TMI Blog2021 (10) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... icate/part occupancy certificate within the window of three months from the date of commencement of Section (3) of the Act. The petitioner has failed to provide substantial proof of his intent to take possession of the flat. Merely, showing receipts of the transaction amount could not be considered as a surety that the person shall necessarily take possession of the Flat/Apartment, even if that person is considered as an allotee. The relief as sought by the Petitioner under the provisions of the Indian Contract Act, 1872 are to be presented in front of appropriate Authority as it falls out of the scope of this court - Petition under section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against Akshar Shanti Realtors Private Limited, the Respondent, is Rejected. - C. P (IB) No. 1726/MB/C-II/2017 - - - Dated:- 5-10-2021 - Hon'ble Member (Judicial) Mr. Ashok Kumar Borah And Hon'ble Member (Technical) Mr. Shyam Babu Gautam For the Financial Creditor : Mr. Tejas Sanghrajka, Advocate. For the Corporate Debtor : Mr. Shyam Kapadia, Advocate. ORDER Per : Shyam Babu Gautam , Member ( Technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Royal College, Shanti Gardens, Mira Road (East), District Thane vide two separate Allotment Letter dated 31.07.2015. The said project is being developed and constructed by the Corporate Debtor in the name and style as one Imperial Heights . Pursuant to the aforesaid two Letter of Allotment dated 31.07.2015 which are annexed as EXHIBIT C2 in the Petition, the Petitioner no.1 had paid an amount of ₹ 49,28,000/- vide Cheque Nos. 000030 / 000031 dated 29.04.2015 / 01.05.2015 drawn on HDFC Bank towards Flat no. 1601. The Petitioner no.2 paid an amount of ₹ 21,75,000/- vide Cheque No. 000027 dated 16.04.2015 drawn on HDFC Bank towards Flat no. 1604. 5. The Petitioner submits that the said amounts have been admittedly received by the Corporate Debtor and the payment has been acknowledged by the Corporate Debtor in the both aforesaid Letters of Allotment. The Bank Certificate evidencing the payment has been annexed as EXHIBIT B1 in the Petition. 6. The Petitioners submitted that they thereafter requested the Corporate Debtors to commence the construction of the building. The Corporate Debtor kept giving the assurances to commence the construction shortly. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repay the amounts is a default and breach of the terms of the aforesaid two Allotment Letters under Section 55, 56 and 73 of Indian Contract Act, 1872. 11. The Petitioner submits that due to non-compliance of the Demand Notice dated 25.11.2017 by the Corporate Debtor the Petitioners were compelled to file the present Petition before this Hon ble Court. 12. Subsequent to the filing of the present Petition, the legislation was pleased to clarify that the present Petitioners should be treated as Financial Creditors and hence a Petition under Section 7 of the IBC would be an appropriate remedy as per the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. The Petitioners accordingly filed a Misc. Application no. 999 of 2018, to amend the present original Petition, which was filed under Section 9 of the IBC, to a Petition under Section 7 of the IBC. This Tribunal vide Order dated 25 February 2019 was pleased to allow the application granted permission to the Petitioners to file the Form I a/w. filing fees. The Petitioners in compliance with the Order filed the Form I a/w. filing fees on 28th February 2019. 13. Thereafter, Order dated 25th February 2019 of this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that in the present petition, they are to be considered as Allotees/Home buyers as against Speculative Investors . The Petitioner further submits that the Respondent failed to respond to the Demand Notice U/s 8 of the IBC and therefore are estop from raising any issue. Submissions on Merits by the Petitioner: 17. The Petitioner submitted the Due, Default and Breach by the Respondent as under: i. Failure to abide by the Terms of the Letter of Allotment (dated 31.07.2015) ii. failure to register the building Wing E of the Project Imperial heights under the Real Estate (Development Regulation) Act, 2016; iii. failure to construct the building Wing E thereby leading to frustration of the contract; iv. failure to repay the debt amounts of ₹ 88,02,792/- under Section 55, 56 and 73 of the Indian Contract Act, 1872; v. failure to comply and/or pay the amount of ₹ 88,02,792/- after receiving the demand notice u/s. 8, dated 23rd November 2017, issued as per the provisions of IBC. 18. The Petitioner submits that the payment of ₹ 66,28,000/- w.r.t allotment of Flat No. 1601 and 1604 against the total consideration of ₹ 1,02,30,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 and under Section 73 of the Indian Contract Act, 1872 for aforesaid inactions, breaches and illegalities which has been denied by the Corporate Debtor. 24. The petitioner submits that the Respondent has acknowledged the Debt of the petitioner and for the same the Petitioner relies on A. Affidavit in Reply dated 10 March 2018 B. Further Affidavit in Reply dated 17 October 2019 25. Lastly, the Petitioner submits that the Respondent in their Original reply have considered the Petitioner as home buyers but in their subsequent Affidavits, they have considered Petitioner as Speculative Investor. Judgements relied upon by the Petitioner 26. The Petioner relies upon following Judgements: A. In case of Manish Kumar V/s Union of India and Another in Writ Petition (Civil) No. 26 of 2020, wherein the Hon ble Supreme Court of India dealt with the question as to Allottees to be from same Real Estate Project, Is it constitutional? 