General

1. Legal system

How would you explain your jurisdiction’s legal system to an investor?

The Indian legal system bears the influence of the English common law system, which is reliant on the value of binding case law precedents, rulings on equity and the principles of natural justice. Despite the influence of the English common law system, the Indian legal system has also incorporated elements of civil law, such as certain investigative powers of the judiciary relating to the institution of commissions of enquiry or questioning of witnesses.

The judicial hierarchy flows upwards from the district or lower courts in every district or city to the High Courts in the states, all subject to the supervision and judgment of the apex court of India, the Supreme Court. With respect to disputes pertaining to transfer of immovable property, the courts’ powers extend to granting injunctions in accordance with the Civil Procedure Code 1908 (CPC) and ordering performance of contracts under the Specific Relief Act 1963 (SRA).

Broadly, the key legislation governing real estate in India includes the following:

• Transfer of Property Act 1882 (TPA);
• Indian Contract Act 1872 (Contract Act);
• Real Estate (Regulation and Development) Act 2016 (RERA);
• Registration Act 1908 (Registration Act);
• Indian Stamp Act 1899 (Stamp Act); and
• Indian Easements Act 1882 (Easements Act).

In addition, various other pieces of legislation, including the CPC, SRA and a gamut of state-specific laws and municipal laws, deal with development and zoning norms, prescription of the conditions for obtaining development licences, completion certificates, and occupation certificates in relation to such real estate projects.

Foreign investment in the construction and development sector is additionally regulated by the Foreign Exchange Management Act 1999 (FEMA) and the rules, notifications and circulars issued thereunder and those issued by India’s central bank, the Reserve Bank of India (RBI).

The Contract Act and the TPA permit oral agreements for transfer of property. However, the TPA also provides that any sale of immovable property above 100 Indian rupees requires a written agreement to be executed and registered (under the Registration Act).

Apart from the above-mentioned state-specific laws, a central law – RERA – has been enacted for the purpose of protecting consumer interests in the real estate sector; regulating the construction, development, sale, advertising and marketing of real estate projects in a time-bound, transparent and efficient manner; and creating a separate real estate regulatory authority, with state-specific and union territory-specific jurisdiction, for adjudication of disputes between consumers and promoters of real estate projects.

2. Land records

Does your jurisdiction have a system for registration or recording of ownership, leasehold and security interests in real estate? Must interests be registered or recorded?

In India, all real estate transactions involving the sale, conveyance or lease of immovable property and land require registration of the definitive agreements or deeds (such as the sale deed or conveyance deed and the lease deed), as the case may be. In a real estate transaction, an agreement to sell, a memorandum of understanding, or a letter of intent (which provides for execution of a definitive agreement or deed at a later date) does not ordinarily require registration.

The law on registration of documents in India is contained in the Registration Act, which provides for compulsory registration of certain documents, while there are other situations where registration of documents is optional.

Registration of the following is mandatory:

• instruments of gifts of property;
• leases of immovable property from year to year;
• non-testamentary instruments, such as deeds of exchange;
• documents assigning rents;
• sales of immovable property; and
• trust deeds evidencing interest in immovable property with a value of 100 rupees or more.

Registration of the following is optional:

• wills;
• leases of immovable property not exceeding one year; and
• instruments evidencing interest in immovable property with a value of less than 100 rupees.

If a document that is required to be registered is not registered, it cannot affect any immovable property, confer any power to adopt or be received as evidence of any transaction affecting such property. A registered instrument over the same property will rank above an unregistered instrument covering the same property.

3. Registration and recording

What are the legal requirements for registration or recording conveyances, leases and real estate security interests?

A document (such as an agreement to sell, conveyance or lease) required to be registered under Indian law needs to be executed before a registrar (a government official, who is appointed under the Registration Act) at district level or sub-registrar at sub-district level, and the parties have to appear before such registrar or sub-registrar for authentication and registration of the document.

Apart from the payment of stamp duty as per the stamp duty legislation, the registration of a document also involves payment of registration charges on the instrument recording the transfer of interest, the rates of which may vary from state to state. In some states, there are additional state-specific charges imposed (eg, municipal charges or taxes, transfer charges, etc), payable to the concerned municipal authorities, development authorities, corporations, etc. Payment of stamp duty, if payable on any instrument or document, is mandatory, notwithstanding registration of such instrument.

As per the Stamp Act, in the absence of any agreement to the contrary, with a sale or conveyance deed the purchaser is required to pay stamp duty, and with a lease deed the lessee is liable to pay stamp duty.

4. Foreign owners and tenants

What are the requirements for non-resident entities and individuals to own or lease real estate in your jurisdiction? What other factors should a foreign investor take into account in considering an investment in your jurisdiction?

As a rule of thumb, foreign companies or foreign citizens are not allowed to directly buy or own real estate in India. A foreign company or foreign citizen may own shares in Indian companies, which may buy or own real estate or carry out construction development of real estate projects in India. The ability of such Indian companies to buy or own will be subject to the business operations of such an Indian company and the proposed usage of the real estate by such an Indian company. An Indian company with a foreign shareholding can own or take on lease any real estate for its business and operations.

The exceptions to the rule of direct ownership or purchase of real estate by a foreign company or a foreign citizen are very limited. In accordance with the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, a foreign company having its branch office or other place of business in India (and which has been set up in accordance with the regulations framed under FEMA) may acquire immovable property for carrying on its business operations in India. For this purpose the foreign company is required to file certain declarations with the RBI as prescribed.

Further, non-resident Indians and persons of Indian origin are entitled to purchase and transfer immovable property (excluding agricultural land) and make payment for this with funds received in India through normal banking channels by way of inward remittance from any place outside India or by debit to an NRE/FCNR (B)/NRO account.

5. Exchange control

If a non-resident invests in a property in your jurisdiction, are there exchange control issues?

A foreign company or individual can invest in the capital of an Indian company engaged in construction, development of townships, housing and built-up infrastructure. There used to be certain ‘project area’ and ‘minimum capitalisation’ requirements for foreign direct investment (FDI) in the construction and development sector, but these requirements have been done away with. Today, 100 per cent FDI under the automatic route is also permitted in completed projects for the operation and management of townships, malls or shopping complexes and business centres. Consequent to foreign investment, transfer of ownership and control of the investee company from residents to non-residents is also permitted.

