TaxTMI 
TaxTMI 
2020 (8) TMI 696
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....and Ms. Sweta Gupta (Allottees - Financial Creditors) moved an application under Section 7 of the 'Insolvency and Bankruptcy Code, 2016 ('I&B Code', for short) for initiation of 'corporate insolvency resolution process' against 'Rajesh Projects (India) Private Limited (Corporate Debtor), an infrastructure Company. 2. The Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi by impugned order date 19th September, 2019 admitted the application. 3. Mr. Rajesh Goyal (Promoter) has preferred this appeal on one of the ground that the Respondents (Allottees) themselves being defaulter and in view of the decision of the Hon'ble Supreme Court in 'Pioneer Urban Land and Infrastructure Limited & Anr. v. Union of India & Ors. - '[(2019) SCC OnLine SC 1005]', the application was fit to be dismissed. It was also submitted that there was no 'default' by the 'Corporate Debtor' in terms of the agreement, therefore, the application under Section 7 of the 'I&B Code' was pre-mature. 4. The Appellant highlighted the present project status in the appeal to suggest that the 9 (nine) towers of the project is on the verge of completion and stated as under: "At....
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....terms of the requirements as prescribed under RERA, which reads as under : "A bare perusal of the above clearly shows that Corporate Debtor has spent on the Project more than the amount collected from the customers and no monies has been paid to any promoter, director or transferred to any other Associate Company, sister concern and the said funds have been used solely for the purpose of the completion and construction of the said Project. Further, as would also be apparent, the expenses that have been incurred by the Corporate Debtor are well within the industry norms and quite reasonable. In fact the expenses are fully in lieu with the requirements prescribed (70:30) under the RERA." 6. Similar issue was fell for consideration before this Appellate Tribunal in 'Flat Buyers Association Winter Hills-77, Gurgaon vs. Umang Realtech Pvt. Ltd. through IRP & Ors.' in 'Company Appeal (AT) (Insolvency) No. 926 of 2019'. In the said case, this Appellate Tribunal in the judgment dated 4^th February, 2020 noticed the problems as arises in the 'corporate insolvency resolution process' of infrastructure companies constructing Apartments/Flats for the allottees. It was noti....
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....resolution of distressed assets and only if the same is not possible, should liquidation follow. The amended Regulation 38 does not lead to the conclusion that 'Financial Creditors' and 'Operational Creditors', or secured and unsecured creditors, must be paid the same amounts, percentage wise, under the resolution plan before it can pass muster. Fair and equitable dealing of Operational Creditors rights under the Regulation 38 involves the resolution plan stating as to how it has dealt with the interests of Operational Creditors, which is not the same thing as saying that they must be paid the same amount of their debt proportionately. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors. 5. In "Pioneer Urban Land and Infrastructure Limited & Anr. v. Uni....
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....nr. (2018) 1 SCC 407" followed by "Swiss Ribbons Pvt. Ltd. & Anr. V. Union of India & Ors. 2019 SCC OnLine SC 73 " and "Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. 2019 SCC OnLine SC 1478". 9. In terms of the 'I&B Code' and the decisions of the Hon'ble Supreme Court, the 'Resolution Plan' must maximise the assets of the Corporate Debtor and balance the stakeholders (secured and unsecured creditors- Financial Creditors/ Operational Creditors). 10. The Infrastructure which is constructed for the allottees by Corporate Debtor (Infrastructure Company) is an asset of the Corporate Debtor. The assets of the Corporate Debtor as per the Code cannot be distributed, which are secured for 'Secured Creditors'. On the contrary, allottees (Homebuyers) who are 'Unsecured Creditors', the assets of the Corporate Debtor which is the Infrastructure, is to be transferred in their favour ('Unsecured Creditors') and not to the 'Secured Creditors' such as Financial Institutions/ Banks/ NBFCs. Normally, the Banks/ Financial Institutions/ NBFCs also would not like to take the flats/ apartments in lieu of the money disbursed by them. On the other hand, ....
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....lution Process the resolution can reach finality without approval of the third party resolution plan." 8. This Appellate Tribunal also noticed the following facts : 13. One of the Promoter - 'Uppal Housing Pvt. Ltd.'/ Intervenor agreed to remain outside the Corporate Insolvency Resolution Process but intended to play role of a Lender (Financial Creditor) to ensure that the Corporate Insolvency Resolution Process reaches success and the allottees take possession of their flats/apartments during the Corporate Insolvency Resolution Process without any third party intervention. The Flat Buyers Association of Winter Hill - 77 Gurgaon also accepted the aforesaid proposal. It is informed that 'JM Financial Credit Solutions Ltd' one of the financial institution has also agreed to cooperate in terms of agreement with the condition that they will get 30% of the amount paid by the allottees at the time of the registration of the flat/apartment. 14. The other development is that 'Rachna Singh' and 'Ajay Singh' (Allottees), who moved application under Section 7 of the I&B Code, joined hands with the Appellant - 'Flat Buyers Association Winter Hill - 77, Gurgaon' and became ....
