on the defendant without the order of the court:

(i) Refusal of acknowledgement- Where the defendant or his agent refuses to sign the

acknowledgement.

(ii) Absence of defendant- Where the serving officer, after due and reasonable diligence,

cannot find the defendant who is absent from his residence at the time of service of summons

and cannot be found within a reasonable time and there is no authorized agent nor any other

person on whom such service can be made. When one of the above two circumstance exist,

the service of summons can be made by affixing a copy on the outer door or some other

conspicuous part of the house in which the defendant ordinarily resides or carries on business

or personally works for gain.

1 See. Maganti Krishna Durga Vs. Maganti Anil Kumar – 2015 (5) ALT 346 (D.B.)

2

Id.

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Procedure after such service: After affixing such copy of summons as stated above, the

serving officer shall then return the original to the court issuing summons with a report

endorsed thereon stating

(a) The fact about affixing the copy;

(b) The circumstances under which he did so;

(c) The name and address of the person, if any, by whom the house was identified and in

whose presence the copy was affixed.

Order V Rule 19 further provides that if the court is satisfied, either on affidavit or

examination on oath of serving officer, that the summon is duly served, it may either declare

the summons has been duly served or may make such inquiry as it thinks fit. If provisions of

Rule 19 are not complied with, service of summons cannot be said to be in accordance with

law3

.

In other words, Rule 19 provides that where a summons is returned under r. 17, the court

shall, if the return under that rule has not been verified by the affidavit of the serving officer,

and may, if it has been so verified, examine the serving officer on oath, or cause him to be so

examined by another Court, touching his proceedings, and may make such further enquiry in

the matter as it thinks fit; and shall either declare that the summons has been duly served or

order such service as it thinks fit4

.

Service with the order of the court- Order V Rule 20 provides the mode of service of

summons with the order of the court. If the court is satisfied that there is reason to believe

that defendant avoids service or for any other reasons, the summons cannot be served in the

ordinary way, in such case, the service may be affected in the following manner:

(i) By affixing a copy of summons in some conspicuous place in the court house, and in the

house in which the defendant is known to have last resided, carried on business or personally

worked for gain, or

(ii) In such other manner as it thinks fit.

The court may order service of summon by advertisement in a daily newspaper circulating in

the locality in which the defendant is last known to have resided or carried on business or

personally worked for gain [Rule 20 A]

3 State of J&K v. H.W. Mohammed, AIR 1972 SC 2538

4 See. Dr. K.C. Verma vs Asstt. Cit, (2004) 89 TTJ Del 129.

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Effect of substituted service of summons- Order V Rule 20(2) provides that the substituted

service is as effective as personal service, and such defendant shall be deemed to be duly

served in accordance with law. The court shall fix a time for the appearance of defendant and

give him reasonable opportunity to appear before court.

Such summons affixed is as effective as the service in the manner provided under the Rule.

In Satish Corporation Company v. Allahabad Bank5

, it was observed that while passing

order under Order V Rule 20 the court is required to record its satisfaction that there were

reasons to believe that the defendant was keeping out of the way for the purpose of avoiding

service or in the alternative it is required to record its satisfaction that for any other reasons

the summons could not be served in the ordinary way.

In Sunil Poddar v. Union Bank of India6

, the Court held that where summons was served by

newspaper publication, then the plea that the person sought to be served does not read such

newspaper is not open to the party.

Substitute service is not due service:- As per Explanation to Article 123 of Limitation Act,

1963, substitute service under Rule 20 of Order 5, CPC shall not be deemed to be a due

service. It was held in Maganti Krishna Durga Vs. Maganti Anil Kumar – 2015 (5) ALT

346 (D.B.).

Publication made by plaintiff in a news paper other than the one ordered by Court:- In Basant

Singh and another v. Roman Catholic Mission7

, it was held that its publication made by

plaintiff in a news paper other than the one ordered by Court. However, both the said papers

are local dailies having wide circulation in the area. Such a publication in the circumstances

of the case is a mere irregularity in service of summons. It would not invalidate the effect of

substituted service.

Non-Service of summons:- It was held in Maganti Krishna Durga’s case that second

proviso to Order 9 Rule 13, CPC makes it obligatory on the appellate court not to interfere

with ex parte decree unless it meets the statutory requirements, showing non-service of

summons or where there is sufficient cause for the wife not appearing before the Court.

5 AIR 1999 MP 21

6 AIR 2008 SC 1006,

7 2003 (1) ALT(SC) 1

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Service of summons in Rent Control cases:- In Bansilal Yadav v. Suraj Chand Bhagat

and others8

, it was observed that under rule 22 (4) of rent control rules, making affixture of

summons on the last known place of abode or business without making efforts to tender

service in person or to serve the same on adult member of their family or to send the same by

registered post is not legal.(2) Order of injunction by Rent Controller.

Permission to defend suit:- In summary suits for recovery of money under Order 37, CPC,

period of ten days to file application by defendant seeking permission to defend the suit be

computed from the date of service of summons for judgment and not from the date of service

of suit summons9

.

Order V is applicable to Execution proceedings:- It is not in dispute that the procedure

contemplated for service of notice under Order 5 is made applicable for service of notice in

the execution proceedings also10

.

Service by Post

Where the summons was properly addressed, prepaid and duly sent by registered post and

acknowledgement is lost or not received by the court within 30 days from the date of issue of

summons, the court shall declare that the summons has been duly served.

Thus, the court may adopt any of these modes accordingly for serving summons on the

defendant so that he is ensured fair trial and there is no delay in the progress of the suit.

Irregularity in service of summons

It has been held that procedural irregularity in the service of notice would not be bad in law

and consequential action would be sustained unless the defendant is able to show that

substantial prejudice was caused due to procedural lapse in making service to him [Prabhun

Ram Pukhan v. State of Assam (2015) 2 SCC (Civ) 331].

For example, A obtained by false representation an order for substituted service by giving

court to understand that B had been avoiding service. In such a case, substituted service shall

be deemed to have effect of personal service upon the defendant and will be valid unless he

shows any prejudice caused to him due to such service.