However, as per the FDI policy, no FDI can be undertaken in an Indian company engaged in the construction of farmhouses, trading in transferable development rights, or ‘real estate business’ (ie, the business of dealing in land and immovable property with a view to earning profit therefrom). The term ‘real estate business’ does not include development of the following:

• townships;
• construction of residential or commercial premises;
• roads or bridges;
• educational institutions;
• recreational facilities;
• city and regional level infrastructure; and
• townships or earning of rent or income on the lease of a property, not amounting to transfer.

With respect to repatriation, the FDI policy in relation to the construction and development sector states that the investor will be permitted to exit on completion of the project or after development of trunk infrastructure ie, roads, water supply, street lighting, drainage and sewerage). Further, as per the FDI policy, the investor is permitted to exit and repatriate the foreign investment before completion of the project, provided that a lock-in period of three years, calculated with reference to each tranche of foreign investment, has been completed. Further, the transfer of a stake by one non-resident to another non-resident without repatriation of the investment is allowed and is subject neither to any lock- in period nor to any government approval.

It is pertinent to note that the exit restriction based on the progress of the project and the three-year lock-in period are not applicable for investments in:

• hotels and tourist resorts;
• hospitals;
• special economic zones;
• educational institutions;
• old age homes; and
• investments by non-resident Indians.

6. Legal liability

What types of liability does an owner or tenant of, or a lender on, real estate face? Is there a standard of strict liability and can there be liability to subsequent owners and tenants including foreclosing lenders? What about tort liability?

The owner of immovable property typically bears the burden of payment of statutory taxes and levies under local state laws (eg, property tax and other municipal taxes or charges). However, with respect to commercial properties granted on lease or licence, the taxes may be contractually passed on to the lessee or licensee.

The rights and liabilities of buyers and sellers of immovable property are prescribed under the TPA. Customarily, while the seller is responsible for payment of statutory dues until the date of transfer of immovable property, there are provisions in law that make the buyer or its lessee liable for non-payment of statutory dues by the seller prior to the effective date of transfer. Therefore, the need to conduct due diligence prior to acquisition of immovable property arises.

In addition, the TPA also prescribes the rights and liabilities of mortgagors and mortgagees in relation to immovable property: mortgagors who are in possession of the mortgaged property are required to pay public charges during the subsistence of the mortgage; and mortgagees who are in possession of the mortgaged property are required to manage the mortgaged property, collect rents and profits accruing thereto, and pay all public charges in relation to the same.

Under RERA, certain liabilities have been imposed on promoters of real estate projects and consumers. Promoters are required to disclose pertinent information – such as sanctioned plans and schedule for completion of the real estate project – to the consumer at the time of issuance of allotment letters. Promoters are also liable, among other things, in relation to:

obligations, functions and responsibilities under RERA and rules made thereunder, as per the sale agreement executed with consumers, until the conveyance of the apartment, plot or building, as the case may be;structural defects in the apartment, building or plot for a period of five years from the date of handover of possession;regulatory compliances such as procurement of occupancy certificate or completion certificate, and lease certificate; andmaintenance of essential services and payment of all outgoings in relation to a real estate project until the time of handover of the real estate project to the association of allottees.Consumers are primarily liable for making payments, including their share of statutory dues and charges, in accordance with the sale agreement executed with the promoter of a real estate project, and paying interest in case of a default in relation to such payments.

7. Protection against liability

How can owners protect themselves from liability and what types of insurance can they obtain?

At the outset, adequate due diligence, conducted prior to acquisition of the property, prevents the passage of undisclosed risks and liabilities to the buyer. Adequate indemnity obligations should be obtained from the transferor of the property in this regard.

In India, insurance policies can be obtained for general as well as specific perils (eg, fire, flood, earthquake, lightning, etc). Coverage may vary from policy to policy and from insurance provider to insurance provider.

Public liability insurance may also be obtained by owners for others who may be affected by any accident at the property, or in connection thereof.

However, there can still be third-party claims for environmental hazards resulting from the property or the usage thereof, which may not be covered under insurance, providing sufficient scope for tortious claims and claims for damages by third parties and public interest litigation by public or environment-spirited citizens.

8. Choice of law

How is the governing law of a transaction involving properties in two jurisdictions chosen? What are the conflict of laws rules in your jurisdiction? Are contractual choice of law provisions enforceable?

Agreements and contracts pertaining to immovable property are principally subject to the local courts within whose jurisdiction the property is situated.

However, the choice of law and dispute resolution fora for investment agreements under which foreign investment or FDI is made into construction development companies are usually international fora such as the International Chamber of Commerce, the Singapore International Arbitration Centre, the London Court of International Arbitration etc, in addition to arbitrations in India, whether ad hoc or institutional.

9. Jurisdiction

Which courts or other tribunals have subject-matter jurisdiction over real estate disputes? Which parties must be joined to a claim before it can proceed? What is required for out-of-jurisdiction service? Must a party be qualified to do business in your jurisdiction to enforce remedies in your jurisdiction?

The CPC distinguishes between subject matter, territorial and pecuniary jurisdiction of civil courts. Accordingly, a court within whose limits the subject matter of a dispute is situated will have jurisdiction. In a situation where the immovable property is situated within the jurisdiction of different courts, a suit can be instituted in any such civil court. However, the CPC also acknowledges that the jurisdiction of civil courts can be expressly, by way of statute, or impliedly barred. Thus other fora, such as revenue courts, which have jurisdiction to entertain suits relating to rent, revenue or profits of land used for agricultural purposes under local land laws, can also adjudicate upon certain real estate-related disputes.

With regard to immovable property, the CPC provides that suits can be instituted for the purpose of:

• recovery;
• partition;
• foreclosure;
• redemption;
• sale;
• compensation for wrongs; and
• the determination of any other right or interest in immovable property.

Persons who are adjudged to be necessary parties can institute a suit with respect to immovable property. Furthermore, a court can join any other person as a party to such suit for immovable property if the court is of the opinion that said person’s presence is necessary for the complete adjudication of the dispute.

Additionally, RERA provides that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the authority or the adjudicating officer or the appellate tribunal is empowered by or under RERA to determine. It also provides that no injunctions shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under RERA.

10. Commercial versus residential property

How do the laws in your jurisdiction regarding real estate ownership, tenancy and financing, or the enforcement of those interests in real estate, differ between commercial and residential properties?

