Tribunal deems 1st Respondent Financial Creditor, allows interest addition to principal amount. Appeal dismissed, Section 7 Petition admission upheld.

The Tribunal affirmed that the 1st Respondent is a Financial Creditor and allowed the interest accrued to be added to the principal amount, qualifying it as 'Financial Debt' under the Insolvency and Bankruptcy Code. The Tribunal dismissed the appeal, finding no grounds to challenge the Section 7 Petition's admission, as liquidation proceedings had commenced against the Corporate Debtor. The related pending application was closed as a result.

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Issues Involved:
1. Whether the 1st Respondent is a Financial Creditor.
2. Whether interest accrued can be added to the principal amount and claimed as 'Financial Debt' in this Section 7 Petition.

Summary:

Issue 1: Whether the 1st Respondent is a Financial Creditor

The Appellant contended that the 1st Respondent is a speculative investor and not a genuine homebuyer. The Appellant cited judgments including 'Nidhi Rekhan Vs. Samyak Projects Pvt. Ltd.' and 'Ankit Goyal Vs. Sunitha Agarwal & Ors.' to support this claim. However, the Tribunal found these cases distinguishable. The Tribunal noted that the assured interest in the present case was conditional upon the failure to obtain HMDA approval, unlike the assured returns in the cited cases. Therefore, the Tribunal concluded that the 1st Respondent is a 'Financial Creditor' and the amount paid qualifies as 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy Code (IBC). The Tribunal referred to the Supreme Court's judgment in 'Pioneer Urban Land and Infrastructure Limited and Ors. Vs. Union of India (UOI) and Ors.' to support this conclusion.

Issue 2: Whether interest accrued can be added to the principal amount and claimed as 'Financial Debt'

The Tribunal examined Clause 3 of the Agreement of Sale, which stipulated that if HMDA approval was not obtained within three months, the vendor would repay the amount with an interest of 24% per annum. The Tribunal found that the final HMDA approval was obtained only in January 2019, and the plots were not registered nor the amounts refunded until after a cheating case was filed. The Tribunal held that the interest calculation was in accordance with the Agreement of Sale and that the amount claimed met the threshold limit under the IBC. The Tribunal dismissed the Appellant's argument that interest should not be added to the principal amount.

Conclusion:

The Tribunal dismissed the appeal, affirming that the 1st Respondent is a Financial Creditor and that the interest accrued can be added to the principal amount, thereby meeting the threshold limit for a Section 7 Petition under the IBC. The Tribunal found no substantial grounds to challenge the admission of the Section 7 Petition and noted that liquidation proceedings had already been initiated against the Corporate Debtor. The connected pending IA No. 319/2022 was also closed.

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