2021 (7) TMI 580 - AT - Insolvency and Bankruptcy

Tribunal upholds financial creditor status in Insolvency case, dismisses appeal

Bhaskar Biswas Versus Avaani Oxford Owners’ Association, Sneh Maheswari, Oxford Facilities Management

Bhaskar Biswas Versus Avaani Oxford Owners’ Association, Sneh Maheswari, Oxford Facilities Management - TMI Issues:Admission of application under Section 7 of Insolvency and Bankruptcy Code, 2016; Nature of debt claimed; Maintainability of the application under Section 7; Default date determination; Financial creditor status; Debt due and default confirmation.Admission of Application under Section 7:The appeal was filed against an order admitting an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the Adjudicating Authority. The application was filed by a corporate association claiming a debt of Rs. 5,64,72,615.80 against the Corporate Debtor, initiating the Corporate Insolvency Resolution Process (CIRP).Nature of Debt Claimed:The debt claimed in the application was related to deposits made by flat owners towards maintenance and sinking fund with the Developer, which were subsequently transferred to the Corporate Debtor. The argument revolved around whether this amount constituted a financial debt under the IBC.Maintainability of Application under Section 7:The Appellant challenged the maintainability of the Section 7 application, contending that the claim should have been pursued against the Developer in a separate CIRP. The Appellant argued that the debt was not financial in nature and that the application was not maintainable against the Corporate Debtor.Default Date Determination:The dispute also involved the determination of the default date, with the Respondent claiming default to be on 21st March, 2016, based on the completion of a specific phase of the residential complex. The Appellant argued that the claim should have been pursued in the CIRP against the Developer.Financial Creditor Status:The Respondent claimed to be a financial creditor based on the provisions of the Agreement and the amounts collected from flat purchasers. The Respondent argued that the debt was admitted in the Corporate Debtor's balance sheets for the relevant years, establishing the financial creditor status.Debt Due and Default Confirmation:After considering the arguments from both sides and examining the records, the Tribunal concluded that the debt claimed was indeed a financial debt falling within the purview of the IBC. The Tribunal found no error in the impugned order initiating the CIRP against the Corporate Debtor, confirming the debt due and default status.Conclusion:The appeal was dismissed, with the Tribunal ruling in favor of the Respondent, confirming the admission of the application under Section 7 and upholding the financial creditor status and debt due and default of the claimed amount. The Tribunal found no merit in the Appellant's arguments and determined that the debt was not time-barred, thereby dismissing the appeal without costs.