The distinction between commercial and residential property does show in the master plan issued by the municipal authority of a city, in which separate zones are earmarked for residential and commercial use. Alternatively, these distinctions are made in development approvals or licences obtained by a developer from the relevant authorities.

Similarly, the building regulations and by-laws of various cities and states distinguish between residential, industrial, commercial, institutional properties, etc, and provide for different procedures with respect to each type of property. Further, varying rates of taxes and circle rates (the government-notified value of a property) are provided for residential and commercial property.

11. Planning and land use

How does your jurisdiction control or limit development, construction, or use of real estate or protect existing structures? Is there a planning process or zoning regime in place for real estate?

The development and construction of real estate are governed by the development regulations, building regulations and by-laws, and the respective master plan of a city or area of a state. A state government, usually, from time to time enacts and enhances its development plans for five or 10 years or for longer periods.

Appropriate development permission or planning permission is provided by state-appointed authorities within the local laws and development regulations. Local municipal authorities in urban areas are empowered to enforce compliance, under applicable local laws, for various aspects of development and construction, including:

• permitted height of buildings;
• floor area ratio or floor space index, which provides the basis for determining the maximum permissible floor area construction;
• water requirements; and
• general building requirements (eg, distance from ancient monuments, eco-sensitive zones, etc).

Construction cannot be undertaken until necessary approvals, such as building plans for the proposed construction prepared by a qualified architect in compliance with applicable laws and applicable environmental consents and approvals, are sanctioned by the authorities concerned.

12. Government appropriation of real estate

Does your jurisdiction have a legal regime for compulsory purchase or condemnation of real estate? Do owners, tenants and lenders receive compensation for a compulsory appropriation?

The Land Acquisition Act 1894 (Erstwhile LA Act) has been the paramount legislation governing acquisition of private property by the government. Provisions for acquisition of land are also found in other legislation, including:

• the Indian Forests Act 1927;
• the Metro Railway (Construction of Works) Act 1978;
• the National Highways Act 1956;
• the Petroleum and Minerals, Pipelines (Acquisition of Right of User in Land) Act 1962; and
• state-specific laws (eg, the Karnataka Industrial Areas Develop-ment Act 1966).

The Erstwhile LA Act was replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 (LA Act), which took effect on 1 January 2014. Under the LA Act, the compensation to be made to landowners has been increased to four times the market value of the land (in rural areas) and twice the market value of the land (in urban areas).

The LA Act provides a detailed mechanism for the calculation of the amount of compensation and the factors to be considered while arriving at such amount. The LA Act does not provide any scope for modification of such compensation by way of contractual arrangements. In addition, under the LA Act, acquisition follows a far more detailed process that includes conducting a social impact study of the proposed acquisition, planning and taking steps for rehabilitation and resettlement of landowners, seeking the consent of landowners, etc.

13. Forfeiture

Are there any circumstances when real estate can be forfeited to or seized by the government for illegal activities or for any other legal reason without compensation?

Long-term leases and conveyances of the acquired lands granted by the government for a specified purpose allow for revocation of the lease or conveyance and seizure of the property by the government in the event of default by the lessee or transferee on payment of rent, consideration, municipal charges or taxes; use of the property for any purpose other than for which it is leased, conveyed or acquired or for any illegal or immoral purpose. However, such rights are not usually exercised without providing a cure period to the lessee or transferee to cure the said default. The length of such cure period depends on the terms of the lease or conveyance, and may differ on a case-by-case basis.Getting the Deal Through

Other cases of forfeiture of property revolve around actions taken by the civil and criminal courts. The CPC empowers the courts to seize and attach property of a judgment debtor if he or she fails to satisfy a decree passed by a court. Similarly, the Code of Criminal Procedure 1973 authorises attachment of the property of an accused that fails to appear before the court despite service of summons to appear.

Non-payment of statutory taxes and bankruptcy could also lead to attachment of property by the competent government authority or court of law.

14. Bankruptcy and insolvency

Briefly describe the bankruptcy and insolvency system in your jurisdiction.

The CPC provides that in the case of immovable property, attachment can be made by an order prohibiting the judgment debtor from transferring or charging such immovable property, and a prohibition on any person from taking any benefit from such transfer or charge (Order 21, Rule 54). However, the CPC also provides that immovable property in the form of houses or buildings and land appurtenant thereto on which an agriculturist, labourer or domestic servant is residing cannot be attached (section 60).

The Insolvency and Bankruptcy Code 2016 (IBC) provides for the codification of the existing framework of insolvency and bankruptcy laws in India and among other things streamlines the processes for insolvency resolution and liquidation of corporate persons, and insolvency resolution and bankruptcy for individuals and partnership firms. The IBC’s enactment brings various benefits, such as enabling any financial creditor, operational creditor or the corporate debtor itself to initiate an insolvency resolution process upon the event of a default by the corporate debtor, to be resolved within a fixed period of 180 days from the submission of an application for the initiation of the insolvency resolution process.

Investment vehicles

15. Investment entities

What legal forms can investment entities take in your jurisdiction? Which entities are not required to pay tax for transactions that pass through them (pass-through entities) and what entities best shield ultimate owners from liability?

As mentioned in questions 4 and 5, under the FDI policy, investment can be made by way of subscription or purchase of capital-linked instruments of Indian companies engaged in the real estate development and construction sector, or subscription or purchase of units issued by a real estate investment trust (REIT) or alternative investment fund established and registered in accordance with the extant regulations issued by the Securities and Exchange Board of India (SEBI).

Investment by non-resident entities in the real estate business is prohibited (ie, trading in or dealing in land, property, etc). However, non-resident entities can be incorporated as companies, foreign portfolio investors (to be able to invest in listed securities including listed debt securities such as non-convertible debentures or listed corporate bonds), or provide external commercial borrowing to Indian companies if such non-resident entities meet certain eligibility criteria.

16. Foreign investors

What forms of entity do foreign investors customarily use in your jurisdiction?

The most prevalent entity formation for foreign investment is the private limited company.

Foreign investors seeking to invest through subscription of non-convertible debentures issued by an Indian company are required to obtain registration from SEBI as Category I, II or III foreign portfolio investors (as the case maybe) in accordance with the SEBI (Foreign Portfolio Investors) Regulations 2014, and have to comply with the restrictions and conditions prescribed therein.

