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2021 (7) TMI 580 - AT - Insolvency and BankruptcyMaintainability of application - CIRP is initiated - amount claimed to be in default were deposits made by flat owners with the Developer - while CIRP was pending, the Respondent No. 1 filed proceedings under Section 7 of IBC for the amounts deposited in terms of the agreement to sell, with the Developer - HELD THAT:- It is clear that the Sale Agreement executed between the Developer – ‘M/s Avaani Projects and Infrastructure Ltd.’ and the main land owner ‘M/s Electrical Manufacturing Company Ltd.’ and the Corporate Debtor as Maintenance Company were to render common service and upkeep till the Association/Society of the flat owners was formed. The Corporate Debtor was to look after the maintenance till three years of the Deed of Conveyance by the respective purchasers with the Developer and Maintenance Company or so soon after completion of construction of Phase II of Avani Oxford whichever was later. The Appeal has also put on record that Avani Oxford Project received Completion Certification on 21st March, 2016. The application under Section 7 of IBC (Page 39 of the Appeal) is dated 21st November, 2019. Record shows that the Financial Creditors also moved the National Consumer Disputes Redressal Commission in July, 2016 in which orders were passed and even written submissions were filed by the Developer and that the Financial Creditors were pursuing their remedies. The Balance Sheets of the Corporate Debtor have also been filed - The Respondent No. 1 Company of Flat Purchasers has been trying to get back the money deposited by Flat Buyers themselves. They have also pursued rights in Consumer Forum - there is no substance in the claim made by the Appellant that the debt is time barred. Admittedly, the amounts were collected by the Developer and kept with its subsidiary, the Corporate Debtor, for the purpose of maintenance till the Association/ Society or Holding Organization (i.e. Respondent No. 1) gets established to hand over the amounts to the body of the flat owners. Section 5(8)(f) Explanation makes it clear that 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. The claim made by Respondent No. 1 is accepted that it is the ‘Financial Debt’. There is Financial Debt due and in default of amount more than threshold stated in Section 4 of IBC. There is any error in the impugned order vide which the CIRP was initiated. Appeal dismissed.
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