Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 08.08.2026
Bombay High Court on Interim Measures in Arbitration: Enforceability of Undisputed Invoices and Third-Party Directions under Section 9
This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email idshobhit.Ica23@gmail.com.
This article provides a comprehensive overview and analysis of the Bombay High Court’s judgment in the commercial appeals involving Valentine Maritime Ltd (VML), Kreuz Subsea Pte Limited (KSS), and Oil and Natural Gas Corporation Ltd (ONGC). The case centers on interim measures granted in arbitration proceedings, the enforceability of undisputed invoices, and the rights of subcontractors and third parties in complex commercial contracts.
Background of the Dispute
Parties Involved:
Valentine Maritime Ltd (VML): Contractor, incorporated in Liberia, with operations in Abu Dhabi.
Kreuz Subsea Pte Limited (KSS): Subcontractor, incorporated in Singapore.
Oil and Natural Gas Corporation Ltd (ONGC): Principal employer, based in Mumbai, India.
Project Scope:
ONGC contracted VML for subsea pipeline installation and related works.
VML subcontracted part of the work to KSS.
Key Contractual Events:
ONGC awarded the contract to VML in August 2019.
VML appointed KSS as subcontractor in October 2019.
Disputes arose over payment of invoices, performance guarantees, and liquidated damages.
Core Issues in the Case
Non-Payment of Invoices:
KSS claimed VML failed to pay for work completed and certified by ONGC, despite VML receiving payment from ONGC.
VML withheld payments citing KSS’s failure to provide a performance bank guarantee and alleged delays.
Interim Measures under Arbitration Act:
KSS sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, requesting the court to secure payment by directing VML (or, failing that, ONGC) to deposit the disputed amount in court.
Impleadment of ONGC:
ONGC challenged its inclusion as a party, arguing there was no arbitration agreement between ONGC and KSS.
Court’s Analysis and Findings
1. Undisputed Invoices and Payment Obligations
The court found that VML was contractually obligated to pay KSS within 7 days of receiving payment from ONGC for work certified by ONGC.
VML did not dispute the May 2020 invoices within the stipulated 5-day period, making the claim crystallized and undisputed.
VML’s subsequent attempts to withhold payment based on counterclaims (liquidated damages, performance guarantees) were not valid grounds to delay payment of undisputed invoices.
2. Interim Measures and Security for Claims
The court upheld the Single Judge’s order directing VML to deposit the amount of US $2,403,073 (the value of the May 2020 invoices) in court.
If VML failed to deposit, ONGC was directed to deposit the amount from sums due to VML, ensuring KSS’s claim was secured pending arbitration.
The court emphasized that such interim measures are essential to preserve the efficacy of arbitration and prevent frustration of the arbitral process.
3. Impleadment and Orders Against Third Parties (ONGC)
The court clarified that while ONGC was not a party to the arbitration agreement between VML and KSS, it could be impleaded in Section 9 proceedings if its interests were likely to be affected.
The court has the power to direct third parties to deposit amounts in court to secure claims, provided such orders do not adjudicate disputes between the third party and the parties to the arbitration agreement.
4. Legal Principles Applied
The court relied on established precedents regarding:
The enforceability of undisputed invoices.
The scope of interim measures under Section 9 of the Arbitration Act.
The ability to grant orders against third parties to secure the subject matter of arbitration.
Key Takeaways and Implications
Prompt Dispute Notification: Parties must raise disputes within contractually stipulated periods; failure to do so can crystallize claims and limit defenses.
Securing Claims in Arbitration: Courts can order deposits or security to protect the interests of claimants in arbitration, especially where there is a risk of dissipation of assets or non-payment.
Third-Party Involvement: Even non-signatories to the arbitration agreement (like ONGC) can be directed to act (e.g., deposit funds) if necessary to secure the subject matter of the dispute.
Balance of Equities: The court balanced the interests of all parties, ensuring that interim measures did not prejudice ONGC’s rights vis-Γ -vis VML.
Conclusion
The Bombay High Court’s judgment in this case reinforces the importance of honoring contractual payment mechanisms, the role of interim measures in arbitration, and the court’s willingness to secure claims even against third parties when justice so requires. The decision provides valuable guidance for contractors, subcontractors, and employers involved in large infrastructure projects and complex commercial arbitrations.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 08.08.2026
Supreme Court Ruled on Classification of ‘Soft Serve’ Ice-Cream
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
In a landmark judgment, the Supreme Court of India addressed a crucial question affecting the food and beverage industry: Should ‘soft serve’βthe popular dessert sold at McDonald’s and similar outletsβbe classified as ‘ice-cream’ for the purposes of excise duty under the Central Excise Tariff Act? The case, Commissioner of Central Excise, New Delhi vs. M/s Connaught Plaza Restaurant (P) Ltd., has significant implications for manufacturers, retailers, and consumers alike.
Background of the Case
Connaught Plaza Restaurant (P) Ltd., the franchisee operating McDonald’s outlets in India, was engaged in selling various food items, including ‘soft serve.’ The company procured a liquid soft serve mix, which was processed and served to customers as a semi-solid, aerated dessert. The central issue was whether this ‘soft serve’ should be classified as ‘ice-cream’ (attracting 16% excise duty under heading 21.05) or under a different heading with nil or lower duty, as argued by the company.
The Legal Dispute
Revenue’s Stand: The Commissioner of Central Excise argued that ‘soft serve’ is commonly understood as ‘ice-cream’ by consumers and should be taxed accordingly under heading 21.05.
Assessee’s Stand: Connaught Plaza contended that ‘soft serve’ is technically different from ‘ice-cream’ due to its lower milk fat content (less than 6%) and semi-solid state. They argued for classification under headings 04.04 or 2108.91, which would attract nil duty.
