TaxTMI 
TaxTMI 
2020 (11) TMI 356
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....admitted the Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'I&B Code'). The Parties are represented by their original status in the Company Petition for the sake of convenience. 2. The brief facts of the case are as follows: The Corporate Debtor is a builder of High-end Project in the name of "Krish Provence" in Gurgaon wherein booking of Flat No. C-1101, Tower-C, Floor-11 admeasuring 5800 sq. ft. for a total sale consideration of Rs. 3,80,10,000/-.Booking of the flat was made under a Construction linked plan. The respondents are the Second Purchasers of the above stated flat booked vide Apartment Buyer Agreement (in short 'ABA') dated 07th August 2011, which was executed on 07th August 2012. As per Agreement, the completion period was 36 months plus six months as a grace period, i.e. February 2015. 3. The Appellant contends that after adjusting the payments made by the Original buyer, the Respondent has paid a total sum of Rs. 2,75,55,186/- as against the total cost of the flat as Rs. 3,80,10,000/-. The last payment was made by the Respondents on 26th August 2013, and after that, despite several reminders, no payme....
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....greement, possession of the flat was to be handed over to the Respondent No.1/Financial Creditor by the first week of February 2016. However, the said unit of Respondent No.1 and 2, as well as Tower-C was not ready for possession till 28th November 2018, when the internal finishing was still going on. Despite the assurances, the Appellant failed to deliver the possession of the said unit to the Respondents. Therefore, the Respondents/Financial Creditor had filed the Application under Section 7 of the Code on 06th December 2018. 10. The Respondent No.1 and 2 contend that the Allotment of the said flat was under Construction linked plan, but the Appellant/Builder inordinately delayed the Construction. The Adjudicating Authority has observed that due to non-performance of the Corporate Debtor, the balance payment was not made by the Financial Creditor, as the Corporate Debtor failed to honour the commitment in terms of the Agreement. 11. The Adjudicating Authority has observed that the Corporate Debtor has not handed over the possession of the flat to the Financial Creditor, as the construction work could not be completed within the stipulated time and there is no proof of exten....
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....ection of the Appellant regarding limitation is not sustainable. Issue No 1 & 2; 16. The Allottee/Financial Creditor contends that the Corporate Debtor has committed default in not completing the Construction of the flat in time and handing over possession of that in terms of Agreement. Per contra, the corporate debtor pleaded that Financial Creditor/Home Buyer committed default in making payment of the instalments, as per Agreement under construction link Plan. Thus, the Financial Creditor/Allottee itself committed default by not paying the instalments. 17. The Appellant has placed reliance on the law laid down by the Hon'ble Supreme Court in case of Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416 wherein it is held ; "56. 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 provid....
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....tion on the order sheet of this Appellate Tribunal dated 18th December 2019, wherein it is recorded that the "Appellant brought cheques amounting to Rs. 1.51 crores shows the intention of the Appellant to settle". It is further submitted that vide letter dated 04th January 2020 the Appellant again offered the same Amount, which was rejected by the Respondent vide its letter dated 04th January 2020. 20. The Appellant/Corporate Debtor further pleaded that the Occupation Certificate has been obtained and letters of possession to 75 Allottees has also been issued. More than 40 people have already taken possession. It is contended that due to the unreasonable demand of one person, the interest of 175 Home Buyer shall be jeopardised. It is claimed that the Respondent did not make any payment after August 2013. It is not the case where the date of possession had expired and the builder failed to complete the Project and hence, the allottees stopped paying the instalments. It is contended that the Respondents are defaulters themselves, and they cannot be allowed to take advantage of their wrong. The flat allotted to the Respondents has been sold. That the Corporate Debtor is a debt-free....
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....- (Rupees Three Crore Eighty Lakhs Ten Thousand only). Despite the said Agreement being dated 07th August 2011, the Appellant/Corporate Debtor vide its letter dated 25th October 2018 informed that in the Agreement, the date of 07th August 2011would be read as 07th August 2012. 27. Given the Agreement, the Appellant/Corporate Debtor proposed to handover the possession of the unit within 36 months alongwith a grace period of 6 months from the date of the execution of said Agreement. Hence, the possession of the said unit was to be handed over latest by07th February 2016. It is also evident from the reply of Notice dated 05th November 2018 that the Project was incomplete up to that time. The Corporate Debtor has stated in its reply that: "We may also clarify at this juncture that IBC, 2016 does not apply in the facts and circumstances as there is no debt whatsoever and therefore the question of there being default or parts of our clients does not arise. Just for the sake of information, we may enlighten you that unlike most builders who have abandoned the projects or stopped work, our client had completed the Project. Hence, at this final stage when your client is aware th....
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....tion 7, the burden shifts on the promoter/real estate developer to point out in their reply and the hearing before NCLT, that the Allottee is himself a defaulter and not entitled to any relief. The remedies available to allottees under RERA shall not affect on the remedies available under the Insolvency Code. The remedies under the Consumer Protection Act, RERA and Insolvency Code, 2016 are concurrent, and in case the Allottee himself is a defaulter under RERA Rule's, the Allottee will not be entitled to any relief including payment of compensation and/or refund. It is further held that under Section 65 of the Code the real estate developer can point out that the Allottee who has knocked the door of NCLT is a speculative investor and not a person who is genuinely interested in purchasing a flat/apartment. They can also point out that in a real estate market, which is falling, the allottees does not want to go ahead with its obligation to take possession of the flat/Apartment under RERA, but want to jump ship and get back, by way of this coercive measure, monies already paid by it. 33. In this case, the Appellant's vehemently argued that the Allottee/Financial Creditor is....
