TaxTMI 
TaxTMI 
2022 (3) TMI 363
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.... Law Tribunal, Mumbai) in CP (IB) No. 4149/NB/C-II/2018 whereby Corporate Insolvency Resolution Process has been initiated against Respondent No. 2 company on an application filed by Respondent No. 1. 2. In brief, the facts of the case, as stated and argued by the Appellant, are that the Respondent No. 1 booked two flats by an agreement dated 15.3.2011 in the project "Shreepati Estate Wing A" being built by the Corporate Debtor Shreepati Build Infra Investment Limited, a company incorporated under the Companies Act, 1956, and having its registered office at Warehouse B, Castle Rock - Land Scape Town, Odxel, North Goa - 403004. The Appellant paid a total amount of Rs. 3,50,00,000 (Rs. Three Crores Fifty Lakhs only) in the project "Shreepati Estate Wing A" in four instalments between 21.8.2009 to 4.2.2010 for booking of two flats, where after, upon receipt of this amount, Respondent No. 1 and Respondent No.2 executed an agreement dated 15.3.2011 for purchase of Flat No. 4201(admeasuring 4232.15 sq. ft. built up area) and Flat No. 4202 (admeasuring 4694.38 sq. ft. built up area) in the proposed building named "Shreepati Estate Wing A". 3. The Appellant further states that Respon....
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....uired under third proviso to section 7(1) of the IBC, which was not done, and hence the section 7 application was not maintainable. Alluding to the statutory provision in this regard, he has clarified that if an application for initiating Corporate Insolvency Resolution Process against a Corporate Debtor has been filed by a Financial Creditor in accordance with the first and second provisos of section 7(1), but has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2020 such application has to be modified to comply with the requirements of the first or second provisos within 30 days of the commencement of the said Act. He has argued that the amendment came into effect on the 28.12.2019 and therefore the said application under section 7 should have been modified by the Applicant within 30 days of the date of amendment, and since this was not done, the application under section 7 should have been rejected on this ground alone. Carrying his arguments further, he has adverted to the agreement dated 15.3.2011 (attached at pp. 80-96 of Appeal Paperbook) to point out that the amount of Rs. 3.50 crore paid by the f....
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....not come to the aid of the Respondent No. 1. 8. The Learned Senior Counsel for Appellant has also argued that the instant application has been filed by Respondent No. 1 with malicious intent and Respondent No. 1 wants a very high interest on the principal amount, and therefore the matter should be dealt under section 65 of the IBC. He has cited the judgment in the case of Nidhi Rekhan vs. Samyak Projects Pvt. Ltd. [2022 SCC Online NCLAT 46] pronounced on 31.1.2022, wherein this Tribunal has held that charging of a very high rate of interest on the deposited amount shows malicious intent of the applicant and does not establish his bonafide. The Ld. Senior Counsel has further stated that the Appellant offered to repay the amount of Rs. 12,42,34,122 which is claimed in section 7 application without prejudice, but such an offer has not been accepted by the Respondent No. 1.The Learned Senior Counsel for Appellant has also referred to paragraph 33 of the Impugned Order to argue that the Adjudicating Authority has not appreciated the argument put forward by the Appellant that the Applicant is not entitled to prefer an application under section 7 as a real estate allottee since he is c....
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....Bharath Hi Tech Builders Pvt. Ltd. [2021 SCC Online SC 1242] wherein it has been held that whether debt is disputed or not is not relevant and only the fact of it being due is to be seen while adjudicating section 7 application. 12. We first consider the fundamental issue raised in the arguments regarding maintainability of section 7 application on the basis of the fact that the purported financial creditor has preferred the section 7 application with the initial claim of being a real estate allottee, and therefore his application had to necessarily be modified as per the third proviso in section 7(1) of the IBC after the enactment of the amendment to IBC on 28.12.2019. 13. The relevant provision of section 7(1) including the third proviso to section 7(1) of the IBC is as follows:- "7. Initiation of corporate insolvency resolution process by financial creditor - (1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government, may file an application for initiating corporate insolvency resolution process against a corporate debtor before ....
