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2019 (7) TMI 1535 - Tri - Insolvency and BankruptcyAdmissibility of application - initiation of CIRP - Corporate Debtor failed to make repayment of outstanding amount - Section 7 of the Insolvency and Bankruptcy Code, 2016 - default of debt or not - HELD THAT:- Clause (8) has been amended by the Insolvency and Bankruptcy (amendment) Ordinance, 2018, with effect from 6th June, 2018. In view of the revised definition, any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing and thus will come within the definition of ‘Financial Debt’ under the Code. Definition of ‘Financial Debt’ has been amended to specifically include dues of homebuyers. Amendment Act recognizes homebuyers as “Financial Creditor”. Accordingly, the homebuyers can initiate Corporate Insolvency Resolution Process against defaulting builder or developer, as “Financial Creditor” in terms of Explanation to Section 5(8)(c) of the Code with effect from 06.06.2018. Since the amount has been raised from the petitioners/allottees under a real estate project, not only the debt has a commercial effect of borrowings and come within the scope of ‘financial debt’ but also the petitioner comes within the definition of ‘financial creditor’ - Therefore, petitioner being a financial creditor can invoke Corporate Insolvency Resolution Process under Section 7 of the code against the Respondent Corporate Debtor in case of default in repayment of financial debt. Whether Respondent Corporate Debtor has committed default in payment of the financial debt? - HELD THAT:- In the present case Financial debt is outstanding since the year 2017. The Corporate Debtor has not denied the claim of Petitioner and the amount of default exceeds much more than 1 lakh. In view of Section 4 of the Code, the moment default is Rupees one lakh or more, the petition to trigger Corporate Insolvency Resolution Process under the Code is maintainable. There is sufficient material on record to conclude that Respondent Corporate Debtor has committed default in repayment of the financial debt. The present application is complete and there has been a default in payment of the financial debt and that no disciplinary proceeding is pending against the proposed IRP and therefore, the applicant financial creditor is entitled to initiate Corporate Insolvency Resolution Process under Section 7 of the Code - Application admitted - moratorium declared.
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