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....ficate only in July 2019. It is evident that Application for granting occupation certificate was submitted on 03rd July 2019, which was granted on 29th October 2019. Thus, it is clear that the Project which was to be completed within 3 years from the date of Agreement and possession was to be handed over latest by 1stweek of February 2016. The position that emerges is that the Project was incomplete, even after expiry of two years from the stipulated date of possession. It is also clear that delay in handing over possession on the stipulated date, was not on account of delay by the statutory authorities in granting occupation certificate. 36. The Appellant contended that since the Allotment had been cancelled; therefore, the Respondents are entitled to refund of the consideration amount, after deduction of the earnest money. Therefore, the Appellant proposes to deduct more than 45% of the paid Amount, as earnest money. 37. The Appellant contends that after issuing reminder dated 08th December 2015, the allotment of the said unit stands cancelled. 38. In its reply to this Notice, the Financial Creditor submits that on 20th December 2016 the Appellant requested for payment o....
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....e 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 15thNovember, 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 11thNovember, 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 stand taken by the 'Corporate Debtor' that for disposal of sewerage and storm water till the time services were made available by HUDA/ State Government as per the Scheme. 40. The Appellant agreed to pay the Amount with interest but the R....
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....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 1stand 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 all the rigours of 'Moratorium' and is allowed to function through its Board of Directors from immedi....
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.... 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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....vin Raheja case, the Developer has even offered to refund the consideration amount. But, the Allottee just to realise higher interest on refund amount, refused to accept the refund amount. In the present matter, no offer has been made by the Appellant to refund the deposited Amount alongwith interest. Thus, it is clear that the instant case is in no manner similar to Navin Raheja (supra) case. Therefore, it is to be decided on the facts and merits of this case. 41. The Applicant/Financial Creditor is an allottee/home buyer, who had already paid an amount of Rs. 2,75,55,186/- out of the total sale consideration of Rs. 3,80,10,000/-, i.e. almost 75% of the total sale consideration. It is also apparent that Construction was not moving ahead and the Corporate Debtor failed to honour its commitment to complete the Project in time. The Corporate Debtor has not procured the completion certificate and occupancy certificate till the stipulated date of possession as per Agreement. The Allotment in the name of Financial Creditor/Respondent No.1 and 2is alleged to have been terminated, whereas the Corporate Debtor had accepted the VAT dues Rs. 300615 on 20th December 2016,i.e. after the ....
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....g with an interest rate of 12% (twelve percent) per annum, and no other compensation of any nature whatsoever shall be payable by the Seller to the Purchaser(s). 2.19 In every case of delayed payment and irrespective of the type of payment plan, acceptance of such delayed Instalment (s)/payments along with interest, as stated hereinabove, shall be without prejudice to the rights of the Seller including the right to terminate this Agreement at the sole and absolute discretion of the Seller. The acceptance of the delayed payment and, or interest due thereon shall not be deemed to be a waiver of the rights of the Seller accrued as a result of not making the payments on or before the respective due dates. 2.21 The Seller and the Purchaser(s) hereby agree that 15% (fifteen percent) of the Basic Sale Price on the Super Area of the Apartment shall constitute the "Earnest Money". Timely of each Instalment of the Sale Consideration as stated herein is the essence of this Agreement. In case the payment of any instalment as may be specified is delayed, then the Purchaser (s) shall pay interest on the Amount due at the rate of 24% (twenty four percent) per annum compounded at....
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....plan as mentioned in the Annexure D, the Seller shall send call/demand notices for instalments on commencement of the respective stages of Construction at the address of the Purchaser(s) available in the records of the Seller. The call/demand notices shall be sent by speed post/courier and shall be deemed to have been received by the Purchase(s) within five (5) days of dispatch by the Seller. 2.18 Except the case of Construction linked payment plan for demand notices for instalments on commencement of the respective stage of Construction as per Annexure D, it shall not be obligatory on the part of the Seller to send demand notices/reminders whatsoever regarding payments of instalments as may be due from the Purchaser(s), who shall be liable to pay interest on such delayed payments at the rate of 24% (twenty four percent) per annum from the date of Instalment due until the date of actual payment received by the Seller. Thus, it is clear that under Construction linked payment plan, as mentioned in Annexure-D of the Agreement it is mandatory to issue demand notice for instalments on commencement of respective stages of Construction by speed post or courier. In this c....
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.... invoked fraudulently, with malicious intent, or for any purpose other than the resolution of Insolvency. The Allottee does not, in fact, 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. The Allottee does not, in fact, 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." 46. It is not impertinent to mention that we often notice that despite fulfilling all the requirements for Section 7 and 9 of the Code, the petitions are rejected only on the pretext that the petition is filed for recovery of Debt and not for the resolution of Insolvency. It is necessary to keep in mind that Sec 65 of the Code is not meant to negate the process U/S 7 or 9 of the Code. Penal action U/S Sec 65 can be taken only when the provision of the Code has been invoked fraudulently, with malicious intent. The Hon'ble Supreme Court in Pioneer's case has given an instance of Home Buyer/ Allottee, who does not have an interest in....