17. Organisational formalities

What are the organisational formalities for creating and maintaining the above entities? What requirements does your jurisdiction impose on a foreign entity? Does failure to comply incur monetary or other penalties? What are the tax consequences for a foreign investor in the use of any particular type of entity, and which type is most advantageous?

As mentioned above, the most viable form of investment is FDI into companies incorporated in India. Where the foreign investor proposes to set up a 100 per cent-owned Indian company, incorporation formalities under the Companies Act will need to be complied with and additional reporting requirements of the RBI will need to be made. Where a foreign investor is investing in an existing company or acquiring shares from an existing shareholder, the RBI will need to be informed by way of filing of the prescribed online forms.

Foreign investors registered as foreign portfolio investors under the SEBI (Foreign Portfolio Investor) Regulations 2014 are among other things required to:

• ensure that they comply with the conditions imposed by SEBI at the time of grant of registration;
• comply with the investment conditions specified in the SEBI (Foreign Portfolio Investor) Regulations 2014; and
• inform SEBI in case of any material change in information submitted with SEBI at the time of registration.

Acquisitions and leases

18. Ownership and occupancy
Describe the various categories of legal ownership, leasehold or other occupancy interests in real estate customarily used and recognised in your jurisdiction.

Indian law recognises multiple classes of interests in immovable property, ranging from a mere easement right created by prescription or by operation of custom to freehold rights in the property conveyed through a registered sale or conveyance deed. Security interests in the nature of a mortgage or a charge may also be created to secure the payment of a debt or to secure the performance of certain obligations.

One of the rights that can be created is a licence right. A licence is a mere right to access or use immovable property for a limited purpose during limited hours. Under a typical leave-and-licence agreement, the licensor retains constructive possession of the property while actual possession may be transferred for a limited purpose and duration.

The next set of rights are those created under a lease registered with the sub-registrar having jurisdiction over the area in which the property is situated, through which actual physical possession of the property is transferred to the lessee. Registration of leases beyond a period of 12 months is compulsory under the Registration Act. Further, leases may also be executed for longer periods (eg, in perpetuity or for 99 years) involving the grant of leasehold rights in a property, mostly by the government in consideration of a lump-sum premium and payment of yearly rent. The rights created under such a lease are long-term leasehold rights (but not freehold).

While a registered lease operates as an effective transfer of leasehold rights in the property against the world at large, transferring freehold rights in a property under a conveyance or sale deed, without reserving any rights thereunder, may create the most marketable and freely transferable interest. Government conveyances usually, however, do reserve certain rights for the government – for instance, the rights to mines and minerals in the land underneath the property, etc, and usage of the property as per the development and zoning norms.

As far as attendant benefits and burdens on or attached to immovable property such as easements are concerned, such interests can be passed on to the transferee if held by the transferor at the time of such transfer. For example, the easements, rents and profits arising out of the transferred land will vest with the transferee in terms of the TPA and the Easements Act. Practically, this means that if an individual were to acquire interest in an immovable property to which a right of way is annexed, he or she would be entitled to enjoy the right of way along with the property for the duration of such transfer.

19. Pre-contract

Is it customary in your jurisdiction to execute a form of non-binding agreement before the execution of a binding contract of sale? Will the courts in your jurisdiction enforce a non-binding agreement or will the courts confirm that a non-binding agreement is not a binding contract? Is it customary in your jurisdiction to negotiate and agree on a term sheet rather than a letter of intent? Is it customary to take the property off the market while the negotiation of a contract is ongoing?

At the option of the parties, depending on the underlying intent of the transaction, non-binding agreements such as a term sheet or memorandum of understanding (MOU) or letter of intent (LOI) may be executed between the parties prior to execution of the definitive agreement, briefly detailing the commercial understanding of the prospective transaction and the rights and obligations of parties in respect thereof. Customarily, these documents are executed as an indication of the transferee’s willingness to enter into the proposed transaction, subject to satisfactory due diligence of the property to be acquired and completion of certain conditions precedent by the transferor. These documents may, in some instances, entail payment of a token amount as an advance payment towards the purchase consideration, which is adjustable in the final consideration payable and simultaneously operates as a motivation for the owner to part with the relevant documents pertaining to the property for conducting due diligence.

In order to ensure that a term sheet, MOU or LOI is not binding on the parties, it may be clarified in such document that the parties have mutually agreed:

• to have no obligation under the term sheet, MOU or LOI;
• that the parties will negotiate in good faith and enter into a definitive agreement for the proposed purchase of the property; and
• that such document is not intended to be a binding contract.

Other than brief highlights of the proposed transaction, the aforesaid documents may include clauses providing for the following, among other items:

• exclusivity in dealings;
• confidentiality of the information;
• representations and warranties;
• conditions precedent to the signing of the definitive documents;
• due diligence;
• indemnity obligations; and
• dispute resolution, etc.

Generally, certain clauses such as exclusivity and confidentiality are specifically stated to be binding, while the others remain non-binding.

Upon a dispute arising as to the binding nature of such term sheet, MOU or LOI, the court will usually seek to determine the intention of the parties – that is, whether they intended such documents to be binding or non-binding. If certain provisions of the term sheet, MOU or LOI are stated to be binding, the court may also specifically examine whether the provision to which the dispute relates was intended to be binding. If such term sheet, MOU or LOI is held to be binding and the parties have commenced performance thereunder, a possible consequence could be that the court decides that the term of the formal contract or definitive agreement drawn up later will be deemed to have commenced from the date of the said term sheet, MOU or LOI.

Generally, a customary binding contract for the sale and purchase of real estate in India is an agreement to sell (ATS) under which the parties agree to the basic terms for the transfer of the property and agree to enter into a sale deed for the proposed transfer.

20. Contract of sale

What are typical provisions in a contract of sale?

Like most contractual agreements, a sale deed will typically include:

• details of the executants, recitals and background to the transaction;
• details of the property (usually the property is demarcated on a map and a layout plan is annexed);
• details and manner of payment of sale consideration, respective obligations and liabilities of the parties with respect to taxes and charges attached to the property;
• restrictive covenants imposed on the parties, representations and warranties, etc; and
• boilerplate clauses including indemnity for breach or representations (or otherwise), dispute resolution, notices, etc.In large transactions that involve the fulfilment of numerous obligations post-execution of the definitive agreement, proceeds may be deposited in an escrow. In some real estate transactions, parties execute an ATS with payment of partial consideration and the remaining consideration is paid upon fulfilment of the conditions precedent simultaneously with the execution of the sale deed, thereby concluding the transaction.