OTHER PROVISION RELATED TO SUMMONS:

8 2007 (2) ALT 491

9 See. Panduga Veera Reddy v. Bandaru Damodar Reddy and another – 2005 (3) ALT 417. L.

10 Pappasani Narayana Reddy v. Mandem Reddappa Reddy, 2004 (5) ALT 226.

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Rule 21: Service of summons where defendant resides within jurisdiction of another

court- The service of summons outside the jurisdiction of the court issuing, may be made in

any of the aforesaid manner provided under the rule, to the court other than the High Court in

whose jurisdiction defendant resides.

Rule 22: Service within presidency-town of summons issued by courts outside- Where a

summons issued by any court established beyond the limits of town of Calcutta, Madras and

Bombay is to be served within any such limits, it shall be sent to the Court of Small Causes

within whose jurisdiction it is to be served.

Rule 23: Duty of Court to which summons is sent- The Court to which a summons is sent

under rule 21 and rule 22 shall, upon receipt thereof, proceed as if it had been issued by such

court and shall return the summons to the court of issue, together with the record (if any) of

its proceedings with regard thereto.

Rule 24: Service on defendant in prison- The service of summons to a person confined in

prison shall be served to the officer in charge of prison for service on the defendant either by

post or by courier service or by any other mode of communication.

Rule 25: Service where defendant resides out of India and has no agent- if the suit is

instituted against a defendant residing outside India and he has no agent in India, then the

summon shall be sent to the defendant at the place where he is residing i.e. in any foreign

country.

The summons may be sent either by post or by courier service or by fax or by electronic mail

service or any other means provided by the High Court.

A defendant residing in Bangladesh and Pakistan may be served with the summons through

the court of that country except the High Court.

Rule 26: Service in foreign country through Political Agent or CourtWhere the defendant is residing in a foreign country;

The summons may be sent through the Ministry of Foreign Affairs of that Foreign Country to

such political agent or court, appointed or established by Central Government or to any court

situated in that country and not established or continued by Central Government, for being

served upon the defendant by post or otherwise.

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When such political agent or court returns the summons with an endorsement to the effect

that summons has been served, such endorsement shall be deemed to be the evidence of the

service.

Rule 26A- Summonses to be sent to officers of foreign countriesThe summons to be served on defendants residing or carrying on business or working for

gain in the foreign country shall be sent to an officer of the foreign country specified by

Central Government through Ministry of Foreign Affairs of India.

The endorsement returned by that officer shall be deemed to be the evidence of the service.

Rule 27: Service on civil public officer or on servant of Railway Company or local

authorityThe service of summons on the defendant who is a public servant (except mentioned in rule

28) or the servant of a railway company or local authority may be served to the head of the

office in which he is employed, together with a copy of it to be retained by the defendant.

Rule 28: Service on soldiers, sailor or airmen- Where the defendant is a soldier, sailor or

airman, the court shall send the summons for service to his commanding officer together with

a copy to be retained by the defendant.

Rule 29: Duty of person to whom summons is delivered or sent for service-

(1) Where a summons is delivered or sent to any person for service under rule 24, rule 27 or

rule 28, such person shall be bound to serve it if possible, and to return it under his signature,

with the written acknowledgement of the defendant, and such signature shall be deemed to be

evidence of service.

(2) Where from any cause service is impossible, the summons shall be returned to the court

with a full statement of such cause and of the steps taken to procure service, and such

statement shall be deemed to be evidence of non-service.

Rule 30: Substitution of letter for summons- This rule provides situation when serving of

summons does not seem to be proper, and in such situation the court sends a letter to the

defendant, who is entitled to this form of calling due to the rank of such defendant requiring

such mark of consideration or respect. However, this does not mean that all the particulars

required in summons will not be mentioned in such letter as it will be treated in all respects,

as a summons.

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This letter may be sent by post or by special messenger. 

http://www.patnalawcollege.ac.in/econtent/ISSUE%20AND%20SERVICE%20OF%20SUMMONS.pdf

Supreme Court of India - allottee holds the right of refund on demand as an unconditional absolute right, if the promoter fails to give possession of the unit within the time stipulated under the terms of the agreement

The Supreme Court of India vide its land mark judgement Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. (MANU/SC/1056/2021) dated November 11, 2021 held that the allottee holds the right of refund on demand as an unconditional absolute right, if the promoter fails to give possession of the unit within the time stipulated under the terms of the agreement regardless of unforeseen events or stay orders of the Court/Tribunal, provided that the allottee wishes to withdraw from the project.

Thus, the unqualified right of the allottee to seek refund is not dependent on any contingencies or stipulations.

Nomination vs Succession

Nomination vs Succession

 Several controversies have been witnessed in the High Courts of India on the subject of nomination.

Black's Law Dictionary defines "Nomination" as an appointment or designation of a person to fill an office or discharge a duty and "Nominee" as a person who has been nominated or proposed for an office. A nominee is a person that is appointed to receive an asset or investment in the event of one's death. A nominee may not necessarily be a legal heir or a relative.

The ownership of a property of a deceased person is distributed on the basis of the Will, in the absence of which, succession laws come into effect. The classification of heirs and who gets how much is different in different succession laws. The nominee holds the asset until the family members or dependants establish their claim on the same. But if a Will states otherwise, then it would discard all the nominations

Types of Succession

There are two types of successions, one is intestate succession and the other is testamentary succession.

Intestate succession: Intestate means when a person dies without making a Will, the property gets disposed between the family and relatives according to the law concerning the religion of the deceased. It will be according to Hindu succession, if a deceased is Hindu, similarly according to Muslim Personal Law, if a person is Muslim and if the deceased is of any other religion, then according to Indian Succession Act,1925.

Testamentary succession: Testamentary succession is a succession where a person can dispose of a property according to his own wish, and the disposition of the property generally occurs after death. Testamentary succession is based on two basic principles. Firstly, the testator must have a degree of understanding of what he is doing, along with the power to choose and secondly, he should not be forced to accept others opinion while making Will. Every religion allows testamentary succession, and anything which the testator holds such as the property, shares etc., can be provided to the intestate by the Will. Rules of testamentary succession are also prescribed on the basis of religion and contained in the Indian Succession Act.

Rationale Behind Nomination

Nomination is essentially a temporary arrangement so that property do not remain ownerless during the period where succession issues are resolved. Nomination is only a means and not an end. If nomination is not done, legal heirs may face complications in proving their right. Till that time, all the assets and investments, like mutual funds or insurance will remain with the respective companies. However, the rationale behind having a nominee is to have a person, who, in the event of death, will become a guardian of the assets and distribute it to the legal heirs.

