Tribunal admits CIRP application, appoints IRP, declares moratorium under Insolvency and Bankruptcy Code

The Tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, appointed Mr. Prabhjit Singh Soni as the Interim Resolution Professional (IRP), declared a moratorium, and directed the IRP to perform his duties as per the Insolvency and Bankruptcy Code. The Tribunal emphasized the importance of addressing financial creditors' claims to prevent injustice to the Corporate Debtor.

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Issues Involved:
1. Territorial Jurisdiction
2. Appointment of Interim Resolution Professional (IRP)
3. Financial Creditor’s Claim and Default
4. Definition of Financial Creditor and Financial Debt
5. Default and Initiation of Corporate Insolvency Resolution Process (CIRP)
6. Moratorium and Duties of IRP

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction:
The Tribunal established that it has territorial jurisdiction over the National Capital Territory (NCT) of Delhi, as the registered office of the Respondent Corporate Debtor, M/s Gaursons Sportswood Private Limited, is located in New Delhi.

2. Appointment of Interim Resolution Professional (IRP):
The Petitioners proposed Mr. Prabhjit Singh Soni as the IRP, who agreed to the appointment and provided the necessary declarations and disclosures as required under Section 7(3)(b) of the Insolvency and Bankruptcy Code, 2016 (the Code). The Tribunal found that no disciplinary proceedings were pending against him, thereby satisfying the requirements for his appointment.

3. Financial Creditor’s Claim and Default:
The Petitioner claimed that he booked a flat in the Corporate Debtor’s project and paid a substantial amount towards its purchase. The Corporate Debtor failed to deliver possession by the stipulated date and denied the Petitioner’s right to a refund under a buy-back scheme. The Petitioner alleged that the Corporate Debtor raised wrongful demands and failed to refund the amount paid along with the agreed interest. The Tribunal noted the supporting documents provided by the Petitioner, including the allotment letter, tripartite agreement, and bank statements.

4. Definition of Financial Creditor and Financial Debt:
The Tribunal referred to Sections 5(7) and 5(8) of the Code, which define "Financial Creditor" and "Financial Debt." The Code was amended to include amounts raised from allottees under real estate projects as financial debt. The Tribunal cited the case of Rajendra Kumar Saxena v. Earth Gracia Buildcon Pvt. Ltd., where it was held that allottees of real estate projects are treated as financial creditors. The Tribunal concluded that the Petitioner, being a homebuyer, qualifies as a financial creditor under the Code.

5. Default and Initiation of Corporate Insolvency Resolution Process (CIRP):
The Tribunal examined whether the Corporate Debtor committed a default in payment of the financial debt. The Corporate Debtor argued that the Petitioner failed to make timely payments and breached the terms of the agreement. However, the Tribunal found that the Petitioner had paid a significant amount, and the Corporate Debtor failed to deliver possession within the stipulated time, thereby entitling the Petitioner to a refund with interest. The Tribunal noted that the financial debt was outstanding since 2017, and the amount of default exceeded the statutory limit of one lakh rupees.

6. Moratorium and Duties of IRP:
The Tribunal admitted the application under Section 7(5)(a) of the Code, satisfied that a default had occurred, the application was complete, and no disciplinary proceedings were pending against the proposed IRP. The Tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on suits, asset transfers, and recovery actions against the Corporate Debtor. The IRP was directed to make a public announcement and perform duties as per Sections 15, 17, 18, 19, 20, and 21 of the Code. The Tribunal emphasized the legal obligation of the Corporate Debtor’s personnel to cooperate with the IRP and protect the value of the Corporate Debtor’s property.

Conclusion:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor, appointed Mr. Prabhjit Singh Soni as the IRP, declared a moratorium, and directed the IRP to perform his duties in accordance with the Code. The Tribunal also highlighted the need for the IRP to address any issues related to the claims made by financial creditors to avoid injustice to the Corporate Debtor.

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