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TMI Blog2023 (12) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... BHUSHAN , J. These two appeals challenges same order dated 05.08.2022 by which order the Adjudicating Authority (National Company Law Tribunal), Indore Bench, Court No.1 admitted Section 9 application filed by M/s D. B. Corp. Ltd., the Operational Creditor. Appellant in Company Appeal (AT) (Ins) No. 1172-1173 of 2022 is Regulatory Authority constituted under Section 20 of the Real Estate (Regulation and Development) Act, 2016. In Company Appeal (AT) (Ins) No. 1172-1173 of 2022 order dated 11.08.2022 appointment of Mr. Anil Goel, Interim Resolution Professional has also been challenged. Company Appeal (AT) (Ins) No. 1321 of 2022 has been filed by 'Aquacity Consumer and Societies Welfare Society' which claim to be association of 74 homebuyers who are aggrieved by the admission order dated 05.08.2022. Brief facts of the case giving rise to these appeals need to be first noted: (i) M/s AG8 Ventures Ltd. is a registered company developing various real estate projects in the State of Madhya Pradesh. M/s AG8 Ventures Ltd. (hereinafter referred to as 'Corporate Debtor') had obtained registration of 11 real estate projects from Real Estate Regulation Authority, Madhya Pradesh (hereinaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23.03.2022 by RERA revoking the registration of real estate project 'Aakriti Business Arcade' and directing for appointment of an agency for completion of the said project under Section 8 of the RERA Act, 2016. (v) Demand Notice under Section 8 dated 13.01.2022 was issued by D.B. Corp. Ltd. to the Corporate Debtor claiming payment of Operational Debtor in Form 3 dated 13.01.2022 claiming an operational debt of Rs.10,77,17,000/- with interest relying on various Barter Agreements entered between the Operational Creditor and the Corporate Debtor. (vi) An application under Section 9 was filed by the Operational Creditor before the Adjudicating Authority on 02.02.2022 claiming default of operational debt of Rs.10,77,17,000/- with interest consequent to the Barter Agreement entered between the Operational Creditor and the Corporate Debtor. The debt was claimed to be fell due from 13.02.2020. Some additional facts contained in Company Appeal (AT) (Ins.) No. 1321 of 2022 also need to be noted. (vii) The Appellant - Aquacity Consumer and Societies Welfare Society claiming to be a society of homebuyers claimed to have filed two consumer complaints under Section 12(1)(b) of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... senior counsel has appeared for the Operational Creditor - D. B. Corp. Ltd. Shri Aditya Gauri and Shri Amar Vivek, leanred counsel have appeared for the Resolution Professional. We have also heard Shri Neeraj Malhotra, learned senior counsel and other learned counsels who had filed different IAs in these Appeals. 3. Company Appeal (AT) (Ins) No. 1172-1173 of 2022 came for consideration before this Tribunal on 30.09.2022, on which date notices were issued in the Appeal and impugned order dated 05.08.2022 was stayed. Following order was passed on 30.09.2022: "ORDER 30.09.2022: Learned counsel for the Appellant submits that by the impugned order dated 05.08.2022 the Adjudicating Authority has admitted section 9 application filed by Respondent No.1 - 'M/s D.B. Corp. Ltd.' (Operational Creditor). It is submitted that the Section 9 proceedings were collusively initiated and because of the fact the Appellant, the Regulatory Authority, has passed orders against the real estate company - the Corporate Debtor, to avoid the consequences of said orders application under Section 9 has been filed. It is further submitted that invoices which has been filed by the Operational Creditor in sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of units. Allotment of units under Barter Agreements cannot be operational debt to enable the Operational Creditor to initiate Section 9 proceeding against the Corporate Debtor. The invoices which were filed along with the Section 9 application were all forged and fabricated invoices prepared for the purposes of the case. It is submitted that invoices are claimed to be for year 2010 to 2017, however, the invoices which are filed along with Section 9 application even of the year 2010 contains column for CGST and IGST while the Goods and Services Tax came into force only on 01.07.2017. A bare look on the invoices reveal that the invoices have been prepared after 01.07.2017 for the purposes of the case. The Operational Creditor has fabricated the invoices with the sole purpose of initiating corporate insolvency resolution process against the Corporate Debtor. It is submitted that the invoices were never relied upon while issuing Demand Notice under Section 8. The Corporate Debtor and the Operational Creditor have entered into unfair trade practice and relied on illegal agreement to initiate CIRP against the Corporate Debtor. The Operational Creditor has also ascertained its right as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta, learned senior counsel appearing for the Operational Creditor refuting the submission of learned counsel for the Appellant submits that RERA has no locus to file the Appeal as RERA is a regulatory authority which could have no grievance against initiation of CIRP against the Corporate Debtor by the impugned order dated 05.08.2022. It is submitted that mention of CGST and IGST in the invoices prior to 01.07.2017 were due to reason that invoices were printed from a new software which contains CGST and ITST number. It is, however, submitted that with regard to invoices prior to 01.07.2017 column of CGST and IGST are nil. The Operational Creditor is a responsible newspaper and Barter Agreement is common media practice. The RERA has itself declared the Operational Creditor as allottee on the basis of Barter Agreement. It is submitted that invoices were issued in pursuance of Barter Agreement which was agreement for services rendered by the Operational Creditor and is covered within the definition of operational debt as per Section 5(20) and 5(21) of the I&B Code, the Operational Debt having arisen out of the services provided to the Corporate Debtor. 