AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1410
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....174131) against whom initiation of Corporate Insolvency Resolution Process has been prayed for, was incorporated on 18.02.2008 under the provisions of the Companies Act, 1956. Respondent Nos. 2 and 3 are directors of respondent No. 1 company. The registered office of the respondent corporate debtor is at 4, Jagriti Enclave, Vikas Marg Extension, New Delhi-110092. Since the registered office of the respondent corporate debtor is in Delhi, this Tribunal having territorial jurisdiction over the place is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. It is the case of the petitioner that the respondent company is engaged in developing and constructing a Group Housing Project in the land measuring approximately 196272 sq. Meter situated at Ahinsa Khand - II, (Near DPS School) Indirapuram, Ghaziabad under the project name of "ANGEL JUPITER'. 4. Petitioner had booked three flats in the said project of the respondent company, the details of which are as follows: "(i) Flat bearing No. C-2103 for 1285 Sq. feet for the considerat....
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....ancial debtor and has issued the receipt of respective payments to the Financial Creditor, the details of which are as follows: 1. Receipt dated 18th March, 2015 for an amount of Rs. 39,74,000 (Rupees Thirty Nine Lakhs Seventy Four Thousand Only) For Flat bearing No. C-2103. 2. Receipt dated 15th March, 2015 for an amount of Rs. 39,74,000 (Rupees Thirty Nine Lakhs Seventy Four Thousand Only) for Flat bearing No. C-2004. 3. Receipt dated 25th June, 2015 for an amount of Rs. 45,00,000 (Rupees Forty Five Lakhs Only) for Flat bearing No. C-2206. 8. Besides Corporate Debtor has further acknowledged the payments made by petitioner Financial Creditor and issued cheques for the said principal amount, the details of which are as follows: 1. Cheque No. 223218 dated September 15, 2015 amounting to Rs. 39,74,000 (Rupees Thirty Nine Lakhs Seventy Four Thousand Only) favouring Mr. Narender Kumar for Flat bearing No. C-2103. 2. The Cheque No. 223217 dated August 31, 2015 amounting to Rs. 39,74,000 (Rupees Thirty Nine Lakhs Seventy Four Thousand Only) favouring Mr. Narender Kumar for Flat bearing No. C-2004. 3. The Cheque No. 241707 dated December 31, 2015 amounting to Rs. 45,00,000 (....
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.... tax levied and deposited against the amount received by respondent. The service tax payment for the real estate transactions is the conclusive proof for the fact that the transaction was never financial in nature. It is also stated that even after getting payment through cheques the applicant has not presented them for months and now the same payment is being claimed through present application which is unsustainable. 14. Further it is stated that the essential nature of the contract is agreement to sale of residential flats in the nature of real estate transaction and the return amount is just an incidental part of the real estate transaction. In no way the nature of payment falls within the meaning of debt in terms of Section 3(11) of the Insolvency and Bankruptcy Code, 2016. It is alleged that neither the debt is a 'financial debt' nor the petitioner can be termed as financial creditor'. 15. It is the case of respondent that if the applicant had any issue with respect to the agreements, the applicant should have contacted respondent but the applicant did not make a single call to respondent and not even approached the Arbitrator as per clause 22 of the said agreem....
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....quested the Financial Creditor through Mr. Devendra Aggarwal, the person mentioned as Arbitrator in Clause 22 of the Buy-Back Agreement cum Guarantee Agreement, not to deposit the said post-dated cheques as there was no balance in the Bank Account of the Corporate Debtor. It is submitted that Mr. Devendra Aggarwal is a very senior Chartered Accountant and was the main instrumental in negotiating and finalising the Buy-Back Agreement cum Guarantee Agreement between the Financial Creditor and the Corporate Debtor. Thus on the various request of the Corporate Debtor the said post-dated cheques were not deposited by the Financial Creditor as the Corporate Debtor had been giving false assurances to the Financial Creditor but the same has not been received till date. It is submitted that the various communications between the Corporate Debtor and Mr. Devinder Aggarwal were not reduced to writing and were made verbal. 18. It has been claimed in the affidavit that the Corporate Debtor has defaulted in re-purchasing the flats which was assured and the details of default are stated as follows: i. As per Clause 5(II) of the Buy-Back Agreement cum Guarantee Deed dated March 18, 2015 for the....
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....as Arbitrator in Clause 22 of the Buy-Back Agreement cum Guarantee Agreement dated March 18, 2015. That the corporate debtor has times and again made various verbal communications with me for requesting the financial creditor for not depositing the said post dated cheques and had been giving false assurances that the payments will be made within 10-15 days but the same has not been received till date." 21. We have heard the parties and have perused the case records including the counter affidavit of respondent filed on 26.07.2018. 22. The scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely, a) Financial creditor b) Operational creditor, and c) Corporate debtor itself. 23. The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the "Financial Creditor" is delineated under Section 7 of the Code, wherein only "Financial Creditor" / "Financial Creditors" can file an application. As per Section 7(1) of the Code an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors. Section 7 of the Code thus mandates that only the app....
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....state 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 (16 of 2016); (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) and (h) of this clause." 26. Clause (8) has been amended by the Insolvency and Bankruptcy (amendment) Ordinance, 2018 with effect from 6th June, 2018. In view of the revised definition, 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 thus will come within the definition of 'Financial Debt' under the Code. Definition of 'Financial Debt&....
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....nancial creditor'. 30. Therefore, petitioner being a financial creditor can invoke Corporate Insolvency Resolution Process under Section 7 of the code against the respondent corporate debtor in case of default in repayment of financial debt. 31. Initiation of Corporate Insolvency Resolution Process by Financial Creditor is regulated by the provision engrafted in Section 7 of the Code, which reads as under: "7. Initiation of corporate insolvency resolution process by financial creditor. - (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. Explanation.- For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application fur....
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.... 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be s....
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....ayment of the financial debt. 37. In this connection respondent corporate debtor has taken a stand that in terms of the buy-back agreement for three flats respondent gave post-dated cheques which was not encashed by the petitioner. It is accordingly contended that the respondent has already cleared the amount within the due date as per the buy-back agreement cum guarantee deed. Therefore, the essential requirement of 'default' for triggering the CIR Process under Section 7 has not been made out. 38. In this regard the precise contention of the petitioner is that the respondent corporate debtor time and again requested him not to deposit the cheques and gave false assurances that the payments will be made shortly. In support of such contention, petitioner has filed the affidavit of Mr. Devinder Aggarwal chartered accountant and the arbitrator, named in Clause 22 of the buy-back agreement cum guarantee deed. 39. Be that as it may admittedly the post-dated cheques have not been encashed by the petitioner. There is also no dispute that the Respondent Corporate Debtor has not even refunded the principal amount to the petitioner. 40. Respondent at Para 7 of its counter affida....
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....are pending against the proposed resolution professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look into any other criteria for admission of the application." (Emphasis given) 44. As a sequel to the aforesaid discussion it is seen that the applicant being a home buyer comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed the money to the respondent corporate debtor as consideration for purchase of three flats. Though considerable long period has since lapsed even the principal amount disbursed has not been repaid by the respondent corporate debtor. It is accordingly-reiterated that respondent corporate debtor has committed default in repayment of the outstanding financial debt which exceeds the statutory limit of rupees one Lakh. Besides it is also seen that the application filed in Form - I under Section 7 of the Code read with Rule 4 of the Rules is complete and there is no infirmity in the same. Moreover the material on record reveals that there is no disciplinary proceeding pending against the proposed IRP. In the facts we are satisfied ....