ELECTIVE PAPER 6D – ECONOMIC LAWS

SUGGESTED SOLUTION – CASE STUDY 1

I. ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (a) [Hints: Refer Section 3 of the Real Estate (Regulation and Development) Act, 2016]

2. (b) [Hint: Refer Section 4 (2) (c) of the Real Estate (Regulation and Development) Act,
2016]

3. (d) [Hint: Refer Section 10 of the Real Estate (Regulation and Development) Act, 2016]

4. (d) [Hint: Section 14 (3) of the Real Estate (Regulation and Development) Act, 2016]

5. (a); [Hint: Refer Section 3 of the Real Estate (Regulation and Development) Act, 2016.
It may not be mandatory in a particular State if the State has granted exemption to
such on-going project]

6. (a); [Hint: Section 15 of the Real Estate (Regulation and Development) Act, 2016. It is to
be noted that if a consumer or his family holds more than one unit in the project then
he will be considered as one consumer only]

7. (b); [Hint: Refer Section 19 (10) of the Real Estate (Regulation and Development) Act,
2016]

8. (b); [Hint: Refer Section 2 (q) of the Real Estate (Regulation and Development) Act,
2016]

9. (b); [Hint: Refer Section 2 (9) (iii) of the Prohibition of Benami Property Transactions Act,
1988]

10. (c). [Hint: According to Section 2 (b) of the Competition Act, 2002, ‘Agreement’ includes
any arrangement or understanding or action in concert:

(i) Whether or not, such arrangement, understanding or action is formal or in

writing; or

(ii) Whether or not such arrangement, understanding or action is intended to be

enforceable by legal proceedings.]

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II. ANSWERS TO DESCRIPTIVE QUESTIONS

1. (i) (a) With reference to Section 19 of the Real Estate (Regulation and
Development) Act, 2016, Dr. Sharma, as an allottee, exercised the following
rights:

(I) Obtained the information relating to sanctioned plans, layout plans

along with the specifications as approved by the competent
authority.

(II) Demanded to know stage-wise time schedule of completion of the

project, including the provisions for water, sanitation, electricity and
other amenities.

(III) Claimed physical possession of the said apartment.

(IV) Obtained the necessary documents and plans, including that of

common areas, after getting the physical possession of the
apartment from the promoter.

(b) With reference to Section 19 of the Real Estate (Regulation and

Development) Act, 2016, Dr. Sharma, as an allottee, fulfilled the following
duties:

(i) Made necessary payments within the time as specified in the

agreement for sale.

(ii) Became a member of the RWA formed by the allottees.

(iii) Took physical possession of the apartment within a period of two

months from the issue of Occupancy Certificate.

(iv) Participated towards registration of the conveyance deed of the

apartment.

(c) (i) With reference to Section 19 of the Real Estate (Regulation and
Development) Act, 2016, Dr. Sharma, as an allottee, did not exercise
the following right:

The right to claim the refund of amount paid along with prescribed
rate of interest. It was so because the promoter was able to give

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2
 possession of the apartment in accordance with the terms of
agreement for sale.

(ii) With reference to Section 19 of the Real Estate (Regulation and

Development) Act, 2016, Dr. Sharma, as an allottee, was not
required to fulfill the following duty:

The duty to pay interest at prescribed rate for delay in making any
payment. It was so because he had made the payments in
accordance with the terms of agreement for sale.

(ii) As per section 15 of the Real Estate (Regulation and Development) Act, 2016, a
promoter is permitted to transfer his majority rights and liabilities in respect of a real
estate project to a third party.

The provisions given below are to be adhered to by the promoter for transfer:

(a) Obtain prior written consent from two-third of allottees. Such consent will not
include the consent given by the promoter.

(b) Also obtain prior written approval of the Authority.

Note: It is to be ensured that such transfer shall not affect the allotment or sale of
the apartments, plots or buildings, as the case may be, in the real estate project
developed by the promoter.

(i) After obtaining the required consent of both allottees and the Authority, the
new promoter shall be required to independently comply with all the pending
obligations under the provisions of the Act or the rules and regulations made
thereunder.

(ii) The new promoter is also required to comply with the pending obligations as
per the agreement for sale entered into by the erstwhile promoter with the
allottees.

(iii) Further, the new promoter must note that any transfer so permitted shall not
result in extension of time to him to complete the real estate project.

Note: In case of default, he shall be liable to the consequences for delay, as per the
provisions of the Act or the rules and regulations made thereunder.

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 Since in the given case study , 95% of the allottees had already given their written
permission. Further, the Authority had given its written approval to the proposal for
transfer and completion of Project by M/s. Sai Developers Pvt. Limited in compliance
with the requirements given in the said provisions. Such transfer of a real estate
project to a Sai Developer’s Pvt Ltd. is valid.

2. According to proviso to section 3 of the Real Estate (Regulation and Development) Act, 2016,
projects that are on going on the date of commencement of the Act, and for which the
completion certificate has not been issued, the promoter of the project are required to make
and application to the concerned Authority for the registration of the said project within a
period of 3 months from the date of commencement of the Act.

Further, the section provides that no registration of real estate project shall be required where
the area of land proposed to be developed does not exceed 500 square meters or the number
of the apartments proposed to be developed does not exceed 8 inclusive of all phases.

Hence, the Act requires registration of on-going projects where completion certificate was
yet to be obtained as well as new projects, if the area to be developed exceeded 500 sq.
mtrs. or apartments to be built under the project exceeded eight. Thus, registration of Omega
Capetown Residency was must with the Real Estate Regulatory Authority of UP (RERA, UP),
as consisted of 1,000 residential units.

Further, even if Omega Capetown Residency consisted of only 250 residential units (i.e.
more than 8 units), it will be compulsory to get itself registered under the Act. The process
of registering a project with the Real Estate Regulatory Authority (RERA) which consists of
1,000 units or 250 units is same which is given under section 4 of the Act.

With reference to Section 4, various important documents and declaration required to be

submitted while registering a project with RERA are as under:

• Details of the project such as name, address, type, names and photographs of the
promoters, etc.

• Details of the project which were already launched by the real estate developer in
the preceding 5 years and their present status.

• Approvals and commencement certificates obtained from the competent authority for
each phase of the project separately.

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 • Sanctioned layout plan, the development plan for the project and details of basic
facilities being made available like drinking water, electricity etc.

• Proforma of allotment letter, agreement for sale and conveyance deed to be signed
with the consumers.

• Location of the project with clear demarcation of the land for the project.

• Number, type and carpet areas of units to be sold.

• The details of open areas if any like terraces, balconies etc.

• Details of associated engineers, contractors, architects and intermediaries in the

project.