Tribunal and Lower Authorities
The case saw conflicting decisions at various levels:
The adjudicating authority initially classified ‘soft serve’ under heading 04.04 (other dairy produce), then later under 21.05 (ice-cream), and finally under 2108.91 (edible preparations not elsewhere specified).
The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) ruled in favor of Connaught Plaza, holding that ‘soft serve’ was not ‘ice-cream’ as per technical definitions and thus attracted nil duty.
Supreme Court’s Analysis
The Core Question
The Supreme Court had to decide whether, in the absence of a statutory definition, ‘ice-cream’ should be interpreted by its technical meaning or by how it is understood in common parlance (everyday language).
The Common Parlance Test
The Court reviewed several precedents and reaffirmed that, unless a statute provides a technical definition, goods in excise law should be classified according to how they are understood by the average consumer. The Court noted:
Most consumers visiting McDonald’s for a ‘soft serve’ would consider it a type of ‘ice-cream,’ regardless of technical distinctions like milk fat content or serving temperature.
Marketing terminology or technical specifications do not override the common understanding of the product.
Rejection of Technical Arguments
The Court rejected the argument that ‘soft serve’ should be excluded from the ‘ice-cream’ category due to its lower fat content or semi-solid state. It also clarified that definitions from other statutes (like the Prevention of Food Adulteration Act) should not be imported into excise law, as their purposes differ.
Reference to Trade Notices
The Court also referred to a trade notice from the Central Excise Department, which classified ‘soft serve’ dispensed by vending machines as ‘ice-cream’ under heading 21.05, further supporting the revenue’s position.
The Final Ruling
The Supreme Court set aside the Tribunal’s decision and ruled in favor of the Commissioner of Central Excise. The Court held:
‘Soft serve’ is to be classified as ‘ice-cream’ under heading 21.05 of the Central Excise Tariff Act.
The product is subject to excise duty as claimed by the revenue.
Excerpt from the Judgment:
“In conclusion, we reject the view taken by the Tribunal and hold that βsoft serveβ is to be classified as βice-creamβ under heading 21.05 of the Act. … the appeals are allowed and the impugned orders of the Tribunal are set aside, leaving the parties to bear their own costs.”
Implications of the Judgment
For Businesses: Outlets selling ‘soft serve’ must classify it as ‘ice-cream’ for excise purposes and pay the applicable duty.
For Consumers: The decision clarifies that, in the eyes of the law, ‘soft serve’ is considered ‘ice-cream,’ aligning with popular perception.
For Legal Interpretation: The judgment reinforces the principle that, in the absence of technical definitions, common parlance prevails in tax classification.
Conclusion
The Supreme Court’s decision in the Connaught Plaza Restaurant case provides clarity on the classification of ‘soft serve’ and sets a precedent for similar disputes. By prioritizing the common understanding of products over technical distinctions, the Court has ensured that tax laws remain aligned with consumer perception and commercial reality.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 07.08.2026
Jurisdiction of RERA Authority to Grant Refund/Interest and Scope of High Court’s Power to Waive Pre-Deposit under Section 43(5) of the RERA Act- 2016
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email idamitnaren@outlook.com.
The Punjab & Haryana High Court recently delivered a significant judgment in a batch of writ petitions involving major real estate developers and the Haryana Real Estate Regulatory Authority (RERA). This article provides a detailed analysis of the case, the legal questions involved, the court’s reasoning, and its implications for promoters, allottees, and the real estate sector at large.
Background of the Case
Multiple real estate companies, including Ramprastha Promoters and Developers Pvt. Ltd., Athena Infrastructure Ltd., Selene Constructions Ltd., M/s Vipul Limited, SS Group Private Limited, and M/s Assotech Moonshine, challenged orders passed by the Haryana RERA. The core issues revolved around:
Jurisdiction of RERA to order refunds and interest to allottees under Sections 12, 14, 18, and 19 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act).
Whether the High Court can waive or relax the mandatory pre-deposit condition under Section 43(5) of the RERA Act for promoters appealing RERA orders.
Facts and Petitions
The developers had allotted flats to buyers under various projects, with agreements specifying possession dates and compensation for delays.
Due to delays in possession, buyers filed complaints before RERA, which ordered the developers to pay interest for the delay and, in some cases, refund amounts.
Developers argued that RERA lacked jurisdiction to grant such relief and that the mandatory pre-deposit for appeals was onerous and caused financial hardship.
Legal Issues Examined
1. Jurisdiction of RERA Authority vs. Adjudicating Officer
Developers’ Argument: Only the Adjudicating Officer (AO) could grant compensation and interest, not the RERA Authority.
Court’s Analysis:
The RERA Act distinguishes between ‘interest’ (for delayed possession/refund) and ‘compensation’ (for specific breaches or damages).
The Supreme Court in M/s NewTech Promoters and Developers Pvt. Ltd. v. State of UP clarified that RERA Authority can order refunds and interest for delayed possession, while the AO exclusively decides compensation claims.
The High Court affirmed that RERA Authority has jurisdiction to order refunds and interest, and such orders are within its statutory powers.
2. Waiver/Relaxation of Pre-Deposit for Appeals (Section 43(5))
Developers’ Argument: The pre-deposit requirement (depositing the amount ordered by RERA before appeal) is harsh and should be waivable by the High Court.
Court’s Analysis:
The pre-deposit is a statutory mandate to protect allottees and ensure serious appeals.
The Supreme Court has upheld such requirements as constitutional and not discriminatory, given the different obligations of promoters and allottees.
The High Court retains constitutional powers under Article 226 to waive the pre-deposit in cases of extreme hardship, but the burden is on the petitioner to prove genuine inability with documentary evidence.
In these cases, the developers failed to provide sufficient evidence of hardship or inability to pay; mere inconvenience or financial difficulty is not enough.
Key Findings and Directions
RERA Authority’s Jurisdiction:
RERA can order refunds and interest for delayed possession or non-delivery, but compensation claims must go to the Adjudicating Officer.
