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2020 (2) TMI 637

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..... 2016 (for brevity 'the Code') with a prayer to trigger the Corporate Insolvency Resolution Process in the matter of M/s. Crown Realtech Private Limited, who is stated to be the 'Corporate Debtor'. 2. The Petitioner is an allottee of a real estate project. He is ex facie financial creditor in terms of provisions of Section 5(8)(f) and explanation inserted by the Second Amendment Act, 2018 w.e.f. 06.06.2018. The challenge to the aforesaid amendment has been repelled by the Hon'ble Supreme Court in the judgment rendered in the case of Pioneer Urban Land & Infrastructure Ltd. v. Union of India 155 SCL 622. Therefore, no doubt is left that the petitioner is Financial Creditor. 3. The Respondent company - the Corporate Debtor, M/s. Crown Realtech Private Limited (CIN U27209DL1983PTC015878) was incorporated on 07.06.1983 under the provisions of the Companies Act, 1956. The registered office of the respondent corporate debtor is 2nd Floor, Rajendra House, El/Bl, Mohan Cooperative Industrial Estate, New Delhi-110044. 4. The 'Financial Creditor' - Petitioner has proposed the name of Resolution Professional, Shri Amit Agarwal (Company Secretaries) with the addr .....

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..... Developer fails to deliver Possession of the unit even up to 30th September, 2013, in that event the Buyer shall be entitled to claim refund of the entire amount with interest @20.5% P.A. compounded annually from the date of payment till the date of refund together with a further sum equivalent to the amount paid by the Buyer as and by way of liquidated damages and/or market difference." 7. There was apparently inordinate delay in delivering the possession of the said unit as well as in making payment towards interest by the Respondent. As a result, the Petitioner wrote a letter dated 10.06.2016 (Annexure-IV) to the Respondent requesting it to comply with the terms of the agreement in delivering the possession and in making the payment of interest. Thereafter another letter dated 13.08.2018 (Annexure-VI) was written showing his willingness in terminating the agreement and seeking refund of the entire amount paid by them but all in vain. The petitioner has availed the remedy under Section 7 by filing the instant petition. 8. The precise case of the Petitioner thus is that the total amount in default due and payable to the Petitioner by the Respondent-Corporate Debtor as on 31.0 .....

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..... e project was primarily on account of non-payment of the instalments by the majority of the allottees ranging between ₹ 30-35 crores, which is due and payable by them and which would be approx. ₹ 50 crores including interest to be paid by these allottees. (vii) The Respondent has already paid a sum of ₹ 4.32 crores as on 30.03.2019 to clear the entire loan advanced by Punjab National Bank and there are no other financial creditors of the Respondent. It has also cleared the statutory liability of ₹ 4.25 crores as on 02.08.2019 towards External Development Charges and has also paid a sum of ₹ 40.75 lakhs towards payment of statutory taxes as on 19.07.2019. (viii) The Petitioners who have filed the various petitions before this Tribunal have pleaded that they have booked the units for their own use and the purpose of their allotment. In absence of the specific pleadings in this regard, these petitioners can be classified as speculative investors, who are not genuinely interested in purchasing the unit. 10. Having heard learned counsel for the parties we are of the considered view that the Financial Creditor has succeeded in establishing a case for trigger .....

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..... a) inso far as applicable to the facts and circumstances of this case would read as under:- "39. It is also important to remember that the Code is not meant to be a debt recovery mechanism [see paragraph 28 of Swiss Ribbons (supra)]. It is a proceeding in rem which, after being triggered, goes completely outside the control of the allottee who triggers it. Thus, any allottee/home buyer who prefers an application under Section 7 of the Code takes the risk of his flat/apartment not being completed in the near future, in the event of there being a breach on the part of the developer. Under the Code, he may never get a refund of the entire principal, let alone interest. This is because, the moment a petition is admitted under Section 7, the resolution professional must first advertise for and find a resolution plan by somebody, usually another developer, which has then to pass muster under the Code, i.e. that it must be approved by at least 66% of the Committee of Creditors and must further go through challenges before NCLT and NCLAT before the new management can take over and either complete construction, or pay out or refund amounts. Depending on the kind of resolution plan that .....

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..... nd; a maximum period of further one year could be granted. The possession should have been offered by March, 2014 and therefore, the principal amount along with compensation and interest becomes payable. 15. For Corporate Insolvency Resolution Process Part-II (chapter-I) has been carved out and in Section 5(8)(f) of the Code the expression 'financial debt' has been defined to mean a debt along with interest, which is disbursed against the consideration for the time value of money and includes any amount raised under any other transaction including the sale or purchase agreement, which has commercial effect of a borrowing.The explanation has clarified that any amount raised from an allottee under a 'real estate project' was to be considered as an amount having the commercial effect of a borrowing and the expression 'allottee' and the 'real estate project' are to have the meanings respectively assigned to them in clauses (d) and (zn) of Section 2 of the Real Estate (Regulation and Development) Act, 2016. It is the aforesaid provision which was subject matter of challenge before the Hon'ble Supreme Court in a bunch of petitions. In the lead case tit .....

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..... cture Ltd's.s case (supra) on 11.03.2019, hearing in this matter was deferred on various occasions. 20. We further find that the provisions of section 7(2) and section 7(5) of IBC have been complied with as discussed in detail in our order dated 27.11.2018 rendered in the case of ECL Finance Ltd. v. Digamber Buildcon (P.) Ltd. (IB-1039(PB)/2018). 21. After a reading of section 7 of the Code along with Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, we are satisfied that a default has occurred and the application under sub-section 2 of Section 7 is complete. The IRP proposed does not have any disciplinary proceedings pending against him. 22. As a sequel to the above discussion, this petition is admitted and Mr. Amit Agarwal is appointed as an Interim Resolution Professional. 23. In pursuance of section 13(2) of the Code, we direct that Interim Insolvency Resolution Professional to make public announcement immediately with regard to admission of this application under Section 7 of the Code. 24. We also declare moratorium in terms of section 14 of the Code. It is made clear that the provisions of moratorium are not to apply to transa .....

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