Insolvency Application Admitted, Interim Resolution Professional Appointed, Corporate Insolvency Resolution Process Initiated

The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted by the Tribunal. Mr. Amit Agrawal was appointed as the Interim Resolution Professional, and a moratorium was declared. The Tribunal found the respondent corporate debtor in default of repayment, triggering the Corporate Insolvency Resolution Process.

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Issues Involved:
1. Jurisdiction of the Tribunal.
2. Authorization to file the application.
3. Appointment of Interim Resolution Professional.
4. Amount due and payable by the corporate debtor.
5. Claims related to the default in completion and repayment.
6. Objections raised by the respondent.
7. Definition and applicability of "Financial Creditor" and "Financial Debt".
8. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
9. Default by the corporate debtor.
10. Declaration of moratorium and its implications.
11. Duties and responsibilities of the Interim Resolution Professional.

Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal has territorial jurisdiction over the NCT of Delhi as the registered office of the respondent corporate debtor is situated in New Delhi. Therefore, the Tribunal is the Adjudicating Authority for initiating the Corporate Insolvency Resolution Process under Section 60(1) of the Insolvency and Bankruptcy Code, 2016.

2. Authorization to file the application:
Mr. Virender Sehgal, Director of the applicant company, was duly authorized to file the application on behalf of the company via a Board Resolution dated 28.07.2018.

3. Appointment of Interim Resolution Professional:
The applicant proposed Mr. Amit Agrawal as the Interim Resolution Professional (IRP), who agreed to the appointment and provided the necessary declarations and disclosures as per the requirements of the IBBI Regulations, satisfying Section 7(3)(b) of the Code.

4. Amount due and payable by the corporate debtor:
The applicant claimed an amount of Rs. 12,21,76,646.62/- was due and payable by the respondent corporate debtor due to default in completion of the allotted unit and repayment of the amount paid by the financial creditor along with compound interest and penalty as ordered by UPRERA.

5. Claims related to the default in completion and repayment:
The applicant agreed to purchase a commercial unit and paid a sum of Rs. 4,97,20,400/- towards the unit under a Construction Linked Plan. The corporate debtor failed to complete the construction within the stipulated time and continued to raise demands for payments, which were met by the applicant. Despite assurances, the corporate debtor did not complete the construction, leading the applicant to seek a refund along with interest as per the agreement.

6. Objections raised by the respondent:
The respondent raised objections, including allegations of forum shopping by the applicant and claimed delays due to the NGT order and demonetization. The respondent argued that the applicant's claim was premature due to force majeure conditions. The applicant countered these objections, asserting no adverse effect on the project development due to the cited reasons and referred to the UPRERA order as conclusive proof of the claim's validity.

7. Definition and applicability of "Financial Creditor" and "Financial Debt":
The Tribunal examined the definitions under Sections 5(7) and 5(8) of the Code. The amendment to Section 5(8) clarified that any amount raised from an allottee under a real estate project is deemed to have the commercial effect of a borrowing, thus falling under the definition of "Financial Debt". Consequently, the applicant, being an allottee, qualifies as a "Financial Creditor".

8. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application was filed in Form-1 as per Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and was found to be complete in all respects with no infirmities.

9. Default by the corporate debtor:
The Tribunal found sufficient material on record to conclude that the respondent corporate debtor committed default in repayment of the financial debt, which exceeded the statutory limit of Rs. 1 lakh, thus satisfying the conditions for triggering the Corporate Insolvency Resolution Process.

10. Declaration of moratorium and its implications:
The Tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on the institution or continuation of suits, transferring or disposing of assets, and actions to foreclose or recover security interests against the corporate debtor.

11. Duties and responsibilities of the Interim Resolution Professional:
The IRP is required to perform functions as per Sections 15, 17, 18, 19, 20, and 21 of the Code, with all personnel connected with the corporate debtor legally obligated to cooperate with the IRP. The IRP must protect and preserve the value of the corporate debtor's property and manage its affairs diligently.

Conclusion:
The application under Section 7 of the Insolvency and Bankruptcy Code, 2016, was admitted, and Mr. Amit Agrawal was appointed as the Interim Resolution Professional. The Tribunal directed the IRP to make a public announcement and declared a moratorium as per the Code's provisions.

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