INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Brijita Prakash, JSA
Typically, shareholder/promoter loans are unse - cured and subordinated. 3.8 Lenders’ Liability Under Environmental Laws Lenders will not ordinarily incur liability under Indian environmental laws simply by holding a security interest. If a lender takes over man - agement and control of the borrower after the enforcement of security, such lender may incur liability as the person in possession of a polluting premises, or as the person responsible for the conduct of the borrower’s business. 3.9 Effects of a Borrower Becoming Insolvent The ideal outcome of an insolvency application under the IBC is a successful corporate insol - vency resolution process, failing which liquida - tion is commenced. There are also provisions for voluntary liquidation. Where a debtor goes into liquidation, the IBC provides the way secured debt will be discharged. Workmen’s (employees whose rights are protected under the Industrial Disputes Act 1947) dues are prioritised over dues to lenders that have relinquished their security interest to the liquidation process. Simi - larly, wages and dues owing to employees (other than workmen) are ranked pari passu with lend - ers that have relinquished their security to the liquidation estate. 3.10 Taxes on Loans As noted above, mortgage deeds need to be registered with the SRA to be enforceable. All lending documents need to be adequately stamped as per the stamp duty rates applicable in the relevant state in India. Also as mentioned above, charges must be filed with the CERSAI subject to a nominal fee. Reg - istration must be done within 30 days from the
date of the transaction and is not required where (a) the creditor is not a bank, financial institution or asset reconstruction company, etc (referred to as “secured creditor” in the SARFAESI); or (b) the security interest is in the nature of a lien on goods, pledges of movables, etc. Apart from the above, there are no exist - ing, pending or proposed rules, regulations or requirements mandating payment of any record - ing or similar taxes in connection with mortgage loans or mezzanine loans related to real estate. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Planning authorities are constituted for the implementation and governing of zoning regula - tions. Most states facilitate the updating/revising of an existing master plan at least once every ten years, by carrying out a fresh survey of the area within its jurisdiction, to indicate the manner in which development and improvement of the entire planning area is proposed. Certain states facilitate the acquisition of lands by government organisations for industrial and residential developments. Developments in such areas are mainly governed by the rules and reg - ulations framed by such government organisa - tions. Any usage of the property other than as pre - scribed under the zoning regulations will require prior consent of the state government.
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