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of <h1>Petition seeking CIRP dismissed for incomplete apartment handover</h1> The tribunal dismissed the petition seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the respondent for default in completion ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditor - existence of debt and dispute or not - HELD THAT:- As stated by the Petitioner, it has paid advance amount of ₹ 5 lakhs each for 10 apartments. However, the Petitioner has not furnished any details of construction, payment of remaining consideration, except enclosing copies of Agreements of Sale. The Petitioner alone has entered into agreements of sale for purchase of 10 apartments. Therefore, the Petitioner, at the most, can claim refund of advance money rather than to hand over completed apartments without paying major portion of consideration. Mere Agreement of sale by paying paltry advance amount cannot create substantial right to the Petitioner to invoke provisions of Code. There is an alternative remedy of Arbitration available in the Agreements of Sale, if there is any dispute arises between the Parties. The Petitioner has not stated whether any steps have been taken to offer the balance amount of consideration to the Respondent. The Petitioner has not furnished any details in respect of Corporate Debtor with regard to its insolvency. The Petitioner has failed to make out any case so as to initiate CIRP in respect of the Corporate Debtor. The Petition is filed on misconceived facts and Law. Petition dismissed. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP)2. Default in completion and handover of apartments3. Classification of the petitioner as a financial creditor4. Limitation period for filing the petition5. Alternative remedy of arbitration6. Entitlement to refund of advance amountIssue-wise Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP):The petitioner, M/s. IPSA Credit Pvt. Ltd., sought to initiate CIRP against the respondent, M/s. Eternity Structures Private Limited, under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, for a default amount of Rs. 50,00,000 excluding interest. The petitioner argued that the sum remitted under the agreements for sale has the commercial effect of borrowing and should be considered a financial debt.2. Default in Completion and Handover of Apartments:The agreements for sale were executed on 07.05.2016, with the respondent required to complete and handover the apartments by 07.11.2016 or latest by 07.05.2017 after an extension. The respondent failed to deliver the apartments or refund the principal with interest by the due date, leading to the petitioner's claim.3. Classification of the Petitioner as a Financial Creditor:The petitioner claimed to be a real estate allottee under Section 2(d) of the Real Estate (Regulation and Development) Act, 2016, and hence a financial creditor under Section 5(8)(f) of the IBC, 2016. The petitioner argued that it met the threshold of 10% of the total number of allottees in the project 'Eternity Ecstasy'.4. Limitation Period for Filing the Petition:The cause of action arose on 07.05.2017, when the apartments were to be handed over. The tribunal noted that the instant petition was filed within the limitation period.5. Alternative Remedy of Arbitration:The tribunal observed that the agreements for sale contained an arbitration clause for resolving disputes. The petitioner did not provide details of any steps taken to offer the balance amount of consideration to the respondent or to initiate arbitration proceedings.6. Entitlement to Refund of Advance Amount:The tribunal noted that the petitioner had only paid an advance amount of Rs. 5,00,000 for each of the 10 apartments and had not paid the remaining consideration. The tribunal concluded that mere agreements for sale with a paltry advance amount did not create a substantial right for the petitioner to invoke the provisions of the IBC. The tribunal held that the petitioner could seek a refund of the advance amount through appropriate legal action but could not demand the handover of apartments without fulfilling the terms of the agreements.Conclusion:The tribunal dismissed the petition, stating that the petitioner failed to make out a case for initiating CIRP against the corporate debtor. The petition was filed on misconceived facts and law. However, the tribunal noted that the petitioner could pursue appropriate legal action in accordance with the agreements for sale. No order as to costs was made.
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