With regard to taxes, public charges, rent and other outgoings, the TPA and usually the sale deeds attribute liability to the seller for clearing all dues and charges and assuming the risk of loss of the property until the effective date of transfer, after which the onus is shifted to the purchaser.

21. Environmental clean-up

Who takes responsibility for a future environmental clean-up? Are clauses regarding long-term environmental liability and indemnity that survive the term of a contract common? What are typical general covenants? What remedies do the seller and buyer have for breach?

The concept of environmental clean-up has not fully evolved in India. However, judicial determination and review of acts of pollution through public interest litigation have led to the formulation of the ‘polluter pays’ principle, which renders the polluter liable for compensating the victims of the pollution and, to the extent possible, restoring the environment to its natural form and taking corrective action to remedy the harm caused by its acts.

Further, environmental aspects of real estate transactions fall within the purview of the environment laws of India, such as:

•  rules enacted
• the Environmental Protection Act 1986;
• the Air Prevention and Control of Pollution Act 1981; and
• the Water Prevention and Control of Pollution Act 1974, and there under, such as the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules 2008 and the notifications enacted there under.

The provisions of the Companies Act 2013 have mandated certain classes of companies to discharge corporate social responsibility, which includes activities relating to environmental protection and conservation.

22. Lease covenants and representation

What are typical representations made by sellers of property regarding existing leases? What are typical covenants made by sellers of property concerning leases between contract date and closing date? Do they cover brokerage agreements and do they survive after property sale is completed? Are estoppel certificates from tenants customarily required as a condition to the obligation of the buyer to close under a contract of sale?

Sellers need to make disclosure of all existing encumbrances on the property, including existing leases. Usually with respect to existing leases, the rent received, the area of the premises leased out, the duration of the lease, the background of the lessee related to payment of rent including defaults by the lessee and the liabilities of the seller towards the lessee, if any, are disclosed and warranted against.

Between the date of the contract and closing or between the execution of an ATS, LOI or MOU and the execution of a sale deed, the seller is restricted by covenants in the ATS, LOI or MOU not to create any further third-party right or encumbrance over the property without the consent of the buyer.

Additionally, prior to entering into such transactions, it should be determined whether the transaction documents for the existing lease arrangement require the seller to obtain the prior written consent of the tenant to the sale of the leased property and/or require the buyer to provide an undertaking to the effect that the rights and entitlements of the tenant in relation to the leased property will not be disturbed pursuant to the sale of the leased property.

23. Leases and real estate security instruments

Is a lease generally subordinate to a security instrument pursuant to the provisions of the lease? What are the legal consequences of a lease being superior in priority to a security instrument upon foreclosure? Do lenders typically require subordination and non-disturbance agreements from tenants? Are ground (or head) leases treated differently from other commercial leases?

If the lessee duly executes a lease prior to the creation of a security interest over the property, the lease will prevail over the security instrument, the secured creditor will be bound by such a lease and will need to wait until the expiry of the lease to enforce its security interest to sell the property. On the other hand, if the lease is created subsequent to a prior security interest, without the consent or knowledge of the secured creditor, the lease can be struck down and the tenant evicted, although eviction proceedings in India are long, drawn-out and complicated.

While under Indian law a security interest includes a mortgage, charge, hypothecation or assignment upon property created in favour of a secured creditor, a mortgage is the most common form of security interest created over immovable property.

24. Delivery of security deposits

What steps are taken to ensure delivery of tenant security deposits to a buyer? How common are security deposits under a lease? Do leases customarily have periodic rent resets or reviews?

It is very common for leases to entail payment of security deposits as a security against any damage caused to the property by the lessee or default in payment of the periodic rent by the lessee, during the lease period. Such security deposits are usually equivalent to three to six months’ rent and may be adjustable against the rent due for the last months of the lease term. Rent revisions are usual, but the rates are dependent upon commercial negotiations between the parties. The usual escalation (for most residential and commercial properties) is 10 to 15 per cent after every three years of the lease term.

Well-informed and advised buyers impress upon delivery (to them) of the security deposit received from the tenants or an adjustment in the valuation.

25. Due diligence

What is the typical method of title searches and are they customary? How and to what extent may acquirers protect themselves against bad title? Discuss the priority among the various interests in the estate. Is it customary to obtain government confirmation, a zoning report or legal opinion regarding legal use and occupancy?

The TPA places the onus on the buyer to verify the title of a property itself, for which it may conduct a title search and due diligence to assure itself of the validity of the transferor’s title to the property being transferred. The title search is usually conducted for a period of 30 years prior to the proposed transaction for which the due diligence is undertaken. Detailed due diligence can cover various aspects relating to the property, including:

• title flow;
• encumbrance check;
• zoning and permitted usage;
• construction-related approvals; and
• conformity with laws, litigation, etc.

A title search involves a check at the office of the concerned sub-registrar within whose jurisdiction the immovable property is situated, to check the registered documents of the sale deed, lease deed, mortgage deeds, etc, from the register of documents executed and registered. In addition to conducting a title search, it is ensured that the definitive agreements provide for all customary representations and warranties and sufficient indemnities for breach of the same.

As far as priority among interests is concerned, as discussed in question 3, the Registration Act gives precedence to registered documents pertaining to land or immovable property over unregistered documents.

Furthermore, the principle of ‘no one can give what he doesn’t have’ applies, whereby no person can transfer a better title than he or she possesses. Consequently, since the title of the seller is subject to the agreements in respect of the property previously registered, the title obtained by the buyer will similarly be so subject thereto.

In addition, government confirmations or approvals under state-specific laws pertaining to development and zoning regulation and building by-laws are required at various stages of construction and development of a real estate project, and the status of such government confirmations or approvals should be reviewed at the time of due diligence. For example, most state-specific laws require developers to obtain a development licence prior to commencement of construction, and completion or occupation certificates upon completion of construction. Similarly, Indian environmental laws require developers to obtain prior consents in certain situations. Furthermore, as per RERA, no advertisement, sale, marketing, booking or invitation for sale of an apartment, plot or building in a real estate project can be undertaken without prior registration of such real estate project.