• a declaration, duly supported by an affidavit, stating the following important matters:

o that the promoter has a legal title to the land and it is free from all encumbrances
along with legally valid documents;

o the time period required for completion of the project;

o that seventy per cent. of the amount realised from the allottees, from time to
time, shall be deposited in a separate escrow account and shall be used only
for the purpose of completion of project;

o that the promoter shall get his accounts audited within six months after the end
of every financial year by a chartered accountant in practice; and shall take all
the pending approvals on time from the competent authorities; etc.

3. According to section 2(b) of the Competition Act, 2002, ‘Agreement’ includes any
arrangement or understanding or action in concert:

(i) Whether or not, such arrangement, understanding or action is formal or in writing, or

(ii) Whether or not such arrangement, understanding or action is intended to be

enforceable by legal proceedings.

Further, section 2(c) of the Competition Act, 2002, "Cartel" includes an association of
producers, sellers, distributors, traders or service providers who, by agreement amongst
themselves, limit, control or attempt to control the production, distribution, sale or price of,
or, trade in goods or provision of services.

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 An association for the welfare of the trade or formed for any other purpose not mentioned in
the aforesaid definition will not be a cartel Thus, it is only when an association, by agreement
amongst themselves, limits control or attempts to control the production, distribution, sale or
price of, or, trade in goods or provision of services, that it will be a cartel.

Hence, an agreement which prohibits an enterprise or person or their association for entering
into an agreement in respect of production, supply, distribution, storage, acquisition or
control of goods or services, which causes or is likely to cause an appreciable adverse affect
on competition. Such agreements entered in contravention of the above are void. These
agreements are presumed to have an appreciable adverse affect on competition.

Here, in the given situation, the agreement between Mr. Bhanu Pratap Taneja and other
builders would have fallen into the ambit of section 2(b) and 2(c) of the Competition Act,
2002 as the aim of the association was to increase the price of the apartments. Thus, such
an association would be void.

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 ELECTIVE PAPER 6D – ECONOMIC LAWS
SUGGESTED SOLUTION – CASE STUDY 2

I. ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (d) [Hint: As per regulation 4 (b) explanation (ii) of the FEMA (permissible capital
account transaction) Regulation 2000.]

2. (c) [As per regulation of FEMA (Export of goods and services) regulation 2016]

3. (d) [Hint: Section 4 (2), proviso to (D) of clause (l) of the RERA, 2016]

4. (c) [Hint: Refer section 3]

5. (d) [Hint: Refer Part C of the Schedule to the Prevention of Money Laundering Act, 2002]

6. (c) [Hint: Refer Section 13 of Foreign Exchange Management Act 1999 along with
Schedule III of the FEM (Permissible Current Account Transactions) Regulations,
2000]

7. (c) [Hint: Refer Section 6 of RERA, 2016]

8. (a) [Hint: As per Section 13 of RERA, 2016]

9. (b) [Hint: Section 6 Prohibition of Benaim Property Transactions Act, 1988 ]

10. (c) [Hint: Section 11 (4) read with section 89 of the RERA, 2016]

II. ANSWERS TO DESCRIPTIVE QUESTIONS

1 (a) As per section 13 (1) of the FEMA, 1999, If any person contravenes any provision of
this Act, or contravenes any rule, regulation, notification, direction or order issued in
exercise of the powers under this Act, or contravenes any condition subject to which
an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable
to a penalty up to thrice the sum involved in such contravention where such amount
is quantifiable, or up to two lakh rupees where the amount is not quantifiable.

Any Adjudicating Authority adjudging any contravention to above provisions, may, if

he thinks fit in addition to any penalty which he may impose for such contravention
direct that any currency, security or any other money or property in respect of which
the contravention has taken place shall be confiscated to the Central Government

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 and further direct that the foreign exchange holdings, if any of the persons
committing the contraventions or any part thereof, shall be brought back into India
or shall be retained outside India in accordance with the directions made in this
behalf.

According to the above provisions, Mr. Mehta will be penalized thrice of the extra
amount (USD, 20,000) remitted above the prescribed limit (USD 2, 50,000). Hence
liable to pay a penalty of USD 60,000 to the Government.

(b) The second issue is related to sections 13(1A), 13(1C) & 37A of the FEMA Act, 1999
read with Regulation 5 of the FEM(Acquisition & transfer of immovable property
outside India)Regulation , 2015.

As per section 13(1A), if any person is found to have acquired any foreign exchange,
foreign security or immovable property, situated outside India, of the aggregate value
exceeding the threshold prescribed under the proviso to sub-section (1) of section
37A, he shall be liable to a penalty up to three times the sum involved in such
contravention and confiscation of the value equivalent, situated in India, of the
foreign exchange, foreign security or immovable property.

13(1C) of FEMA says that if any person is found to have acquired any foreign
exchange, foreign security or immovable property, situated outside India, of the
aggregate value exceeding the threshold prescribed under the proviso to sub-section
(1) of section 37A, he shall be, in addition to the penalty imposed under sub-section
(1A), punishable with imprisonment for a term which may extend to five years and
with fine.

According to Section 37A of the FEMA, upon receipt of any information or otherwise,
if the Authorised Officer prescribed by the Central Government has reason to believe
that any foreign exchange, foreign security, or any immovable property, situated
outside India, is suspected to have been held in contravention of section 4, he may
after recording the reasons in writing, by an order, seize value equivalent, situated
within India, of such foreign exchange, foreign security or immovable property:

Provided that no such seizure shall be made in case where the aggregate value of
such foreign exchange, foreign security or any immovable property, situated outside
India, is less than the value as may be prescribed.

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 As per regulation 5 of the FEM (Acquisition & transfer of immovable property outside
India) Regulation, 2015, a person resident in India may acquire immovable property
outside India jointly with a relative who is a person outside India. Provided there is
no outflow of funds from India.

Since in the given case, Mr. Mehta remitted Foreign exchange to Sorav in excess to
the limit prescribed under the FEMA. Sorav partially used USD 20,000 for medical
treatment and rest USD 50,000 to purchase property outside India jointly with Mr.
Mehta. So Both Mr. Mehta and his son Sorav will be liable under sections 13(1),
13(1A), 13(1C) of the FEMA, 1999.

2. (1) According to section 3(2) of the Real Estate (Regulating ) Authority Act, 2016, no
registration of the real estate project shall be required for the purpose of renovation
or repair or re-development which does not involve marketing, advertising selling or
new allotment of any apartment, plot or building, as the case may be, under the real
estate project. So Registration for the re-development of society (Royal Ashiana)
was not required.

