TMI Blog2021 (12) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Home Buyers appeared in any of the proceedings before the DRT whereby the recovery certificates were obtained - a mere Permission to Mortgage is of no relevance in the absence of not having registered a charge under Section 77 of the Companies Act, 2013. It can be seen from the material on record that Axis Bank had rendered financial assistance for the purpose of booking units in the Project floated by the Corporate Debtor and had a tie-up with the Corporate Debtor for procuring business from the Home Allottees. The Home Loan Agreements in these cases were made individually by the Borrowers. As per standing instructions, the money in the account of the Home Allottees was disbursed automatically to the Corporate Debtor - The Home Loan Agreement read with the Demand Letters and the Allotment Letter clearly specify that when there is a default on behalf of the Home Allottee a penalty interest would have to be paid by the allottee to the Bank. Therefore, the default aspect is to be seen vis-a-vis the Home Allottee and the Appellant Bank only. It is contended by the Respondent that though the Allotment Letter shows that the payments were construction linked, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights and privileges of a secured financial creditor and also proportionate voting rights in the forthcoming meeting of Committee of Creditors. b. In case if any Resolution Plan commenced the amount so received from the CD should be equally appropriated as per the proportionate share of the secured creditors. c. In case company goes into Liquidation direct the official liquidator to distribute the sale proceeds amount as per section 53 (B) (II). d. Direct the Resolution Professional/Liquidator, in case any amount is refunded to the home buyers, the said amount must be first utilised to pay the loan amounts as set out under the proof of claim submitted by the Applicant Bank; On perusal of this application, it appears this bank advanced loan to the home buyers of the corporate debtor. In view of it, now the bank is asking this Bench to pass an order declaring him a secured financial creditor of the corporate debtor and also to allow him to sit in the CoC. We are of the view that this bank cannot be called as a creditor to the corporate debtor because the loans are given to the home buyers of the corporate debtor. Therefore, we have not found any merit in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement of their dues, despite the fact that lien over the said Flat has already been acknowledged by the Corporate Debtor in its separate Permission to Mortgage letter issued to the Appellant at the time of disbursement of the loans. The Appellant has given a list of 42 Home Buyers who have already transferred their respective rights under the Flats in favour of the Appellant as evident from the lien marked by the Corporate Debtor in favour of the Appellant. The subrogation clause mentioned in the standard tri-partite Agreement, the Power of Attorney by the Home Buyer is in favour of the Appellant and other documents executed by the Home Buyers are also in favour of the Appellant. Learned Counsel placed reliance on the definitions of Sections 3(10), 5(7) 3(34) of the Code in support of his Arguments. In the present case, the Appellant has advanced loan to 42 Home Buyers, out of which, the Appellant has filed recovery Applications against 41 allottees as well as the Corporate Debtor before the DRT for recovery of debts. The Appellant holds the decree in its favour from DRT against 31 allottees as well as the Corporate Debtor . Proceedings against 10 allottees ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents pertaining to the 44 Flats have not been produced. Only an Excel Sheet has been filed praying for consideration of the claims which amounts to more than ₹ 15 Crores/-. The Appellant has not done any due diligence before advancing the loans. As an example, Learned Counsel contended that one Mr. Rawat was sanctioned a Loan on 30.03.2014 for Flat No. F-021, when the Project was not even approved as on that date. Out of the 44 Flats, 26 Flats have already been sold and Sale Deed was executed by the Corporate Debtor even before the issuance of the recovery certificate. 6. Learned Counsel for Respondent No. 2 has adopted the submissions made in the Reply of Respondent No. 1 and hence for the sake of brevity we do not wish to repeat the same. Assessment: 7. The central point in this Appeal is whether the Appellant/M/s. Axis Bank can be considered as a Financial Creditor on account of its having sanctioned and released housing loans to some of the allottees who have purchased Flats/units in the Project floated by the Corporate Debtor . 8. It is not disputed that M/s. Axis Bank has sanctioned loans to 44 Home Buyers/Allottees who have purchased un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructure Ltd. Anr. (Supra) has observed as follows:- 18. It can be seen that the Insolvency Law Committee found, as a matter of fact, that delay in completion of flats/apartments has become a common phenomenon, and that amounts raised from home buyers contributes significantly to the financing of the construction of such flats/apartments. This being the case, it was important, therefore, to clarify that home buyers are treated as financial creditors so that they can trigger the Code under Section 7 and have their rightful place on the Committee of Creditors when it comes to making important decisions as to the future of the building construction company, which is the execution of the real estate Project in which such home buyers are ultimately to be housed. 19. Shri Shardul Shroff, whose dissent was provided to us in the form of an e-mail, after finding that self-financed home buyers may be financial creditors, but a home buyer who is a borrower is not, then went on to state: 8. If the home buyers have taken loans from banks, then it is such lenders who should be on the table on the CoC as special status creditors. 9. Our report ought to be altered to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation: Provided that the Registrar may, on an application by the company, allow such registration to be made (a) in case of charges created before the commencement of the Companies (Amendment) Act, 2019, within a period of three hundred days of such creation; or (b) in case of charges created on or after the commencement of the Companies (Amendment) Act, 2019, within a period of sixty days of such creation, on payment of such additional fees as may be prescribed: Provided further that if registration is not made within the period specified (a) in clause (a) to first proviso, the registration of the charge shall be made within six months from the date of commencement of the Companies (Amendment) Act, 2019, on payment of such additional fees as may be prescribed and different fees may be prescribed for different classes of companies; (b) in clause (b) to the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act, 2013. 14. The relevant clause of the tri-partite Agreement entered into between the Home Buyers, the developer and the Appellant/M/s. Axis Bank is reproduced as hereunder:- It is agreed by and between the parties to this Agreement that in case if the BORROWER fails to honour the commitment, the developer/BUILDER shall inform the BANK and the BANK shall have the right to pay the Sale consideration and get it registered either in BANK's name or its nominee. Likewise in the event the Borrower defaults in payment of instalments then, in such an event also, the Bank shall have the right to inform about such default on the part of the Borrower to the Builder and shall accordingly have the right to write to the Builder cancellation of Agreement executed between the Builder and the Borrower, where after the Bank shall have the right to pay the Sale consideration and get the subject property registered either in the Bank's name or in the name of the Bank's nominee. 15. It can be seen from the material on record that Axis Bank had rendered financial assistance for the purpose of booking units in the Project floated by the Corporate Debtor and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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