8. Learned counsel for the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? 5. Whether invoices which were filed along with the Section 9 application by the Operational Creditor were manufactured and forged invoices prepared for the purposes of the case, which were not genuine invoices? Question No. I 12. Section 61 of the I&B Code, 2016 provides for an Appeal by "any person aggrieved by the Order of the Adjudicating Authority". Section 61, sub-Section (1) uses the expression "any person aggrieved". Learned Counsel for the Operational Creditor has questioned the locus of the Real Estate Regulatory Authority to file an Appeal under Section 61 of the Code challenging the Impugned Order dated 05th August, 2022. The submission is that the Appellant is a Real Estate Regulatory Authority under the Real Estate Regulation and Development Act, 2016 and has only regulatory role as contained in the enactment. By Order of the Adjudicating Authority initiating 'Corporate Insolvency Resolution Process' against the Corporate Debtor and imposing the moratorium, Regulatory Authority cannot be held to be aggrieved since the moratorium comes into play by statutory provisions of the Code and has applicability on all proceedings covered by Section 14 of the Code. 13. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll include, to register and regulate Real Estate Project and Real Estate Agent registered under the Act. Real Estate Regulatory Authority thus is statutorily entrusted to promote the real estate sector and to protect the interest of the allottees. 17. In the facts of the present case where Regulatory Authority has come up in the Appeal questioning the very maintainability of Section 9 Application and further alleging that Section 9 Proceedings are collusive proceedings between Corporate Debtor and Operational Creditor, can it be said that it has no locus to file an Appeal? 18. The obvious consequences of admission of Section 9 Application and declaration of moratorium is that all proceedings before RERA against the Corporate Debtor has to come to a grinding halt. RERA is a statutory authority under Section 20 sub-section (2). RERA is a body corporate and is entitled to sue or to be sued in its name. RERA is thus fully competent to sue in its name and it has questioned the order on grounds as enumerated in paragraph 9 of the Appeal. We make it clear that question of locus to file an Appeal as an aggrieved person and the question as to whether appeal filed by the aggrieved person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to be maintainable. In paragraph 5 and 6 of the Judgment, following has been observed by this Tribunal: "5. At the outset, Counsel for the Appellant has been asked as to how the Appellant Board is an aggrieved person especially when the aggrieved person (Canara Bank) has already filed the appeals i.e. CA (AT) (Ins) No. 68 & 69 of 2023. In merely requested that the present appeal may be re-notified to be heard along with aforesaid two appeals on 17.03.2023. However, from the perusal of the memorandum of appeal, we could not find the cause of concern much less the grievance of the Appellant for preferring the present appeal especially when the appeals have already been filed by the aggrieved person. In this regard, we may also refer to an order passed by this Tribunal in the case of Insolvency and Bankruptcy Board of India Vs. Wig Associates Pvt. Ltd. & Ors., 2018 SCC Online NCLAT 386, in which the Tribunal has recorded its displeasure while noticing the fact that the appeal has been filed by the board as an aggrieved person which was held to be not maintainable. 6. In our considered opinion as well, the Appellant has nothing to do with the litigation between two parties i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding refund of deposited amount and payment of compensation have not been complied with by the appellant and 13 orders have been complied with only partially. Thus, the appellant has violated rule 18. ii. From the date of coming into force of section 4 of the Act, 01.05.2017 till date, 70 percent of the amount received from the allottees has been received by the appellant as per section 42) clause (1VD) of the Act PROJECT LO REAL ESTATE has not been deposited in the special bank account created for the project as per clause (1) (D) of section 4 (2) read with rule 5. As on 30th September, 2021, ln the special bank account created for the project, the amount required by section 4 (2) clause (1) (D) read rule:5 is only zero as compared to the amount of Rs 7718 lakh. Thus, the appellant has continuously contravened the provisions of this section after the commencement of section 4 of the Act. 43. In the context of the above findings, in order to protect the interests of the allottees and for the purpose of getting the project completed as soon as possible, the appellant is directed to: I. And according to the orders of the adjudicating officer, the payment of the amount sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is directed that the authority selected by the authority under section 8 for completion of the project the proper financial help will be provided." 