Pre-Deposit Requirement:
The statutory pre-deposit for appeals is valid and mandatory.
High Courts can waive it only in proven cases of extreme hardship, not as a routine matter.
Petitioners must provide clear financial evidence to support claims of hardship.
Relief to Petitioners:
The court granted an additional four weeks for the petitioners to make the pre-deposit, subject to a nominal payment to a welfare fund, to avoid further delays in appeals.
Implications for Real Estate Stakeholders
For Promoters:
Appeals against RERA orders require strict compliance with pre-deposit conditions.
Jurisdictional challenges to RERA’s power to order refunds/interest are unlikely to succeed post this judgment and the Supreme Court’s clarification.
Claims of financial hardship must be substantiated with concrete evidence.
For Allottees:
The judgment strengthens the enforceability of RERA orders for refunds and interest.
Allottees can expect timely relief and reduced delays in execution of RERA orders.
For Legal Practitioners:
The distinction between ‘interest’ and ‘compensation’ under RERA is now judicially settled.
The scope for challenging pre-deposit requirements is narrow and fact-specific.
Conclusion
This High Court judgment, in line with Supreme Court precedents, clarifies the powers of RERA Authorities and the appellate process under the RERA Act. It reinforces the statutory protections for homebuyers while balancing the rights of promoters, setting a clear precedent for future disputes in the real estate sector.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 07.08.2026
Bombay High Court’s Analysis of Interim Relief and Contractual Obligations under Section 37 of the Arbitration and Conciliation Act, 1996
This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email idshobhit.Ica23@gmail.com.
A recent judgment by the Bombay High Court in the case of Hella Infra Market Metal Private Limited versus Pushkaraj Ispat (India) LLP has brought to light important legal principles regarding interim measures in commercial arbitration, the enforceability of contract terms, and the protection of parties’ interests during ongoing disputes. This article provides a detailed overview of the dispute, the court’s findings, and its broader implications for commercial contracts and arbitration in India.
Background of the Dispute
The Agreement
Hella Infra Market Metal Pvt. Ltd. (“Hella”) and Pushkaraj Ispat (India) LLP (“Pushkaraj”) entered into an Operating License Agreement on September 11, 2023.
Under this agreement, Pushkaraj licensed certain industrial sheds, office space, and plant and machinery in Ahmednagar to Hella for five years (until September 2028) on an “as-is-where-is” basis.
Key financial terms included a security deposit of Rs. 3 crores and a monthly license fee of Rs. 30 lakhs, with a three-year lock-in period.
Termination and Dispute
Hella terminated the agreement on March 18, 2024, citing a material breach by Pushkaraj.
Upon termination, the agreement required the exchange of the licensed property and the security deposit, with interest on delayed refunds.
Disputes arose regarding payment of electricity charges, license fees, and the refund of the security deposit.
Key Contentions
Hella’s Position
Argued that the arbitral tribunal’s interim order was, in effect, a final award without addressing the refund of the security deposit.
Claimed that electricity charges and license fees were ordered to be paid without proper consideration of Hella’s submissions.
Asserted that all dues up to January/February 2024 were paid and that certain license fees had been waived by Pushkaraj.
Pushkaraj’s Position
Maintained that Hella’s termination was not in dispute, but the property should have been handed over.
Highlighted that the plant and machinery were encumbered to a bank, and license fees were to be deposited with the lender.
Contended that Hella’s claims for the security deposit were an afterthought and that Hella still owed significant dues, especially for electricity.
The Arbitral Tribunal’s Interim Order
Directed Hella to hand over the licensed property within six weeks, with Pushkaraj to refund the security deposit (with interest) depending on the arbitration outcome.
Issued a mandatory injunction against Hella from creating third-party rights on the property.
Ordered Hella to deposit Rs. 5.31 crores (half the license fees for early termination) and pay Rs. 2.71 crores towards electricity charges, plus Rs. 73.48 lakhs to the electricity distribution company.
Court’s Analysis and Findings
Nature of the Interim Order
The court found that the arbitral tribunal’s order was a reasonable interim measure, not a final award.
The tribunal correctly interpreted the contract, especially regarding deductions from the security deposit for amounts owed.
Contractual Obligations
Hella was contractually obliged to pay for electricity consumed and half the license fee for the residual lock-in period upon early termination.
The tribunal’s directions were based on crystallized and admitted liabilities, not speculative amounts.
Protective Measures
The court modified the order slightly, directing Pushkaraj to create a fixed deposit of Rs. 5.31 crores with a lien in favor of Hella, ensuring the deposit’s security pending arbitration.
The court emphasized that such interim measures are within the tribunal’s powers when amounts are clearly due and the subject matter of the dispute needs protection.
Legal Precedents
The judgment referenced several Supreme Court and High Court decisions, affirming that interim protection is justified when there is little dispute over the amounts owed and the subject matter is at risk.
Implications for Commercial Contracts and Arbitration
Enforceability of Contract Terms: The case underscores the importance of clear contractual provisions regarding termination, dues, and security deposits.
Interim Relief in Arbitration: Tribunals can grant interim measures to protect parties’ interests, especially when liabilities are clear and the subject matter is at risk.
Judicial Intervention: Courts will intervene only to the extent necessary to make interim orders workable, not to substitute their own views for those of the tribunal.
Conclusion
The Bombay High Court’s decision in Hella Infra Market Metal Pvt. Ltd. vs. Pushkaraj Ispat (India) LLP provides valuable guidance on the scope of interim measures in arbitration and the enforceability of commercial contract terms. Businesses entering into similar agreements should ensure clarity in their contracts and be prepared for the possibility of interim relief being granted to protect the subject matter of disputes during arbitration proceedings.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 07.08.2026
CESTAT Kolkata on SHIS License Utilization and Capital Goods Definition in Customs Dispute
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata recently delivered a significant judgment in the case of Usha Martin Limited, addressing the complex issue of utilizing Status Holder Incentive Scrips (SHIS) for importing capital goods under Indian customs regulations. This article provides a detailed analysis of the case, the legal arguments, and the implications for Indian exporters and manufacturers.
