2024 (12) TMI 1706 - AT - IBC

Project Management Consultant approval and supervision: NBCC authorised to complete interconnected residential projects subject to statutory compliance and court supervised governance.

NBCC is authorised to act as Project Management Consultant to complete sixteen interdependent residential projects (excluding Doon Square) subject to ... Project-wise resolution - construction of Supertech projects - appointment of Project Management Consultant - no exemption from statutory compliances including RERA - protection of homebuyers from cost escalation - Apex Court Committee and Project-wise Court Committees - designated project-wise accounts and use of 70% for construction - Day Zero and project timelines - distribution of surplus and commencement of repayment to creditors - Appointment of Project Management Consultant - Project-wise resolution - HELD THAT:- As noted, the majority of Homebuyers who have filed various Applications and objections have supported the proposal of NBCC provided the Projects are completed in timeline and no additional cost is imposed on the Homebuyers, and NBCC maintains the quality of construction. Other set of Homebuyers who have not supported the proposal of NBCC have contended that although they do not support the proposal, but they have no specific objection for Project to be given for construction to any entity provided timelines, quality of construction is maintained and Homebuyers are not put to any financial burden. NBCC is PSU, which has nation wise presence and most of the Projects as noted above are spread in Noida, Greater Noida, and Gurgaon. One Project, Rivercrest in Rudrapur, State of Uttarakhand and one Project Micasa in Bangalore. The Project Doon Square has already been directed to be resolved and cannot be part of the Projects to be given. We are of the view that NBCC being a PSU, who is required to maintain quality of construction and maintain uniformity in quality of construction in all Projects, giving all Projects to be constructed under the NBCC shall ensure uniformity and the quality of construction in execution and implementation of the Projects. As noted above hiving out 5 Projects, out of 16 Projects, out of which 4 Projects are Cash Surplus shall not be beneficial for completion of all 16 Projects. We thus are of the considered opinion that NBCC be allowed to carry out construction in all 16 Projects as listed in Annexure A to the Application (except Doon Square Project). Questions are answered accordingly. Day Zero and project timelines - HELD THAT:- To obviate uncertainty and delay in achieving of day zero, we shall be issuing necessary directions to the statutory bodies for considering grant of requisite permit/ approvals. A timeline will also be fixed for obtaining requisite funds for commencing a work in relation to each Project. All necessary requirements for achieving day zero is to be completed before 31.03.2025, except award of works by NBCC to contractors for Project, which shall also be completed by 30.04.2025. We thus approve the timelines as indicated in Annexure D to revise proposal. Question is answered accordingly. No exemption from statutory compliances including RERA - public trust doctrine (as applied) - HELD THAT:- We are of the considered opinion that Noida, Greater Noida Yamuna Expressway Authority, and other statutory authorities concerned with the Project shall take all necessary actions and in compliance of statutory requirements including approvals which are necessary for Projects in question with sense of urgency or immediacy giving priority looking to the huge delay in completion of Project and miseries of Homebuyers. We thus answer, to the effect that NBCC proposal to grant waiver from provisions of UP RERA, and other statutory provisions cannot be granted. Protection of homebuyers from cost escalation - designated project-wise accounts and use of 70% for construction - HELD THAT:- As a matter of fact, the builders could not complete the Project in the timeline and it was due to default, committed by builder that CIRP process commenced against the Corporate Debtor. The Orders passed in this Appeal from time to time have been towards commencing of the construction of all stalled Projects. The priority of the court is to complete the Projects, the court cannot be oblivious to the fact that construction cost has also increased by a passage of time of several years from the date when Homebuyers were required to be handed over the possession of their units. The completion of construction has to be from receivables from unsold, inventory, and the receivables from the Homebuyers and the funding which is to be arranged by the NBCC as indicated. As of date, the prayer of the Homebuyers to pay any delay compensation cannot be accepted. Completion of the Projects with enhanced construction cost, which is to be undertaken under the Orders of this Court shall be with no additional cost to be imposed on the Homebuyers, as has been submitted on behalf of the NBCC. We thus are of the view that Homebuyers who have already been allotted units which allotment are subsisting cannot be subjected to any escalation of cost, except the dues which are required to be paid by them as per the Builder Buyers Agreement. Thus, the only recovery which can be affected from the Homebuyers is the recovery of unpaid dues, which were required to be paid by them as per the Builder Buyers Agreement. Question is answered