TaxTMI 
TaxTMI 
2020 (11) TMI 585
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....ansi Brar Fernandes claiming to be the Financial Creditor. The order of admission passed on 02.01.2020 by the Adjudicating Authority (National Company Law Tribunal) New Delhi, Principal Bench with consequences of imposing the memorandum and appointment of Interim Resolution Professional (IRP) has been assailed in the instant Appeal. 2. Gayatri Infra Planner Pvt. Ltd. Company is engaged in the business of real Estate development and allied activities. Gayatri Infra Planner Pvt. Ltd. (Respondent No. 2/Corporate Debtor) and Mrs. Mansi Brar Fernandes (Respondent No. 1/Financial Creditor) entered into an Agreement/MOU on 06.04.2016. A provisional allotment of an under construction located in Sector 16, Noida Extension, UP having 4 apartments area of 6,740 Sq. Ft. (Approx.) in a project named "Gayatri Life" was made infavour of the Financial Creditor at an agreed consideration of Rs. 1,03,78,521/-and as part payment an amount of Rs. 35 lacs was paid at the time of the signing of the Agreement. The construction likely to complete within a period of 12 months from the date of execution of the agreement i.e. by April, 2017. There was a compulsory buyback provision in the agreement which ....
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....he I&B Code. As per Amendment Act, the allottee is 'Financial Creditor' in terms of explanation to Section 5 (8) (f) of the I&B Code. Therefore, allottee can initiate CIRP against the defaulter builder or developer. The Corporate Debtor upon expiry of 12 month period contained in the MOU and even upon expiry of extended period i.e. (06.10.2018) has not returned the amount collected from the Financial Creditor (allottee) and has not given the possession of the apartments. Thus, the Corporate Debtor has committed default in repayment of Financial Debt. Therefore, admitted the Application preferred under Section 7 of I&B Code, and declared moratorium. Being aggrieved with this order, the Appellant Former Director of Corporate Debtor filed this Appeal. 5. Learned Senior Counsel for the Appellant raised a question of law and submitted that Section 7 of the I&B Code as amended in terms of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 enforced w.e.f 28.12.2019 added proviso to Section 7, sub-Section 1 before the explanation providing a threshold limit for initiation of CIRP at the instance of allottees under a Real Estate Project providing that an Application shall be ....
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....defective and not in accordance with the applicable law, as well as, the Affidavits are in contravention of the Notaries Act, 1952. Therefore, these Affidavits are not admissible in law. It is further urged that the Affidavits are expressly made for filing before the Adjudicating Authority and not before this Appellate Tribunal. Thus, the Respondent No. 1 (Financial Creditor) failed to modify the Application to comply with the requirements of the first or second proviso within 30 days of the commencement of the Ordinance. Therefore, the Application shall be deemed to be withdrawn. 8. Learned Senior Counsel for the Appellant also submitted that the Respondent No. 1 (Financial Creditor) in her Application under Section 7 of the I& B Code mentioned that the total debt disbursed is Rs. 1,02,50,000/- whereas, admittedly only Rs. 35 lacs were paid to the Corporate Debtor. Thus, the Application itself defective. Therefore, the impugned order is liable to be set aside. 9. Learned Senior Counsel for the Appellant further submitted that the MOU dated 06.04.2016 between the Respondent No. 1 and 2 an is irrevocable contract that they shall compulsorily buy back the apartments at the end ....
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....ble Supreme Court in the case of Chandrakant Uttam Chodankar vs. Dayanand Rayu Mandrakar & Ors. MANU/SC/1059/2004 held that every minor variation would not considered but only vital defect in substance which can lead to a finding of non- compliance, be considered. Hon'ble Supreme Court in the case of Uday Shankar Triyar vs Ram Kalewar Prasad Singh & Anr. Manu/SC/2173/2005 held that procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. It is also contended that the Appellate proceedings are a continuation of original proceedings. Therefore, Application under Section 7 of the I&B Code can be modified at appellate stage also. for this proposition of law cited the Judgment of the Hon'ble Supreme Court in the case of Darshan Singh Vs. Rampal Singh, 1992 Suppl. (1) SCC 191.There will be no prejudice caused to the Respondent No. 2 (Corporate Debtor) when the Application is modified at appellate stage. 12. Learned Counsel for the Respondent No. 1 submitted that the buyback agreement is similar to the standard home buyers agreement except buyback clause which ensures to the benefit of the Builder/Corporate Debtor....