A nomination saves many hassles and reduces formalities when, for example, payment of funds outstanding in a closed bank account of any deceased person is to be made. If there is a nomination in the account, the bank gets a perfectly valid discharge of liability if it makes the payment to the nominee. The other successors can then have no legal recourse against the bank under succession laws and they will get their share, if any, from the nominee. People are encouraged to make nominations in financial assets, and they are increasingly making such nominations, to reduce the complications and court cases arising in a situation where there are several claimants to a financial asset.

Legal Heir v Nominee

The legal position of the nominee has been a debated issue in India for a long time. Many instances arise, wherein an individual nominates a nominee, like while purchasing an Insurance Policy or Shares or while creating a fixed deposit in a bank. The role of the nominee in these instances are highlighted below:

HEADING	NOMINATION VS. SUCCESSION
Insurance	The apex court in the case of Smt. Sarbati Devi vs. Smt. Usha Devi1 held that, a mere nomination made under section 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount; however, can be claimed by the heirs of the assured in accordance with the law of succession governing them. Now the situation under the Insurance Laws (Amendment) Act 2015 (hereinafter "Act") has changed, where a holder of a life insurance policy nominates his parents, or his spouse, or his children, or his spouse and children or any of them, the nominee or the nominees shall be beneficially entitled to the amount payable by the insurance company to him or them. Further, where the nominee or nominees so elected above, dies after the person whose life is insured, but before the amount is received, then the legal heirs of the nominee or the nominees (as the case may be) shall be beneficiary entitled to such, to the amount which represents the share of the nominee or nominees so dying. The Act clearly specifies that, a nominee shall only get such beneficial interest, where the nominee or the nominees so elected are the parents of the person so insured, or his spouse, or his children, or his spouse and children or any of them.
Fixed Deposits and Employees Provident fund	Vide notification dated June 09, 2005, RBI has notified that in case of deposit accounts where the depositor had utilized the nomination facility and made a valid nomination clause, the payment of the balance in the deposit account to the nominee of a deceased deposit account holder represents a valid discharge of the bank's liability provided that nominee would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to him shall not affect the right or claim which any person may have against the nominee to whom the payment is made. In case where the deceased depositor had not made any nomination, the repayment is made to the legal heirs. Employees Provident Fund: Employee provident fund, the nominee inherits the funds, according to EPF rules, one needs to appoint his family member as nominee unless he has no family, then only he can appoint someone else. If he acquires a family his old nomination becomes invalid and he needs to make new nomination.
Shares and Securities	There is no decision of the Apex court which conclusively answers the question vis-à-vis a nomination of shares per se. Considering the case of Dayagen Private Limited v Rajendra Dorian Punj and Anr2 2008, the Hon'ble Delhi High Court, giving a strict interpretation to article 109A of the Companies Act, made it abundantly clear that the intendment of the legislature is to override the general law of succession and to carve out an exception in relation to nomination made in respect of shares and debentures. The procedural requirements laid down in the said section, for such overriding effect to be given, have to be strictly adhered to i.e. the nomination should be made in the prescribed manner. In the present case, the nomination was not properly attested by any witness, hence invalid. Subsequently in the year 2010, in the case of Harsha Nitin Kokate vs. The Saraswat Co-operative Bank Limited & Ors3 the Hon'ble Bombay High court held that, Section 109A of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights thereunder in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case. So, the nomination made shall be valid and the legal heirs of the deceased shall have no claim on the deceased. This has further been abundantly clarified by the provisions of Section 72 of the Companies Act, 2013, that, notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, where a holder of securities of a company or joint holders of the securities (as the case may be) appoints a nominee in a prescribed manner, then in the event of the death of the holder or all such joint holders, the nominee so appointed shall be entitled to all the rights in the securities, of the holder or, as the case may be, of all the joint holders, in relation to such securities, to the exclusion of all other persons, unless such nomination is varied or cancelled in the prescribed manner.
Real Estate	Property or Real Estate of the testator can be divided into 4 parts, self-acquired, inherited ancestral property, jointly owned and property under the Society Act. The Hon'ble Supreme Court, in the case of Smt. Sarbati Devi vs. Smt. Usha Devi4, which was decided in 1983, held that the nominee is a trustee of the property and is liable to hand it over to the legal heirs. The High Court while following Sarbati Devi case held that it is well settled that mere nomination made in favour of a person does not have the effect of conferring on the nominee any beneficial interest in property after the death of the person concerned. The nomination indicates the hand which is authorized to receive the amount or manage the property. Following the above case, the Hon'ble High Court of Delhi in the case of Rampali v.State Govt of NCT(Delhi) where appellant was the sister of the deceased who had filed an appeal to revoke the succession certificate granted to the daughter and husband of the deceased on the ground that the deceased had not been residing with the defendant for over 35 years and had named the appellant as the nominee as per official government records. The Hon'ble Delhi High court held that nomination is not a Will in law and in the absence of any Will, only legal heirs (as per the Hindu Succession Act) shall be entitled to inherit the property of the deceased. Hence, the appeal was dismissed. Talking about the ancestral property, the Apex court in the case of U.R.Virupakshaiah vs Sarvamma & Anr5 held that rights of successors overrides every other mode including the Will. All family members get equal share of ancestral property in accordance with law, thus a nominee cannot exercise his right on ancestral inherited property. But in case of joint ownership of a property, the remaining owner becomes the sole owner. The legal requirement is that the co-owners need to take the title at same time, in the same agreement, with equal interest. The Hon'ble Supreme court got another twist in March 2016 in the case of Indrani Wahi v. Registrar of Cooperative Societies & Ors, wherein it stated that, "a cooperative society cannot challenge the transfer of property to the nominee, if she is a relative of the deceased. The nominee of a deceased member is entitled to ownership by transfer, if she is a relative of the deceased person, who made the nomination in her name, according to the record of the cooperative society and the co-operative society cannot challenge the right of nominee."