accordingly. Apex Court Committee and Project-wise Court Committees - distribution of surplus and commencement of repayment to creditors - designated project-wise accounts and use of 70% for construction - HELD THAT:- With regard to Projects which are covered by the Real Estate Regulation and Development Act, 2016, under Section 4(2)(1)D the 70% of the amount realised from the Real Estate Projects from the allottees from time to time shall be deposited in a separate account to be maintained in a scheduled Bank to cover cost of construction. The 70% of the receivables in a Project has necessarily to be spent for construction cost and land cost as per the statutory requirement. We, thus are of the view that repayment of land authorities, financial institutions, Banks has to be commenced from 30% balance amount from receivables and on approval of the Court Committee. For payment to land authorities, the 70% amount deposited in designated account can also be utilised. We, thus are of the view that repayment of land authorities, financial institutions, Banks cannot await till the completion of the Projects nor it can wait to be distributed from surplus after completion of the Project rather said repayment shall simultaneously begin along with the date and manner to be decided by the Apex Court Committee, which we shall be directing for constituting for carrying out the Project. We do not approve the proposal of the NBCC to make payment to various authorities, financial institutions from the surplus fund after completion of the Project rather repayment shall begin in the manner as decided by the Apex Court Committee. The constitution of both the Committees have also been suggested by the IRP. We approve the constitution of Apex Court Committee and project wise Committees as suggested by the IRP in the process note except one modification in project wise Court Committee that one representative of the NBCC has also to be part of the project wise Court Committee, thus, in addition to process as suggested in project wise Court Committee, one nominee of the NBCC shall be there with regard to each Project. The formation of the Apex Court Committee and project wise Court Committee with others suggestions given by the IRP as extracted above under the heading A are approved subject to any direction or modification which may be issued from time to time. As nominated by the NBCC a separate account shall also be maintained in the name of NBCC (I) Limited – Supertech unfinished Project as suggested by the NBCC, which account shall be operated and managed by NBCC through its authorised signatories with joint signatories of the IRP. All funding and finance received from the finance obtained by the NBCC for completion of the Project shall be credited in the above designated account, which account shall be operated under the decision of the Apex Court Committee by authorised signatory of the NBCC and the IRP. NBCC as suggested shall obtain necessary finance of Rs. 100 Crores and deposited in the said designated account to be spent as per decision of the Apex Court Committee for carrying out the Project. The project wise Court Committee having been constituted, it shall be open for the concerned Stakeholders to submit its grievance before the project wise Court Committee, which Court Committee shall consider and take appropriate decision and communicate the same to the Stakeholders. Stakeholders are at liberty to bring decision of the project wise Court Committee for review before the Apex Court Committee. We, thus are of the view that consideration of various objections raised by the Stakeholders, including Homebuyers with respect to respective Projects need no consideration at this stage. We also noticed that NBCC in IA 6557/2024 in its terms of reference has proposed a fee of 8% as PMC fee. 8% on the actual cost of work and 1% for the sale value of the Project is marketing fee. We are of the view that 8% on the actual cost of work PMC fee shall also include the marketing fee and no separate fee as marketing fee shall be chargeable by the NBCC. We also emphasise and remind the NBCC that NBCC, although is taking the Project as Project Management Consultant, however, looking to the special features of the Project and the plight of Homebuyers who are waiting for their units for last several years, NBCC shall not treat its obligations only as a Project Management Consultant and shall go an extra mile to ensure that Project is completed and all unnecessary and extra cost be avoided due to limited resources of fund for completion of the Project. NBCC has to play role not only Project Management Consultant, but an entity who is entrusted to monitor completion of the entire Project. The term of reference as contained in IA 6557/2024 as modified by revised proposal dated 11.11.2024 shall stand approved subject to directions and modifications as contained in this Order. Issues: (i) Whether IA No.6557/2024 filed by NBCC to undertake construction of Supertech projects should be allowed; (ii) Whether all 16 projects (excluding Doon Square) should be handed to NBCC or certain five projects be handed to co-developers; (iii) Whether the timelines proposed by NBCC for completion should be approved; (iv) Whether NBCC can be granted waiver from statutory compliances including UP RERA; (v) Whether existing homebuyers can be subjected to any escalation of cost beyond Builder Buyers Agreement; (vi) What directions are required for completion of