TMI Blog2022 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... it of section 5(8)(f) of IBC will not enure in her favour. In the Agreement dated 20th July 2016 that the Appellant is relying on, there are no specified repayment schedules or consequences in the event of default. The assurance mentioned by the Appellant, and also claimed in the Corporate Debtor s letter dated 15.06.2019 are not in the nature of consequences in the event of default in payment of debt. It is also noted by us is that this letter dated 15.6.2019 was issued almost three years after the original Agreement dated 20.7.2016 was executed, and is certainly part of the agreement. Neither there is a date of default in the section 7 application, nor any repayment schedule has been outlined in the said agreement - the Appellant cannot claim the status and benefits as a financial creditor by virtue of being an allottee/homebuyer under explanation (i) to section 5 (8)(f) of the IBC. The Appellant, who is a speculative investor, cannot claim status and benefits as financial creditor under Explanation (i) of Section 5(8)(f) of the IBC, and is not interested in the financial well-being, growth and vitality of the Corporate Debtor, but is just interested in her investment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he financial creditor. Consequently, the financial creditor issued forty cheques dated 20.11.2018 to 31.1.2020 for amounts detailed at pp.39 64 of the Appeal Paperbook. The Appellant has thus claimed that a total amount of admitted debt of ₹ 2,19,56,000/- (Rupees Two Crores Nineteen Lakhs and Fifty Six Thousand only) is due from the corporate debtor and in default as on 10th February 2020. The Appellant filed petition under section 7 of the IBC seeking initiation of insolvency proceedings against the Corporate Debtor on 16.3.2020, which was dismissed vide impugned order dated 20.10.2020. 3. We heard the arguments of both the parties and perused the record. 4. In the arguments, the Learned Counsel for Appellant has claimed that the Learned Adjudication Authority has dismissed the section 7 application holding that the Appellant (applicant in section 7 application) is not a financial creditor under section 5(7) of the IBC and the amount, which the applicant has invested with the Corporate Debtor is not financial debt under section 5(8) of the IBC and that the default in payment on the basis of settlement agreement is not a default of the financial debt. 5. The Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are present in the instant case, and the money was raised from an allottee, the money deposited by the Appellant should be categorized as financial debt. The Ld. Counsel for Appellant has also referred to the judgment of Hon ble Supreme Court in M/s Orator Marketing Pvt. Ltd. vs M/s Samtex Desinz Pvt. Ltd. [Civil Appeal No. 2231 of 2021] in this regard to claim that the amount deposited by the Appellant with the Corporate Debtor is a financial debt. 7. The Learned Senior Counsel for the Respondent/Corporate Debtor has claimed that the Section 7 application filed by the Appellant does not contain any date of default; hence such an application is not maintainable. He has also claimed that the amount deposited by the Appellant was refunded through cheques given by the Corporate Debtor in refund were not realized and hence the debt does not materialize. Moreover, pointing to the agreement dated 20.7.2016, he has claimed that the purported Financial Creditor/Appellant is only a speculative investor and therefore she cannot enjoy the status of the financial creditor. Ld. Counsel of Respondent has also referred to the judgment of Hon ble Supreme Court in Anuj Jain Interim Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes a financial debt and operational debt. Xxx xxxxxx Section 5 (7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. (8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e)receivables sold or is counted other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of their nominated nominee without charging any transfer charges. However, the nominee (s) of the Allottee shall be under obligation to sign and execute the necessary documents/papers in respect of the said Flats/Units which would be registered in their name, PROVIDED ALWAYS it is agreed to by the Allottee that he/it shall not assign or transfer its rights in the Allotted Flats/Units or any part thereof in favour of any third person or in favour of its nominee(s) before the expiry of one year period from the date hereof. (7) Notwithstanding anything contained herein it is specifically agreed to between the parties that after a period of one year from the date hereof, the Allottee or FIRST PARTY without assigning any reason, in its absolute discretion, is fully entitled to cancel or rescind the Allotment of the Flats/Units herein booked. Once the Allottee exercises its/his option to cancel the booking after the specified period of one year, the Allottee shall send written intimation to FIRST PARTY upon receipt of which the FIRST PARTY shall forthwith refund the entire amount of consideration herein paid together with any outstanding amount of assured return accrued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veloper 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 interested in purchasing a flat/apartment. They can also point out that in a real estate market which is falling, the allottee does not, in fact, want to go ahead with its obligation to take possession of the flat/apartment under RERA, but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it. Given the above, it is clear that it is very difficult to accede to the Petitioners contention that a wholly one sided and futile hearing will take place before the NCLT by trigger-happy allottees who would be able to ignite the process of removal of the management of the real estate project and/or lead the corporate debtor to its death. 12. We, therefore, now examine the various clauses of the Agreement entered between the Corporate Debtor Samyak Projects Private Limited and Mrs. Nidhi Rekhan who purports to be an allottee. The above-mentioned clauses 3, 4, 5 and 6 of the Agreement are primarily concerned with the Down Payment and an assured rate of return of 24% p.a. and the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a genuine allottee but an investor who has come as allottee with no intention of possessing the flats. The Ld. Counsel for Appellant has also referred to Pioneer Urban Land and Infrastructure (supra), particularly paragraph 67 wherein it is held that The expression borrow is wide enough to include an advance given by the home buyers to a real estate developer for temporary use i.e. for use in construction project so long as it is intended by the agreement to give something equivalent to money back to the home buyers. It is noted by us that the Appellant in the instant case is not a genuine home buyer but someone who has invested a certain amount but is coming before us as a home buyer. We distinguish the above observation made in the Pioneer Urban Land and Infrastructure (supra) judgment as the Appellant is not a genuine home buyer and hence he cannot claim benefit as an allottee in a real estate project and hence will not be considered a financial creditor by taking recourse to Explanation (i) of section 5(8)(f) of the IBC. 13. The Ld. Counsel for Appellant has also cited the judgment of this tribunal in Ashok Agarwal vs Amitex Polymers Pvt. Ltd. [Company Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor s business when there is financial stress. Hence, a financial creditor is not only about in terrorem clauses for repayment of dues; it has the unique parental and nursing roles too. In short, the financial creditor is the one whose stakes are intrinsically interwoven with the well-being of the corporate debtor. 16. We find that in the Agreement dated 20th July 2016 that the Appellant is relying on, there are no specified repayment schedules or consequences in the event of default. The assurance mentioned by the Appellant, and also claimed in the Corporate Debtor s letter dated 15.06.2019 are not in the nature of consequences in the event of default in payment of debt. It is also noted by us is that this letter dated 15.6.2019 was issued almost three years after the original Agreement dated 20.7.2016 was executed, and is certainly part of the agreement. We also find that neither there is a date of default in the section 7 application, nor any repayment schedule has been outlined in the said agreement. We therefore, are constrained to view the agreement not as an agreement between a homebuyer and builder, but relating to an investment made by the Appellant. The judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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