TMI Blog2019 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... tection of consumer interest; the latter seeks to consolidate the law relating to insolvency and bankruptcy and ensure resolution of insolvency of corporate persons, firms and individuals in a time bound manner. Thus, there is no question of a conflict between the two enactments and both will have an overriding effect in the fields exclusively assigned to them. Petition admitted - moratorium declared. - C.P. NO. IB-923(PB)/2018 - - - Dated:- 20-8-2019 - MR M. M. KUMAR, PRESIDENT AND DR. DEEPTI MUKESH, MEMBER (JUDICIAL) For The Petitioner : Mr Abhay Pratap Singh, Advocate For The Respondent : Mr Vivek Sibal, Sumesh Dhawan, Ms. Vatsala Kak, Ms. Tulika Bhatnagar and Ms. Geetika Sharma, Advocates JUDGMENT Dr. Deepti Mukesh, Member(J) 1. The Present application is filed under Section 7 of the Insolvency Bankruptcy Code, 2016, (hereinafter referred to as the 'Code'), read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity 'the Rules') jointly by the Financial Creditors who are also 'home buyers' (for brevity & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate debtor has failed to hand over the possession of the flat. It is further submitted by the financial creditors that more than 60 months have elapsed and the possession of said apartment has not been given to the applicant till date. Therefore, the applicant had asked the Corporate debtor for compensation for the delayed possession of the said apartment as per the rules and provisions laid down under the RERA Act,2016. But there is deafening silence. 7. The Respondent-Corporate Debtor has filed its reply and it is asserted that the provisions of Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as RERA) came into force on 1.05.2016 and in terms of Section 3 of RERA, the Respondent filed application for registration of its project namely Ridge Residency as an ongoing project before the Real Estate Regulatory Authority, Uttar Pradesh. Thereafter, in terms of Section 5 of the RERA, the said project was accorded registration and further time of four years has been granted to the Corporate Debtor for the completion of the project. Therefore, for the completion of the project the time is extended till 30.06.2021. 8. The Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority by registered post or speed post to the registered of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. Thus it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the debt , which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub- section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 admission or rejection of such application, as the case may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the consideration for the time value of money and includes- . (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; Explanation:- For the purposes of this sub-clause' (i) 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 (ii) the expressions, allottee and real estate project shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016; 14. The Financial Creditors have further relied on the judgment of the Hon 'ble Supreme Court of India Chitra Sharma Ors V. Union of India Ors , W.P. (Civil) No. 744 of 2017 decided on 09.08.2017. The observations of the Supreme Court supports the case of the Financial Creditor and the same reads as under: 27 . ..... As a result of the amendment brought about in the definition of 'financial debt', amounts raised from allottees under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e builder has been provided a different time-line for completion of the project to the RERA would not cut any ice because IBC override RERA and secondly the financial creditor is not a party to any such transaction. Moreover, there is contravention of clause 7.1 of the agreement and has also not paid refund or any compensation to the unit holders as agreed in the builder buyer agreement. 18. It is settled principle of law that wherever time is the essence of a contract in such types of construction contracts, the builder is required to adhere to the date of delivery mentioned in the builder-buyer agreement despite the presence of similar reservations in the contract. We are supported by the observations of Hon'ble National Consumer Disputes Redressal Commission in the case of Pradeep Narula v. Granite Gate Properties Pvt. Ltd, 2016 SCC Online NCDRC 1050. The learned commission has negatived a similar contention and held as under: 5. Despite use of the words the company shall endeavor to complete the construction , I am of the view that unless prevented by reasons beyond its control, the opposite party was under a contractual obligation to complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the proposed IRP is pending. 22. The Judgment in this matter could not be pronounced earlier as the issue concerning constitutional validity of explanation to sub section 8 (f) of Section 5 of the Code, 2016 was subject matter of challenge before Hon'ble the Supreme Court in a bunch of petitions. In the lead case titled as Pioneer Urban Land and Infrastructure Limited and Another V. Union of India Ors. (Writ Petition (Civil) No. 43 of 2019) the order has now been pronounced on 09.08.2019. we have gone through the order and find that the directions issued by the Hon'ble Supreme Court do not in any manner advance the case of the Corporate Debtor and the petition deserves to be admitted. It may also be noticed that at no stage possession has been offered and the denial of possession does not arise. 23. Learned Counsel for the applicant has rightly argued that all requirements of Section 7 of the Code for initiation of Corporate Insolvency Resolution Process by a Financial Creditor stand fulfilled. In that regard, he has submitted that the application is complete as per the requirements of Section 7 (2) of the Code and other conditions p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (3) The provisions of sub-section (l) shall not apply to- a. such transaction as may be notified by the Central Government in consultation with any financial sector regulator. b. a surety in contract of guarantee to a Corporate Debtor. 17. The Interim Resolution Professional shall perform all his functions religiously and strictly which are contemplated, inter alia, 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 Corporate Debtor. In case there is any violation by the ex-management or its ex-direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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