AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1175
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....Section 7 of the I & B Code, 2016 was filed by Mrs. Rachna Singh and Mr. Ajay Singh, who were Homebuyers/ Allottees in the project being developed under name "Winter Hills 77 Gurgaon" by M/s. Umang Realtech Pvt. Ltd. (Corporate debtor), for initiation of the 'Corporate Insolvency Resolution Process' (in short 'CIRP'). The Application was admitted in terms of Section 7(5) (a) of the I & B Code, 2016 by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi, Principal Bench) in the matter of 'Rachna Singh & Anr. Vs. Umang Realtech Pvt. Ltd.' in CP (IB) 1564 (PB)/2018 dated 20.08.2019. By the same order, the 'Adjudicating Authority' declared moratorium in terms of Section 14 of the I & B Code, 2016. 3. Subsequently, an appeal was filed before this 'Appellate Tribunal' in CA (AT) (Insolvency) No. 926 of 2019 which was disposed off vide order dated 04.02.2020 with suitable observations and directions regarding 'Reverse CIRP'. 4. The 'Appellant' has, sought clarification arising out of this 'Appellate Tribunal' order dated 04.02.2020 with the following prayers :- "(i) pass an appropriate order clarifying that the original order dated 04.02.2020 (Annexure A-....
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....te Debtor' did not refund the amount against which the 'Applicant' filed an Execution Application bearing No. 3171-2020 and "HARERA" passed order dated 12.02.2021 for attachment of three bank account of the 'Corporate debtor' for recovery of decretal amount of Rs. 76,68,788/-. 9. The 'Corporate Debtor' through the 'IRP' filed an 'Appeal', bearing No. 134 of 2021 (RERA Appeal) before "RERA Appellate Tribunal" which is pending. While hearing the 'Appeal', the "RERA Appellate Tribunal" vide order dated 27.07.2021, directed the IRP/ Respondent to file an 'Affidavit' to clarify whether the 'CIRP' also cover the project "Monsoon Breeze-II". The 'Appellant' states that IRP/Respondent filed his 'Affidavit' dated 28.08.2021 before 'RERA Appellate Tribunal' stating that the 'CIRP' is applicable only to "Winter Hills" but the moratorium is imposed against the 'Corporate Debtor'. 10. The 'Appellant' has alleged that despite specific directions contained in this 'Appellate Tribunal' order dated 04.02.2022, the IRP/ Respondent enlarged the scope of 'CIRP' to the other projects of the 'Corporate Debtor'. The 'Appellant' has further alleged that IRP/Respondent has misinterpreted the order of....
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.... 'Appellant' pleaded that in case the other projects including the project "Monsoon Breeze-II" are not de-linked with the existing proceedings, their right will be adversely affected which is not the intent of I & B Code, 2016 and also not intended by this 'Appellate Tribunal' in its order dated 04.02.2020. 14. The 'Appellant' also took pains to explain the rational for the present application on the premise that once the CIRP/ Reverse CIRP is restricted only for one project i.e. "Winter Hills-77", there is no question of continuing CIRP and consequently moratorium on other projects of the 'Corporate Debtor'. As per the 'Appellant', this 'Appellate Tribunal' in its order dated 04.02.2020 had in fact clarified the same aspect by suitable illustration. The 'Appellant' therefore requested that his prayers may be allowed and it may be clarified that the 'Reverse CIRP' shall be limited to only "Winter Hills-77" and not to any project and therefore other projects of the 'Corporate Debtor' are free from the moratorium and consequently the 'Corporate Debtor' should be allowed to go on to complete the projects. The 'Appellant' pleaded that this will be just, fair and based on equity, tak....
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.... Ltd.' was in nature of 'Resolution Applicant' and its plan should be treated as 'Resolution Plan'. The 'Appellant' emphasised that since this 'Appellate Tribunal' order dated 04.02.2022 contained all details regarding who will invest, how and when distribution will be made, time frame within which project will be completed and possession will be handed over, payments to the 'Financial Creditors', 'Operational Creditors', etc., thus, truly speaking this tantamount to approval of the 'Resolution Plan', accordingly in a manner CIRP ended. The 'Appellant' urged that his prayers may be allowed. 17. Per-contra IRP/Respondent has denied all the averments made by the 'Appellant' labelling these averments as false, misleading and mischievous and termed the present I.A. No. 2187 of 2021 as gross misuse and abuse of process of law, which is liable to be dismissed devoid of any merits with cost. 18. The IRP/ Respondent submitted that by present I.A No. 2187 of 2021 seeking clarification, the 'Appellant' is trying to obtain reliefs which is otherwise not entitled under law. The IRP/ Respondent further submits that the 'Adjudicating Authority' vide its order dated 20.08.2019 admitted S....