Conclusion

From the instances stated above, it is not clear whether nomination should be given preference over testamentary/non-testamentary succession or vice-versa. One should always ensure that, for smooth flow of assets/wealth to the heirs, a Will made by the person should be in line with the nomination or the Will so made should specifically override nominations so that the basic object of the nomination made for a particular subject matter is not defeated. This will avoid any potential conflicts amongst the beneficiaries and the legal heirs.

Footnotes

1. (1984) 1 SCC 424

2. INDLAW DEL 1105 40

3. 2010(112) BomLR2014

4. (1984) 1 SCC 424

5. 1998 (4) Bom CR 506

CREDIT - LALIT MUNSHI - 

Agama Law Associates

https://www.mondaq.com/india/family-law/1167570/nomination-vs-succession?email_access=on

Hon'ble High Courts shall entertain the Writ petitions and exercise their discretionary powers as provided in terms of Article 226 of the Constitution of India, only in exceptional circumstances

Hon'ble High Courts shall entertain the Writ petitions and exercise their discretionary powers as provided in terms of Article 226 of the Constitution of India, only in exceptional circumstances, where either the Adjudicating Authority acted without jurisdiction or there was violation of the principles of Natural Justice.

 In the case of Whirlpool Corpn. v. Registrar of Trade Marks [1998] 8 SCC 1 

wherein, the Supreme Court laid down the triple test for entertaining a writ petition despite availability of the remedy of an appeal in contractual matters i.e., 

firstly if the action of the respondent is illegal and without jurisdiction, 

secondly if the principles of natural justice have been violated and 

thirdly if the petitioner's fundamental rights have been violated.

In the case of Barik Biswas vs Union of India & Ors., Hon'ble High Court of Delhi also dismissed the writ petition and held that 

"the action of coming to this Court is premature and therefore, this Court is of the view that since the petitioners have effective and efficacious remedy under PMLA, necessitating institution of the petition by invoking extraordinary jurisdiction of this Court is not appropriate at this stage. If this Court were to enter into the merits of this case at this stage, it would amount to scuttling the statutorily engrafted mechanism i.e. PMLA."

However, the Hon'ble High Court of Madras in the case of A.Kamarunnisa Ghori and Others , accepted the Writ Petition on a limited point, where the Enforcement Directorate and Adjudicating Authority interpreted the law in a way different from the view point of the Hon'ble Court. Against the argument of presence of alternate remedy, the Hon'ble Court held that "in view of the fact that the order of the Appellate Tribunal is ultimately subject to an appeal to this Court under Section 42 of the Act. By the time the petitioners go before the Appellate Authority and thereafter come up before this Court under Section 42, the petitioners would have long lost possession of their properties" and hence prejudiced.

Madras High Court : the election dispute raised by the Petitioner in terms of by-laws can be adjudicated only through public fora (Courts) & not through Arbitration, which is confidential in nature.

 Madras Sporting Youngsters Football Club vs. Tamil Nadu Football Association and Ors. (Madras High Court, decided on 31.01.2022), 

was a Petition under Section 11 of the #arbitration & conciliation Act, 1996 for appointment of and #arbitrator, where this question was raised.

Here Madras Sporting Youngsters Football Club (MSYFC) was challenging the appointment of the 4th Respondent (R4), as the secretary of the TN Football Association, and was relying on the arbitration clause contained in the by-laws of the TN Football Association.

The court observed as follows:

1. The dispute raised by MSYFC is an election dispute TN Football Association, in which R4 was elected as Secretary. R4 is not a member of the TN Football association as only Football clubs can be its members.

2. Therefore R4 is not a party to the by-laws of the TN Football association, which contain the arbitration clause. He has neither signed the by-laws nor agreed to the terms and conditions contained therein. 

3. By-laws of a society are internal regulations of the said society applicable only to its members, and is a public document. It is not a person-centric or private documents. 

4. Therefore, several parties may be interested in the by-laws such as players, stage, members, etc. In view of the same, the election dispute raised by the Petitioner in terms of by-laws can be adjudicated only through public fora (Courts) & not through Arbitration, which is confidential in nature. 

5. Matters such as actions for enforcement of in-rem rights can only be adjudicated by public fora, and stand excluded from purview of private fora by necessary implication such disputes are incapable of being resolved in arbitration. (Reliance placed on Booz Allen & Hamilton Inc. V. SBI Home Finance Ltd., 2011 5 SCC 532)

6. If the subject matter of a dispute affects third party rights, it is not arbitrable. (Reliance placed on Vidya Drolia V. Durga Trading Corporation 2021 (2) SCC 1)

7. Disputes involving public interest or interests of numbers persons not parties before Court and disputes relating to election to public offices are non-arbitrable. (Reliance placed on Afcons Infrastructure Ltd. V. Cherian Varkey 2010 (8) SCC 24)

In view of the above observations, the Court dismissed the Petition under Section 11 for appointment of arbitrator. 

Delhi High Court : only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

Bhopal Dal Udyog v. Food Corporation Of India (Delhi High Court, Division Bench, decided on 04.01.2022), 

The Arbitrator had awarded Liquidated Damages (LD) in favour of the Respondent, relying on clause of the Agreement between the parties, in addition to the actual loss suffered by the Respondent (which was proved), as a result of the breach of Contract by the Appellant. 

The Court observed as follows:-

1. Section 74 of the Indian Contract Act, 1872 provides that when a sum has been named in a contract, as the amount to be paid on breach, the party complaining of breach is entitled, whether or not actual damage or loss is proved to have been caused, to receive from the party in breach, reasonable compensation not exceeding the amount so named. (Commonly called LD)

2. Such a sum named in the contract, is payable only if it is a genuine pre-estimate of damages, fixed by both parties, and found to be such by Court/arbitrator.

3. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

4. In the Present case as the actual damages suffered by the respondent were proven and accepted by the #Arbitrator, LD over and above such actual damages could not have been awarded.

(Reliance placed on Kailash Nath Associates v. DDA & Anr., (2015) 4 SCC 136)

On the basis of above, the Arbitral Award was set aside to the limited extent of the Liquidated Damages being awarded over and above the actual damages.

