TaxTMI 
TaxTMI 
2020 (2) TMI 57
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.... Law Tribunal), Special Bench, New Delhi, by impugned order dated 20th August, 2019 initiated 'Corporate Insolvency Resolution Process' against 'Raheja Developers Ltd.'- ('Corporate Debtor'). 2. The Appellant, Shareholder/ Promoter has challenged the order alleging fraudulent and malicious initiation of proceedings with an intent for any purpose other than for the resolution of insolvency or liquidation. It was also alleged that the application under Section 7 was barred by limitation and was otherwise not maintainable on different grounds. Brief facts of the case:- 3. The 1st and 2nd Respondents- allottees had booked an apartment in the Residential Project- 'Raheja's Sampada' being developed by the 'Corporate Debtor'. In pursuance of the same, the 'Corporate Debtor' issued a joint allotment letter dated 3rd August, 2012 and executed a Flat Buyer's Agreement dated 3rd August, 2012. They disbursed total Rs. 86,62,691/- to the 'Corporate Debtor' on different dates as mentioned in Part-IV of Form-1 (application under Section 7). In support of the claim, receipts issued by the 'Corporate Debtor' and ledger account of the 'Corporate Debtor' were enclosed. 4. It was alleged t....
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.... the said Agreement subject to the 'force majeure conditions'. 10. It was specifically pleaded that the construction was complete in all respects by the 'Corporate Debtor', in advance, and the Occupation Certificate was applied by the year 2013, the 'Corporate Debtor' had duly complied with all set of obligations under the said Agreement and Allotment letter was issued on 3rd August, 2012. 11. Further, the 'Corporate Debtor' stated that as far as the processing of its application for obtaining an Occupation Certificate was concerned, the same was under the control of the concerned Government/ Competent Authority and any delay on account of the actions inactions and omissions on the part of the Government/or Authority it was beyond the reasonable control of the 'Corporate Debtor'/ Promoter. In the circumstances, in terms of Clause 4.2 of the Flat Buyer's Agreement a 'force majeure' condition will be applicable. 12. It was stated that despite all impediments, with the constant efforts of the 'Corporate Debtor', the Occupation Certificate was duly obtained by the 'Corporate Debtor' in the year 2016 whereinafter possession of the unit was offered on 15th November, 2016 which h....
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....ed a deaf ear and neither took the possession of the unit/ apartment on the other hand they defaulted to pay rest of the amount and filed malicious, frivolous petition under Section 7, after expiry of two years of receiving of notice of possession. 18. Learned counsel for the Appellant submitted that there was no default on the part of the 'Corporate Debtor' who offered possession to allottees. The alternative offer was also given to accept the money, if they do not intend to take the possession on payment of dues. 19. Notices were issued to Respondents. When asked Mr. Arunav Patnaik, Advocate appearing on behalf of Ms. Shilpa Jain and Mr. Akash Jain- allottees ('Financial Creditors') on instruction refused to accept any amount already deposited by them. 20. The questions arise for considerations in this appeal are: i. Whether the 'Corporate Debtor' can be held to have committed default, if apartment/ flat/ premises is otherwise ready but offer of possession was delayed due to the reasons beyond the control of 'Corporate Debtor' such as absence of clearance by the Competent Authorities/Government(s), etc.? and; ii. Whether application under Section 7 was ....
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....l be entitled to a reasonable extension of time for delivery of possession of the said Apartment, depending upon the contingency/ prevailing circumstances at that time. The Company as a result of such a contingency arising thereto reserves, its right to alter or vary the terms and conditions of allotment or if the circumstances beyond the control of the Company so warrant the Company may suspend the scheme. 26. As per Clause 5.1 of Article-5, the Appellant has right to cancel the allotment after refunding the payment along with interest calculated @9% per annum. Therefore, it cannot be said that allottee is remedy less. 27. Right of allottees and developer fell for consideration before the Hon'ble Supreme Court in "Pioneer Urban Land and Infrastructure Limited & Anr. v. Union of India & Ors.− (2019) SCC OnLine SC 1005" in which the present 'Corporate Debtor' was also one of the Appellants. The Hon'ble Supreme Court taking into consideration the 'Real Estate (Regulation and Development) Act, 2016' ("RERA" for short) observed and held that there being no provision similar to that of Section 88 of RERA in the Code, it is meant to be a complete and exhaustive statement of t....
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....s or regulations made thereunder. (5) The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter. (6) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any. (7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under sub-section (6). (8) The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee. (9) Every allottee of the apartment, plot or building as the case ma....
