The Disaster Management (Amendment) Bill, 2024

The Disaster Management (Amendment) Bill, 2024 was introduced in Lok Sabha on August 1, 2024, and seeks to amend the Disaster Management Act of 2005. It redefines the roles of the National Disaster Management Authority (NDMA), State Disaster Management Authority (SDMA), and District Disaster Management Authority, which are responsible for disaster management at different levels.

The bill aims to enhance the operational efficiency of the National Disaster Management Authority (NDMA) and State Disaster Management Authorities (SDMAs). It grants these authorities the power to develop disaster management plans at both the national and state levels, replacing the previous role of the National and State Executive Committees. It enhances the functions of the NDMA and SDMAs to include assessing disaster risks, providing technical assistance to lower authorities, setting relief standards, and maintaining national and state disaster databases. Additionally, the bill calls for the creation of disaster databases at both national and state levels.

Overall, the bill seeks to clarify and align the responsibilities of various authorities and committees involved in disaster management. It also allows the NDMA, with prior approval of central government, to formulate regulations under the Act.

The Bill empowers states to establish Urban Disaster Management Authorities for state capitals and large cities with municipal corporations, led by the Municipal Commissioner, to manage urban disaster plans. It allows state governments to form State Disaster Response Forces, defining their functions and service terms.

The Bill grants statutory status to existing bodies like the National Crisis Management Committee (NCMC) and High-Level Committee (HLC) to coordinate major disaster responses and provide financial assistance, respectively.

Finally, while the Act previously allowed the central government to appoint NDMA staff, the Bill gives NDMA the authority to determine its staffing needs, subject to central government approval.

Overall, the Amendment aims to improve disaster preparedness and response mechanisms in India, addressing current challenges and enhancing local governance. However, there are growing concerns over the further centralisation of the Disaster Management Act of 2005.

Case Summary – Rameshwar Singh Versus Ocean Seven Buildtech Pvt. Ltd. A/w 14 others Complaint no. 7964 of 2022

 The Haryana Real Estate Regulatory Authority (H-RERA) bench, led by Member Ashok Sangwan, has mandated Ocean Seven Buildtech Pvt. Ltd. to compensate 15 homebuyers of the Expressway Towers project in Sector 109, Gurugram, for delays in possession delivery.

This project, classified as an affordable housing initiative, was expected to have possession handed over within four years from the date of the building plan approval or environmental clearance, whichever occurred later. The directive underscores the Authority’s commitment to protecting the rights of homebuyers and ensuring timely delivery of residential projects.

Factual Background

The homebuyer (Complainant) was allocated a flat in the builder’s (Respondent) affordable housing project, Expressway Towers, located in Sector 109, Gurugram, via a letter dated September 25, 2019. A builder-buyer agreement was subsequently executed on May 25, 2019.

The homebuyer argued that the builder breached Section 1(iv) of the Affordable Housing Policy, 2013, by not delivering possession of the flat within the stipulated four-year timeframe from either the approval of the building plan or the granting of environmental clearance, whichever occurred later. This delay prompted the complaint to the Haryana Real Estate Regulatory Authority.

Additionally, the homebuyer asserted that the builder did not adhere to the terms of the agreement or the Affordable Housing Policy, leading to significant hardships for the homebuyer. As a result, the homebuyer filed a complaint with the Haryana Real Estate Regulatory Authority, seeking delay interest from the builder under Section 18(1) of the Real Estate (Regulation and Development) Act, 2016 (RERA). This claim highlights the homebuyer’s pursuit of accountability and compensation for the builder’s failure to meet contractual obligations.

Observations by the Authority

The authority referenced Clause 1(iv) of the Affordable Housing Policy, 2013, which mandates that all projects must be completed within four years from the date of either building plan approval or environmental clearance, whichever occurs later. This provision underscores the expectation for timely project completion in affordable housing initiatives and serves as a basis for evaluating the builder’s compliance in this case.

The Authority cited Section 18(1) of the Real Estate (Regulation and Development) Act, 2016, which states:

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot, or building—

1. In accordance with the terms of the agreement for sale or, as the case may be, by the date specified therein; or

This provision emphasizes the obligation of the promoter to fulfill their commitments regarding the timely delivery of possession and outlines the potential for compensation if they fail to do so. The authority’s reliance on this section underscores its role in protecting the rights of homebuyers in cases of delay.

