Tribunal initiates CIRP against Corporate Debtor for possession delay, imposes moratorium.

The tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (CD) for failure to deliver possession within the agreed timeframe, acknowledging the existence of financial debt and default. Despite the CD's claims of force majeure events and delays, the tribunal appointed an Interim Resolution Professional (IRP) and imposed a moratorium under Section 14 of the Insolvency and Bankruptcy Code, prohibiting certain actions. The tribunal highlighted the significance of contractual timelines and the precedence of IBC over other laws like Real Estate Regulation and Development Act (RERA).

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Existence of financial debt and default.
3. Delay in possession and its implications.
4. Application of force majeure clause.
5. Interaction between IBC and RERA.
6. Appointment of Interim Resolution Professional (IRP).
7. Moratorium under Section 14 of IBC.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of IBC:
The application was filed under Section 7 of IBC, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiating CIRP against the Corporate Debtor (CD), M/s Horizon Concept Pvt. Ltd. The Financial Creditors (FCS) had made a booking in the project and entered into agreements with the CD, but the CD failed to deliver possession within the stipulated time.

2. Existence of Financial Debt and Default:
The tribunal noted that the CD had agreed to deliver possession within 36 months from the agreement date, with a grace period of 180 days. The CD failed to deliver possession, thus admitting the existence of a 'financial debt' and a 'default'. The total amount due as on 6.12.2018 was Rs. 72,19,848/-, including principal and interest.

3. Delay in Possession and Its Implications:
The tribunal observed that the CD had failed to deliver possession by the agreed date, causing frustration of the purpose of the agreement. The CD's argument that it had time till 2021 to complete the project was rejected, as it did not absolve the CD of its liability to honor the original commitment. The tribunal emphasized that time is the essence of the contract in such construction agreements.

4. Application of Force Majeure Clause:
The CD claimed delays due to force majeure events, including interference by the NOIDA Authority and legal proceedings. However, the tribunal found that despite these claims, the CD had not completed the project and thus could not rely on the force majeure clause to absolve itself of liability.

5. Interaction Between IBC and RERA:
The tribunal clarified that both IBC and RERA operate in different fields. While RERA regulates and promotes the real estate sector, IBC consolidates insolvency and bankruptcy laws. Section 238 of IBC, which has a non-obstante clause, prevails over RERA. Thus, the admission of the application under IBC results in the commencement of CIRP, overriding any RERA provisions.

6. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Manish Gupta as the IRP, noting that he had provided written consent and was eligible for the role. The IRP is required to act in accordance with IBC provisions and the attendant rules.

7. Moratorium under Section 14 of IBC:
The tribunal declared a moratorium on the CD, prohibiting the institution or continuation of suits, transferring or disposing of assets, foreclosing or enforcing security interests, and recovering property occupied by the CD. The moratorium will last until the completion of the CIRP, or until an order for liquidation or approval of a resolution plan is passed.

Conclusion:
The application for initiating CIRP against the CD was admitted, and the tribunal directed the suspension of the CD's Board of Directors and communication of the order to relevant parties, including the Insolvency and Bankruptcy Board of India (IBBI). The tribunal emphasized the importance of adhering to contractual timelines and the overriding nature of IBC over other laws like RERA.

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