26. Structural and environmental reviews

Is it customary to arrange an engineering or environmental review? What are the typical requirements of such reviews? Is it customary to get representations or an indemnity? Is environmental insurance available?

As discussed in questions 6 and 21, real estate projects are subject to structural and environmental concerns. Structural engineers and architects conduct engineering reviews to verify that the building conforms to structural safety norms and specifications and is constructed as per the approved plans and layouts. Representations and warranties with  corresponding indemnities are usually obtained from the seller to the effect that the property is constructed as per the approved layout plans and all consents and approvals related thereto have been obtained. The scope of such representations and warranties may also include representations on mandatory environmental clearances and approvals under applicable laws. Similarly, occupancy and completion certificates issued by municipal bodies and local authorities require satisfaction as to structural safety, fire safety, hygiene and sanitary conditions, etc.

27. Review of leases

Do lawyers usually review leases or are they reviewed on the business side? What are the lease issues you point out to your clients?

For short-term or low-value property leases, some clients prefer to follow standard formats provided by lawyers that are updated with the relevant commercial details by the business side and provided for final review to the lawyers. However, leases involving higher or longer commitments or complex transactions are generally prepared, reviewed and negotiated by lawyers. Usual causes of concern are related to:

• representations and warranties of the parties;
• breaches and termination-related provisions;
• lock-in periods;
• lease extensions and renewals;
• delivery of premises;
• payment and securing of the security deposit;
• registration and stamp duty implications; and
• dispute resolution, etc.Property management and maintenance agreements are also negotiated and reviewed alongside the lease. They are coterminous agreements with the lease deed, entail payment of nominal stamp duty and do not have to be registered. Lenders do require that any outflow of money with respect to any contract or understanding such as project management agreements, etc, be subservient to the financing security instruments.

28. Other agreements

What other agreements does a lawyer customarily review?

Other than title documents, lawyers review the LOI, MOU or ATS at the first stage, which is thereafter followed by a sale or lease deed. Depending on the magnitude and complexity of the transaction, an agreement for transfer of property may be coupled with numerous other agreements.

A transfer of property such as a residential house between the owner of the house and a prospective buyer will involve a title search and review of the terms of transfer (consideration, encumbrances, compliance with local laws pertaining to rent, etc); whereas a transfer of immovable property, as between two corporate entities, will involve more complex agreements. These may include:

• escrow arrangements, in which monetary consideration flows from one party to another;
• a share purchase agreement, where the purchaser buys 100 per cent of the share capital of the company owning the immovable property;
• agreements to set up a single purpose entity (SPE) that will acquire the immovable property, or to carry out construction and development; and
• powers of attorney (POA) executed to facilitate the buyer entity’s post-transaction title requirements.As far as development and construction of real estate properties are concerned, a lawyer will be required to draft and review the following, among other things:
• joint development agreements;
• collaboration agreements;
• development rights agreements;
• service contracts pertaining to supply of building materials; and
• labour agreements.
  
  29. Closing preparations
  
  How does a lawyer customarily prepare for a closing of an acquisition, leasing or financing?

Indian law permits executory consideration – namely, payment and delivery taking place after the contract has been created – so the timing of closing and funding can be determined by the parties to the transaction. Having said that, generally, there is no strict concept of closing of simple real estate transactions involving sale deeds, and the same is usually accomplished by the parties by executing the deed by which the transfer is effected and having it registered at the relevant sub-registrar’s office simultaneously with payment of the consideration by the buyer and delivery of original documents pertaining to the property by the seller.

The list of deliverables may vary depending on the nature of the entities involved in the transaction and the nature of the transaction. For instance, in cases of acquisition of shares of a company owning immovable property, the following documents will need to be handed over to the purchaser:

• share certificates;
• corporate filings;
• statutory registers;
• share transfer forms; and
• other corporate and secretarial documents.Further, all transactions where the title is being transferred will involve the seller delivering original documents, including:
• the deed by which transfer of property is effected;
• title documents of the seller and the past owners;
• clearances and approvals obtained from appropriate authorities;
• mutation certificate;
• documents evidencing existence of encumbrances; and
• authorisation by the board of directors, if the seller is a company or a POA.

30. Closing formalities

Is the closing of the transfer, leasing or financing done in person with all parties present? Is it necessary for any agency or representative of the government or specially licensed agent to be in attendance to approve or verify and confirm the transaction?

With respect to the transfer of immovable property, the process of execution and registration of the deed of transfer in the presence of two witnesses at the concerned sub-registrar’s office simultaneous with payment of the consideration constitutes closing in India.

The parties may either be personally present or may authorise their lawful attorneys (via registered POAs) or, in the case of a company, an individual (duly authorised by a board resolution) to execute the transfer deed on their behalf.

As noted above, transfer deeds are required to be executed along with stamp papers, e-stamp papers or franking (depending on the rules of the concerned state) of the requisite value (based on the stamp duty rates prevalent in the concerned state). Except in prescribed special circumstances, under the Registration Act registration of documents is required within four months of the execution of such document.

31. Contract breach

What are the remedies for breach of a contract to sell or finance real estate?

An ATS immovable property usually contains provisions to the effect that a breach by the buyer to pay the balance consideration renders the seller liable to forfeit the advance consideration paid under the ATS.

Further, an ATS also customarily records provisions stipulating that a breach by the seller to deliver possession of the property when the purchaser is willing to perform its part of the obligations will make the seller liable for refund of the advance consideration with substantial interest or penalty (at times twice the amount advanced) or will entitle the buyer to compel specific performance under the ATS.

However, enforcing specific performance under the SRA has its own limitations, but pursuant to the recent amendments to the SRA, the plaintiff can seek specific performance of a contract as a matter of right, and does not need to prove damages owing to non-performance in a court of law.

Damages are usually granted under the Contract Act if the damage caused by the breach of contract is direct. Indirect, special and remote damages are not granted under Indian law. If the contract stipulates a penalty amount, then the plaintiff will be entitled to compensation up to the penalty amount depending, among other things, on the quantum or excessiveness of the penalty amount.

Under the TPA, in the case of a mortgage deed, at any time after the mortgage money has become due to the mortgagee, and before a decree has been made for the redemption of the mortgaged property, if the mortgagor has failed to pay the mortgage money, the mortgagee can obtain a decree from the court debarring the mortgagor from redeeming the mortgaged property, or for the sale of such property.