(2) According to the above provision no registration is required when any project is
renovated or repair or re-development and it does not involve marketing, advertising
selling or new allotment of any apartment, plot or building, as the case may be, under
the real estate project. However, in the given situation in the question, Mr. Mehta
plans to develop it as a new society under new name with new allotments. So
registration of the said project was necessaited as the Act.

(3) As per the proviso to section 3(1) of the RERA, projects that are ongoing on the date
of commencement of this Act and for which the completion certificate has not been
issued, the promoter shall make an application to the Authority for registration of the
said project within a period of three months from the date of commencement of this
Act. In the given case, where the project have been completed and obtained the
certificate of completion before the commencement of RERA, such project shall not
require registration.

(4) As per the explanation to section 3 of the RERA, where the real estate project is to
be developed in phases, every such phase shall be considered a stand alone real
estate project, and the promoter shall obtain registration under this Act for each

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 phase separately. Therefore if the said project is to be developed in phases , it needs
separate registration for each phase.

(5) As per Section 5 of the RERA, the Authority has to decide on the application within
30 days of its receipt. It further provides that in case the Authority fails to take a
decision within the said period of 30 days the project shall be deemed to be
registered.

3. (i) According to provision of Section 15 (1)

(1) Any contravention under section 13 may, on an application made by the

person committing such contravention, be compounded within one hundred
and eighty days from the date of receipt of application by the Director of
Enforcement or such other officers of the Directorate of Enforcement and
officers of the Reserve Bank as may be authorised in this behalf by the
Central Government in such manner as may be prescribed."

(2) Where a contravention has been compounded under sub-section (l), no

proceeding or further proceeding, as the case may be, shall be initiated or
continued, as the case may be, against the person committing such
contravention under that section, in respect of the contravention so
compounded.

As per the above mention provision Mr. Mehta will submit the application to the
concerned authority for compounding of the offences committed in contravention to
the FEMA Act.

(ii) The Section 5 of PMLA authorizes the Director or any other officer not below the
rank of Deputy Director to attach the property. Section 8 of PMLA lays down an
elaborate procedure for adjudication of complaint under Section 5 of PMLA. It calls
for a show cause notice to be issued to the offender/ person from whom property
has been seized, so as to give the person an opportunity to make a case against
attachment. Such a person in order to avoid confiscation, can demonstrate the
legitimate source of his income/earning or assets, out of which or by means of which
he has acquired the property attached. The evidence on which he realized and other
relevant information and particulars, and to basically convince the authority about
the property which should not be declared to be the property involved in money
laundering.

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 If the authority reached the conclusion that the offense has not taken place it shall
order release of such property to the person entitled to receive it.

Hence as per the above provision, Mrs. Rama Devi aggrieved by the provisional
attachment may file her objection before the adjudicating authority.

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 ELECTIVE PAPER 6D- ECONOMIC LAWS

SOLUTION – CASE STUDY 3

I. ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (b)

[Hint: As per Schedule I of PMLA, 2002 it is a predicate offence related to custom Act]

2. (b)

[Hint: Section 3 of the Prevention of Money-Laundering Act, 2002 states of commission of an

offence of money-laundering.—Whosoever directly or indirectly attempts to indulge or knowingly
assists or knowingly is a party or is actually involved in any process or activity connected with
the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-
laundering. Since Shalini’s uncle has given the loan from the known sources of his income so
he is not a part of this crime.]

3. (b)

[ Hint: 2(fa) of PMLA, 2002 ]

4. (b)

[ Hint: As per exception of Section 2 (9) (A) Neeraj is not liable for Benami Transaction as he
stand in a fiduciary capacity for the benefit of other person.]

5. (a)

[Hint: Refer the schedule of PMLA, 2002]

6. (a)

[Hint: Refer Section 6 of the Prohibition of Benami Property Transactions Act, 1988]

7. (d)

[Hint: Refer Schedule I of FEM (Current Account Transaction ) Rules, 2000]

8. (c)

[Hint: Refer section 2(v) of the RERA]

9. (b)

[Hint: Refer section 2(9) of the Prohibition of Benami Property Transactions Act, 1988]

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10. (b)

[Hint: Refer section 4 of the Competition Act, 2002]

II. ANSWERS TO DESCRIPTIVE QUESTIONS

1. a. According to provision of the PMLA, 2002 the money earned by Neeraj is not from the
legitimate sources. Since Neeraj forged the sign and seal of his Chief Engineer so the
money earned by him is proceed of crime. According to Schedule Part A of Para 1 of
PMLA, Neeraj has committed an offence under section 472 and 473 of Indian Penal
Code. These Section deals with the offence of making or possessing counterfeit seal,
etc., with intent to commit forgery. Whoever makes or counterfeits any seal, plate or
other instrument for making an impression, intending that the same shall be used for
the purpose of committing any forgery which would be punishable under section 467 of
this Code and under any other section under this Code, or, with such intent, has in his
possession any such seal, plate or other instrument, knowing the same to be counterfeit,
shall be punished with imprisonment for life, or with imprisonment of either description
for a term which may extend to seven years, and shall also be liable to fine.

b. Neeraj is liable under the provision of PMLA Act. His act is covered under the provision of
Part B of the Schedule. Part B of the Schedule refers to offence under the Customs Act,
1962. Section 132 of the Customs Act states that whosoever makes sign, or use or cause
to be made, sign or use any declaration, statement or document in relation to customs
knowingly or having reasons to believe that such declaration statement etc. is false shall be
punishable for a term which may extend to two years or fine or both.

2. a. Neeraj has contravened the Prevention of Money Laundering Act under Part A Para 22
of the Information Technology Act 2000. According to the provision of Section 72 of
Information of Technology Act 2000, if any person who, in pursuance of any of the
powers conferred under this Act, rules or regulations made thereunder, has secured
access to any electronic record, book, register, correspondence, information, document
or other material without the consent of the person concerned discloses such electronic
record, book, register, correspondence, information, document or other material to any
other person shall be punished with imprisonment for a term which may extend to two
years, or with fine which may extend to one lakh rupees, or with both.

Neeraj in the given case, without the consent of his Executive Director accessed the
electronic records and passed on the official information to the vendor without permission.
This information can produce large profits and legitimize the ill-gotten gains through money

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 laundering. Hence it is punishable under the Section 72 of the Information of Technology
Act, 2000.

b. The given issues falls within the ambit of the Prohibition of Benami Property Transactions
Act, 1988. According to Section 2 (26) "Property" means assets of any kind, whether
movable or immovable, tangible or intangible, corporeal or incorporeal and includes any
right or interest or legal documents or instruments evidencing title to or interest in the
property and where the property is capable of conversion into some other form, then the
property in the converted form and also includes the proceeds from the property.