Background of the Case
Usha Martin Limited, a prominent manufacturer of iron and steel products, exported goods worth over Rs. 1,315 crore between 2010-11 and 2012-13. As a recognized Trading House, the company was granted SHIS scrips amounting to 1% of its export value, in accordance with the Foreign Trade Policy (FTP) 2009-14. These scrips allowed the company to import capital goods at concessional customs duty rates under Notification No. 104/2009-Cus.
The dispute arose when customs authorities alleged that Usha Martin had wrongly availed the SHIS benefit for certain importsβspecifically, items like “Whims Bottom Parts,” “Driving Wheels,” “Gaskets,” and “Spare Parts for Coke Oven Plant”βwhich were classified as parts/spares/components of capital goods. The authorities claimed that the company exceeded the permissible 10% duty debit limit for such items, violating the conditions of the notification and the FTP.
Key Legal Issues
Definition of Capital Goods: The central question was whether the imported items qualified as “capital goods” under Notification No. 104/2009-Cus. and the FTP 2009-14. The notification defines capital goods broadly, including plant, machinery, equipment, or accessories required for manufacturing, modernization, or expansion.
10% Restriction: The customs department argued that imports of parts/spares/components of capital goods imported earlier are subject to a 10% value restriction. Usha Martin contended that their imports were for new capital goods and modernization projects, not for previously imported machinery, and thus not subject to this cap.
Limitation and Penalty: The department invoked the extended limitation period and imposed penalties, alleging suppression of facts by Usha Martin. The company argued that all imports were transparently declared and that the extended period and penalties were unjustified.
Arguments Presented
Usha Martin Limited
Legitimate Use of SHIS: The company maintained that all imports were for capital goods or accessories used in modernization and expansion, supported by technical documents and Chartered Engineer’s Certificates.
Broad Definition: Cited multiple tribunal and Supreme Court judgments affirming the wide scope of “capital goods,” including parts and accessories.
No Suppression: Asserted that all details were disclosed to customs, and there was no intent to evade duty.
Procedural Lapses: Highlighted that the show cause notice was adjudicated beyond the statutory time limit, rendering the order invalid.
Customs Department
Excess Duty Debit: Alleged that Usha Martin exceeded the 10% limit for parts/spares/components.
Misclassification: Claimed that the imported items were not capital goods but merely parts, thus not eligible for full SHIS benefit.
Suppression of Facts: Accused the company of misrepresenting the nature of imports.
Tribunal’s Findings and Decision
Wide Definition Upheld: The tribunal reaffirmed that the definition of capital goods under the notification and FTP is broad, covering not just machinery but also accessories and parts required for modernization and expansion.
No Violation of 10% Rule: It was held that the 10% restriction applies only to parts/spares/components of capital goods imported earlier, not to new capital goods or their accessories. Usha Martin’s imports were for new projects and modernization, thus not subject to the cap.
No Suppression or Misdeclaration: The tribunal found no evidence of deliberate suppression or misrepresentation by Usha Martin. All imports were properly declared, and the SHIS scrips were presented to customs at the time of import.
Procedural Compliance: The tribunal noted procedural lapses by the department, including delayed adjudication of the show cause notice.
Order Set Aside: The demand for Rs. 1.3 crore in customs duty, interest, and penalty was quashed, and the appeal was allowed in favor of Usha Martin.
Implications for Exporters and Importers
Clarity on Capital Goods Definition: The judgment reinforces the inclusive definition of capital goods, benefiting manufacturers investing in modernization and expansion.
SHIS Utilization: Companies can confidently use SHIS scrips for importing a wide range of capital goods and accessories, provided they are for new projects and not for previously imported machinery.
Procedural Safeguards: The case highlights the importance of timely adjudication and transparent documentation in customs proceedings.
Conclusion
The CESTAT Kolkata’s decision in favor of Usha Martin Limited sets a significant precedent for the interpretation of SHIS license utilization and the definition of capital goods under Indian customs law. It provides much-needed clarity and relief to exporters and manufacturers seeking to upgrade their facilities, ensuring that the objectives of the Foreign Trade Policy are upheld.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 06.08.2026
Locked at the Port: Inside Indiaβs βΉ1.52 Trillion Customs Litigation Crisis
This Insightful Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com.
As of recent legal and official reports, there are approximately 38,000 to 40,000 cases pending specifically in customs matters across all major judicial and quasi-judicial forums in India. This represents a massive backlog, with a staggering litigation amount of βΉ1.52 lakh crore locked up in these disputes.
The structure of customs litigation in India flows from specialized tribunals up to the apex court. The volume of pending cases is split across three primary tiers:
CESTAT (Customs, Excise and Service Tax Appellate Tribunal): This quasi-judicial tribunal holds the largest chunk of customs-specific backlogs. Out of its total estimated backlog of roughly 72,000 to 80,000 indirect tax cases, customs matters constitute a significant portion.
High Courts: Thousands of customs appeals and writ petitions challenge CESTAT orders or provisional assessments under Section 130 of the Customs Act.
Supreme Court of India: The top court handles high-stakes customs classification and valuation matters. The Central Board of Indirect Taxes and Customs (CBIC) maintains dedicated quarterly tracking of admitted and pending revenue matters awaiting final judgment here.
Core Drivers of Customs Litigation
The persistent accumulation of customs disputes is primarily driven by specific legal and structural bottlenecks:
Classification Disputes (HS Codes): Importers and customs authorities frequently clash over product definitions, especially regarding composite goods and technological items.
Valuation and Transfer Pricing: Intense scrutiny by field formations and Special Valuation Branches (SVBs) over royalties, licence fees, and related-party transaction values routinely feeds new appeals.