Under special enactments such as the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act), on the failure of the borrower to repay the secured debt and the consequent classification of his or her account as a non-performing asset by the secured creditor, the secured creditor can initiate proceedings to enforce its security interest and take possession of the secured assets, provided that notice has been sent to the borrower to discharge the liability in full within the stipulated period and the borrower has failed to do so.

32. Breach of lease terms

What remedies are available to tenants and landlords for breach of the terms of the lease? Is there a customary procedure to evict a defaulting tenant and can a tenant claim damages from a landlord? Do general contract or special real estate rules apply? Are the remedies available to landlords different for commercial and residential leases?

For a breach of the lease terms by the tenant, the landlord retains the right to terminate the lease deed in accordance with the terms contained therein and upon failure to vacate the premises, the lessor can seek eviction of the tenant. However, eviction is a cumbersome and tedious process in India and it may take many years to evict a tenant, depending upon the location of the property and the courts having jurisdiction.

On the other side, upon a breach of the covenants by the lessor and failure to rectify them, the lessee may, if the lease permits, serve notice of termination on the lessor. In such cases the lessee also has a right to have the same rectified at the lessee’s cost and deduct such cost from the rents payable by the lessee or recover the same from the lessor.

The TPA expressly provides that a lease can be determined by forfeiture upon the breach of an express condition. If such forfeiture relates to non-payment of rent, the lessee retains the right to seek relief against forfeiture at the time of hearing of a suit, by paying a sum equivalent to the rent and interest due along with the full cost of the suit, or by providing such security that the court deems fit. If the forfeiture results from the breach of an express condition, the lessor can enforce his or her rights against the lessee only after serving notice and giving the lessee a chance to rectify the breach, if possible.

As far as special rules are concerned, different states have their own specific rent control legislation that takes precedence over the general law of the land in the case of a clash of provisions. For instance, under the Delhi Rent Control Act 1958, a tenant to whom the act applies cannot be evicted by a landlord unless the conditions specified in this legislation are satisfied, in addition to those specified in the TPA. In the case of a conflict of laws, however, the specific state law prevails over the general laws.

Financing

33. Secured lending

Discuss the types of real estate security instruments available to lenders in your jurisdiction.

Customarily, a mortgage is the most common form of security interest created over immovable property. The TPA provides for different types of mortgage, such as the following:

Simple mortgage: where the property is mortgaged without any delivery of possession, and upon failure to repay the loan the sale proceeds of the property may be appropriated towards the mortgage sum.

Mortgage by conditional sale: where the mortgagor ostensibly sells the mortgaged property to the mortgagee with a covenant that the mortgage will become void pursuant to payment of the mortgage sum.

Usufructuary mortgage: where possession of the mortgaged property is delivered to the mortgagee, who is authorised to retain the mortgaged property and receive rents and profits accruing therefrom.

English mortgage: where the property is transferred absolutely to the mortgagee who will re-transfer the same to the mortgagor upon payment of the mortgage sum.

Mortgage by deposit of title deeds: where the mortgagor delivers the documents of title to immovable property to the creditor with the intent to create a security thereon (this is only prevalent in certain states).

Anomalous mortgage: mortgages that do not fall into one of the above categories.

Other security instruments are pledges or hypothecation of movables, which may form part of a real estate project, or escrow of project receivables, which is primarily wanted to ensure control over the cash flows of a project. In a self-liquidating project, cash flows are considered the best security, since the mortgage over the immovable property keeps diminishing as the allotment or sale of units to third-party customers occurs.

In the recent past, real estate developers managed to make successful issuance of mortgaged-back securities to public and financial institutions.

34. Leasehold financing

Is financing available for ground (or head) leases in your jurisdiction? How does the financing differ from financing for land ownership transactions?

State government instrumentalities and municipal authorities usually grant ground leases in India. These leases usually allow the lessees to obtain financing through pre-identified banks and lenders subject to receipt of prior approval from the lessor. The lessee’s lender in such a case acquires no better rights than the lessee itself. In case the borrower defaults in repayment of the secured debt, the lender bank only has the right to appropriate leasehold rights in the property to itself or its nominee if the borrower obtains the land under a ground lease. This is because the rights of the lender will not ordinarily override the lessor’s rights under the contractual documents executed. If, however, the borrower defaults in repayment in respect of funds secured against a charge over land owned by the borrower, the lender may appropriate the charged land and may sell or encumber it to recover the amount due from the borrower.

In addition, lease rental discounting can be obtained by the owners of leased properties. These financing arrangements are on the basis of the lease rentals, lease tenures and other covenants of leases on a property.

Under applicable laws, there is no minimum lease term for a lease being financed or a shorter maximum term for the financing depending on the business decision of the lenders.

The terms of a lease deed pursuant to which a ground lease has been granted should ordinarily permit the lessee to obtain financing, subject to the lessor’s consent, and enable the creation of security over the leased premises or receivables accruing therefrom, to the lender.

35. Form of security

What is the method of creating and perfecting a security interest in real estate?

See question 33.

36. Valuation

Are third-party real estate appraisals required by lenders for their underwriting of loans? Are there government or industry standards for appraisals? Must appraisers have specific qualifications or required government or industry certifications? Who is required to order the appraisal?

Valuation for the transfer of real estate usually revolves around the benchmark of circle rates of the properties notified by the government (though the market rates could be significantly higher in certain jurisdictions). Real estate appraisers and valuation firms are used for valuation of properties in larger transactions where the value of the property is significantly higher than the circle rate therefor. These valuations can be on the basis of the net operating income from the property (if leased), the net present value of discounted free cash flow of a potential development on a property, the replacement cost of the property or the locational advantage of a property and the like.

37. Legal requirements

What would be the ramifications of a lender from another jurisdiction making a loan secured by collateral in your jurisdiction? What is the form of lien documents in your jurisdiction? What other issues would you note for your clients?

Lenders from foreign jurisdictions are subject to the RBI’s Master Direction on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers, dated 1 January 2016, bearing FED Master Direction No. 5/2015–16 (ECB Framework), as updated from time to time. This master direction provides for certain conditions that must be satisfied by borrowers and lenders in case of the loan falling under the automatic route or the approval route. In the case of the automatic route, foreign lenders must supply a certificate of due diligence to the bank of the borrower in compliance with regulatory requirements to which the foreign lender is subject.