If the promoter discontinues business as a developer due to suspension or revocation of registration under this Act, or for any other reason, he is liable to return the amounts received for the apartment, plot, or building, with interest at the prescribed rate, if the allottee chooses to withdraw from the project. If the allottee does not intend to withdraw, the promoter must pay interest for every month of delay until possession is handed over, at the prescribed rate.

The authority noted that the builder received environmental clearance on November 30, 2017, establishing May 30, 2022, as the due date for possession, accounting for a six-month extension due to the COVID-19 pandemic. Consequently, the authority concluded that the builder is obligated to pay interest to the homebuyer under Section 18(1) of the Real Estate (Regulation and Development) Act, 2016.

As a result, the authority directed the builder to pay interest to the homebuyer from the possession date of May 30, 2022, until a valid offer of possession is made, plus an additional two months. Furthermore, the authority instructed the builder to execute a conveyance deed in favor of the homebuyer, ensuring the completion of the transfer process.

IBBI Issues Guidelines for Committee of Creditors

On August 6, 2024, The Insolvency and Bankruptcy Board of India (IBBI) formulated and issued new self-regulating ‘Guidelines for Committee of Creditors’ (“Guidelines”) effective from August 6, 2024, itself.

These new Guidelines are issued to serve a plethora of purposes, such as promoting more effective and time bound decision making by members of the Committee of Creditors (“CoC”), ensuring value maximization of assets of Corporate Debtor (“CD”), curtailing procedural delays, increased transparency in decision-making by CoC members and faster resolution of the insolvency resolution procedure. Members of CoC are subject to the following Guidelines:

• Objectivity and Integrity –

1. Adhering to the provisions of the Insolvency and Bankruptcy Code, 2016 (“Code”).
2. Integrity in discharging their roles and functions.
3. Objectivity in decision-making.
4. Informed decision-making.
5. Sharing relevant information relating to transactions, recoveries, claims, etc. relating to the CD with the CoC / Insolvency Professional (“IP”).

• Independence and Impartiality –

1. Immediate disclosure of any existing / potential conflict of interest with the CoC / IP.

• Professional Competence and Participation –

1. Keeping themselves updates with provisions, rules and regulations of the Code.
2. Nominate authorized representatives to participate in meetings and obtain approvals of competent authorities.
3. Ensure active, constructive and effective participation in decision-making and deliberations of the CoC.

• Co-operation, Supervision and Timeliness –

1. Supervision and facilitation of Insolvency Professional in discharge of his duties.
2. Expeditious and timely appointments of various professionals as mandated by the Code.
3. Resolve disputes between members of CoC through non-adversarial means.

• Confidentiality –

1. Strict adherence to the confidentiality of information undertaking.

• Costs –

1. Ensure reasonable insolvency resolution costs.
2. Prompt decision-making related to expenses incurred by Insolvency Professional including his fee and going concern expenses.
3. Fix the fee of the liquidator.

• Meeting of the CoC –

1. Monitor activities of the IP and seek rationale for his decisions / actions.
2. Recommend inclusion of delayed claims and their treatment in the resolution plan.
3. Active participation in presentation of valuation methodologies made by Registered Valuers.
4. Conduct CoC meetings at regular intervals.

• Sharing of Information –

1. Share latest financial statements and other related information of the CD, with the Insolvency Professional for efficient conduct of the resolution process.
2. Seek all litigation details filed against or by the CD from Insolvency Professional and recommend necessary actions for safeguarding the CD.

• Feasibility and Viability of CD –

1. Review and assess information memorandum prepared by Insolvency Professional and offer additional insights.
2. Contribute to preparation of marketing strategy for assets of the CD by the Insolvency Professional.
3. Ensure all resolution plans received by Insolvency Professional are placed before CoC.
4. Consider requirement of a monitoring committee for implementation of the resolution plan.

Disclaimer: The information published in the above newsletter is collected from various sources in electronic medium and analyzed by the firm. The reader is advised to consult the attorney qualified in their jurisdiction, before acting on any information contained in this newsletter. India Juris excepts no liability what so ever in this regard.