Tribunal admits CIRP application against Corporate Debtor under IBC: IRP appointed, moratorium declared

The Tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s Today Homes Noida Private Limited, under Section 7 of the Insolvency & Bankruptcy Code, 2016. An Interim Resolution Professional (IRP) was appointed, and a moratorium was declared to protect the Corporate Debtor's assets. Financial creditors were directed to deposit funds for expenses, and the IRP was tasked with safeguarding the Corporate Debtor's property value. The Tribunal emphasized the precedence of the IBC over RERA in cases of inconsistency, allowing for the CIRP to proceed despite arguments based on RERA provisions.

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Issues Involved:
1. Triggering of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Non-delivery of possession and refund of amounts paid by homebuyers.
3. Applicability and precedence of RERA over IBC.
4. Admission of financial debt and default.
5. Compliance with procedural requirements under IBC.

Detailed Analysis:

Issue 1: Triggering of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016
The application was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, by financial creditors who are also homebuyers, seeking to initiate CIRP against the Corporate Debtor, M/s Today Homes Noida Private Limited. The Tribunal noted that the application was complete and satisfied the requirements under Section 7(2) of the Code and Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

Issue 2: Non-delivery of possession and refund of amounts paid by homebuyers
The financial creditors entered into a Flat Buyers Agreement with the Corporate Debtor and paid almost 90% of the purchase value of the flats. Despite this, the Corporate Debtor failed to deliver possession of the flats or refund the amounts paid. The Tribunal observed that the Corporate Debtor had admitted the receipt of payments and the failure to deliver possession within the stipulated time, thereby acknowledging the existence of a financial debt and default.

Issue 3: Applicability and precedence of RERA over IBC
The Corporate Debtor argued that the application was not maintainable due to the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), which granted an extended timeline for project completion. However, the Tribunal held that Section 238 of the IBC, which contains a non-obstante clause, overrides RERA. The Tribunal emphasized that IBC and RERA operate in different fields, and the provisions of IBC would prevail in case of any inconsistency.

Issue 4: Admission of financial debt and default
The Tribunal referred to the Supreme Court's observations in "Innovative Industries Ltd v. ICICI Bank" and "Chitra Sharma & Ors V. Union of India & Ors," which clarified that amounts raised from allottees under real estate projects are deemed to be financial debts. The Tribunal found that the Corporate Debtor had committed a clear default by failing to deliver possession within the agreed timeline, thus justifying the initiation of CIRP.

Issue 5: Compliance with procedural requirements under IBC
The Tribunal confirmed that the application met all procedural requirements under Section 7 of the Code. The financial creditors provided overwhelming evidence of default, specified the name of the resolution professional, and annexed the necessary consent in Form 2. The Tribunal appointed Mr. Rabindra Kumar Mintri as the Interim Resolution Professional (IRP) and directed the IRP to make a public announcement and declare a moratorium as per Section 14 of the Code.

Conclusion:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor and appointed an IRP. A moratorium was declared, prohibiting suits, asset transfers, security interest enforcement, and property recovery actions against the Corporate Debtor. The Tribunal directed the financial creditors to deposit a sum with the IRP for expenses and emphasized the IRP's duty to protect and preserve the value of the Corporate Debtor's property.

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