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....oject "Winter Hills-77" completed in time bound manner, in order to enable the Homebuyers to get possession of their flats and not to set aside the 'Adjudicating Authority' order dated 20.08.2019 or terminate/ suspend other provisions of order of the 'Adjudicating Authority'. 22. The IRP/ Respondent submits that intent of this 'Appellate Tribunal' in order dated 04.02.2020 again becomes clear where it has been held that in case the 'Promoter' failed to comply with the undertaking to invest funds or it fails to co-operate with the 'IRP', then the process of the 'CIRP' under I & B Code, 2016 would continue, which makes it clear that in case of failure of 'Reverse CIRP', the 'CIRP' of the 'Corporate Debtor' will automatically get assumed. Thus, moratorium of the Section 14 of the 'Corporate Debtor' as a whole has to be continued. 23. As per IRP/ Respondent, the 'Adjudicating Authority' in its order dated 20.08.2019, in Para-26 has authorised him to perform all functions as stipulated in Section 15, 17, 18, 19, 20 & 21 of the I & B Code, 2016. The IRP/ Respondent submitted that in terms of Section 17 of the I & B Code, 2016, the management of the 'Corporate Debtor' stands suspend....
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....dent clarified that the he has taken all the required steps to protect the rights of all stakeholders and has followed the concept of CIRP only in the project "Winter Hills-77" and not on other projects which are continued on going concern basis. The IRP/ Respondent claimed that no adverse impact on the rights of home allotees of Monsoon Breeze-II has been caused due to 'Reverse CIRP' in terms of this 'Appellate Tribunal' order dated 04.02.2020. The IRP/ Respondent emphasised that any modification on the order of this 'Appellate Tribunal' dated 04.02.2020 based on 'Appellant's claim on lifting of CIRP/ moratorium on other projects and assets of the 'Corporate Debtor' may impact chances of putting the 'Corporate Debtor' back on the rails. The IRP/ Respondent amplified that for argument sake, if moratorium is lifted on other projects of the 'Corporate Debtor' and in case the present 'Reverse CIRP' fails for want of adequate finances by the 'Corporate Debtor' or due to non-cooperation of the 'Corporate Debtor' or due to any other reason, there will be no remedies available to the IRP/ Respondent to carry out its obligations as stipulated under I & B Code, 2016 read with the orde....
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....he Insolvency and Bankruptcy Code (Amendment) Act, 2020, 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 Act, failing which the application shall be deemed to be withdrawn before its admission.] Explanation. - For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish - (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b)the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the app....
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....rity interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted duri....
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....al interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor the in where such property is occupied by or in by the possession of the corporate debtor." 26. The Interim Resolution Professional shall perform all his functions religiously and strictly which are contemplated, interalia, by Sections 15, 17, 18, 19, 20 & 21 of the Code. He must follow best practices and principles of fairness which are to apply at various stages of Corporate Insolvency Resolution Process. His conduct should be above board & independent; and he should work with utmost integrity and honesty. It is further made clear that all the personnel connected with the Corporate Debtor, erstwhile directors, promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Profe....
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....o accepted and endorsed by Mr. Manish Kr. Gupta, Interim Resolution Professional, who is present and always remain present in person. (i) There are 706 number of flats/apartments in Winter Hills -77, Gurgaon project. Out of 706 flats/apartments, 624 flats/apartments have been booked/agreed to be sold which includes 3 bookings done during CIRP. The Corporate Debtor offered possession to all 624 allottees through the Interim Resolution Professional and asked them to pay their respective outstanding dues. (ii) There are 453 number of allottees who have paid their respective consideration amount in full and have taken possession. The list of 453 Allottees who have taken the possession after making payment as per the demand notice issued has been annexed and marked as Annexure -1. There are 26 allottees who have paid the consideration amount in full, but have not taken possession of their respective apartment/flat from the Corporate Debtor through IRP. The list of these 26 Allottees who have paid the amount as per the demand notice issued has been annexed and marked as Annexure-2. (iii) There are 142 allottees who have defaulted in making payment of their inst....
