Tribunal Starts Insolvency Process Against Debtor for Property Dispute; Moratorium Declared, IRP to Take Charge.

The Tribunal admitted the financial creditors' application, initiating the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor due to failure to hand over possession of the property and confirm the debt's due status. The proposed resolution professional was accepted, and a moratorium was declared, prohibiting legal actions against the debtor during CIRP. The Interim Resolution Professional (IRP) was instructed to assume control immediately and ensure compliance with the Insolvency and Bankruptcy Code, 2016. The order was pronounced in open court, with no costs awarded, and a copy was provided to the corporate debtor without charge.

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Issues Involved:
1. Whether the application is time barredRs.
2. Whether the financial creditors have defaulted in making the paymentsRs.
3. Whether other efficacious remedies are available to the financial creditorsRs.

Issue-wise Analysis:

Issue No. 1: Whether the application is time barredRs.

The Tribunal noted that various communications had been sent by the corporate debtor to the financial creditors, confirming their rights and claims. Specifically, a communication dated December 20, 2016, requested a VAT deposit of Rs. 3,00,615, followed by an email on December 22, 2016, attaching the statement of account. Another communication on March 5, 2019, requested the financial creditors to collect a refund cheque for Rs. 1,51,34,908. These communications confirmed the ongoing acknowledgment of debt, thereby ruling that the application is not barred by limitation. Hence, Issue No. 1 was decided in favor of the financial creditors.

Issue No. 2: Whether the financial creditors have defaulted in making the paymentsRs.

The corporate debtor argued that the financial creditors had delayed balance payments and thus were defaulters. However, the Tribunal found that the financial creditors had paid a substantial amount of Rs. 2,75,55,186 against the total sale consideration of Rs. 3,80,10,000. The financial creditors withheld the balance due to the corporate debtor's failure to honor the commitment of handing over possession by February 2016. Therefore, the Tribunal concluded that the financial creditors could not be considered defaulters. Issue No. 2 was decided in favor of the financial creditors.

Issue No. 3: Whether other efficacious remedies are available to the financial creditorsRs.

The corporate debtor contended that alternative remedies were available under the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Consumer Protection Act, 1981. In response, the financial creditors cited a Supreme Court judgment stating that remedies under the Code, Consumer Protection Act, and RERA are concurrent. Thus, invoking the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) was legally permissible. Consequently, Issue No. 3 was decided in favor of the financial creditors.

Conclusion:

The Tribunal concluded that the corporate debtor had failed to hand over possession of the subject property within the stipulated time, and there was no proof of an extension of time by the concerned authority. This established the debt as due and payable, which the corporate debtor failed to pay, confirming the default. The financial creditors' application was found to be complete, and the name of the proposed resolution professional, Mr. Jugraj Singh Bedi, was accepted. Consequently, the application was admitted, and the Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor, to be completed within 180 days. The Interim Resolution Professional (IRP) was directed to take charge immediately and make the necessary public announcements.

Moratorium Declaration:

A moratorium was declared effective from the date of the order until the completion of the CIRP, prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, or disposing of any assets of the corporate debtor.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property occupied by the corporate debtor.

The supply of essential goods or services to the corporate debtor shall not be terminated during the moratorium period. The IRP was directed to comply with relevant sections of the IBC, 2016, and the corporate debtor's management was instructed to cooperate fully with the IRP.

Order Pronouncement:

The order was pronounced in open court, with no order as to costs. A copy of the order was to be provided to the corporate debtor free of cost.

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