TMI Blog2019 (3) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocates for the Petitioner For The Respondent : Sachin Datta, Sr. Advocate and Arjun Jain, Advocate JUDGMENT M.M. KUMAR, PRESIDENT Mr. Neeraj Gupta claiming himself to be a financial creditor has filed this application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity the Code ), read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity the Rules ) with a prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent company, EMMAR MGF Land Limited, who is stated to be the corporate debtor. 2. The Respondent company-the Corporate Debtor, EMAAR MGF Land Limited (CIN U45201DL2005PTC133161) was incorporated on 18.02.2005 under the provisions of the Companies Act, 1956. The registered office of the respondent corporate debtor is situated at 306-308, Square One, C2, District Centre, Saket, New Delhi-110017. Its authorized share capital is ₹ 60,00,00,00,000/- and the paid-up share capital is ₹ 912,62,00,000/- which is based on the details given in master data obtained from the official website of Registrar of Companies (Annexure 1/B). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l seeking either to handover the physical possession of the flat with interest from the due date of the possession i.e. 28.08.2015 till date of actual possession or in the alternative to refund the entire amount of ₹ 88,49,036/- towards principal amount along with interest @ 24% per annum from the date of payment within 15 days from the date of receipt of the notice but all in vain. 6. It is claimed that the Respondent is liable to pay an amount of ₹ 88,49,036/- (Rupees Eighty Eight Lacs Forty Nine Thousand and Thirty Six Rupees Only) to the petitioner. 7. Learned counsel for the Corporate Debtor has opposed the admission of the application and has advanced the following arguments:- (i) The Buyer s Agreement dated 29.03.2011 has reciprocal promises inter se the parties and thus, the default on part of one of the parties to a contract, cannot be held responsible in case the other party has also defaulted in obligations cast upon them under the same contract. (ii) The real intent and spirit of the legislature in bringing about the special Act namely the Real Estate Regulation Act, 2016 was to include homebuyers in the list of creditors, should any Company go i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication under Rule 11 of the NCLT Rules, 2016 along with supporting affidavit was filed by the Corporate Debtor with a prayer to take on record the additional facts and documents. The said application came before us on 17.01.2019 whereby direction was issued that same to be considered with the main case. In the said application it has been asserted that the Corporate Debtor is ready and willing to settle the matter amicably to mutual satisfaction of both parties as numerous stakeholders are involved in the matter including a huge number of homebuyers, other creditors, vendors etc. who would be put to great inconvenience and duress if the Corporate Insolvency Resolution Process is initiated. The Corporate Debtor is spending substantial amounts of money on a monthly basis and in the last four months it invested up to ₹ 42.5 crores approximately, with the sole purpose of completing all the various projects that had been undertaken by the erstwhile merged entity. The Corporate Debtor has been and is still willing to relocate the applicant to a similarly situated ready to move in unit in the same project if the applicant accepts such an offer. On account of the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encement of construction. Therefore, from 11.04.2011 the period of thirty six months has to be counted which expire in year 2014 with further grace period of three months to apply for and obtaining the completion certificate as per the provisions of clause 10 of the flat buyer agreement. The maximum period would be completed in July, 2014. The Financial Creditor-allottee has not been paid any amount of compensation @ ₹ 7.50/- per square feet per month nor the possession has been offered. Even in the year 2019 the additional affidavit vide C.A. No. 93(PB)/2019 has been filed by the Corporate Debtor to show that the application for obtaining occupation certificate has been filed and it is likely to be issued. The argument raised on behalf of the Corporate Debtor is that the agreement continues to operate and neither of the two parties has terminated/cancelled the agreement. The argument seems to be that in the absence of express termination of the agreement the Financial Creditor-allottee would not have any right to claim that default has occurred. 13. The aforesaid argument suffers from a basic fallacy. The period of thirty six months plus three months came to an end in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by financial creditor. 7(1) . 7(2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. 7(3) . 7(4) . 7(5) Where the Adjudicating Authority is satisfied that- (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) . 15. A conjoint reading of the aforesaid provision would show that form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the pro forma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, read with Section 7 of the Code. We are satisfied that a default amounting to lacs of rupees has occurred. As per requirement of Section 4 of the Code if default amount is one lac or more then the CIR Process would be issued. The application under sub-section 2 of Section 7 is complete; and no disciplinary proceedings ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5 an explanation has been inserted as per which 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. Thereby, after amendment of the Act, the allottees of real estate project have been treated as Financial Creditors . (Emphasis supplied). A bare perusal of the aforesaid paragraph of the judgment would show that even without any element of assured return an allottee in the real estate project has to be regarded as a Financial Creditor . The petitioner eminently fulfils the aforesaid condition. 18. The petitioner has paid a total amount of ₹ 88,49,036/- of the total consideration on various dates as per table prepared vide Annexure 1/C (at pgs. 22-23) to the Respondent/Corporate Debtor. The amount has been raised from the petitioner/allottee under a real estate project. In such a situation not only the debt has a commercial effect of borrowings and come within the scope of financial debt but also the petitioner is covered by the definition of expression financial creditor . 19. Therefore, petitioner being financial creditor can invoke Corporate Insolvency Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019, when the aforesaid C.A. No. 93(PB)/2019 came before us and the learned counsel for the Corporate Debtor orally shows intention that the Corporate Debtor is ready and willing to settle the matter. However, no application has been filed showing that any settlement has been reached till date. Therefore, no useful purpose would be achieved by keeping the judgment in abeyance. The object of the Code is to resolve the insolvency issue which cannot be achieved unless the petition is admitted. The resolution as against liquidation would only be possible if the Corporate Insolvency Resolution Process is triggered and efforts in that direction are made. The admission of the petition cannot be successfully resisted on such a flimsy ground. Therefore, we have no hesitation to reject the defence raised on behalf of the Corporate Debtor. 23. As a sequel to the aforesaid discussion and the material placed on record it is confirmed that applicant-financial creditor had disbursed the money to the respondent corporate debtor as consideration for purchase of a residential flat. Though a considerable long period has lapsed even the principal amount disbursed has not been repaid by the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionally, the supply of essential goods or services to the Corporate Debtor as may be specified is not to be terminated or suspended or interrupted during the moratorium period. These would include supply of water, electricity and similar other supplies of goods or services as provided by Regulation 32 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 29. The Interim Resolution Professional shall perform all his functions religiously and strictly which are contemplated, interalia, by Sections 15, 17, 18, 19, 20 21 of the Code. He must follow best practices and principles of fairness which are to apply at various stages of Corporate Insolvency Resolution Process. His conduct should be above board independent; and he should work with utmost integrity and honesty. It is further made clear that all the personnel connected with the Corporate Debtor, erstwhile directors, promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the affairs of the Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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