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....uilding, as the case may be. 33. The Hon'ble Supreme Court also noticed the Rules framed by 'Andaman and Nicobar Islands Real Estate (Regulation and Development) (General) Rules, 2016' which includes 'interest payable by promoter and allottee' and the 'timelines for refund' and observed: "57. It can thus be seen that just as information utilities provide the kind of information as to default that banks and financial institutions are provided under Sections 214 to 216 of the Code read with Regulations 25 and 27 of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017, allottees of real estate projects can come armed with the same kind of information, this time provided by the promoter or real estate developer itself, on the basis of which, prima facie at least, a "default" relating to amounts due and payable to the allottee is made out in an application under Section 7 of the Code. We may mention here that once this prima facie case is made out, the burden shifts on the promoter/real estate developer to point out in their reply and in the hearing before the NCLT, that the allottee is himself a defaulter and would, therefore, on a reading ....
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....led by trigger-happy allottees who would be able to ignite the process of removal of the management of the Real Estate project and/ or lead the 'Corporate Debtor' to its death. 37. It has come to our notice that in large number of cases, in the language of the Hon'ble Supreme Court, the allottees are speculative investor and not a person who is genuinely interested in purchasing a flat/ apartment. They do not want to go ahead with its obligation to take possession of the flat/ apartment under RERA, but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it. 38. The Adjudicating Authority noticed the letter dated 15th November, 2016 relating to delivery of possession but refused to accept the same. In the said Notice of possession, a further period of four weeks to handover the possession and three months for registration have been sought. In the No Objection Certificate dated 11th November, 2016, the 'Corporate Debtor' showed that it applied for water connection but having not received, till then at least potable water through tankers was required to be supplied to the residents. 39. The Adjudicating Authority also noticed the st....
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....ffered the possession of flat on 15th November, 2016 and obtained completion certificate immediate thereafter. Therefore, delay in granting approval by the Competent Authority cannot be taken into consideration to hold that the 'Corporate Debtor' defaulted in delivering the possession. The Adjudicating Authority failed to appreciate the fact and also ignored the decision of the Hon'ble Supreme Court though rendered prior to the admission of the application which is binding on all the Court(s) and Tribunal(s). 47. The case of the 1st and 2nd Respondents is covered by Section 65 of the 'I&B Code' and are liable for imposition of penalty. However, in the facts and circumstances of the case, we are not imposing such penalty on 1st and 2nd Respondents, who even in presence of this Appellate Tribunal refused to accept the money in terms of the Agreement and also refused to take possession of the flat. 48. In view of the aforesaid findings, we have no other option but to set aside the impugned order dated 20th August, 2019. The application preferred by 1st and 2nd Respondents under Section 7 of the 'I&B Code' is dismissed. The appellant 'Corporate Debtor' (company) is released from ....
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....nder the same real estate project, whichever is less: Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, such application shall be modified to comply with the requirements of the first or second provisos as the case may be within thirty days of the commencement of the said Ordinance, failing which the application shall be deemed to be withdrawn before its admission." 52. The aforesaid provisos inserted in sub-section (1) of Section 7 came into force since 28th December, 2019 though not applicable in this appeal, but the Adjudicating Authority is required to notice the said provisions. 53. Before admitting such case, it will be desirable to find out whether the allottees have come for refund of the money or to get their apartment/ flat/ premises by way of resolution. If the intention of the allottees only for refund of money and not possession of apartment/ flat/....
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.... be and the said charges and expenses as may be payable or demanded from the Allottee in respect of the Apartment and Parking space(s) allotted to him/her. In case the Allottee fails to deposit the Stamp duty, Registration charges and all other incidental and legal expenses eta, so demanded within the period mentioned in the demand letter, the Company shall be free to appropriate the part of sale price paid by the Allottee towards the said charges and expenses and the Allottee shall forthwith deposit the shortfall in the Sale Consideration so caused together with interest 18% per annum for period of delay in depositing the Sale Consideration so appropriated according to payment plan. The Allottee undertakes to execute the Conveyance Deed within a period of sixty (60) days from the date of Company intimating in writing the receipt of the certificate for use and occupation of the said building from the competent authority failing which the Allottee authorizes the Company to cancel allotment and forfeit the earnest Bore First Applicant Second Applicant For RAHEJA DEVELOPERS LITEO 4.2 4.3 4.4 money, brokerage/commission paid, interest ....
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....any such delay. Failure to provide infrastructure facilities NOT The said project falls within the new Master Plan of Gurgaon and the site of the project may not have the infrastructure in place as on the date of booking or at the time of handing over of possession as the same is to be provided / developed by the Government /nominated governinent agency. Since this is beyond the control of company, therefore, the Allottee shall not claim any compensation for delay/ non-provision of infrastructure facilities and /or consequent delay in handing over the possession of the apartment(s) in the project. AR Force Majeure The Allottee agrees and accepts that construction/continuation/completion/or the said.building/ said complex is subject to Force Majeure Conditions which inter-alia include delay on account of non availability of steel and/or cement or other building materials or water upply vor electric power or slow down, strike, lock out or due to any dispute with the construction jeney employed by the Company, non-availability of necessary infrastructure facilities being provided by the government for carrying development activities, pol....