Absence of Dispute Settlement Mechanisms: Since the Customs Settlement Commission became unavailable, there is a lack of structured exit paths for legacy cases, prompting trade bodies to heavily advocate for a dedicated Customs Amnesty Scheme.
While the Central Board of Indirect Taxes and Customs (CBIC) does not publish a live, automated dashboard isolating a single static percentage, continuous legal audits, tribunal studies, and trade grievance reports indicate that classification disputes constitute roughly 40% to 50% of all pending customs litigation in India.
When analyzing the volume of disputes and structural bottlenecks, the share of pendency unfolds through specific data points:
The Dominance of Classification in Litigation Volume
The ~45% Structural Share: In overall revenue litigation volumes (spanning CESTAT to the Supreme Court), classification disputesβspecifically disagreements over the 8-digit Harmonised System (HS) codesβconsistently rank as the single largest category of active court disputes.
Contrasting with Valuation: While technical trade facilitation reports (like those published by NACIN or industry commerce groups) point out that day-to-day clearance friction at port entry levels is heavily dominated by Valuation / Special Valuation Branch (SVB) issues (~19%), Classification issues dominate long-term court backlogs. Valuation disputes are often resolved via financial bonds or provisional clearance, whereas a rigid dispute over an HS code (such as whether an item is a structural component or an electronics accessory) routinely drives deep multi-tier appeals lasting years.
Why Classification Accounts for Nearly Half of the Backlog
The outsized percentage of classification pendency is locked into the system by three factors:
Vast Exemption Dependencies: In Indian customs, a minor change in the assigned HS code can swing an importer’s duty liability from 0% (under free-trade exemptions) to the maximum standard rate. High-stakes corporate demandsβsuch as the landmark $1.4 billion auto-component classification caseβclog up appellate backlogs because neither the revenue department nor the corporate entity is willing to yield.
Rapid Technological Evolution: Traditional tariff entries struggle to accommodate modern composite tech imports. High Courts and CESTAT are continually gridlocked trying to determine the “most akin” function of multi-use items (e.g., smart wearable bands vs. watches, or networking module components vs. generic electronic equipment).
The “Extended Period” Trigger: Customs authorities frequently issue Show Cause Notices alleging “willful mis-declaration” under Section 28(4) simply because an importer used a different tariff heading. This escalates minor interpretative differences into high-penalty litigation, compounding the multi-year backlog.
The Over-50% Tariff Trap: Why Pre-PO HSN Vetting is the Ultimate Customs Shield
With customs litigation in India locked in a massive multi-trillion rupee backlog across tribunals and High Courts, a staggering fact stands out to trade compliance officers: classification and related tariff matters account for over 50% of all litigations within the Customs Department.
For businesses relying on global supply chains, entering this judicial gridlock is costly, disruptive, and entirely avoidable.
Moving from ‘Damage Control’ to ‘Preventive Compliance’
The traditional approach to customs disputes in India has long been reactive. Importers frequently discover classification misalignments only after goods land at the port, or when a Show Cause Notice (SCN) is slapped against them alleging mis-declaration under Section 28 of the Customs Act. At this stage, companies are forced into “damage control” modeβsubmitting provisional bonds, paying differential duties under protest, and entering years of appellate battles.
To safeguard corporate balance sheets, the industry must pivot sharply toward a “preventive” compliance mode.
The absolute best practice to insulate your supply chain is to thoroughly vet the Harmonised System of Nomenclature (HSN), tariff descriptions, and exemption notification conditions even before a Purchase Order (PO) is issued to overseas suppliers.
The Silent Threat: CAROTAR Rules, 2020 and FTA Disallowances
The stakes of incorrect classification have exponentially magnified following the enforcement of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR).
Under these rigid regulations, an incorrect HSN or an inaccurate material description on a bill of entry does not just trigger a local classification dispute. It frequently leads to the absolute disallowance of Free Trade Agreement (FTA) or Preferential Trade Agreement (PTA) claims. When an FTA claim is dismantled due to a classification error, the importer is suddenly hit with standard, non-concessional duty rates alongside significant statutory penalties.
Empowering Corporate Teams: The Need for Legal & Classification Training
Technology is a formidable shield, but it is only as powerful as the hands that wield it. To truly institutionalize a preventive mindset, corporate procurement, tax, and logistics teams must be systematically trained on the legal aspects of customs classification.
Understanding the General Rules for the Interpretation (GIR) of the customs tariff, navigating Section and Chapter Notes, and recognizing the strict legal triggers of CAROTAR are no longer skills exclusive to lawyersβthey are essential core competencies for modern corporate teams to prevent catastrophic compliance errors at the port.
A Strategic Synergy: Technology Meets Legal Expertise
Recognizing this critical gap where technology must meet seasoned legal interpretation, Treximerce Technology and Consulting LLP and Advocate Ravi Shekhar Jha have teamed up. This unique collaboration bridges the best of both worlds: cutting-edge legal tech and deep courtroom litigation experience.
While Treximerceβs flagship platform, Trade Companion, enables compliance teams to run a precise 10-second verification check to validate HSN accuracy before a contract is signed, our joint advisory framework ensures that corporate teams are deeply trained to understand why those classifications matter legally. This combination short-circuits future complexities and customs litigation before an item ever boards a cargo vessel.
The Verdict
In customs law, a stitch in time doesn’t just save nineβit saves millions in locked-up revenue, bank guarantees, and legal expenses. By integrating automated pre-PO vetting with well-trained corporate teams, your business can confidently navigate India’s customs corridors, ensuring that preferential tariffs are fully protected and port clearances remain completely seamless.
Over 50% of Indian Customs litigation stems from a single vulnerability: HSN Classification.
Is your supply chain operating in a “preventive” mode, or are you constantly stuck in “damage control” after goods hit the port?