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....) 95.74% 04.26% 100.00% 11. The time for completion of the project after receiving the occupancy certificate has been shown by Mr. Rajesh Goyal - Promoter as under, as agreed with the allottees : S.No Name of the Tower Period for applying occupancy certificate after completion of work 01 Tower A Within 180 days from the start of work. 02 Tower B Within 180 days from the start of work 03 Tower C Within 180 days from the start of work 04 Tower F Within 180 days from the start of work 05 Tower D Within 180 days from the start of work 06 Tower E Within 180 days from the start of work 07 Tower M Within 180 days from the start of work 08 Tower G Within 180 days from the start of work 09 Tower H Within 180 days from the start of work (ii) The second party also undertakes to start work within 30 days (+-) 10 days from the date of order passed by Hon'ble NCLAT in all respect allowing the construction at the project site. 12. Mr. Rajesh Goyal (Promoter) who appear in person accepted that the Promoter will make investment as 'Financial Creditor' to keep the 'Corporate Debtor' (com....
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....aid within 180 days, the time period has provided or by 30th August, 2020, the last date for completion of the project. 15. Mr. Rajesh Goyal, who is present in the Court, undertakes that he will immediately infuse a sum of Rs. 5.38 Cr. plus 0.50 Cr. i.e. Rs. 5.88 Cr. within a week. 16. Mr. Rajesh Goyal (Promoter) also agrees to pay to all the 'Financial Institutions' such as 'Allahabad Bank', 'Punjab National Bank' and 'Indiabulls' etc. The dues of all the 'Financial Institutions' and time of payment has been shown as under: "The dues of financial institutions (Principal only), as existing on the day of declaration of the account as NPA or 19th September, 2019 the date on which the insolvency petition against the corporate debtor was admitted as the case may be, shall be paid in the following time frame: No. Sl. Name of Financial Institutions the Amount (Rs.) due as on date Time period payment for 1. Allahabad Bank 17.35 Crores (as on 01/04/2019 Within 180 days of the start of the work, subject to any unforeseen circumstances 2. Punjab National Bank 1.33 Crores 19/09/2019 (as on Within 180 days of the start of ....
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....of other project cannot file a claim before the Interim Resolution Professional of other project and such claim cannot be entertained. So, we hold that Corporate Insolvency Resolution Process against a real estate company (Corporate Debtor) is limited to a project as per approved plan by the Competent Authority and not other projects which are separate at other places for which separate plans approved. For example - in this case the Winter Hill - 77 Gurgaon Project of the 'Corporate Debtor' has been place of Corporate Insolvency Resolution Process. If the same real estate company (Corporate Debtor herein) has any other project in another town such as Delhi or Kerala or Mumbai, they cannot be clubbed together nor the asset of the Corporate Debtor (Company) for such other projects can be maximised. 22. Further, a 'Secured Creditor' such as 'financial institutions/ banks', cannot be provided with the asset (flat/apartment) by preference over the allottees (Unsecured Financial Creditors) for whom the project has been approved. Their claims are to be satisfied by providing the flat/apartment. While satisfying the allottees, one or other allottee may agree to opt for an....
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....16, pass the following order: i. 'Rajesh Goyal' (Promoter) is directed to cooperate with the Interim Resolution Professional and disburse amount (apart from the amount already disbursed) from outside as Lender (financial creditor) not as Promoter to ensure that the project is completed within the time frame as given by him. The disbursement of amount which has been made by 'Rajesh Goyal.' and the amount as will be generated from dues of the Allottees (Financial Creditors) during the Corporate Insolvency Resolution should be deposited in the account of the Company (Corporate Debtor) to keep the Company a going concern. The amount can be utilized only by issuance of cheque signed by the authorised person of the Company (Corporate Debtor) with counter signature by the Interim Resolution Professional. The Bank in which the Corporate Debtor (Company) has account the amount should be deposited only for the purpose of completion of the Project. Banks will allow the cheques for encashment only with the counter signature of the Interim Resolution Professional. ii. The flats/apartments should be completed in all aspect by 30th June, 2020. All internal fit outs for electrici....