Supreme Court of India: Triple Tier Test for prosecution under Section 138 of the Negotiable Instruments Act, 1881

Supreme Court of India : Alka Khandu Avhad v. Amar Syamprasad Mishra (2021) 4 SCC 675

Honourable Supreme Court of India has designed the Triple Tier Test for prosecution under Section 138 of the Negotiable Instruments Act, 1881.Para 9. On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied:

9.1. That the cheque is drawn by a person and on an account maintained by him with a banker.

9.2. For the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability.

9.3. The said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account.

Supreme Court of India:here is no bar on limitation for filing of the corruption cases in India

  Supreme Court of India : P. Ramachandra Rao v. State of Karnataka (2002) 4 SCC 578

Honourable Supreme Court of India has held that there is no bar on limitation for filing of the corruption cases in India as Prevention of Corruption Act, 1988 does not have such scheme of limitations

Supreme Court : Even after a petition under Section 7 of the IBC is admitted and before the Committee of Creditors is formed, the parties can settle the dispute

 Supreme Court : Swiss Ribbons Pvt Ltd and Anr. v. Union of India and Ors (2019) 4 SCC 17

Even after a petition under Section 7 of the IBC is admitted and before the Committee of Creditors is formed, the parties can settle the dispute. Further, even after the CoC is formed, Section 12A of the IBC does provide for a mechanism through which the petition can be withdrawn (if the parties were to reach a settlement);

Supreme Court : NCLT can not dismiss the petition on the basis that the corporate debtor has initiated the process of settlement with the financial creditors

 Supreme Court :ES Krishnamurthy v. M/S Bharath Hi Tech Builders Pvt Ltd.,

the legal issue before the apex court was whether the NCLT can, without applying its mind to the merits of the petition under Section 7, simply dismiss the petition on the basis that the corporate debtor has initiated the process of settlement with the financial creditors.

The Court found that the NCLT and NCLAT had abdicated their jurisdiction to decide a petition under Section 7 by directing the respondent to settle the remaining claims within three months, noting that such a course of action is not contemplated under the IBC except either admit or reject an application respectively contemplating occurrence of debt and default.

The Bench stated that while settlements can be encouraged by the NCLT and NCLAT to achieve the objectives of the IBC, however, "they cannot direct them by acting as courts of equity."

Madras High Court : The private rights of an individual to acquire title by adverse possession cannot be upheld when the same is put up against the public rights of the beneficial owners

 Thankappan Vs The State of Tamil Nadu S.A.(MD)No.252 of 2005 JUDGMENT PRONOUNDED ON : 10.02.2022 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

The occupier can plead and prove title by adverse possession only as long as the Government property remains as a Government Poramboke, not being reserved for any public purposes. Only in those cases,the occupier can invoke Article 112 of the Limitation Act and claim title by adverse possession. In all other cases, where the properties are being classified and reserved for public purposes, since he cannot have anyanimus as against all the beneficial owners, the occupier cannot acquire title by adverse possession.The private rights of an individual to acquire title by adverse possession cannot be upheld when the same is put up against the public rights of the beneficial owners. Hence, no occupier can acquire title by adverse possession over a water body or any other land reserved for public purposes despite being in possession beyond the statutory period of 30 years

Suprem court : jurisdiction of the Lok Adalat under Section 20 is to facilitate a settlement of disputes between the parties in a case.

 NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY (NOIDA) V/s YUNUS & ORS. CIVIL APPEAL NO.901 OF 2022 (Arising out of SLP (C) No. 9927 of 2020)

It is clear beyond the shadow of any doubt that the jurisdiction of the Lok Adalat under Section 20 is to facilitate a settlement of disputes between the parties in a case. It has no adjudicatory role. It cannot decide a lis. All that it can do is to bring about a genuine compromise or settlement. 

The Lok Adalat by virtue of the express provisions is only a facilitator of settlement and compromise in regard to matters which are referred to it. It has no adjudicatory role (See State of Punjab & Anr. v. Jalour Singh & Ors (supra))

In Union of India v. Ananto (Dead) & Anr.14, this Court inter alia held as follows:

“7. The specific language used in sub-section (3) of Section 20 makes it clear that the Lok Adalat can dispose of a matter by way of a compromise or settlement between the parties. Two crucial terms in sub-sections (3) and(5) of Section 20 are "compromise" and "settlement". The former expression means settlement of differences by mutual concessions. It is an agreement reached by adjustment of conflicting or opposing claims by reciprocal modification of demands.

As per Termes de la Ley, "compromise is a mutual promise of two or more parties that are at controversy". As per Bouvier it is "an agreement between two or more persons, who, to avoid a law suit,amicably settle their differences, on such terms as they can agree upon".The word "compromise" implies some element of accommodation on each side. It is not apt to describe total surrender. [See Re NFU Development Trust Ltd. [1973] 1 All ER 135(Ch.D)]. A compromise is always bilateral and means mutual adjustment. "Settlement" is termination of legal proceedings by mutual consent. The case at hand did not involve compromise or settlement and could not have been disposed of by Lok Adalat. If no compromise or settlement is or could be arrived at, no order can be passed by the Lok Adalat. Therefore, question of merger of Lok Adalats order does not arise.”

https://www.livelaw.in/pdf_upload/new-okhla-industrial-development-authority-noida-vs-yunus-2022-livelaw-sc-123-408906.pdf

Supreme Court : parties are entitled for the refund of the Court Fees in case of private amicable negotiation without intervention of the Hon’ble Courts

 High Court of Madras v. M.C. Subramaniam (2021) 3 SCC 560

Honourable Supreme Court of India has held that parties are entitled for the refund of the Court Fees in case of private amicable negotiation without intervention of the Hon’ble Courts as prescribed under aegis of Section 89 of the Code of Civil Procedure, 1908

Supreme Court : the banks had failed to comply with their duties, and had in fact colluded with the developer in committing a fraud on the home buyers, and breaching public trust.

 Bikram Chaterjee vs. Union of India, [2018]147 SCL 154 wherein the Apex Court took cognizance of the fact that the banks had failed to comply with their duties, and had in fact colluded with the developer in committing a fraud on the home buyers, and breaching public trust. It may be useful to refer to paragraphs 69 and 127 of the judgement, which reads as under-

“69. In the instant matter, the question of larger public importance is involved. It is a shocking and surprising state of affairs that such large scale cheating has taken place and middle and poor class home buyers have been duped and deprived of their hard-earned money and lifetime savings and some of them had taken a loan from the bank and they are not getting houses. Bank has made payment to the builder, owners have the liability of making payment of amount with interest, homebuyers are still waiting for their dream houses to be completed.