139. We have referred to the definition of the word allotee in Section 2(d) of the RERA. In regard to a real estate project, all persons, who are treated as allottees, as per the definition of allottee would be entitled to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahajan Versus Maple Leaf Trading International P. Ltd (2007 SCC OnLine Del 496: (2007) 139 Comp Case 718), wherein the Hon ble Delhi High Court held that: 30. The facts of the present case show that section 56 of the Contract Act is applicable. The petitioner had entered into a contract in 1999 with the respondent. Immediately, thereafter in 1999, itself after raids by the Enforcement Directorate and criminal prosecution initiated against the directors, the respondent-company's accounts were frozen and the money lying in the bank accounts was seized. The contract envisaged recruiting and duplication of new members by existing members like the petitioner, which was impossible because of search, seizure and commercial activities of the respondent-company coming to a standstill. Neither was it possible for the respondent-company to comply with the terms of the contract and enroll new members. It was practically impossible for the respondent-company to comply with their obligations in view of the action taken by the Enforcement Directorate and freezing of accounts. The respondent-company has not been able to carry on business for the last nearly eight years. In fact the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s set out above. C. In case of Bombay Dyeing and Manufacturing Co. Ltd. v. State of Bombay Ors., reported in AIR 1958 SC 328, wherein the Supreme Court has held that: 24. Counsel for the respondents relies on these observations and contends that when the contract of service was entered into between the employer and the employees, they could not have contemplated that the legislature would have, intervened and required the employer to pay the arrears of wages to the Board, and that that is a supervening impossibility which brings Section 56 into play and renders the contract void. We are not satisfied that the performance of the contract of service has been rendered impossible by reason of Section 3(1) of the impugned Act. But assuming that that is the position, what follows? The matter would then be governed by Section 65 of the Contract Act, which provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it. Under this section, the employer is liable to make compensation to the employee for the work done by him, and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then such application shall be modified to meet the threshold within a period of 30 days of the commencement of the Amendment Act, failing which the application shall be deemed to be withdrawn before its admission. The said amendment was challenged before the Hon ble Supreme Court in the case of Manish Kumar v. Union of India Anr., wherein the Supreme Court unequivocally held the said amendment to be constitutional and retrospective. Therefore, the threshold prescribed via the said Amendment would be applicable to the Petitioners. The failure of the Petitioners to meet the said threshold bars the captioned Petition at the very outset. 30. It is submitted that the Petitioners have no locus before this Hon ble Tribunal as the Real Estate (Regulation and Development) Act, 2016 ( RERA Act ) does not apply to them. The Explanation to Section 5(8)(f) of the IBC stipulates that the expressions, allottee and real estate project shall have meanings assigned to them in Section 2 (d) and (zn) of the RERA Act. In order for a homebuyer to attract the provisions of the IBC, it is imperative that the said homebuyer qualifies as an allottee to which the RERA Act applies. It is pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas Section 2(zn) of the same Act defines real estate project . These are separate definitions and the Petitioners are attempting to conflate the two. Since E Wing is admittedly not registered, it is not possible to treat it as a separate real estate project like the Petitioners would like to. 35. Case laws relied upon by the Respondent: A. It is submitted that the Petitioners are nothing but speculative investors who are either unable to pay the balance consideration or who realized that the real estate market is failing and therefore, do not want to continue with their obligations and The Supreme Court in Pioneer Urban Land and Infrastructure Ltd. Anr. v. Union of India Ors., Writ Petition (Civil) No.43 of 2019, observed as follows: 50 under Section 65 of the Code, the real estate developer can also point out that the insolvency resolution process under the Code has been invoked fraudulently, with malicious intent, or for any purpose other than the resolution of insolvency. This the real estate developer may do by pointing out, for example, that the allottee who has knocked at the doors of the NCLT is a speculative investor and not a person who is genuinely in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be supporting the case of the Petitioners that each and every Wing of a project has to be registered as a separate project under the RERA Act. 38. In the matter of Shridhar Krishna Mani Ors. v. Lucina Land Developers Ltd., the judgment has been issued by the Ld. Real Estate Appellate Authority hence not binding upon this Hon ble Court. Further in Para 42 (h) the Ld. Real Estate Appellate Authority has been pleased to declare that the said judgment is not a binding precedent. Therefore, the Respondents cannot seek support of the said judgment. 39. In the matter of Macrotech Developers v. the State of Maharashtra Ors. the Hon ble High Court has held that if a project is not registered under Section 3 of the Real Estate (Regulation and Development) Act, 2016 then the concerned allottees do not have the right to claim any reliefs under the said act. In the present case, as the project has not been registered under the Real Estate (Regulation and Development) Act, 2016 therefore the Petitioners are claiming relief under the IBC. The Petitioner cannot be without any remedy for seeking reliefs. 40. In the matter of Navin Raheja v. Shilpa Jain Ors., the facts of the said cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the occupancy certificate/part occupancy certificate within the window of three months from the date of commencement of Section (3) of the Act i.e. 1st May, 2017 44. For the petitioner to qualify the threshold limit 100 or 10% to initiate a CIRP under the purview of Section 7 of IBC, it must primarily satisfy the requisite of an Allotee which the Petitioner has failed in the instant case. Proviso of Section 7 of IBC states: Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less 45. Further, even if we consider that the Petitioner is a Allotee, in line to the Hon ble NCLAT s decision in Navin Raheja v. Shilpa Jain Ors., Company Appeal (AT) (Insolvency) No.864 of 2019, we are inclined to reject this petition. In the above case, the Hon ble NCLAT held: 37 in a large number of cases in the langu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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