the projects.Issue (i): Whether IA No.6557/2024 filed by NBCC praying to undertake the projects should be allowed.Analysis: The Tribunal examined the NBCC proposal, objections from statutory authorities, lenders and homebuyers, and IRP's process note; it considered NBCC's revised proposal (11.11.2024) and its capacity to mobilise funds, the inter-project surplus/deficit matrix, and the need for unified execution to ensure timely completion and uniform quality. The Tribunal noted Doon Square was already dealt with separately and excluded it from NBCC's list.Conclusion: IA No.6557/2024 is allowed and NBCC is permitted to undertake construction of the 16 listed projects (excluding Doon Square) as Project Management Consultant, subject to the modifications and directions in the order.Issue (ii): Whether all 16 projects should be handed to NBCC or five specified projects be handed to co-developers.Analysis: The Tribunal evaluated promoters' co-developer proposals for five projects and NBCC's contention that some projects show surplus that are required to fund deficit projects. The Tribunal found that segregating surplus projects would jeopardise viability of completing all projects and that a unified execution under NBCC would better assure uniform quality and completion.Conclusion: All 16 projects (except Doon Square) are to be entrusted to NBCC; the request to hive off five projects to co-developers is rejected.Issue (iii): Whether the timelines proposed by NBCC need approval.Analysis: The Tribunal considered NBCC's revised timeline matrix (Annexure D) and the concept of 'Day Zero' with specified preconditions. To avoid uncertainty, the Tribunal fixed dates for completion of preconditions and award of contracts and approved the proposed timelines conditional on achieving Day Zero milestones by specified dates.Conclusion: The timelines in NBCC's revised proposal are approved; conditions for achieving Day Zero and related target dates (completion of preconditions by 31.03.2025 and award of contracts by 30.04.2025; construction to commence 01.05.2025) are directed.Issue (iv): Whether NBCC's request for waiver from statutory provisions including RERA can be granted.Analysis: The Tribunal reviewed statutory obligations, submissions of IRP and statutory authorities, and relevant Supreme Court precedent on public trust and statutory compliance; it found no jurisdiction to grant blanket exemptions from statutory requirements and emphasised statutory authorities must act with urgency.Conclusion: NBCC cannot be granted exemption from compliance with building regulations, UP RERA 2016 or other statutory requirements; applications for approvals must be made through IRP and considered urgently by authorities.Issue (v): Whether homebuyers with subsisting allotments can be subjected to escalation of cost beyond Builder Buyers Agreement.Analysis: Considering the hardship to homebuyers, source of funding for completion and NBCC's assurance, the Tribunal balanced the need to complete projects without imposing fresh financial burden on homebuyers against existing dues.Conclusion: Homebuyers with subsisting allotments shall not be subjected to any escalation of cost beyond amounts due under their Builder Buyers Agreements; only unpaid dues under those agreements may be recovered.Issue (vi): What directions are required for completion of construction of all projects.Analysis: The Tribunal accepted IRP's governance proposals and process note, addressing objections on repayment sequencing and fund management. It approved constitution of an Apex Court Committee and project-wise Court Committees with specified composition and powers, project-wise designated accounts, operational modalities (joint signatories IRP and NBCC nominee), requirement of NBCC to deposit initial finance, limits on NBCC fees, repayment priority from 30% balance and use of 70% for construction in compliance with RERA, and other implementation measures.Conclusion: Specific directions issued: constitution of Apex Court Committee and project-wise Court Committees (with NBCC nominees), project-wise designated accounts (operated by IRP and NBCC nominee), NBCC to deposit Rs.100 crores and obtain interim funding, project-wise cash-flow and due-diligence timelines, commencement and contract award schedule, prohibition of separate marketing fee (included in 8% PMC fee), commencement of repayments to stakeholders in the manner determined by Apex Court Committee, and other procedural directions as set out in the order.Final Conclusion: The Tribunal permitted NBCC to act as Project Management Consultant to undertake and complete the 16 Supertech projects (excluding Doon Square), approved NBCC's revised TOR subject to mandatory statutory compliance and detailed governance, fixed Day Zero related timelines and directed formation of Apex and project-wise Court Committees with specified financial and operational safeguards to ensure completion without imposing additional cost on subsisting homebuyers.Ratio Decidendi: Where completion of multiple interdependent real-estate projects is necessary for protecting public interest and homebuyers, an appointed project management consultant may be authorised to execute all projects subject to statutory compliance, project-wise designated accounts, and court-supervised governance (apex and project-wise committees) to ensure prioritized use of project receivables for construction and equitable, supervised repayment to stakeholders.