Another route that foreign lenders and investors use is through subscription to secured non-convertible debentures of Indian companies, in accordance with the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, which may or may not be listed on a stock exchange in India. The security interest is created in favour of a debenture trustee, who is responsible for holding the security on behalf of the non-resident and overseeing compliance by the borrower. The non-resident subscriber must be registered with SEBI as a foreign portfolio investor.

38. Loan interest rates

How are interest rates on commercial and high-value property loans commonly set (with reference to Libor, central bank rates, etc)? What rate of interest is legally impermissible in your jurisdiction and what are the consequences if a loan exceeds the legally permissible rate?

Interest rates are set on the basis of the interest rates set by the RBI. Interest rates are higher in India, since it is still a developing country and there is a high level of inflation. Consequently the interest rates for any loans or financing are high. While Indian banks usually do not lend money for the acquisition of land, they do lend for construction of real estate projects. Loans are easily available for homebuyers as well. The fees and lender costs are generally excluded from the interest and are charged separately.

Additionally, the interest chargeable in relation to loans that qualify as external commercial borrowing will be subject to the conditions prescribed under the ECB Framework and may vary accordingly. For example, developers of special economic zones and REITs can avail of external commercial borrowing from eligible lenders at interest rates not exceeding 450 basis points (4.5 per cent) above the applicable benchmark.

39. Loan default and enforcement

How are remedies against a debtor in default enforced in your jurisdiction? Is one action sufficient to realise all types of collateral? What is the time frame for foreclosure and in what circumstances can a lender bring a foreclosure proceeding? Are there restrictions on the types of legal actions that may be brought by lenders?

As mentioned in question 31, after a mortgage payment has become overdue, a mortgagee can institute proceedings to obtain a decree debarring the mortgagor from redeeming the mortgage property or for sale of the property. Similarly, in the case of a mortgage by way of conditional sale, default in payment of a loan will make a conditional sale absolute. If a loan is secured by a security interest as defined in the SARFAESI Act, a secured creditor will have the option to enforce its security interest according to the procedure laid down in the SARFAESI Act, which is more expeditious than the usual civil court process. Upon receipt of notice from the secured creditor, the borrower is required to discharge its liability within the stipulated time frame, failing which the secured creditor will have the right to take possession of the secured assets of the borrower.

Additionally, in accordance with the IBC, a financial or operational creditor can initiate an insolvency resolution process upon the occurrence of a default on a debt owed by a corporate debtor to such financial or operational creditor. This remedy is becoming increasingly popular among creditors since the insolvency resolution process is professionally managed and must be completed within 180 days from commencement of the insolvency resolution process.

40. Loan deficiency claims

Are lenders entitled to recover a money judgment against the borrower or guarantor for any deficiency between the outstanding loan balance and the amount recovered in the foreclosure? Are there time limits on a lender seeking a deficiency judgment? Are there any limitations on the amount or method of calculation of the deficiency?

There are no limitations. Indian law does not allow remote or indirect damages awards.

41. Protection of collateral

What actions can a lender take to protect its collateral until it has possession of the property?

Lenders usually seek interim orders to protect the status quo of the property. Lenders also seek rent deposits or other income or revenue from the property to be deposited with a court-appointed receiver or escrow agent or in a separate bank account. Further, the TPA prescribes certain liabilities which the mortgagee in possession has to bear, such as:

• to manage the property as a person of ordinary prudence would manage it;
• to make best endeavours to collect rent and profits;
• to make repairs; and
• not to undertake any destructive activity, etc.In the event of failure of a mortgagee in possession to comply with its responsibilities, when account is made pursuant to a decree of a court, such mortgagee must be debited with the loss, if any, occasioned by such failure.

42. Recourse

May security documents provide for recourse to all of the assets of the borrower? Is recourse typically limited to the collateral and does that have significance in a bankruptcy or insolvency filing? Is personal recourse to guarantors limited to actions such as bankruptcy filing, sale of the mortgaged or hypothecated property or additional financing encumbering the mortgaged or hypothecated property or ownership interests in the borrower?

Recourse is first available to the collateral. However, in winding up, insolvency or other recovery proceedings initiated by a lender, the court can award recourse to all other assets of the borrower.

43. Cash management and reserves

Is it typical to require cash management system and do lenders typically take reserves? For what purposes are reserves usually required?

The lender typically takes charge over all cash flows of the borrower (or as agreed for security and collateral). These are created through hypothecation of the receivables along with escrow account agreements. It is not customary in India to maintain reserves for expenses, but in most cases the lenders require appropriate debt service cover reserves to be maintained in lending agreements.

44. Credit enhancements

What other types of credit enhancements are common? What about forms of guarantee?

Guarantees, including personal guarantees of promoters, are very common in India. In fact, lenders rely more on personal guarantees from promoters or key shareholders rather than a security offered by the borrower company, since promoters make every effort to ensure that lenders are paid if the project does not perform. Depending on the negotiations, suitable covenants can be built into guarantee documents to protect the lenders in the event the borrower creates any mischief.

45. Loan covenants

What covenants are commonly required by the lender in loan documents?

Usually there are negative and affirmative covenants in loan documents and additionally certain information covenants. Furthermore, with respect to the freehold and leasehold financing, among other things, one important covenant is in relation to maintaining the ownership of the property. In the freehold asset class, ownership is already in favour of the borrower or owner, whereas with leasehold assets, a covenant with the effect of maintaining leasehold ownership is provided.

46. Financial covenants

What are typical financial covenants required by lenders?

The most typical are security cover and the asset value, where periodic appraisals are conducted to keep the security enhanced if the value diminishes, and special rights requiring the permission of the lender for any major actions of the borrower or its shareholders.

47. Secured movable (personal) property

What are the requirements for creation and perfection of a security interest in movable (personal) property? Is a ‘control’ agreement necessary to perfect a security interest and, if so, what is required?

See above.

48. Single purpose entity (SPE)

Do lenders require that each borrower be an SPE? What are the requirements to create and maintain an SPE? Is there a concept of an independent director of SPEs and, if so, what is the purpose? If the independent director is in place to prevent a bankruptcy or insolvency filing, has the concept been upheld?

This varies on a case-by-case basis.

Authors:

Hardeep Sachdeva, Partner
Ravi Bhasin, Partner
Abhishek Awasthi, Partner