According to Section 2 (10) "benamidar" means a person or a fictitious person, as the case
may be, in whose name the benami property is transferred or held and includes a person
who lends his name.

According to Section 2 (9) (B), a transaction or an arrangement in respect of a property

carried out or made in a fictitious name; or (D) a transaction or an arrangement in respect
of a property where the person providing the consideration is not traceable or is fictitious.
Hence, according to all the above provisions, Neeraj has done Benami transactions. He has
done the investment in the share as a Benamidar as he holds the share in the fictitious
name of shareholders. Hence this is a Benami transaction and is liable for punishment
under the Benami Transaction Act.

3. (i) (A) The term ‘agreement’ as defined in section 2 (b) of the Competition Act, 2002,
includes any arrangement or understanding or action in concert.

(i) whether or not such arrangement, understanding or action is formal or in

writing, or

(ii) whether or not such arrangement, understanding or action is intended to

be enforceable by legal proceedings.

Thus an agreement between Shubh Ltd. and Mangal Ltd. satisfies the above
ingredients of an agreement as per section 2 (e) of the Act, so agreement has
appreciable effect on competition.

(B) Factors to be considered:

(1) creation of barriers to new entrants in the market.

(2) driving existing competitors out of the market.

(3) foreclosure of competition by hindering entry into the market.

(4) accrual of benefits to consumers.

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 (5) improvements in production or distribution of goods or provision of
services.

(C) Orders of CCI: If after enquiry by the Director General, the Commission finds the
agreement entered into by Shubh Ltd. and Mangal Ltd. are in contravention of
section 3, it may pass all or any of the following orders:

(1) direct Shubh Ltd. and Mangal Ltd. to discontinue and not to re-enter such
agreement.

(2) impose such penalty as it may deem fit which shall not be more than 10% of
the average of the turnover for the last 3 preceding financial years, upon each
of such person or enterprises which are parties to such agreement or abuse;

(3) direct that agreement shall stand modified to the extent and in the manner
as may be specified in the order by the commission

(4) direct Shubh Ltd. and Mangal Ltd to abide by such other orders as the
commission may pass and comply with the directions including payment
of cost, if any.

(5) pass such other orders or issue such directions as it may deem fit.

(ii) Issue of equity shares to NRI’s and transfer of shares by NRIs are capital account
transactions.

RBI may in consultation with the Central Government specify any class or classes of
transactions which are permissible [Section 6(2)(a)].

According to Regulation 3(1) of the Foreign Exchange Management (Permissible capital

Account Transactions) Regulations, 2000 issued by RBI, Investment in India by a person
resident outside India is a permissible capital account transactions (Schedule II).

Further RBI is empowered under Section 6(3)(b) to prohibit, restrict or regulate, by

regulations, transfer or issue of any security by a person resident outside India.

According to Regulation 5(3)(ii) of the said regulations a NRI may purchase shares of an
Indian Company which is not engaged in Print Media Sector on non-repatriation basis
without any limit (para 2 of Schedule 4). The shares may be issued by the company either
by public issue or private placement. The only condition is that the amount of consideration
for purchase of shares shall be paid by way of inward remittance through normal banking
channels from abroad or out of funds held in NRE/FCNR/NRO/NRSR/N&NR account
maintained with an authorized dealer or as the case may be with an authorised bank in India
(Para 3 of Schedule 4).

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 ELECTIVE PAPER 6D- ECONOMIC LAWS

SOLUTION – CASE STUDY 4

I. ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (b)

[ Hint: Based on Section 2 (1) (u) of the Prevention of Money-Laundering Act, 2002]

2. (b);

[Hint: Refer Section 8 of the Prevention of Money-Laundering Act, 2002].

3. (b);

[Hint: Refer section 8 (4) of the Prevention of Money-Laundering Act, 2002].

4. (d);

[Hint: Based on Section 2 (1) (d) of the Prevention of Money-Laundering Act, 2002]

5. (c);

[Hint: Refer Section 5 (5) of the Prevention of Money-Laundering Act, 2002].

6. (b);

[Hint: Refer Section 8 (3) and 8 (6) of the Prevention of Money-Laundering Act, 2002].

7. (b);

[Hint: Refer Schedule to the Prevention of Money-Laundering Act, 2002]

8. (c);

[Hint: Refer Section 2 (1) (y) of the Prevention of Money-Laundering Act, 2002].

9. (d);

Hint: Refer Section 2 (10) of the Prohibition of Benami Property Transactions Act, 1988.

10. (d):

[Hint: Refer Section 5 (1) of the Prevention of Money-Laundering Act, 2002].

II. ANSWERS TO DESCRIPTIVE QUESTIONS

1. According to section 8 of the Prevention of Money Laundering Act, 2002, on receipt of a

complaint or applications, if the Adjudicating Authority has reason to believe that any person

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 has committed an offence of money laundering or is in possession of proceeds of crime, he may
serve a notice of not less than thirty days.

Such person shall be called upon to indicate the sources of his income, earning or assets, out
of which or by means of which he has acquired the property so or, seized or frozen.

However, where a notice specifies any property as being held by a person on behalf of any other
person, a copy of such notice shall also be served upon such other person. Where if, such
property is held jointly by more than one person, such notice shall be served to all persons
holding such property.

The Adjudicating Authority shall, after hearing the aggrieved person and the Director or any
other officer authorised by him in this behalf, and taking into account all relevant materials
placed on record before him, by an order, record a finding whether all or any of the properties
referred to in the notice issued , are involved in money-laundering. Provided that if the property
is claimed by a person, other than a person to whom the notice had been issued, such person
shall also be given an opportunity of being heard to prove that the property is not involved in
money-laundering.

According to the above stated provisions, following are the answers:

(a) Since in the given case, Alberts holds the property jointly in his and his wife’s name i.e.
Neelima George. As per the above law, such notice shall be served to all persons holding
such property. So accordingly, Neelima will also be served the notice, and being heard.
Taking into account all relevant materials placed on record before him, by an order, record
a finding whether all or any of the properties referred to in the notice issued , are involved
in money-laundering, then in such case Neelima will also be liable for holding of the joint
property.

(b) If property is claimed by a person, other than whom the notice has been issued therein,
such person shall also be given an opportunity of being heard to prove that the property is
not involved in money-laundering.

2. (a) According to the Explanation given to section 2(9) of the Prohibition to Benami
Transaction Act, Benami transaction shall not include any transaction involving the
allowing of possession of any property to be taken or retained in part performance of a
contract, where—

(i) consideration for such property has been provided by the person to whom
possession of property has been allowed but the person who has granted
possession thereof continues to hold ownership of such property;

(ii) stamp duty on such transaction or arrangement has been paid; and

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 (iii) the contract has been registered

Since the property is in the name of Mr. X and not in others name and it is registered on
duly paid stamp duty, it is not a Benami Transaction.