25. In view of the sequence and events of the facts which took place and various proceedings drawn by RERA much prior to issuance of notice under Section 8 of the Code by the Operational Creditor, we are satisfied that Appeal filed by the RERA cannot be thrown out on the ground of locus. The RERA held to be aggrieved person within the meaning of Section 61 of the Code. 26. Thus, the Question No. I has to be answered in affirmative holding that RERA has locus to file Company Appeal (AT) Ins. No. 1172-1173 of 2022. Question No. II 27. The Appellant who has filed Company Appeal (AT) Ins. No. 1321 of 2022 is association of home buyers of a registered Real Estate Project developed by the Corporate Debtor. The Members of the Appellant were allotted units in the year 2010-14 and they were promised possession of their respective units in the year 2014-17. Appellant association being aggrieved by the Corporate Debtor has filed the consumer complaints before the National Consumer Disputes Redressal Commission on which order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and is operating FM Stations throughout India and the Corporate Debtor is engaged in the business of acquiring, developing, constructing and sale of real estate projects. The Corporate Debtor was desirous of conducting extensive advertising campaign of its various projects and for which the Operational Creditor and Corporate Debtor entered into various barter agreements, the details of which are mentioned as under : Sr. No. Date Total Consideration 1. 13.08.2019 25,50,000/- 2. 15.10.2017 1,31,15,000/- 3. 02.06.2016 1,90,83,772/- 4. 01.08.2014 30,50,000/- 5. 28.03.2014 3,00,00,000/- 6. 25.03.2013 2,00,00,000/- 7. 01.10.2012 1,50,00,000/- 8. 18.07.2011 2,00,00,000/- 9. 29.09.2010 2,00,00,000/- Copies of Barter Agreements are enclosed herewith and marked as Annexure A-4 (Colly). As per the aforementioned Barter Agreements, it was agreed between the Operational Creditor and Corporate Debtor that in lieu of advertisement services provided by the Operational Creditor, the Corporate Debtor shall pay partly in the form of cash/cheque (hereinafter referred as "Cash Component") and partly in the form of transfer/sale of units (hereinafter referred as "Barter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding debt was sent to Corporate Debtor by email dated 13.01.2022. Simultaneously, said demand notice was also sent by speed Post on 13.01.2022 at the registered office of the Corporate Debtor and the same was duly delivered on 14.01.2022 and the said demand notice has not been disputed or replied by the Corporate Debtor till date. Copies of Demand Notice dated 13.01.2022 alongwith email, postal receipt and consignment report are enclosed herewith and are marked as Annexure A-8 (Colly). Debt falls due with effect from 13.02.2020. 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM) Rs. 10,77,17,000/- (Rupees Ten Crore Seventy Seven Lakhs Seventeen Thousand) along with interest @ 18% p.a. The default occurred on the last date i.e. 13.02.2020 on which the possession were required to be given by the Corporate Debtor as per Barter Agreement dated 02.06.2016. (Computation of outstanding amount due from Corporate Debtor is enclosed herewith and marked as (Annexure A-9). 30. As per Barter Agreement in lieu of the advertisement services provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand shall form the Barter Component. Clause 2.3 is as follows: "2.3 Pursuant to this Agreement and subject to conditions precedent as provided for in clause 2.1 hereinabove, the Owner & Advertiser shall be entitled to publish advertisements in DBCL Media for the Aggregate Commitment of Rs. 25,50,000/- (Rs. Twenty Five Lakhs and Fifty Thousand Only) including GST, out of which Rs. 2,00,000/- (Rs. Two Lakh Only) shall form the cash component ("Cash Component") and Rs. 23,50,000/- (Rs. Twenty Three Lakhs and Fifty Thousand Only) shall form the barter component (Barter Component). The bifurcation of total Cash Component and Barter Component in INR would be as per Schedule I ("DBCL Deliverables and Rates") and Annexure 'A' appended to Schedule I proves the list of deliverables with respective rates agreed amongst parties for consumption during first 12 (twelve) months of term. The Owner & Advertiser agrees to consume the deliverables according to the specified time lines mentioned in Schedule I." 34. Article 3 deals with invoices and payments. Clause 3.1 and 3.2, 3.3, and 3.4 are as follows: "3.1 Upon the release of an advertisement of the Owner & Advertiser/Affiliate, DBCL s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;agreed upon mutual consent) As per Annexure A Barter Component (Amount in Rs.) 11,75,000 11,75,000 Cash Component at the time of Agreement (Amount in Rs) 2,00,000 Total agreed Spend for the First Year (Amount in Rs) 13,75,000 11,75,000 Total Agreed Spend for 23 Months (Term) 25,50,000/- *GST Included in the above amount The Owner & Advertiser should ensure to consume the deliverables according to the specified timelines mentioned in Schedule I *Above rates are inclusive of GST" 38. From the pleadings in Part-IV of the Section 9 Application as noted above, it is clear that Application has been filed by the Operational Creditor on the foundation that the Corporate Debtor although had discharged the cash component but barter component has not been discharged and out of Barter Component of Rs. 11,73,36,000/- commitment for 22 Units aggregating to Rs. 6,47,47,000 were discharged and remaining 19 units aggregating to Rs. 5,25,89,000/- are still not handed over to the Operational Creditor which pleadings have already been extracted above in Part-IV. 39. Now question to be answered is as to whether there was any operational debt due on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editor may file an application for initiating a Corporate Insolvency Resolution Process, thus not receiving the payment from the Corporate Debtor is a condition precedent for initiating Section 9 Application. 42. Learned Counsel for the Appellant Mr. Abhijeet Sinha has contended that the Operational Debt in the present case cannot arise from Barter Agreement where under the Agreement what was agreed between the parties was allotment of units and allotment and sale of units in lieu of the Barter Component. The payment of unpaid operational debt relates to payment of money when we look into the pleading of the operational creditor, it is clear that what is pleaded is that non-discharge of Barter Component under which component the operational creditor was entitled for allotment of units and sale of the units. According to the own case of the Operational Creditor against the total Barter Component of Rs. 11,74,22,441/- which related to 41 units only commitment of 22 units have been discharged and commitment for remaining 19 units have not been handed over to the Operational Creditor, non-handing over of the 19 units against the Barter Component cannot lead to operational debt nor as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionate share in the equity of Expressway SPV and land parcels but not any payment in terms of money. The dissenting financial creditor, ICICI Bank, is thoroughly dissatisfied with such a prescription whereby its dues shall be satisfied by a mode other than direct payment in cash. On the other hand, the IRP, the resolution applicant and even the assenting financial creditor would assert that such a prescription satisfies all the essential requirements of Section 30(2)(b) and Regulation 38(1)(b). Both these provisions essentially use the expressions "payment"; "the amount to be paid"; "the amount payable"; and "shall be paid". ICICI Bank asserts that these expressions refer only to the payment in monetary terms, whereas the submissions are countered with the assertions that the term "payment" is with reference to discharge of obligation and that could be brought about by any of the methods permissible in law and not necessarily by way of payment in terms of money alone. This takes us to the principles of interpretation and assigning appropriate meaning to the expressions used." 44. The expression payment as occurring in Section 30(2) was explained by the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not anything else. In the frame and purport of the provision and also the scheme of the Code, the expression "payment" is clearly descriptive of the action of discharge of obligation and at the same time, is also prescriptive of the mode of undertaking such an action. And, that action could only be of handing over the quantum of money, or allowing the recovery of such money by enforcement of security interest, as per the entitlement of the dissenting financial creditor." 45. Hon'ble Supreme Court had also occasion to refer Section 8 of the IBC which was held to be also a provision for money transfer and not by other mode. In paragraph 166.5, following has been laid down: "166.5. The other submissions and counters with reference to the phraseology of Section 8 of the Code do not require much dilation because, the said provision essentially relates to the dues of an operational debtor and the steps envisaged before commencement of insolvency resolution process. Nevertheless, "payment" for the purpose of the said provision is also of money transfer; and not by any other mode." 46. The Hon'ble Supreme Court has also occasion to use expression "Barter". In paragraph 167 of the Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arter Component the Operational Creditor was entitled for allotment of the units and non-allotment of the units against the Barter Component cannot make the DB Corporation Limited as an Operational Creditor nor any payment of money can be claimed by the Operational Creditor as against non-discharge of Barter Component as per the agreement between the parties themselves as noted above. 49. We thus are satisfied that there was no operational debt due on the corporate debtor on which operational creditor can claim payment of money from the corporate debtor to enable it to issue a demand notice under Section 8 or to file Section 9 Application before the Adjudicating Authority. We thus are satisfied that entire initiation of proceedings under Section 9 by the Operational Creditor is contrary to the scheme of IBC and no payment of money was due on the corporate debtor on basis of which unpaid dues any proceedings under Section 9 can be initiated. 50. We thus answer Question No. III in following manner: i. On the basis of Barter Agreement and consequent invoices, non-discharge of Barter Component by the Corporate Debtor shall not lead to any operational debt on basis of which payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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