2021 (8) TMI 1155 - Tri - Insolvency and Bankruptcy

Tribunal rejects amendment request, upholds objection on MOU validity during moratorium. Clarifies IBC allottee definition pre-Manish Kumar.

The Tribunal dismissed the applicant's prayer for amendment of the earlier application and upheld the respondent's objections regarding the validity of ... Seeking direction to RP to verify, entertain and accept the claim of the applicant - seeking permission to bring on record the averments that on the basis of the MoU - HELD THAT:- It is not the case that on 09.03.2018, while admitting the application, the IRP was not appointed by the Bench, rather on 30.07.2018, the earlier IRP Mr. Yogesh Tyagi was discharged and a new IRP Mr. Anurag Nirbhay was appointed. Therefore, we find, no force in the contention raised on behalf of applicant that since the IRP was not appointed on the date of admission of the application, therefore, the insolvency commencement date will shift to the date, when the IRP was appointed. Mere mentioning of an incorrect insolvency commencement date by the IRP/RP in Form A i.e. Public Announcement cannot change the position of law as referred to in Section 5(12) of IBC, 2016 - the contention of the applicant is not liable to be accepted. Seeking amendment in the earlier application - HELD THAT:- The only ground for seeking amendment is that the definition of the word 'allottee' was not clear prior to pronouncement of the Judgment by the Hon'ble Supreme Court in the MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER [2021 (1) TMI 802 - SUPREME COURT] - A bare perusal of Section 5(8) of IBC, 2016 shows that there is no 'if and but' regarding the meaning of 'financial debt' so far as the expression allottee is concerned. By an amendment w.e.f. 06.06.2018, which is prior to the submission of claim by the applicant before the RP, it was crystal clear that any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing and the expressions, 'allottee' and 'real estate project' shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016. Merit of the amendment proposed - HELD THAT:- Since the applicant has already submitted his claim in Form B and so far as the reference to the MoU is concerned, that reference was already made in para 5 of the application IA/1442/2020 filed by the applicant, it cannot be said that these facts were not within the knowledge of the applicant at the time of filing of the earlier application - we are unable to accept the prayer of the applicant to permit him to make necessary amendment in the IA/1442/2020. Application dismissed. Issues Involved:1. Validity of the Memorandum of Understanding (MOU) executed during the moratorium period.2. Determination of the Insolvency Commencement Date.3. Eligibility of the applicant as an 'Allottee' under the Insolvency and Bankruptcy Code (IBC).4. Amendment of the earlier application based on the Supreme Court's judgment in the Manish Kumar case.Detailed Analysis:1. Validity of the Memorandum of Understanding (MOU) Executed During the Moratorium Period:The applicant contended that the MOU dated 19.04.2018, which allotted 20 units to the applicant in lieu of the outstanding debt, was valid as it was executed before the appointment of the Interim Resolution Professional (IRP). The respondent argued that this MOU was executed in contravention of Section 14 of the IBC, which prohibits the transfer or disposal of any assets or beneficial interest during the moratorium period. The Tribunal noted that the application for initiation of Corporate Insolvency Resolution Process (CIRP) was admitted on 09.03.2018, and the MOU was executed on 19.04.2018, during the pendency of the moratorium period, thus violating Section 14.2. Determination of the Insolvency Commencement Date:The applicant argued that the insolvency commencement date should be considered as 22.06.2018, the date when the order was uploaded and the IRP received it. The respondent maintained that the insolvency commencement date is the date of admission of the application, i.e., 09.03.2018. The Tribunal referred to Section 5(12) of the IBC, which defines the 'insolvency commencement date' as the date of admission of the application. The Tribunal concluded that the mere incorrect mention of the insolvency commencement date in the public announcement by the IRP does not change the legal position, and the correct date remains 09.03.2018.3. Eligibility of the Applicant as an 'Allottee' under the IBC:The applicant sought recognition as an 'Allottee' under Section 5(8)(f) of the IBC, based on the MOU and Apartment Buyer Agreements (ABAs). The applicant argued that the definition of an allottee was clarified by the Supreme Court in the Manish Kumar case, and thus, the applicant should be considered an allottee. The Tribunal examined Section 5(8) of the IBC and noted that the definition of 'financial debt' includes amounts raised from an allottee under a real estate project, which was clear even before the Manish Kumar judgment. Therefore, the Tribunal found no merit in the applicant's contention that the definition was unclear prior to the Supreme Court's judgment.4. Amendment of the Earlier Application Based on the Supreme Court's Judgment in the Manish Kumar Case:The applicant sought to amend the earlier application (IA/1442/2020) to reflect the clarified definition of an allottee as per the Manish Kumar judgment. The Tribunal noted that the applicant had already submitted the claim in Form B as an Operational Creditor and referenced the MOU in the earlier application. The Tribunal held that these facts were within the applicant's knowledge at the time of filing the earlier application and did not constitute new information. Consequently, the Tribunal rejected the applicant's prayer for amendment, stating that the grounds for amendment were not justified.Conclusion:The Tribunal dismissed the applicant's prayer for amendment of the earlier application and upheld the respondent's objections regarding the validity of the MOU executed during the moratorium period and the determination of the insolvency commencement date. The Tribunal also clarified that the definition of an allottee under the IBC was clear prior to the Supreme Court's judgment in the Manish Kumar case.