(b) (i) As per the Prevention of Money Laundering Act, 2002, whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly is a party or is
actually involved in any process or activity connected with the proceeds of crime
including its concealment, possession, acquisition or use and projecting or
claiming it as untainted property shall be guilty of offence of money laundering
(Section 3).

“Proceeds of crime” means any property derived or obtained, directly or indirectly,

by any person as a result of criminal activity relating to a scheduled offence or the
value of any such property [Section 2(1)(u)].

Every Scheduled Offence is a Predicate Offence. The occurrence of the scheduled

Offence is a pre requisite for initiating investigation into the offence of money
laundering.

In the given case , Chiman Bhai assigned Albert to deliver counterfeit currency
notes to be given to his friends in Hongkong , which is an offence falling within the
purview of scheduled offence in Part A of the PMLA, 2002 under section 489B of
the IPC. This section deals with the using as genuine, forged or counterfeit
currency-notes or bank-notes. According to the section whoever sells to, or buys
or receives from, any other person, or otherwise traffics in or uses as genuine, any
forged or counterfeit currency-note or bank-note, knowing or having reason to
believe the same to be forged or counterfeit, shall be liable under the Prevention of
Money Laundering Act.

Hence, Albert, Chiman Bhai and his friends in Hongkong, all are said to be liable
under the Prevention of Money Laundering Act.

(ii) The Foreign Exchange Management (Permissible Capital Account Transactions)

Regulations, 2000 specifies list of transactions, which are permissible in respect of
persons resident in India in Schedule I.

Schedule I states the list of permissible classes of transactions made by persons

resident in India. List specifies, maintenance of foreign currency accounts in India
and outside India by a person resident in India. Accordingly, maintenance of foreign
currency accounts in India and outside India by Albert is permittable in FEMA.

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3. (i) Person resident in India

Section 2(v) of FEMA, 1999 defines the term “person resident in India”. According to Section
2(v) (iii), all business units in India will be “resident in India” even though these units are
owned or controlled by a person resident outside India.

Similarly all business units outside India will be ‘resident in India’ provided the business
units are either owned or controlled by a person resident in India [Section 2(v) (iv)].

It is necessary to determine the residential status of the person (i.e.,Chiman bhai) who
owns or controls the business units in outside India.

(ii) Blue Sapphire Pvt. Ltd., being a Singapore based company would be person resident
outside India [(Section 2(w)]. Section 2 (u) defines ‘person’ under clause (vii) thereof, as
person would include any agency, office or branch owned or controlled by such person. The
term such person appears to refer to a person who is included in clause (i) to (vii).
Accordingly Blue Sapphire Pvt. Ltd. unit in Mumbai, being a branch of a company would be
a ‘person’.

Section 2(v) defines a person resident in India. Under clause (iii) thereof person resident in
India would include an office, branch or agency in India owned or controlled by a person
resident outside India. Blue Sapphire Pvt. Ltd unit in Mumbai is owned or controlled by a
person resident outside India, and hence it, would be a ‘person resident in India.’

However, Dubai Branch though not owned, is controlled by Blue Sapphire Pvt. Ltd. unit in
Mumbai which is a person resident in India. Hence prima facie, it may be possible to hold a
view that the Dubai Branch is a person resident in India.

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 ELECTIVE PAPER 6D: ECONOMIC LAWS

SOLUTION

Case Study 5

ANSWER 1
I ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (c) [Hints: Refer Regulation 2 of Schedule III of Foreign Exchange Management (Current
Account Transactions) Rules, 2000]
2. (c) [Hint: Refer Section 2 (9) of the Prohibition of Benami Property Transactions Act, 1988.
It is not a benami transaction because all statutory dues have been paid and his father
knew about the transaction. Therefore, it falls under exempted category. The amount so
contributed can be a loan or gift to the son.]
3. (c) [Hint: Refer Regulation 4 of the Foreign Exchange Management (Export of Goods and
Services) Regulations, 2015]
4. (c) [Hint: Refer Regulation 15 of the FEM (Export of Goods and Services), Regulations, 2000]
5. (a) [Hint: Refer Regulation 3 of FEM (Acquisition and transfer of immovable property in India)
Regulations, 2000]
6. (d) [Hint: Refer Regulation 7 of FEM (Realisation, Repatriation and surrende r of Foreign
Exchange) Regulations, 2015]
7. (b) [Hint Refer Regulation 4 the FEM (Export of Goods and Services), Regulations, 2015
which has exempted such export transaction from furnishing of export declaration]
8. (b) [Hint: Section 14 of the Insolvency and Bankruptcy Code, 2016, describes moratorium. It
is an order passed by the adjudicating authority (NCLT) declaring a moratorium on the
debtor's operations for the period of the Insolvency Resolution Process, during which no
action can be taken against the Company or the assets of the Company. This operates
as a 'calm period' during which no judicial proceedings for recovery, enforcement of
security interest, sale or transfer of assets, or termination of essential contracts can take
place against the debtor.]
9. (b) [Hint: FEMA does not impose any restriction on acquisition of immovable property outside
India by a non-resident Indian. Further, when at a future date the person concerned
becomes a person resident in India, Section 6(4) even permits him to hold, own or transfer
immovable property situated outside India since such property was acquired by him when
he was resident outside India]
10. (c) [Hint: As per section 22 of the Insolvency and Bankruptcy Code, 2016, an Interim
Resolution professional approved by the Committee of Creditors can be replaced with
75% voting in favour of the decision and approval of the Board.
II. ANSWERS TO DESCRIPTIVE QUESTIONS
1. (i) Section 11(3) of the Foreign Exchange Management Act, 1999 states that where any
Authorised person contravenes any direction given by the Reserve Bank of India under the
said Act or fails to file any return as directed by the Reserve Bank of India, the Reserve Bank
of India may, after giving reasonable opportunity of being heard, impose on Autho rised
Person, a penalty which may extend to ten thousand rupees and in the case of continuing

