Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2021 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 908 - AT - Insolvency and BankruptcyTripartite agreement - financial creditors or not - whether the Appellant/M/s. Axis Bank can be considered as a ‘Financial Creditor’ on account of its having sanctioned and released housing loans to some of the allottees who have purchased Flats/units in the Project floated by the ‘Corporate Debtor’? - HELD THAT:- It is clear from the principle laid down by the Hon’ble Supreme Court in ‘Pioneer Urban Land & Infrastructure Ltd. & Anr.’ [2019 (8) TMI 532 - SUPREME COURT] that it is the Home Buyer who should be considered as ‘Financial Creditors’ of the ‘Corporate Debtor’ whether he has self financed his flat or has exercised his choice of taking a loan from the Bank - admittedly, as per Section 77 of the Companies Act, 2013 every security interest has to be registered with the Registrar within 30 days of its creation and admittedly no ‘charge’ has been created against any of the property of the ‘Corporate Debtor’ in favour of the Appellant. A perusal of the documents shows that none of the Home Buyers appeared in any of the proceedings before the DRT whereby the recovery certificates were obtained - a mere ‘Permission to Mortgage’ is of no relevance in the absence of not having ‘registered a charge’ under Section 77 of the Companies Act, 2013. It can be seen from the material on record that Axis Bank had rendered financial assistance for the purpose of booking units in the Project floated by the ‘Corporate Debtor’ and had a tie-up with the ‘Corporate Debtor’ for procuring business from the Home Allottees. The Home Loan Agreements in these cases were made individually by the Borrowers. As per standing instructions, the money in the account of the Home Allottees was disbursed automatically to the ‘Corporate Debtor’ - The Home Loan Agreement read with the Demand Letters and the Allotment Letter clearly specify that when there is a ‘default’ on behalf of the Home Allottee a penalty interest would have to be paid by the allottee to the Bank. Therefore, the ‘default’ aspect is to be seen vis-a-vis the Home Allottee and the Appellant Bank only. It is contended by the Respondent that though the Allotment Letter shows that the payments were construction linked, the Bank released the entire amount prior to completion of construction. It is definitely not the scope and objective of the Code to include Banks/Financial Institutions which have advanced loans to Home Buyers to be considered as ‘Financial Creditors’ and included in the CoC, specifically in the light of the fact the liability to repay the Home Loan is on the individual Home Buyers. This would defeat the very spirit and objective of the Code aiming at Resolution and maximisation of the assets of the ‘Corporate Debtor’. Presence of a mere tri-partite Agreement does not change the character of the amount borrowed by the Home Buyer vis-a-vis the Bank and vis-a-vis the ‘Corporate Debtor’. Viewed from any angle, the Appellant cannot be included as a ‘Secured Financial Creditor’ in this case and hence, there are no reasons to interfere with the well-reasoned Order of the Adjudicating Authority. This Appeal fails and is accordingly dismissed.
|