Tribunal dismisses insolvency application, finds no default due to external factors.

The Tribunal held that the 'Corporate Debtor' did not commit default as the delay in possession was beyond their control due to external factors. Additionally, the application under Section 7 was found to be filed with malicious intent rather than for insolvency resolution purposes. The Tribunal set aside the order, dismissed the application, released the 'Corporate Debtor' from 'Moratorium,' and allowed them to operate through their Board of Directors. The Tribunal emphasized the importance of scrutinizing applications for insolvency carefully to prevent misuse.

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Issues Involved:

1. Whether the 'Corporate Debtor' committed default if the apartment was ready but possession was delayed due to reasons beyond their control.
2. Whether the application under Section 7 was filed fraudulently or with malicious intent for purposes other than the resolution of insolvency or liquidation.

Issue-Wise Detailed Analysis:

1. Default by 'Corporate Debtor':

The 1st and 2nd Respondents booked an apartment in 'Raheja's Sampada' and disbursed Rs. 86,62,691/- to the 'Corporate Debtor'. The possession was to be provided within 36 months from 3rd August 2012, but construction was not completed by 3rd August 2015. The 'Corporate Debtor' claimed that the notice of possession was issued on 15th November 2016, and the delay was due to reasons beyond their control, such as the absence of clearance by competent authorities. The 'Corporate Debtor' argued that the delay fell under 'force majeure' conditions as per Clause 4.4 of the Flat Buyer's Agreement, which included delays due to non-availability of infrastructure facilities provided by the government, pollution clearances, or court injunctions. The 'Corporate Debtor' obtained the Occupation Certificate in 2016 and offered possession, but the allottees refused to take it and sought a refund with interest.

The Tribunal noted that the 'Corporate Debtor' had complied with all obligations under the Agreement and that the delay was due to factors beyond their control. The Tribunal concluded that the 'Corporate Debtor' could not be held responsible for delays caused by external factors, and thus, there was no default on their part.

2. Fraudulent or Malicious Intent:

The 'Corporate Debtor' alleged that the application under Section 7 was filed fraudulently and with malicious intent. The Tribunal referred to the Supreme Court's decision in "Pioneer Urban Land and Infrastructure Limited & Anr. v. Union of India & Ors.," which held that a real estate developer could point out that the insolvency resolution process was invoked fraudulently, with malicious intent, or for any purpose other than the resolution of insolvency. The Tribunal found that the allottees refused to take possession and demanded a refund with interest higher than the principal amount paid, indicating a malicious intent to get back the money rather than the possession of the apartment.

The Tribunal concluded that the application under Section 7 was filed with malicious intent and not for the resolution of insolvency. The Tribunal set aside the impugned order dated 20th August 2019, dismissed the application under Section 7, and released the 'Corporate Debtor' from the rigours of 'Moratorium'. The Tribunal also noted that many allottees file applications under Section 7 with fraudulent or malicious intent and emphasized the need for the Adjudicating Authority to scrutinize such applications carefully.

Conclusion:

The Tribunal allowed the appeal, set aside the impugned order, and dismissed the application under Section 7. The 'Corporate Debtor' was released from the 'Moratorium' and allowed to function through its Board of Directors. The Tribunal also directed the 'Interim Resolution Professional' to hand over the assets and records to the Board of Directors and provided observations for future cases involving similar issues.

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