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 contraventions with an additional penalty which may extend to two thousand rupees for every
day during which such contravention continues.
Since as per the facts given in the question, the Authorised person, namely, Forex Dealers
Ltd., has failed to file the returns as directed by the Reserve Bank of India. According to the
above provisions, it has exposed itself to a penalty which may extend to ten thousand rupees
and in the case of continuing contraventions in the nature of failure to file the returns, with an
additional penalty which may extend to two thousand rupees for every day during which such
contravention continues.
(ii) According to the provisions of section 2(v) of the Foreign Exchange Management Act, 1999,
a person in order to qualify for the purpose of being treated as a "Person Resident in India"
in any financial year, must reside in India for a period of more than 182 days duri ng the
preceding financial year. In the given case, Mr. Shekhar has resided in India for a period of
only 150 days, i.e., less than 182 days, during the financial year 2016-2017. Hence, he cannot
be considered as a "Person Resident in India" during the financial year 2017-2018 irrespective
of the purpose or duration of his stay.
(iii) Printex Computer being a Singapore based company would be person resident outside India
[(Section 2(w)]. Section 2 (u) defines ‘person’ under clause (vii) thereof, as person would
include any agency, office or branch owned or controlled by such person. The term such
person appears to refer to a person who is included in clause (i) to (vii). Accordingly printex
unit in Pune, being a branch of a company would be a ‘person’.
Section 2(v) defines a person resident in India. Under clause (iii) thereof person resident in
India would include an office, branch or agency in India owned or controlled by a person
resident outside India. Printex unit in Pune is owned or controlled by a person resident outside
India, and hence it, would be a ‘person resident in India.’
However, Dubai Branch though not owned is controlled by Printex unit in Pune which is a
person resident in India. Hence prima facie, it may be possible to hold a view that t he Dubai
Branch is a person resident in India.
2. Capital Account Transactions: All the transactions referred to in the question are capital account
transactions.
Section 6(2) of FEMA, 1999 provides that the Reserve Bank may in consultation with the Centra l
Government specify the permissible capital account transactions and the limit upto which foreign
exchange will be allowed for such transactions.
(i) Depreciation of direct investments: According to proviso to section 6(2), the Reserve bank
shall not impose any restriction on the drawal of foreign exchange for certain transactions.
One such transaction is drawal of foreign exchange for payment due for depreciation of direct
investment in the ordinary course of business. Hence this transaction is permissi ble without
any restrictions.
(ii) Person resident in USA returning permanently to India: When the person returns to India
permanently, he becomes a resident in India. Section 6(4) provides that a person resident in
India may hold, own, transfer or invest in foreign currency, foreign security, etc. if such
currency, security or property was acquired, held or owned by such person when he was
resident outside India or inherited from a person who was resident outside India. In view of
this, the person who returned to India permanently can continue to hold the foreign security
acquired by him when he was resident in U.S.A.
(iii) Investment in shares of Indian company by non-resident: Reserve Bank issued Foreign
Exchange Management (Permissible Capital Account Transactions) Regulations, 2000.
Regulation 4(6) of the said Regulations prohibits a person resident outside India from making
investment in India, in any form, in any Company or partnership firm or proprietary concern
or any entity, whether incorporated or not, which is engaged or proposes to engage in

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 construction of farm houses. Hence it is not possible for a person resident outside India to
invest in the shares of a company engaged in construction of farm houses as such investment
is prohibited.
(iv) Acquisition of immovable property by person resident outside India: Reserve Bank
issued Foreign Exchange Management (Permissible Capital Account Transactions)
Regulations, 2000. The regulations specify the classes of capital account transactions of
persons resident outside India in Schedule II. Under this schedule, acquisition and transfer of
immovable property in India by a person resident outside India is permissible. Hence, the
person resident of Canada can acquire the immovable property in Mumbai.
3. (i) Adherence to sanctioned plans and project specifications by the promoter (Section 14)
The proposed project shall be developed and completed by the promoter in accordance with
the sanctioned plans, layout plans and specifications as approved by the competent
authorities.
Notwithstanding anything contained in any law, contract or agreement, after the sanctioned
plans, layout plans and specifications and the nature of the fixtures, fittings, amenities and
common areas, of the apartment, plot or building, as the case may be, as approved by the
competent authority, are disclosed or furnished to the person who agree to take one or more
of the said apartment, plot or building, as the case may be, the promoter shall not make —
(1) any additions and alterations in the sanctioned plans, layout plans and specifications
and the nature of fixtures, fittings and amenities described therein in respect of the
apartment, plot or building, as the case may be, which are agreed to be taken, without
the previous consent of that person.
Provided that the promoter may make such minor additions or alterations as may be
required by the allottee, or such minor changes or alterations as may be necessary due
to architectural and structural reasons duly recommended and verified by an authorised
Architect or Engineer after proper declaration and intimation to the allottee.
Explanation.—For the purpose of this clause, "minor additions or alterations" excludes
structural change including an addition to the area or change in height, or the removal
of part of a building, or any change to the structure, such as the construction or removal
or cutting into of any wall or a part of a wall, partition, column, beam, joist, floor including
a mezzanine floor or other support, or a change to or closing of any required means of
access ingress or egress or a change to the fixtures or equipment, etc.
(2) any other alterations or additions in the sanctioned plans, layout plans and specifications
of the buildings or the common areas within the project without the previous written
consent of at least two-thirds of the allottees, other than the promoter, who have agreed
to take apartments in such building.
Explanation.—For the purpose of this clause, the allottees, irrespective of the number of
apartments or plots, as the case may be, booked by him or booked in the name of his
family, or in the case of other persons such as companies or firms or any association of
individuals, etc., by whatever name called, booked in its name or booked in the name of
its associated entities or related enterprises, shall be considered as one allottee only.
In case any structural defect or any other defect in workmanship, quality or provision of
services or any other obligations of the promoter as per the agreement for sale relating to
such development is brought to the notice of the promoter within a period of five years by the
allottee from the date of handing over possession, it shall be the duty of the promoter to rectify
such defects without further charge, within thirty days, and in the event of promoter's failure
to rectify such defects within such time, the aggrieved allottees shall be entitled to re ceive
appropriate compensation in the manner as provided under this Act.

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 Hence, in the instant case, reducing the number of rooms does not come under minor
additions or alterations. The promoter i.e. Mr. Pankaj Gupta shall not make any additions and
alterations in the sanctioned plans, layout plans and specifications within the project without
the previous written consent of at least two-thirds of the allottees, other than the promoter,
who have agreed to take apartments in such buildings.
(ii) No deposit or advance to be taken by promoter without first entering into agreement
for sale
According to section 13 of the said Act, a promoter shall not accept a sum more than ten per
cent of the cost of the apartment, plot, or building as the case may be, as an advance payment
or an application fee, from a person without first entering into a written agreement for sale
with such person and register the said agreement for sale, under any law for the time being
in force.
In the instant case, the cost of the flat is Rs. 2 crore and Mr. Shyam put a condition to pay
Rs. 50 Lakhs as an application fee before entering into a written agreement for sale with Mr.
Vivaan. This is invalid as a promoter can accept only Rs.20 Lakhs (10% of Rs. 2 Crore) as an
advance or an application fee without first entering into a written agreement for sale.