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....e taken possession without the fit-outs and they will do necessary fit-outs on their own. Such allottees have made payment to the Corporate Debtor after deducting the cost of the fit-outs. The Corporate Debtor would provide necessary fit-outs in rest of the flats expeditiously and the entire work would be completed within 4-5 months depending upon fund follow and delivery of necessary material from the suppliers, subject to final payment by each of the allottees. Uppal Housing Pvt. Ltd. has requested to stay all the recovery proceedings and the Corporate Debtor and/or Uppal Housing Private Limited may not be burdened with additional amount in satisfying the order passed by the Court/Consumer Forum/ RERA Authority till the works mentioned are complete. Further, necessary directions is required so that the amount deposited by the allottees is utilized exclusively for the purpose of providing amenities, facilities and Completion of work in the respective projects. It is stated that some of the allottees are adopting arm twisting tactics against Uppal Housing for recovery of the amount as they are not willing to take possession of their flats/apartments. 20. We have a....
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....f 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. 25. In the light of aforesaid discussion, as we find it is very difficult to follow the process as in normal course is followed in a Corporate Insolvency Resolution Process, we are of the view, that a 'Reverse Corporate Insolvency Resolution Process' can be followed in the cases of real estate infrastructure companies in the interest of the allottees and survival of the real estate companies and to ensure completion of projects which provides employment to large number of unorganized workmen. 26. The 'Uppal Housing Pvt. Ltd.' - Intervenor (One of the 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 with the time frame given by it. The disbursement of amount which has been made by 'Uppal Housing Pvt. Ltd.' and the amount as will be ....
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....nsolvency Resolution Process. The appeal stands disposed of with aforesaid observations and directions." (emphasis supplied) 32. The intent of Section 7 of the I & Code, 2016 is pretty clear and the role of 'Adjudicating Authority' has been clearly defined to examine the existence of debt and subsequent default on payment on due date by the 'Corporate Debtor' and also meeting the threshold criteria. Admittedly, in the present case no error was found in the order of the 'Appellate Tribunal' contained in order dated 04.02.2020, thereby there was no case of the 'Appellant' therein to set aside the order dated 20.08.2019. This 'Appellate Tribunal' also notes that accordingly while disposing the appeal against the order dated 20.08.2019 in CP (AT) (Ins.) No. 926 of 2019, the order of 'Adjudicating Authority' did not set aside and similarly no error was found therein in the 'impugned order' 20.08.2019 passed by the 'Adjudicating Authority'. This 'Appellate Tribunal', taking the support of the ratio as laid down by the Hon'ble Supreme Court of India in the case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors. [(2020) 8 SCC 531], regarding ec....
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....he 'Adjudicating Authority' which resulted into 'CIRP' of the 'Corporate Debtor', joined hands with the 'Appellants' therein- 'FBA' and became its member and have taken possession of their flats and sale deeds which have also been registered in their favour. This clearly demonstrated the efficacy of the concept of 'Reverse CIRP' which has started giving desired results. 36. This 'Appellate Tribunal' notes carefully that in Para 21, of its earlier order, it has been clearly stipulated that the 'Reverse CIRP' shall be confined to only one project for which 'CIRP' was initiated against the 'Corporate Debtor' and cannot affect other projects of the same 'Corporate Debtor'. 37. This 'Appellate Tribunal' also notice that even the Hon'ble Supreme Court of India in the Civil Appeal titled as Narendra Singh vs. M/s Umang Realtech Pvt. Ltd. bearing Civil Appeal No. 2942 of 2020 vide Diary No. 13889 of 2020, dismissed the Appeal filed by Mr. Narendra Singh challenging order dated 04.02.2020 passed by this 'Appellate Tribunal' holding that there is no ground to interfere with the 'impugned orders' passed thereby acknowledging the concept of 'Reverse CIRP' to be Project Specific. 38. T....
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.... to set aside the order of the 'Adjudicating Authority' revoking the 'CIRP' and resultant moratorium on the 'Corporate Debtor'. We have already noted and examined in details that the said 'Appeal' CA (AT) (Ins.) No. 926 of 2019 was disposed off vide its order dated 04.02.2020 and significantly no mention regarding moratorium on the other projects of the 'Corporate Debtor' was mentioned. To reiterate, we have already noted that this 'Appellate Tribunal' made its position clear that the present 'CIRP' (Reverse CIRP) is restricted to only project "Winter Hills-77" and do not affect other projects, thereby it can inferred that other projects are out of bound of its order dated 04.02.2020. Although, the aspects of moratorium and impact of 'Reverse CIRP'/ moratorium has not been discussed, amplified or elaborated in the above discussed order dated 04.02.2020, the intent becomes more clear where it has been stipulated that once the project is completed, the 'IRP' was put under obligation to move an application before the 'Adjudicating Authority' (NCLT, New Delhi) with the report of completion and asking for disposal of application under Section 7 filed by 'Rachna Singh' and 'Ajay Singh'. ....