Waiting for a Show Cause Notice to verify your tariff headings is a high-risk strategy. An incorrect classification can instantly dismantle your FTA/PTA benefits under the strict CAROTAR Rules, 2020.
The Strategy:
1. Vet your HSN and tariff descriptions before the Purchase Order (PO) is issued. 2. Upskill your corporate procurement and tax teams on the legal nuances of customs classification.
To solve this exact bottleneck, Treximerce Technology and Consulting LLP and I have joined forces. By pairing their advanced Trade Companion platformβwhich allows a precise, 10-second HSN checkβwith specialized legal training and advisory, we are helping corporate teams kill litigation before it even starts.
How Advocate Ravi Shekhar Jha and Treximerce Train Corporate Teams to Kill Customs Litigation before placing the PO
Through a powerful blend of courtroom litigation experience and cutting-edge trade intelligence, Advocate Ravi Shekhar Jha and Treximerce are fundamentally rewriting how businesses approach border compliance. Their joint masterclasses dismantle traditional, reactive “damage control” by training corporate procurement, tax, and logistics teams to master the technical intricacies of the General Rules of Interpretation (GIR), Chapter Notes, and strict CAROTAR 2020 legal triggers. By transforming raw legal principles into actionable operational workflows, this collaborative training empowers your workforce to spot high-risk tariff anomalies and execute precise HSN vetting before a Purchase Order is ever issuedβeffectively killing multi-year customs disputes and catastrophic FTA disallowances at the absolute root of the supply chain. To ensure a seamless transition from theory to real-world application, every trainee receives complimentary, unrestricted access to the powerful Trade Companion product for 7 calendar days (1 week) absolutely FREE.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Source: The Original News Piece was published on the website of Times of India
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 06.08.2026
Supreme Court Clarifying RERAβs Scope, Homebuyer Rights, and Developer Obligations
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email idamitnaren@outlook.com.
The Supreme Court of India delivered a landmark judgment in the case of M/s. Newtech Promoters and Developers Pvt. Ltd. vs. State of UP & Ors. (Civil Appeal Nos. 6745-6749 of 2021 and connected matters), addressing crucial issues under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016, and the functioning of the Uttar Pradesh Real Estate Regulatory Authority (UP RERA). This article provides a detailed analysis of the judgment and its implications for homebuyers, promoters, and the real estate sector at large.
Background and Context
The appeals were filed by promoters and real estate developers challenging certain provisions of RERA, the UP Rules, and the functioning of UP RERA. The core issues revolved around the rights of homebuyers, the powers of the regulatory authority, and the obligations of promoters, especially in cases where possession of units was delayed or not delivered as per agreement.
Key Issues Decided by the Supreme Court
1. Applicability of RERA to Ongoing Projects
Retroactive Application: The Court held that RERA applies retroactively to ongoing projects where the completion certificate had not been issued at the time the Act came into force. This means that even agreements executed before RERA’s enactment are subject to its provisions if the project was incomplete.
Legislative Intent: The Act was designed to protect homebuyers, ensure transparency, and regulate the real estate sector, including ongoing projects, to prevent frauds and delays.
2. Jurisdiction for Refunds and Compensation
Distinct Remedies: The Court clarified that the right to refund (with interest) and the right to compensation are distinct. Refund claims are to be decided by the Regulatory Authority, while compensation claims fall under the jurisdiction of the Adjudicating Officer.
Summary vs. Detailed Inquiry: Refunds are to be processed expeditiously based on documentary evidence, while compensation requires a more detailed adjudicatory process.
3. Delegation of Powers to Single Member Benches
Permissibility: The Court upheld the delegation of powers by the Authority to a single member for hearing complaints under Section 31 of the Act, provided such delegation is made by a general or special order as per Section 81 of RERA.
Quasi-Judicial Functions: The power to decide complaints regarding refunds can be delegated, but the power to adjudicate compensation (vested in the Adjudicating Officer) is non-delegable.
4. Pre-Deposit Requirement for Appeals
Sustainability: The requirement for promoters to deposit at least 30% of the penalty or the total amount to be paid to the allottee (including interest and compensation) before an appeal is entertained by the Appellate Tribunal was upheld as constitutional and non-discriminatory.
Purpose: This ensures that homebuyers’ interests are protected and discourages frivolous appeals by promoters.
5. Recovery of Principal Amount as Arrears of Land Revenue
Enforceability: The Court clarified that the principal amount determined as refundable to the allottee, along with interest, is recoverable as arrears of land revenue under Section 40(1) of the Act. This harmonizes the Act’s intent to provide speedy recovery for homebuyers.
Implications for Stakeholders
For Homebuyers
Enhanced Protection: Homebuyers have an unqualified right to seek refunds with interest if possession is delayed, regardless of when the agreement was signed.
Speedy Redressal: The regulatory authority is empowered to process refund claims quickly, while compensation claims are handled by the Adjudicating Officer.
For Promoters/Developers
Compliance Obligations: Promoters must comply with RERA for ongoing projects and are subject to refund and compensation provisions.
Pre-Deposit for Appeals: Promoters must make the required pre-deposit before appealing, ensuring only genuine appeals are filed.
For the Real Estate Sector
Regulatory Clarity: The judgment provides clear delineation of powers between the Authority and Adjudicating Officer, streamlining dispute resolution.
Transparency and Accountability: The Act, as interpreted by the Court, enforces higher standards of transparency, professionalism, and consumer protection.
Conclusion
The Supreme Court’s judgment in the Newtech Promoters case is a significant milestone in real estate regulation in India. It reinforces the rights of homebuyers, clarifies the roles of regulatory authorities, and ensures that the objectives of RERA are fulfilled. Stakeholders must align their practices with these legal standards to foster a fair, transparent, and accountable real estate market.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 06.08.2026
Supreme Court on Order II Rule 2 CPC: Reliefs Unavailable Due to Statutory Bar
This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email idshobhit.Ica23@gmail.com.