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 ELECTIVE PAPER 6D: ECONOMIC LAWS

SOLUTION

Case Study 6

I. ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (d) [Hints: As per section 3(12), Default means non-payment of debt when whole or any part
or instalment of the amount of debt has become due and payable and is not repaid by the
debtor or the corporate debtor, as the case may be]
2. (c) [Hints: Financial creditor means any person to whom a financial debt is owed and includes
a person to whom such debt has been legally assigned or transferred to;{section 5(7)}]
3. (b) [Hint: Refer Regulation 15 of the FEM (Export of Goods and Services), Regulations, 2000]
4. (c) [Hint: Refer Section 5 (7) of the Code]
5. (c) [Hint: Refer Section 5 (25) read with section 28 of the Code]
6. (c) [Hint: Refer Section 16 of the Code]
7. (d) [Hint: Refer Section 15 of the Code]
8. (c) [Hint: Refer Section 22 (1)]
9. (d) [Hint: Refer Regulation 3 of the Insolvency and Bankruptcy (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016]
10. (d) [Hint: section 61(3) of the IBC]

II ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (i) According to section 33 of the Insolvency and Bankruptcy Code, 2016, where the Adjudicating
Authority before the expiry of the insolvency resolution process period does not receive a
resolution plan as approved by the committee of creditors, it shall—
(a) pass an order requiring the corporate debtor to be liquidated as per the relevant
provisions
(b) issue a public announcement stating that the corporate debtor is in liquidation; and
(c ) require such order to be sent to the authority with which the corporate debtor is
registered.
According to section 12 of the Insolvency and Bankruptcy Code, 2016, the corporate
insolvency resolution process (CIRP) shall be completed within a period of one hundred and
eighty days from the date of admission of the application to initiate such process.
As per the facts, Ronit, presented the approved resolution plan, before NCLT after the
prescribed period for the completion of CIRP i..e, after 180 days of insolvency commence ment
date.
According to the above stated provisions, NCLT, shall pass an order requiring the corporate
debtor (MMPL) to be liquidated. It shall issue a public announcement of its liquidation and
send such order to the Registrar of companies.
(ii) As per Section 33(3) of the Insolvency and Bankruptcy Code, 2016, where the resolution plan
approved by the Adjudicating Authority is contravened by the concerned corporate debtor,
any person other than the corporate debtor, whose interests are prejudicially affec ted by such
contravention, may make an application to the Adjudicating Authority for a liquidation order

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 as referred above. Accordingly, the employees and the stakeholders of MMPL, whose
interests are affected by contravention in compliances of the resolut ion plan, may make an
application to NCLT for initiation of liquidation. On receipt of an application, if the Adjudicating
Authority determines that the MMPL has contravened the provisions of the resolution plan, it
shall pass a liquidation order.
(iii) As per section 33(7) of the Insolvency and Bankruptcy Code, 2016, the order for liquidation
shall be deemed to be a notice of discharge to the officers, employees and workmen of the
corporate debtor.
However, where the business of the corporate debtor when continued during the liquidation
process by the liquidator, it shall not be deemed to be notice of discharge to the officers,
employees and workmen of the corporate debtor.
So the Conduct of business of MMPL during liquidation process by the liquidator i s tenable
and shall not be deemed to be notice of discharge to the officers, employees and workmen of
the MMPL.
2. (i) Validity of the conduct of undervalued transaction : As per the provisions given in section
45 of the Insolvency and Bankruptcy Code, 2016, Ronit, on an examination of the
transactions of the MMPL, determines that certain transactions were made by MMPL with a
related party (Rama devi) within the period of two years preceding the insolvency
commencement date (in 6 months preceding the Insolvency Commencement date), which
were undervalued. Ronit, shall make an application to the NCLT to declare such transactions
as void and reverse the effect of such undervalued transaction and requiring the person who
benefits from such transaction to pay back any gains he may have made as a result of such
transaction.
(ii) Failure to report to NCLT of undervalued transactions: As per the stated facts given in
the light of the provisions laid in Section 47 of the Insolvency and Bankruptcy Code, an
undervalued transaction has taken place and Ronit (Resolution Professional) has not reported
it to the NCLT, in such case, a creditor , member or a partner of a MMPL, as the case may
be, may make an application to the NCLT to declare such transactions void and reverse their
effect in accordance with the relevant provisions of this Code.
(iii) Order of NCLT: Where the NCLT, after examination of the application made above, is
satisfied that undervalued transactions had occurred; and Ronit (RP) after having sufficient
information or opportunity to avail information of such transactions did not report such
transaction, there it shall pass an order of —
(a) restoring the position as it existed before such transactions and reversing the effects
thereof in the manner as laid down in section 45 and section 48 of the Code. The order
of the Adjudicating Authority may provide for the following:—
(1) require any property transferred as part of the transaction, to be vested in the
corporate debtor(MMPL);
(2) release or discharge (in whole or in part) any security interest granted by the
corporate debtor (MMPL);
(3) require any person to pay such sums, in respect of benefits received by such
person, to the Ronit (RP), as the Adjudicating Authority may direct; or
(4) require the payment of such consideration for the transaction as may be determined
by an independent expert.
(b) requiring the Board(IBBI) to initiate disciplinary proceedings against Ronit.
3. (a) (i) As per the provisions given in section 68 of the Code, Mr. Shyam, Director (an officer in
default) has within the twelve months immediately preceding the insolvency
commencement date, fraudulently transferred his holding of shares in favour of his sister

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 of Rs.1 lakh (which is more than value of ten thousand rupees ). So, Mr. shyam, shall
be punishable with imprisonment for a term which shall not be less than three years but
which may extend to five years, or with fine, which shall not be less than one lakh rupees,
but may extend to one crore rupees, or with both: However, he shall not be liable to any
punishment under this section if he proves that he had no intent to defraud or to conceal
the state of affairs of the corporate debtor.
(ii) According to section 71 of the Code, on and after the insolvency commencement date,
Mr. Shyam, makes a false entry in the books of account of MMPL with an intent to
defraud or deceive any person, he shall be punishable with imprisonment for a term
which shall not be less than three years, but which may extend to five years, or with fine
which shall not be less than one lakh rupees, but may extend to one crore rupees, or
with both.
(iii) As per Section 77 of the Code, as Shyam permitted Shivam to provide informations in
the application under section 10,which is false in material particular and omits material
fact related to a books of accounts of a specified period, so he shall be punishable
with imprisonment for a term which shall not be less than three years, but wh ich
may extend to five years or with fine which shall not be less than one lakh rupees,
but which may extend to one crore rupees, or with both.
(b) As per section 69 of the Code, on or after the insolvency commencement date, where the
directors of the MMPL—
(a) has made transfer of, or charge on, or has caused or connived in the execution of a
decree or order against, the property of the corporate debtor;
(b) has concealed or removed any part of the property of the corporate debtor within two
months before the date of any unsatisfied judgment, decree or order for payment of
money obtained against the corporate debtor,
such directors of MMPL, shall be punishable with imprisonment for a term which shall not be
less than one year, but which may extend to five years, or with fine, which shall not be less
than one lakh rupees, but may extend to one crore rupees, or with both.
However, directors of MMPL, shall not be punishable under this section if the acts mentioned
in clause (a) were committed more than five years before the insolvency commencement date;
or if he proves that, at the time of commission of those acts, he had no intent to defraud the
creditors of the corporate debtor.

