Petitioner denied relief for failing to pay balance amount within stipulated time

The court held that the petitioner qualified as a Financial Creditor under the Insolvency and Bankruptcy Code due to an agreement for the allotment of flats. However, as the petitioner failed to pay the full balance amount within the stipulated time, the court found no default by the respondent. Consequently, the company petition was rejected, and the petitioner was not entitled to any relief. The petition was dismissed with no costs awarded.

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Issues Involved:
1. Whether the Petition is maintainableRs.
2. Whether the Petitioner is a Financial Creditor of the RespondentRs.
3. Whether the Respondent defaulted in payment of financial debtRs.
4. To what relief the Petitioner is entitledRs.

Issue-wise Detailed Analysis:

ISSUE No. II:
This issue is taken up first as it is vital for the decision. A Financial Creditor under Section 5(7) of the Insolvency and Bankruptcy Code 2016 (the Code) is someone to whom a financial debt is owed, including a person to whom such debt is legally assigned or transferred. Financial debt, as defined under Section 5(8) of the Code, includes any amount raised under transactions having the commercial effect of borrowing, such as forward sale or purchase agreements. The Petitioner entered into an agreement with the Respondent on 15.03.2007 for the allotment of 10 flats/apartments, which qualifies as a Real Estate Project under the Real Estate (Regulations and Development) Act 2016. Thus, the Petitioner is an allottee, and the amount raised for the forward sale is considered a financial debt. The Hon'ble Apex Court in Pioneer Urban Land & Infrastructure Ltd. v. Union of India confirmed this interpretation. Therefore, the Petitioner is a Financial Creditor under Section 5(7) of the Code. The Respondent's contention that the Petitioner does not qualify as a consumer and hence not a financial creditor is irrelevant, as the Petitioner meets the criteria of a financial creditor. Issue No. II is answered in the affirmative.

ISSUE NO(S). I & III:
These issues are interlinked and addressed together. The relationship between the Petitioner and the Respondent began with an agreement on 15.03.2007 for the sale of 10 flats for Rs. 2,52,50,000, with an advance payment of Rs. 55,00,000. The Petitioner was to pay the balance within one year, irrespective of the Respondent obtaining necessary permissions. The Respondent received permissions between 07.07.2012 and 09.08.2017 and executed sale deeds for two apartments in 2018. Despite these developments, the Petitioner did not pay the full balance amount within the stipulated one year, paying only Rs. 1,91,00,000 in total. Due to the non-payment, the Respondent canceled the allotment and terminated the agreement on 18.07.2018. Consequently, the Petitioner cannot claim a financial debt default by the Respondent. The Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank Ltd. stated that the Adjudicating Authority must see evidence of default. In this case, no default occurred. Issue No. III is answered in the negative, and Issue No. I is also answered in the negative.

Issue No. IV:
Given the findings on the previous issues, the Company Petition by the Petitioner cannot be allowed and is liable to be rejected. The Petitioner is not entitled to any relief in this forum.

ORDER:
The Petition is rejected on contest. The observations made herein shall not affect any other proceedings for enforcement or realization of reciprocal dues before other competent fora. No order as to costs.

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