TaxTMI 
TaxTMI 
2023 (8) TMI 1291
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...., in 'dismissing', the said 'Application'. 2. Earlier, the 'Adjudicating Authority' ('National Company Law Tribunal', Bengaluru Bench), while passing the 'impugned order', dated 25.05.2023, in IA No. 343 / BB / 2021 in CP (IB) No. 189 / BB / 2018 (Filed by the 'Appellants' / 'Petitioners'), under Section 60(5)(c) of the I & B, Code, 2016, r/w. Rule 11 of the NCLT Rules, 2016, the 'Adjudicating Authority', 'National Company Law Tribunal', Bengaluru Bench, among other things, at Paragraph Nos. 10 & 11, had observed the following: 10. ''It is observed that the applicant has prayed to exclude Schedule B property from the Liquidation Estate of the Corporate Debtor. However, it is pertinent to note that only the assets which is charged as security interest will fall outside the purview of Liquidation proceedings. Section 3 (31) of the IBC defines security interest as right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or perfor....
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....red as "Revenue from operations" under Schedule -III, Part-II of the Companies Act, 2013? Here, it is observed that in case of real estate company, such constructed spaces/houses as and when sold its sale price goes to the heading 'Revenue from operations' of the profit and loss accounts of the Company being part of its commercial operation. If this houses / constructed spaces belongs to a company which is not in real estate business and is an industrial company/manufacturing company then the impact of sale from such houses will appear in the 'Balance Sheet' of the Company as per Schedule-III Part-I-(II Assets) of the Companies Act, 2013 and any sale of this house by this industrial company, if it results into a profit or loss on the sale of such assets, then it will reflect to the extent of profit or loss on sale of this assets only in the profit and loss account under the heading "other income" and the cost value of the assets will be reduced from the assets side of the 'Balance Sheet'. For a clarity, let us see the following examples: i. In case of a real estate company - (Ram & Mohan Company), if House No. 'A' is sold to Mr. ....
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....39; money in large scale. No action has been taken by the Noida and Greater Noida Authorities against builders for cancellation of leases due to violation to fulfil their obligation. Bankers have financed to builder certain loan on the condition to invest in the projects, but they have also permitted the money to be used as for other purposes as apparent from the report of the Forensic Audit in the instant case which had been submitted by Auditors - Mr. Pawan Kumar Aggarwal and Mr. Ravinder Bhatia. The facts which are projected in the Forensic Auditor Report speaks for itself." "173. We have also found that non-payment of dues of the Noida and Greater Noida Authorities and the banks cannot come in the way of occupation of flats by home buyers as money of home buyers has been diverted due to the inaction of Officials of Noida / Greater Noida Authorities. They cannot sell the buildings or demolish them nor can enforce the charge against homebuyers/ leased land/ projects in the facts of the case. Similarly, the banks cannot recover money from projects as it has not been invested in projects. Homebuyers money has been diverted fraudulently, thus, fraud cannot be perpetuated ag....
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....judicating Authority' / 'Tribunal', indicates a 'Lackadaisical Attitude' of the 'Respondent', in protecting the interests of 'Bona fide Home Buyers', and the interests of the 'Corporate Debtor', which is in conflict with the 'settled Principles of Law'. 8. The Learned Counsel for the Appellants, projects an argument that 'Appellants Rights', as 'Bona fide Home Buyers', cannot be affected, and adverts to the Judgment of this 'Tribunal', dated 04.02.2020 in Flat Buyers Association v. Umang Realtech Pvt. