NCLT Delhi: 'Homebuyers' Seeking Redressal Through 'RERA' Or 'NCDRC' Prior To Approaching 'NCLT' Retain Their Status As Financial Creditors

National Company Law Tribunal (“NCLT” or “Tribunal”) New Delhi, in its recent order while hearing a CIRP (Corporate Insolvency Resolution Process) petition filed by the homebuyers under Section 7 of the Insolvency and Bankruptcy Code (IBC), held that regardless of whether homebuyer-allottees have sought recourse through RERA (Real Estate Regulatory Authority) or NCDRC (National Consumer Disputes Redressal Commission) prior to approaching Tribunal, their status as 'financial creditors' under Section 5(8)(f) of the IBC will remain unchanged. Section 5: Definitions (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 – (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing. Section 7: Initiation of corporate insolvency resolution process by financial creditor “A financial creditor either by itself or jointly with [other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.” 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. Background Facts Financial Creditors (“allottees”) reserved 51 units out of 512 in the "Aanand Vilas" project developed by the Corporate Debtor in April 2013. In April 2013, Financial Creditors received provisional allotment letters after depositing the booking amount for the units. The agreement stipulated that the Corporate Debtor would provide the possession of the units within 48 months (Dec. 2017–Jan. 2018) after the execution of the agreement, with an extra 180-day grace period. The Corporate Debtor failed to deliver possession within the stipulated timeframe, attributing the delay to reasons such as incomplete payments by some allottees and a construction halt in Delhi NCR in 2015 due to High pollution levels issues not anticipated during the Agreement's execution in 2013. It was contended by the Corporate Debtor that 41 out of 51-unit holders had approached either Real Estate Regulatory Authority (RERA) or National Consumer Disputes Redressal Commission (NCDRC) for seeking refund of the amount already paid to the Corporate Debtor, however, such applications before RERA or NCDRC were either dismissed or disposed of as withdrawn, therefore, such allottees ceases to be considered as 'financial creditors' in the light of Section 5(8)(f) of IBC. The present petition was filed on 24.02.2020 before this Tribunal on the grounds that the Corporate Debtor has defaulted in making a payment of Rs.1,11,93,76,405 to the Financial Creditors. NCLT Verdict Tribunal held that irrespective of the fact that the home buyer allottees approached RERA or NCDRC before approaching Tribunal, the status of the home buyers being financial creditors under Section 5(8)(f) of the Code remains intact. Tribunal further held that the averment of the corporate debtor that the allottees who approached RERA or NCDRC cease to be considered 'financial creditors' under Section 5(8)(f) of the Code does not hold any ground. On the other issue, whether it was contended by the corporate debtor that the application lacks a threshold limit as prescribed under Section 7 of the IBC, Tribunal held that the number of allottees has to be seen on the date of the filing of the petition and subsequent withdrawal of certain allottees because of the settlement that arose between settled allottees and the corporate debtor would not affect the maintainability of the present petition. Case Title: (TARUN AHUJA & ORS. vs PURI CONSTRUCTION PRIVATE LIMITED) Bench: SHRI MAHENDRA KHANDELWAL (Judicial Member) and DR. SANJEEV RANJAN (Technical Member) Case No: CP IB NO. 755/PB/2020 Counsel for Appellants: Mr. Gaurav Gupta, Ms. Rajshree Jaiswal, Advs Counsel for Respondent: Mr. Krishnan Venugopal, Sr Adv., Mr. Pravin Bahadur, Mr. Saurabh Kumar, Ms. Kanika Gomber, Mr. S. Anjani Kumar, Mr. Amit Agarwal, Mr. Vishnu Kant, Advs. Click Here to Read/Download Order

NCLT Delhi: 'Homebuyers' Seeking Redressal Through 'RERA' Or 'NCDRC' Prior To Approaching 'NCLT' Retain Their Status As Financial Creditors

Aryan Raj

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