This article provides a comprehensive overview of the Supreme Court of India’s recent judgment in the dispute between Cuddalore Powergen Corporation Ltd. and Chemplast Cuddalore Vinyls Ltd., a case that clarifies the application of Order II Rule 2 of the Civil Procedure Code (CPC) in property and contract disputes.
Background and Factual Matrix
Parties and Property: The dispute centers on a 1-acre property in Thiyagavalli, Cuddalore, Tamil Nadu. Chemplast Cuddalore Vinyls Ltd. (the respondent) entered into an agreement for sale with Mrs. Senthamizh Selvi (the original owner) in January 2007, paid the full consideration, and received possession. An irrevocable Power of Attorney was executed in their favor.
Subsequent Transactions: Despite the agreement, the original owner later revoked the Power of Attorney and attempted to return the sale consideration, which Chemplast refused. Meanwhile, the owner sold the property to Cuddalore Powergen Corporation Ltd. (the appellant) in January 2008.
Legal Hurdles: Registration of the sale deed in Chemplast’s favor was refused by authorities due to a government order reserving the land for a thermal power station. This order was later quashed by the Madras High Court, restoring the right to register such properties.
Legal Proceedings
First Suit (O.S. No. 28 of 2008): Chemplast filed for a permanent injunction to restrain dispossession, as threats to their possession emerged.
Second Suit (O.S. No. 122 of 2008): After learning of the sale to Powergen, Chemplast filed for specific performance of the original sale agreement, declaration of the subsequent sale as void, and a permanent injunction.
Appellant’s Objection: Powergen argued that the second suit was barred by Order II Rule 2 CPC, as Chemplast could have claimed all reliefs in the first suit.
Key Legal Issues
What is Order II Rule 2 CPC?
Order II Rule 2 CPC prevents plaintiffs from splitting claims or remedies arising from the same cause of action into multiple suits. If a plaintiff omits a relief in the first suit (without court’s leave), they cannot claim it in a subsequent suit based on the same cause of action.
Supreme Court’s Analysis
Distinct Causes of Action: The Court emphasized that Order II Rule 2 applies only if both suits arise from the same cause of action. If the evidence and facts required to prove each suit are different, the bar does not apply.
Availability of Relief: The Court clarified that a plaintiff cannot be penalized for not seeking a relief that was impossible to obtain at the time of the first suit. In this case, due to the government ban on registration, Chemplast could not have sought specific performance earlier.
Subsequent Events: The lifting of the government ban by the High Court created a new cause of action, enabling Chemplast to seek specific performance and cancellation of the subsequent sale.
Holistic Reading of Pleadings: The Court reiterated that the entire plaint must be read as a whole to determine the true cause of action and whether the bar applies.
Judgment and Implications
Supreme Court’s Decision: The Court held that the bar under Order II Rule 2 CPC did not apply. Chemplast’s second suit was based on a new cause of action that arose only after the government ban was lifted. The appeals by Powergen were dismissed, and the trial court was directed to decide both suits on their merits.
Legal Precedent: This judgment clarifies that:
Plaintiffs are not barred from seeking reliefs that were unavailable due to legal or factual impossibility at the time of the first suit.
The existence of a government order or statutory bar can create a new cause of action when lifted.
Courts must avoid a technical approach and focus on substantive justice.
Practical Takeaways
For Litigants: Always include all available claims and reliefs in the first suit, unless a relief is genuinely unavailable due to external legal constraints.
For Legal Practitioners: Carefully analyze the cause of action and the timing of relief availability. Use subsequent events (like lifting of bans) to justify new suits if necessary.
For Property Transactions: Ensure due diligence regarding government notifications or restrictions that may affect the ability to register or transfer property.
Conclusion
The Supreme Court’s judgment in this case is a significant development in Indian property and contract law, reinforcing the principle that justice should not be denied due to technicalities when genuine legal barriers exist. It provides clarity on the application of Order II Rule 2 CPC and protects the rights of parties affected by unforeseen legal impediments.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 06.08.2026
Madras High Court Sets Aside Customs Order and Recovery Notice for Violation of Natural Justice
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
JK Paper Limited, a leading manufacturer and exporter of paper and paperboard products, found itself at the center of a legal dispute with the Chennai Customs Department. The case revolved around the recovery of duty drawback benefits previously granted to the company for exports made between April and December 2022.
The customs authorities alleged that JK Paper Limited failed to realize export sale proceeds within the period prescribed under the Foreign Exchange Management Act, 1999, and consequently issued an order demanding repayment of the duty drawback amounting to Rs. 1,67,98,813, along with a recovery notice.
The Dispute
The customs department’s order was based on the conclusion that there was a shortfall in the realization of export proceeds for certain shipping bills, compared to the declared export value. JK Paper Limited, however, maintained that it had submitted all necessary documentation, including Electronic Bank Realisation Certificates (eBRCs), to prove that the export proceeds had indeed been realized. Despite this, the customs authorities proceeded to pass the adverse order without granting the company a personal hearing.
Legal Challenge
JK Paper Limited challenged the customs order and the recovery notice before the High Court of Madras, filing a writ petition under Article 226 of the Constitution of India. The company argued that the customs authorities had violated the principles of natural justice by failing to provide a reasonable opportunity for a personal hearing, as required under Rule 16A(1) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, and Rule 18(1) of the Customs and Central Excise Duties Drawback Rules, 2017.
Court’s Findings
The High Court, presided over by Justice Hemant Chandangoudar, examined the records and submissions from both sides. The Court found that:
Submission of Evidence: JK Paper Limited had furnished documents, including eBRCs, to establish realization of export proceeds.
Civil Consequences: The customs authority’s finding of short realization had significant civil consequences, as it led to the recovery of previously granted duty drawback.