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 ELECTIVE PAPER 6D: ECONOMIC LAWS

SOLUTION

Case Study 7

I. ANSWERS TO OBJECTIVE TYPE QUESTIONS

1. (a) [Hint: The matter relates to concerns of an individual consumer regarding non-delivery of
booked vehicle in the given time]
2. (b) [Hint: The allegations essentially relate to abuse of dominance by a car manufacturing
company, directly or through its authorized dealer]
3. (c) [Hint: The tried to portray his issue as an issue of consumer exploitation to draw the attention
of the competition authority]
4. c, d, a, b [Hint: To examine a case under section 4 of the Competition Act, 2002, it is to be seen
first whether the alleged entity is an enterprise or not before defining the relevant market,
assessment of its position of dominance in the relevant market and examination of its conduct]
5. b, a, d, c [Hint: To examine a case under section 3 (4) of the Competition Act, 2002, first it is to be
seen whether the alleged two entities are in a vertical chain and whether they have entered into
any agreement as defined under the Competition Act, 2002. Then it is to seen whether such
agreement is anti-competitive and it has appreciable adverse effect on competition]
6. (a) [Hint: Essentially, the allegations relate to passenger car market]
7. (d) [Hint: All are the factors prescribed under section 19 (6) the Competition Act, 2002 to assess
dominance of an enterprise in a relevant market]
8. (b) [Hint: Cartelization requires agreement amongst players placed at horizontal level ]
9. (a) [Hint: No competition concerns raised in the matter as delay in giving delivery to a consumer
or not passing the benefit of tax reduction to consumer or increasing the price cannot said to
be anti-competitive]
10. (d) [ Hint: Refer section 4 of the Competition Act, 2002]
II. ANSWERS TO DESCRIPTIVE QUESTIONS
1. Even though the concerns raised by Mr. Nazir cannot be redressed by the competition authority
as it essentially relates to grievances of an individual consumer of a passenger car manufactured
by XMC Pvt. Ltd, however if the matter is placed before the competition authority it will be examined
in terms of section 4 of the Competition Act, 2002. It is so because the allegations of Mr. Nazir
essentially relate to abuse of dominance by XMC Pvt. Ltd, directly or through its authorized dealer
M/s Ratan Lal & Sons.
To examine the matter under section 4 of the Competition Act, 2002, it is to be seen first whet her
the alleged entity is an enterprise or not before defining the relevant market, assessment of its
position of dominance in the relevant market and examination of its conduct.
Enterprise: Yes, XMC Pvt. Ltd. is an enterprise in terms of Section 2 (h) of the Act.
Relevant Product Market: The market for passenger car [section 2 (t)]
Relevant Geographic Market: whole of India [see section 2 (s)]
Relevant Market: the market for passenger car in India [section 2 (r)]
Assessment of Dominance of XMC Pvt. Ltd.: Appear to be dominant in the market for
passenger car in India as it has highest market share and financial strength besides its brand name
and dependence of the consumer on it.

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 Assessment of the alleged conduct of XMC Pvt. Ltd.: Not appear to be abusive. Delay in giving
delivery of a product to a consumer or not passing the benefit of tax reduction to consumer or
increasing the price cannot said to be anti-competitive in terms of section 4 of the Competition Act,
2002.
2. To examine the matter under section 4 of the Competition Act, 2002, it is to be seen first whether
the alleged entity is an enterprise or not before defining the relevant market, assessment of its
position of dominance in the relevant market and examination of its conduct. (all the steps of
answer no. 1 above to be followed)
Delay in giving delivery of a product to a consumer without enabling provisions in the booing
document may be an issue of breach of contract between two parties. It may not be a case of
imposition of unfair condition in term of the provisions of section 4 of the Competition Act, 2002.
Further, increasing price is a commercial decision of an enterprise which is taken considering the
market demand conditions of the product. If market is competitive then excess price, if any, can be
wiped out in the long run, no intervention of the competition authority is required. However, if the
company raised the price after negotiation with the consumer, it can be challenged in other
appropriate forum.
3. As per section 2(r) of the Act, ‘relevant market’ means the market which may be determined by the
Commission with reference to the relevant product market or the relevant geographic market or
with reference to both the markets. Further, the term ‘relevant product market’ has been defined in
section 2(t) of the Act as a market comprising all those products or services which are regarded as
interchangeable or substitutable by the consumer, by reason of characteristics of the products or
services, their prices and intended use. And, the term ‘relevant geographic market’ has been
defined in section 2(s) of the Act to mean a market comprising the area in which the conditions of
competition for supply of goods or provision of services or demand of goods or services are
distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring
areas.
In order to determine the ‘relevant product market’, the Commission, in terms of the factors
contained in section 19(7) of the Act, is required to have due regard to all or any of the following
factors viz. physical characteristics or end- use of goods, price of goods or service, consumer
preferences, exclusion of in-house production, existence of specialized producers and
classification of industrial products. Similarly in order to determine the ‘relevant geographic market’,
the Commission, in terms of the factors contained in section 19(6) of the Act, is required to have
due regard to all or any of the following factors viz., regulatory trade barriers, local speci fication
requirements, national procurement policies, adequate distribution facilities, transport costs,
language, consumer preferences and need for secure or regular supplies or rapid after - sales
services.
As stated above, as per the provisions of the Competition Act, 2002 the relevant market comprises
of the relevant product market and relevant geographic market. In the instant matter, the relevant
product market may be considered as the ‘market for passenger car’. It may be noted that the
allegations of Mr. Nazir pertains to purchase and after sale service of a passenger car which cannot
be substitutable with other type of vehicle in terms of price, end use, characteristics, etc. The
relevant geographic market in this matter may be considered as ‘India’ because the condition of
competition in passenger car market in India is homogeneous throughout India. A consumer can
buy a passenger car from any part of India with similar competitive condition. Thus, the market for
passenger car in India may be considered as the relevant market in this case.

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