Homebuyers' Section 7 Application Admitted; Project Completion Approved with Rs.75 Crore Interim Finance Despite Higher Interest

The NCLT, New Delhi Bench, admitted the Section 7 Application filed by homebuyers against the corporate debtor. The tribunal approved a proposal for project completion involving interim finance of Rs.75 Crores from EKA Life Limited, despite a higher interest rate, as the appellant agreed to cover the excess cost. The tribunal directed the IRP to oversee construction and financial arrangements, ensuring project phases are completed by January 2025 and January 2026. The tribunal also required a fresh proposal to address ABFL's dues and mandated regular status reports, listing the appeal for 04.12.2023.

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Issues Involved:

1. Admission of Section 7 Application by homebuyers.
2. Proposal for project completion with interim finance.
3. Extension of time for interim finance infusion.
4. Comparison of interim finance offers.
5. Implementation of the construction project and financial arrangements.

Summary:

1. Admission of Section 7 Application by homebuyers:
The appeal was filed by the suspended director of the corporate debtor, challenging the order dated 16.06.2023 by the NCLT, New Delhi Bench, admitting the Section 7 Application filed by Mr. Neerav Bhatnagar and 79 other homebuyers.

2. Proposal for project completion with interim finance:
The appellant proposed to complete the construction under the supervision of the IRP with a strategic project partner, EKA Life Limited, offering interim finance of Rs.75 Crores. The introduction of the strategic partner was aimed at completing the project in a time-bound manner, benefiting homebuyers and creditors without any haircut.

3. Extension of time for interim finance infusion:
EKA Life Limited requested an extension of 30 days to infuse the interim finance amount of Rs.20 Crores. The tribunal extended the time from 25.08.2023 to 14.09.2023, when the bank draft of Rs.20 Crores was deposited.

4. Comparison of interim finance offers:
Aditya Birla Finance Limited (ABFL) submitted a better financial offer for the project. The IRP compared the cost of interim finance from different providers, noting EKA Life's interest rate at 18% p.a. and Zenius Global Media Private Limited at 15% p.a. The tribunal accepted the appellant's submission to bear the 3% excess interest, making EKA Life's offer equal to Zenius Global Media's.

5. Implementation of the construction project and financial arrangements:
The tribunal directed the IRP to ensure construction as per the MoU and submit a status report every eight weeks. The appellant was to cooperate with the IRP and arrange Rs.75 Crores interim finance. The project phases were to be completed by January 2025 and January 2026, respectively. The tribunal emphasized the need for a fresh proposal to clear ABFL's dues from the project receivables.

Conclusion:
The tribunal disposed of IA No.4103 of 2023, impleading ABFL as Respondent No.4 and directed all concerned parties to act per the order dated 25.07.2023. The IRP and promoter were to take steps for renewal of project registration and necessary permissions, with a status report to be filed monthly. The appeal was listed for 04.12.2023.

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