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TMI Blog2020 (8) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... al Creditors) moved an application under Section 7 of the 'Insolvency and Bankruptcy Code, 2016 ('I&B Code', for short) for initiation of 'corporate insolvency resolution process' against 'Rajesh Projects (India) Private Limited (Corporate Debtor), an infrastructure Company. 2. The Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi by impugned order date 19th September, 2019 admitted the application. 3. Mr. Rajesh Goyal (Promoter) has preferred this appeal on one of the ground that the Respondents (Allottees) themselves being defaulter and in view of the decision of the Hon'ble Supreme Court in 'Pioneer Urban Land and Infrastructure Limited & Anr. v. Union of India & Ors. - '[(2019) SCC OnLine SC 1005]', the application was fit to be dismissed. It was also submitted that there was no 'default' by the 'Corporate Debtor' in terms of the agreement, therefore, the application under Section 7 of the 'I&B Code' was pre-mature. 4. The Appellant highlighted the present project status in the appeal to suggest that the 9 (nine) towers of the project is on the verge of completion and stated as under: "At present, as far as the physical structure is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the amount collected from the customers and no monies has been paid to any promoter, director or transferred to any other Associate Company, sister concern and the said funds have been used solely for the purpose of the completion and construction of the said Project. Further, as would also be apparent, the expenses that have been incurred by the Corporate Debtor are well within the industry norms and quite reasonable. In fact the expenses are fully in lieu with the requirements prescribed (70:30) under the RERA." 6. Similar issue was fell for consideration before this Appellate Tribunal in 'Flat Buyers Association Winter Hills-77, Gurgaon vs. Umang Realtech Pvt. Ltd. through IRP & Ors.' in 'Company Appeal (AT) (Insolvency) No. 926 of 2019'. In the said case, this Appellate Tribunal in the judgment dated 4th February, 2020 noticed the problems as arises in the 'corporate insolvency resolution process' of infrastructure companies constructing Apartments/Flats for the allottees. It was noticed that the allottees were not agreed to invest more amount or to finance to keep the 'Corporate Debtor' (Umang Realtech Pvt. Ltd. (through IRP) as a going concern. For the said reason, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured and unsecured creditors, must be paid the same amounts, percentage wise, under the resolution plan before it can pass muster. Fair and equitable dealing of Operational Creditors rights under the Regulation 38 involves the resolution plan stating as to how it has dealt with the interests of Operational Creditors, which is not the same thing as saying that they must be paid the same amount of their debt proportionately. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors. 5. In "Pioneer Urban Land and Infrastructure Limited & Anr. v. Union of India & Ors. (2019) SCC OnLine SC 1005", the Hon'ble Supreme Court upheld the Explanation below Section 5(8) (f) to hold that allottees (Homebuyers) of Infrastructure Company are 'Financial Creditors'. It further o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'I&B Code' and the decisions of the Hon'ble Supreme Court, the 'Resolution Plan' must maximise the assets of the Corporate Debtor and balance the stakeholders (secured and unsecured creditors- Financial Creditors/ Operational Creditors). 10. The Infrastructure which is constructed for the allottees by Corporate Debtor (Infrastructure Company) is an asset of the Corporate Debtor. The assets of the Corporate Debtor as per the Code cannot be distributed, which are secured for 'Secured Creditors'. On the contrary, allottees (Homebuyers) who are 'Unsecured Creditors', the assets of the Corporate Debtor which is the Infrastructure, is to be transferred in their favour ('Unsecured Creditors') and not to the 'Secured Creditors' such as Financial Institutions/ Banks/ NBFCs. Normally, the Banks/ Financial Institutions/ NBFCs also would not like to take the flats/ apartments in lieu of the money disbursed by them. On the other hand, the 'unsecured creditors' have a right over the assets of the Corporate Debtor i.e. flats/ apartment, assets of the Company. 11. In most cases, the Committee of Creditors take 'haircut'. The Resolution Applicants satisfy them most of the time with lesser amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to play role of a Lender (Financial Creditor) to ensure that the Corporate Insolvency Resolution Process reaches success and the allottees take possession of their flats/apartments during the Corporate Insolvency Resolution Process without any third party intervention. The Flat Buyers Association of Winter Hill - 77 Gurgaon also accepted the aforesaid proposal. It is informed that 'JM Financial Credit Solutions Ltd' one of the financial institution has also agreed to cooperate in terms of agreement with the condition that they will get 30% of the amount paid by the allottees at the time of the registration of the flat/apartment. 