127. The Forensic Auditors’ report makes it apparent that Bankers have failed to ensure and oversee that the money was invested in the projects. It was diverted elsewhere as rightly found by the Forensic Auditors. Even what was paid by the home buyers, had not been used in the projects and stands diverted. There was, in fact, no necessity for raising the loans from the bank. The money borrowed from banks was used to create other assets worth thousands of crores. Thus, the banks can realise their money from those assets  and from guarantors and not from the investment of home buyers, not from the buildings in which loans granted by banks have not been invested, which have been erected partially or some are at the nascent stage, for which hard- earned money has been paid by the home buyers”

Delhi High Court : The Bank has disbursed the loan amount to the builder, and in these circumstances, it remains to the seen as to whether, or not, the petitioner is at all liable.

 Hirdesh Kumar Pathak v Bank of Maharashtra WP (C) 6774/2021 Delhi High Court

“In our view, prima facie, it appears that the petitioner has been taken for a ride by the builder and it is not the petitioner, who has received the loan amount. The Bank has disbursed the loan amount to the builder, and in these circumstances, it remains to the seen as to whether, or not, the petitioner is at all liable. Moreover, the Resolution Plan appears to be on force and there would be no justification to subject the petitioner to the ongoing proceedings before the DRT at this stage. We, accordingly, stay further proceedings in O.A No. 166/2019 pending before the DRT-II, Delhi, till further orders.”

Housing Finance Company (Reserve Bank) Directions, 2021 issued by the RBI on 17.02.2021

Housing Finance Company (Reserve Bank) Directions, 2021 issued by the RBI on 17.02.2021

88. Disbursement of housing loan to individuals linked to the stages of construction

88.1 Disbursal of housing loans sanctioned to individuals shall be strictly linked to the stages of construction of the housing projects/ houses and upfront disbursal shall not be made in case of incomplete/ under-construction/ green field housing project/ houses.

88.2 HFCs while introducing any kind of product shall take into account the customer suitability and appropriateness issues and also ensure that the borrowers/customers are made fully aware of the risk and liabilities under such products.

88.3 In cases of projects sponsored by Government/ Statutory Authorities, HFCs may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.

88.4 HFCs shall desist from offering loan products involving servicing of the loan dues by builders/ developers etc. on behalf of the borrowers.

88.5 HFCs shall have in place a well-defined mechanism for effective monitoring of the progress of construction of housing projects and obtaining consent of the borrower(s) prior to release of payments to the builder/developer.

circular dated 09.07.2019 issued by the NHB,

 circular dated 09.07.2019 issued by the NHB, 

“3. Based on a review of the matter, HFCs are advised to desist from offering loan products involving servicing of the Loan dues by builders/ developers etc. on behalf of the borrowers. The prevalent products of HFCs, if any, should also be reviewed on the above lines. It is clarified that the above stipulation shall also be effected in cases wherein the HFC is yet to commence disbursements under the sanctioned cases.

Further, reference is also drawn to the Circular No.NHB(ND)/DRS/Policy Circular No.75/2016-17 dated July 01, 2016 whereby HFCs were again advised that disbursal of housing loans should be strictly linked to the stages of construction and no upfront disbursal should be made in case of incomplete/un-constructed projects. It is reiterated that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project/houses. In cases of projects sponsored by Government/Statutory Authorities, HFCs may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.

HFCs should have in place a well-defined mechanism for effective monitoring of the progress of construction of housing projects and obtaining consent of the borrower(s)

prior to release of payments to the builder/ developer. Merely obtaining borrower consent and release of funds by the company without linkage to the stage of construction will be seen as dereliction of duty of the HFC.”

RBI circular dated 01.07.2015, pertaining to the issue of subvention schemes or “innovative housing loan schemes”

RBI circular dated 01.07.2015, pertaining to the issue of subvention schemes or “innovative housing loan schemes”. Paragraph 3 (d) (e) and (f) of the same which read as under:

“(d) It has been observed that some banks have introduced certain innovative Housing Loan Schemes in association with developers / builders, e.g. upfront disbursal of sanctioned individual housing loans to the builders without linking the disbursals to various stages of construction of housing project, Interest/EMI on the housing loan availed of by the individual borrower being serviced by the builders during the construction period/ specified period, etc. This might include signing of tripartite agreement between the bank, the builder and the buyer of the housing unit. These loans products are popularly known by various names like 80:20, 75:25 schemes

Such housing loan products are likely to expose the banks as well as their home loan borrowers to additional risks e.g. in case of dispute between individual borrowers and developers/builders, default/ delayed payment of interest/ EMI by the developer/ builder during the agreed period on behalf of the borrower, non-completion of the project on time etc. Further, any delayed payments by developers/ builders on behalf of individual borrowers to banks may lead to lower credit rating/ scoring of such borrowers by credit information companies (CICs) as information about servicing of loans get passed on to the CICs on a regular basis. In cases, where bank loans are also disbursed upfront on behalf of their individual borrowers in a lump-sum to builders/ developers without any linkage to stages of constructions, banks run disproportionately higher exposures with concomitant risks of diversion of funds.

Banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project / houses and upfront disbursal should not be made in cases of incomplete /under-construction / green field housing projects.”

CCI- A mere letter from the company that the super area has increased is not sufficient to claim any amount from the allotte

 In the Matter of Belaire Owners' Association vs Dlf Limited, Huda CASE NO.19/2010 the Competition Commission of India held that 

" there may be instances where at the time of actual construction, certain minor changes are required to be made in some of the drawing board plans and the building is constructed slightly different from the drawing board plan but it,  more or less, conforms to the drawing board plan. In such a case, there may be either minor (say + 2%) increase or decrease in the super area as well as the carpet area of each apartment. However, the company if substantially changes the lay-out plan resulting, in more than 2% increase or decrease in super area, the allottees' consent should be obtained for such changes in the lay-out plans. Since the price paid by the allottee is per sq. ft. of super area, the price of the apartment would increase or decrease after the actual building is constructed. In order to lay a claim on the basis of increase in super area, the company is supposed to give information to the allottee about the difference in the initial building plan and the actually-constructed building plan on the basis of which the new super area is calculated. The actual plan should be the one submitted to the authorities for completion certificate and on the basis of which occupancy certificate is granted. The calculations of increased area should be sent to the allottee, so that the allottee knows and can verify on ground as to how his super area has increased. A mere letter from the company that the super area has increased is not sufficient to claim any amount from the allottee. Thus, whenever a claim on the basis of increase in super area is made, the company is bound to give the relevant information as to how the super area stands increased.