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....cy resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten percent. of the total number of such creditors in the same class, whichever is less: Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under 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 and second provisos and has not been admitted by the Adjudicating Authority before the commencement of the insolvency and bankruptcy code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first or second proviso within thirty days of the commencement of the said Act, failing whi....
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.... 2019 and not w.e.f. 13th March, 2020. This is bound to lead to absurdity. It is brought to our notice that one Mr. Manish Kumar has filed Writ Petition (Civil) No. 26/2020 before the Hon'ble Apex Court challenging the amended Section 7 with respect to allottees who has already filed applications under Section 7 prior to the date of Amendment. The Hon'ble Apex Court vide order dated 13th January, 2020 issued notice to Respondents and order to maintain status quo. It is, therefore, clear that provision of Section 7 of the 'I&B Code' as it obtained prior to the date of Amendment, occupies the field as of now. Since the issue is pending consideration before the Hon'ble Apex Court, we refrain from making any observation thereon." 19. With the aforesaid observation of the coordinate bench of this Tribunal, we are of the view that provision of Section 7 of the I&B Code, as is obtained prior to the date of Amendment occupies the field as of now. Thus, we hold that there is no effect of the I&B Code, Amendment Ordinance 2019 which was replaced by the I&B Code Amendment Act, 2020, on the present Application under Section 7 of the I&B Code. Therefore, it is not required to be con....
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....ent. The Respondent No. 1 has actually granted debt Rs. 35,00,000/-to the Respondent No. 2. Which is not mentioned. However, erroneously the amount of postdated cheques and interest shown. In serial No. 2 the Respondent No. 1 is required to mention the date on which the default occurred. However, no such date is mentioned. (Please see above extract of the Application) 22. In Part V in Serial No. 1 the Respondent No. 1 mentioned 'not applicable'' instead of she should have been mentioned the particulars of security i.e. postdated cheques which were handed over by the Respondent No. 2 at the time of signing of MOU. Thus, incorrect particulars are mentioned in the Application. Date of default, is crucial date for calculating the period of limitation. 23. We have considered overall facts of this case and of the firm view that the Respondent No. 1 has deliberately mentioned the incorrect particulars and not disclosed the date of default in the Application. B. Whether MOU is an agreement for sale the apartments or an agreement to buy back the apartments? 24. For ascertaining the nature of MOU dated 06.04.2016 we have to consider what are the special feature of an agreement fo....
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....o 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 may be, shall participate towards the formation of an association or society or c....
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....ule has been mentioned. On the other hand, the Respondent No. 2 has delivered to the Respondent No. 1 (allottee) at the time of execution of the MOU two postdated cheques for Rs. 1,00,00,000/- 30. The Respondent No. 2 has not placed any document of demanding remaining cost of the apartments from the Respondent No. 1. Though, as per the Sub-Section 6 of Section 19 of the RERA, 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, is responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale. 31. As per clause 8 of the MOU, in the event of dishonor of any cheques the Respondent NO. 1 (Allottee) shall take possession of the apartments on the basis of this MOU. In the MOU, it is not provided when the Respondent No. 1 (allottee) shall be entitled to claim the possession of apartments and if the Respondent No. 2 (builder) fails to comply or is unable to give possession of the apartments then what is the remedy available to the Respondent No. 1. 32. As per clause 1 of the MOU, the MOU is valid only for 12 month. However, the period of 12 mont....
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....t(Rs.) Drawn on 1. 016173 06.04.2017 65,00,000/- OBC Bank 2. 016174 06.04.2017 35,00,000/- OBC Bank 8. The cheques mentioned in para 7 above shall be encased on the date mentioned against each cheque, upon first presentation. In the event of dishonor of any cheque, the second party shall take possession of the Apartment on the basis of this MOU & no possession letter or any further act or deed would be required to be done by it for taking over possession and the second party shall be free to sell/deal with the same in any manner and no demand shall be payable by second party by way of other charges, transfer charges or balance BSP and it shall be deemed that the amount paid under this MOU is the full and final payment for the apartments. The first party also undertakes that they will not stop payment order against the above mentioned cheques in any manner, in addition, the second party shall also be entitled to take proceedings for recovery of the monies due to it hereunder as well as such other proceedings to which it is entitled in law. 15. In the event of failure of first party to complete the buyback by the end of the 12 month ....
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....anks 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 of the agreement and the applicable RERA Rules and Regulations, not be entitled to any relief including payment of compensation and/or refund, entailing a dismissal of the said application. At this stage also, it is important to point out, in answer to the arguments made by the Petitioners, that under Section 65 of the Code, the real estate developer can also point out that the insolvency resolution process un....