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.... number of such allottees of such real estate project, whichever is less. The third proviso gave an opportunity for persons who had already initiated corporate insolvency resolution process against a corporate debtor to comply with the said requirement within 30 days of the commencement of the said ordinance, failing which the application would be deemed to be withdrawn before its admission. In Paragraphs 7 to 9 of its further Affidavit dated 6th February 2021, the corporate debtor has given the details of the number of units to be constructed. A total of 2699 units are to be constructed, of which 2139 units have been allotted. Even if one was to consider only the free sale units, out of 631 free sale units only 71 units have in all been allotted. Therefore, at least 8 allottees ought to have file the application. The present application has been filed by a single allottee. The Applicant has not taken any steps to comply with the amended provision of S.7 of the Code, and the application is therefore deemed to be withdrawn before admission. 15. The Corporate Debtor submits that the amendments to Section 7 of the Code were challenged in the Hon'ble Supreme Court of India, an....
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....attached at page 110 of the appeal paper book). It is useful to reproduce the relevant part of this letter which is as follows: - "Dear Sir, With reference to the above, we would like to state and confirm the following:- i) Investment in Shreepati Estate, N.M. Joshi Marg:- The above investment was made in the year 2009-2010. However, the project could not take off for want of approvals from various authorities especially Jail authorities. Since the Housing Regulatory Authority have come in force and it is settled law, now no sales would be done prior to approval of full project till it commences. It's also a settled law that, all the taxes such as VAT, Service Tax has to be made on all advance payments received from the purchaser. In view of the above, the undersigned has requested to transfer the amount in to the loan amount in favour of Shreepati Investment (R.R.C) on temporary basis till the project is approved and starts. It has also been agreed that, as soon as the project starts within three months the investments would be realized by giving and exit in case to be decided by the Investor. In case he decides to retain, it w....
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.... occupation/possession of the flat after construction, when the flat purchaser shall pay to the Corporate Debtor the balance amount of Rs. 9,57,00,000 and also a sum of Rs. 23,47,500 towards membership of the project. The letter dated 31.3.2015 states that the project could not take off for want of approvals from various authorities especially jail authorities, and since no sales should be done prior to approval of the project, it is in such a situation that the corporate debtor made an arrangement to transfer the amount deposited by the Respondent into a loan account in favour of Shreepati Investment (RRC) on temporary basis till the project is approved and starts. 19. Furthermore, the same letter dated 31.3.2015 mentions that this arrangement will not relinquish the right of the investor from the permanent allotment of the flat on the day the project is complete at the agreed rate. In view of such statements in the letter dated 31.3.2015, we are of the view that since the requisite and necessary approvals for starting the Shreepati Estates project could not be obtained by the corporate debtor, and since it had already accepted an advance of Rs. 3.50 crores from the Respondent ....
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....spondent No. 1 has not been established in the present case. 22. On the other side, the Ld. Counsel for Respondent No. 1 has cited the judgment of NCLAT in the matter of G. Sreevidhya Vs M/s. Karismaa Foundations Pvt. Ltd. [2019 SCC Online NCLAT 145] wherein the Financial Creditor and the Corporate Debtor had entered into an agreement for construction of a residential building on turnkey basis and since the agreement was not implemented, the Corporate Debtor retained the money as loan and started paying interest on the same. In this matter since the agreement was not implemented in accordance with its provisions and a conscious decision was taken by the corporate debtor to retain the deposited amount as loan with payment of interest, we note that the context in the case is different from the one in the present appeal where the amount has been transferred as a loan only as a temporary measure, and the corporate debtor agrees to provide a completed flat but for delays due to necessary approvals which could not be obtained. 23. In another judgment in the matter of E S Krishnamurthy v. Bharath Hi Tech Builders Pvt. Ltd. [2021 SCC Online SC 1242]cited by the Ld. Counsel for Respon....