mutual settlement is always bilateral and not unilateral

 

In the Matter of Sharad Avasthi V. Pivotal Infrastructure Pvt. Ltd. Appeal No.140 of 2019 before THE HARYANA REAL ESTATE APPELLATE TRIBUNAL it was held that "mutual settlement is always bilateral and not unilateral. The affidavit-cum-undertaking given by one party cannot constitute the mutual settlement."

the allottees will not lose their right to claim interest for delayed possession merely on the ground that the conveyance deed had already been executed

 Amit Gupta Vs. Athena Infrastructure Ltd.Appeal No.79 of 2020 in Haryana Real Estate Appellate Tribunal,

The complaint filed by the appellant-allottee for grant of interest for delayed possession was dismissed by Ld. Haryana Real Estate Regulatory Authority, Gurugram The only ground taken in the order is that as the conveyance deed had already been executed, so the complaint was not maintainable.

It was held by the Appellate tribunal that 

"In our view the approach of the Ld. Authority is erroneous. The Hon'ble Apex Court in case Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and others vs. DLF Southern Homes Pvt. Ltd. (now known as BEGUR OMR Homes Pvt. Ltd.) and others 2020(3) R.C.R.(Civil) 544 has laid down as under:-

“The developer in the present case has undertaken to provide a service in the nature of developing residential flats with certain amenities and remains amenable to the jurisdiction of the Consumer Fora. Consequently, we are unable to subscribe to the view of the NCDRC that flat purchasers who obtained possession or executed Deeds of Conveyance have lost their right to make a claim for compensation for the delayed handing over of the flats.”

In view of the aforesaid ratio of law laid down by the Hon'ble Apex Court, the allottees will not lose their right to claim interest for delayed possession merely on the ground that the conveyance deed had already been executed. The execution of the conveyance deed cannot extinguish the cause of action which had already accrued to the allottee due to delay in delivery of possession. Thus, the impugned order passed by the Ld. Authority is not sustainable. Consequently, the present appeal is hereby allowed. The impugned order dated 19.12.2019 is hereby set aside.

Plaintiff is entitled to decree of specific performance where the plaintiff has done substantial acts in consequence of a contract/agreement to sell

 In Jinesh Kumar Jain v. Iris Paintal, MANU/DE/3387/2012, the DELHI HIGH Court held that 

the plaintiff is entitled to decree of specific performance where the plaintiff has done substantial acts in consequence of a contract/agreement to sell. Substantial acts obviously would mean and include payment of substantial amounts of money. The plaintiff may have paid 50% or more of the consideration or having paid a lesser consideration he could be in possession pursuant to the agreement to sell or otherwise is in the possession of the subject property or other substantial acts have been performed by the plaintiff, and acts which can be said to be substantial acts under Section 20(3) of Specific Relief Act. However, where the acts are not substantial i.e. merely 5% or 10% etc. of the consideration is paid i.e. less than substantial consideration is paid, (and for which a rough benchmark can be taken as 50% of the consideration), and/or plaintiff is not in possession of the subject land, the plaintiff is not entitled to the discretionary relief of specific performance.

SC - Right to appeal is neither an absolute right nor an ingredient of natural justice

 Vijay Prakash D. Mehta v. Collector of Customs (1988(4) SCC 402), wherein the  Apex Court observed: 

 "9. Right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant."

in The Anant Mills Co. Ltd. v. The State of Gujarat (1975(2) SCC 175), it was held that

"...The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal.

the terms of registered document can be altered, rescinded or varied only by subsequent registered document and not otherwise

 S. Saktivel(Dead) Vs. M. Venugopal Pillai & Others, (2000) 7 SCC 104 wherein the Supreme Court with reference to Section 92 proviso (4) of the Indian Evidence Act held thus:

the terms of the registered document can be altered, rescinded, or varied only by subsequent registered document and not otherwise

HIGH COURT OF CHHATTISGARH - No appeal will be maintainable against an interim order before the Division Bench

In the Matter of Amrit Homes Private Limited vs M/S Las Vista Residents Welfare  WA No.470 of 2019 at HIGH COURT OF CHHATTISGARH, BILASPUR held that appeal is maintainable only as provided under the statue; particularly Section 2 of the Chhattisgarh High Court (Appeal to Division Bench) Act, 2006. Section 2(1) carries a 'proviso' as well, which clearly says that no appeal will be maintainable against an interim order. This scope of the said proviso has been explained by a Full Bench of this Court as per the judgment date 25/01/2017 passed in WA No.255/2016, which says that only, if the issue has been decided creating a finality to the lis, will the appeal be maintainable before the Division Bench.

Supreme Court of India -Charge of the money paid by the home buyers must be treated as the highest priority.

in the matter of Bikram Chatterjee and others vs. Union of India and others in Writ Petition (C) No.940 of 2017 and other connected matters, (MANU/SC/0947/ 2019) The Apex Court held that charge of the money paid by the home buyers must be treated as the highest priority. It also held that "the public trust doctrine enshrined under Article 21of the Constitution of India is very much applicable upon the authorities and a duty is cast upon them to act fairly and reasonably in order to promote the public good and public interest."

Hence, amount charged by builder on account of delay in payment of installments which comes of ₹2,69,675/- approximately stands quashed.