Violation of Natural Justice: The customs department failed to provide JK Paper Limited with a personal hearing before passing the adverse order, which is a mandatory requirement under the relevant rules.
The Verdict
The High Court ruled in favor of JK Paper Limited, setting aside both the customs order and the recovery notice. The Court held that the order was vitiated due to a violation of the principles of natural justice. The matter was remanded to the customs authority for fresh consideration, with clear instructions:
The customs authority must provide JK Paper Limited a reasonable opportunity for a personal hearing.
All documents submitted by the company must be duly considered.
A fresh order must be passed in accordance with the law within two months from the date of receipt of the Court’s order.
Implications
This judgment underscores the importance of adhering to the principles of natural justice in administrative proceedings, especially when decisions have significant financial and civil consequences. It also highlights the necessity for authorities to provide affected parties with a fair opportunity to present their case before passing adverse orders.
The case serves as a reminder to both exporters and regulatory authorities about the procedural safeguards enshrined in law, ensuring that justice is not only done but is seen to be done.
This outcome reinforces the judiciary’s role in upholding due process and protecting the rights of businesses against arbitrary administrative actions.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 05.08.2026
High Court of Punjab & Haryana Remands RERA Registration Dispute: Judicial Scrutiny of Regulatory Compliance, Contractual Rights, and Project Transparency
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email idamitnaren@outlook.com.
This article provides an in-depth look at the recent decision by the High Court of Punjab & Haryana in the RERA Appeal No. 48 of 2022, involving Tri Star Hotels Private Limited (the appellant) and Curo India Private Limited (the respondent), and its implications for real estate regulation, project registration, and stakeholder rights in India.
Background of the Dispute
The Initial Agreement
In 2006, Tri Star Hotels Pvt. Ltd. entered into an agreement with Dynamic Continental (now Curo India Pvt. Ltd.) to purchase 1.53 acres of land for developing a five-star hotel in Mullanpur-Garibas, Punjab.
Tri Star paid Rs. 6.5 crores as part of a total consideration of Rs. 12.5 crores.
The agreement was contingent on obtaining Change of Land Use (CLU) permissions and other regulatory approvals.
Breakdown and Allegations
In 2008, Curo India informed Tri Star that due to insufficient frontage (120 ft. instead of the required 200 ft.), CLU could not be obtained, frustrating the agreement.
Tri Star alleged that Curo India later developed the same land for other commercial and residential projects (Curo One Part I & II) without honoring the original agreement or refunding the money.
Tri Star sought revocation of Curo India’s RERA registration and compensation.
Legal Proceedings and Key Contentions
Appellant’s (Tri Star) Arguments
Violation of RERA and Transparency
Curo India failed to disclose the prior agreement and did not deposit 70% of the collected funds in a separate account as required by RERA.
The Non-Encumbrance Certificates (NECs) submitted for project registration were allegedly flawed and not in compliance with statutory requirements.
Right to Refund and Penalty
As per the agreement, failure to obtain CLU within 24 months entitled Tri Star to a refund and penalty.
Tri Star argued that the main grievance was not specific performance but revocation of project registration due to regulatory violations.
Respondent’s (Curo India) Arguments
Frustration of Contract
The agreement was frustrated due to a government notification requiring a 200 ft. frontage for hotels, which the land did not have.
The transaction was a commercial contract, not a promoter-allottee relationship under RERA.
Jurisdiction and Limitation
The dispute arose before the enactment of RERA (2016), and thus, the authority lacked jurisdiction.
Tri Star’s claim was time-barred due to a 12-year delay in seeking legal remedy.
Court’s Analysis and Findings
1. Nature of the Agreement and Rights
The court found that the agreement was for the purchase of land, not for an allotment in a registered real estate project.
At the time of the agreement, Curo India was not a registered promoter, nor was the land part of a registered project.
Tri Star was not considered an “allottee” under RERA.
2. Delay and Inaction
There was a 12-year gap with no legal action or communication from Tri Star, undermining the enforceability of the agreement.
The court held that the agreement had lost its legal significance due to prolonged inaction.
3. Irregularities in Project Registration
The court noted serious lapses in the registration and revision of the Curo One projects:
NECs were not issued as per statutory requirements (not through a qualified advocate or proper revenue authority).
Successive revisions of project registration were granted without proper legal basis or compliance with Section 14 of RERA.
The transfer of project promoter without the consent of two-thirds of allottees was flagged as irregular.
4. Authority’s Responsibility
The Real Estate Regulatory Authority (RERA) failed to ensure compliance with mandatory documentation and transparency norms.
The court emphasized the importance of NECs and proper disclosure for safeguarding allottees and stakeholders.
Final Judgment and Directions
The High Court set aside the orders of the RERA Authority and the Appellate Tribunal, remanding the matter back to the Authority for fresh consideration of the registration and revised registration of both Curo One projects.
The Authority was directed to pass a new order in accordance with the law, specifically scrutinizing the validity of NECs and compliance with RERA provisions.
The liberty for Tri Star to maintain a complaint for non-disclosure of vital information was preserved.
Key Takeaways for Stakeholders
Strict Compliance with RERA
Promoters must ensure all statutory documents, especially NECs, are obtained and submitted as per the law.
Any manipulation or dilution of mandatory clauses in agreements or declarations can lead to regulatory action.
Timely Legal Action
Parties must act promptly to enforce contractual rights; prolonged inaction can render agreements unenforceable.
Transparency and Disclosure
Authorities and promoters are both responsible for maintaining transparency, especially regarding encumbrances and prior agreements.
Remedies and Revocation
RERA provides for revocation of project registration in cases of default, fraud, or unfair practices, but due process and proper documentation are essential.
Conclusion
This case underscores the critical importance of regulatory compliance, transparency, and timely action in real estate transactions. It also highlights the evolving role of RERA and the judiciary in protecting the interests of all stakeholders in the real estate sector.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