14. The other development is that 'Rachna Singh' and 'Ajay Singh' (Allottees), who moved application under Section 7 of the I&B Code, joined hands with the Appellant - 'Flat Buyers Association Winter Hill - 77, Gurgaon' and became its members. During the last few months the Corporate Insolvency Resolution Process has progressed and a number of allottees including 'Rachna Singh' and 'Ajay Singh' have already taken possession of their respective flats and sale deed(s) have been registered in their favour. 15. 'Uppal Housing Pvt. Ltd.' invested certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F Within 180 days from the start of work 05 Tower D Within 180 days from the start of work 06 Tower E Within 180 days from the start of work 07 Tower M Within 180 days from the start of work 08 Tower G Within 180 days from the start of work 09 Tower H Within 180 days from the start of work (ii) The second party also undertakes to start work within 30 days (+-) 10 days from the date of order passed by Hon'ble NCLAT in all respect allowing the construction at the project site. 12. Mr. Rajesh Goyal (Promoter) who appear in person accepted that the Promoter will make investment as 'Financial Creditor' to keep the 'Corporate Debtor' (company) as a going concern. 'Summary of sources of funds and time period' to infuse such investment shown as under: "Summary of Sources of Funds and time period {Total 70 Crores (approx.) S.No Particulars Amount in crores 30 Days 60 Days 90 Days Total 1 Sanctioned Loan from IIFL Home Finance Limited 5.00 5.00 5.00 15.00 2 Confirmed Investor 3.00 3.00 3.00 9.00 3 From the properties of Sister concerns 0.50 2.00 2.15 4.65 4 From the personal properties of the promoter and his family members 5.38 15.94 20 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September, 2019 the date on which the insolvency petition against the corporate debtor was admitted as the case may be, shall be paid in the following time frame: No. Sl. Name of Financial Institutions the Amount (Rs.) due as on date Time period payment for 1. Allahabad Bank 17.35 Crores (as on 01/04/2019 Within 180 days of the start of the work, subject to any unforeseen circumstances 2. Punjab National Bank 1.33 Crores 19/09/2019 (as on Within 180 days of the start of the work, subject to any unforeseen circumstances 3. Indiabulls Commercial Credit Ltd. 35.80 Crores (the balance as on 01/07/2019 after payment of Rs. 3.70 Crores on 29.06.2019 for regularizing the account) Within 180 days of the start of the work, subject to any unforeseen circumstances 4. India Infoline Housing Finance Limited 27.00 crores (as on 19/09/2019) Within 180 days of the start of the work, subject to any unforeseen circumstances Total 81.48 Crores 17. Learned counsel for the "Indiabulls' submitted that an amount of Rs. 35.80 Crores has wrongly shown and due amount is Rs. 42 Crores. 18. Mr. Rajesh Goyal (Promoter) submitted that any amount as may be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor (Company) for such other projects can be maximised. 22. Further, a 'Secured Creditor' such as 'financial institutions/ banks', cannot be provided with the asset (flat/apartment) by preference over the allottees (Unsecured Financial Creditors) for whom the project has been approved. Their claims are to be satisfied by providing the flat/apartment. While satisfying the allottees, one or other allottee may agree to opt for another flat/apartment or one tower or other tower if not allotted to any other. In such case their agreements can be modified by the Interim Resolution Professional/ Resolution Professional with the counter signature of the Promoter and the allottees, so that the allottees (financial creditors), who are on rent or paying interest to banks may like to get earlier possession and are relieved from paying rent or interest to banks. xxx xxx xxx 24. However, after offering allotment it is open to an allottee to request the Interim Resolution Professional/Promoter, whoever is in-charge, to find out a third party to purchase said flat/apartment and get the money back. After completion of the flats/project or during the completion of the project. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erim Resolution Professional. The Bank in which the Corporate Debtor (Company) has account the amount should be deposited only for the purpose of completion of the Project. Banks will allow the cheques for encashment only with the counter signature of the Interim Resolution Professional. ii. The flats/apartments should be completed in all aspect by 30th June, 2020. All internal fit outs for electricity, water connection should be completed by 30th July, 2020. The allottees are directed to deposit their balance amount and pay 90% without penal interest, if not deposited, by 15th March, 2020. The Allottees in whose favour possession has been offered and clearance has been given by the competent authority are bound to pay the cost for registration and directed to deposit registration cost to get the flats/apartments registered after paying all the balance amount in terms of the agreement. iii. Common area such as Swimming Pool, Club House etc. as per the agreement, be also completed by 30th August, 2020. The allottees are allowed to form 'Residents Welfare Association' and get it registered to empower them to claim the common areas. iv. 'Rajesh Goyal' will return the amount to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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