 TDI Infrastructure Ltd. vs Sukhbir Singh decided on 25.03.2021. Haryana RERA Panchkula

Authority has passed a detailed order vide which settled all issues and are reproduced here in brief and be read as part of this order also:

a. Stamp Duty / Misc. expenses: Authority asked respondent to withdraw charges of amount ₹11,800/- subject to the condition that all these expenses will be borne by the consumer himself at the time of conveyance deed is executed and registered.

b. Club Membership Charges: On raise a demand of ₹50,000/- by the builder on account of club membership charges which is presently not functional, therefore, the Authority decides that these charges shall be payable by the consumer only when the club becomes functional.

c. Increase in super area: Authority directed that the area covered by staircase as per principles laid down in earlier decisions by HRERA, cannot form part of super area and the same is liable to be deducted from the super area to calculate the actual cost. Considering the cost incurred by builder to construct the staircase, Authority would hold that the builder shall divide the actual cost of the staircase by the total number of flats in the building and then the proportionate cost so arrived shall then be charged from the consumer.

d. Goods and services Tax: The builder is charging GST @ 12% while according to consumer, it should be @ 5%. The Authority directed that, the rate of charging GST by the builder will be based on the date when the conveyance deed is executed and registered in favor of consumer.

e. Interest on account of delay in offer of possession: As per clause 28 of FBA, builder was obliged to give possession to the consumer within 30 months which period had already lapsed in July, 2016. And, since builder offered Fit-out Possession but hedoes not have the occupation certificate (OC) till date, so the offer cannot be considered valid and consumer is entitled to receive interest on account of delay in offering possession from the deemed date of July, 2016 to the date on which a valid possession will be offered to him after obtaining the occupation certificate. Such interest as per decision of Authority in case Madhu Sareen vs BPTP Limited is to be calculated as per Rule 15 of HRERA Rules,2017. 

The HRERA also ordered:

2) Since occupation certificate has not been obtained till date so the Fit-out possession which was offered on 04.04.2019 cannot be considered a legally valid offer.

3) In current situation, when builder himself has failed to deliver a valid possession till date to consumer, he cannot be allowed to charge interest on delay in payment of installments, Hence, amount charged by builder on account of delay in payment of installments which comes of ₹2,69,675/- approximately stands quashed.

that every allegation / averment in the plaint, if not denied specifically or stated to be not admitted in the written statement, shall be taken to be admitted

 In the Matter of Balraj Taneja v. Sunil Madan (1999) 8 SCC 396 at page 404

Honorable Supreme Court of India has held that every allegation / averment of fact in the plaint, if not denied specifically or by necessary implication or stated to be not admitted in the written statement, shall be taken to be admitted in accordance to the Order 8 Rule of the Code of Civil Procedure 1908. The denial of the statement of the fact has to be Specific and not Evasive else it will be considered as deemed admitted in the eyes of the law. 

Supreme Court of India - The nature and extent of relief, to which a subsequent purchaser can be entitled to, would be fact dependent.

 In the matter of LAUREATE BUILDWELL PVT. LTD. V/s CHARANJEET SINGH CIVIL APPEAL NO. 7042 of 2019 decided on July 22, 2021 before THE SUPREME COURT OF INDIA

Fact of the Case

• Ms. Madhabi Venkatraman (hereafter “the original allottee”) applied on 29.08.2012 for allotment of a residential flat (No. 7013,(hereafter “the flat”) admeasuring 4545 sq. ft., in Nectarine Tower "PARX LAUREATE" at Sector- 108, Expressway, Noida.

• On 16.10.2012, an allotment letter was issued to the original allottee

• According to the allotment letter, the possession of the flat was to be handed over within 36 months (from the date of allotment letter) i.e., latest by 15.10.2015.

• The original allottee made payment to the tune of ₹1,55,89,329/

• after noticing the slow pace of construction, the original allottee decided to sell the flat

• The purchaser and now complainant alleged that possession was not delivered in October, 2015 as  promised (in the allotment letter).

• The Complainant claims to have visited the builder’s office in last week of January, 2017 and was informed that possession of the said flat could not be delivered till the end of year 2017

• After this, the purchaser sought for refund of the amount paid, from the builder. On 08.03.2017, a legal notice was issued to the builder asking for refund of the amount of ₹1,93,70,883/- with interest

• The builder, Laureate denied the claim

• . It is in these circumstances, that the appellant approached the NCDRC, for direction to the builder to refund the entire sum of ₹1,93,70,883/- with interest at the rate of 24% from the respective dates when the instalments were paid to Laureate. In addition, ₹ 5,00,000/- as compensation and ₹ 2,00,000/- as litigation expenses were sought along with other costs.

• The NCDRC directed the Developer to refund the amount deposited with the developer in respect of subject flat No. 7013 with interest @ 10% p.a

Arguments of the Builder 

• Learned senior counsel submits that since the complainant was not the original allottee but a subsequent purchaser, he could not claim any interest. He relied upon two rulings of this Court in HUDA v. Raje Ram and the recent judgment of this Court in Wing Commander Arifur Rahman Khan and Anr. v. DLF Southern Homes Pvt. Ltd.

• It is submitted that in both these cases, this Court had categorically ruled that when the allottee in a housing project transfers his or her rights in favor of another, such a third party cannot claim equities to the same extent as the original allottee, especially as regards a claim for interest

Analysis and Conclusions:

• this court is of the opinion that the per se bar to the relief of interest on refund, enunciated by the decision in Raje Ram (supra) which was applied in Wg. Commander Arifur Rehman (supra) cannot be considered good law. 

• The nature and extent of relief, to which a subsequent purchaser can be entitled to, would be fact dependent.

• It would no doubt be fair to assume that the purchaser had knowledge of the delay. However, to attribute knowledge that such delay would continue indefinitely, based on an a priori assumption, would not be justified.

• the interests of justice demand that interest at least from that date ( Subsequent allottee purchasing the unit" should be granted, in favor of the respondent.

Punjab RERA - Long unexplained delay in pursuing the matter would obviously be hit by the bar of limitation.

 In the Matter of Indra Duggal V/s Chandigarh Overseas Pvt ltd. Case no. 1769 of 2020 decided on 07.07.2021 Before The Real Estate Regulatory Authority, Punjab

Fact of the Case 

• Unit was allotted on 26.09.2014
• Date of Builder buyer agreement was on 26.09.2014
• Entire payment has also been received by the Respondent.
• Date of Possession was 30.06.2016
• Possession has not been provided

It was held by the Authority That 

• There has been a complete inaction on the part of complainant for a period of nearly 6 years till the present complaint is filed on Aug 2020.
• Such a long unexplained delay in pursuing the matter would obviously be hit by the bar of limitation.
• The Entry at Serial no. 113 of the schedule of the limitation act,1963 provides that the limitation for any proceedings for which no separate period of limitation is provided would be 3 years from the time the right to sue accrues.
• The complaint is being dismissed as being barred by limitation.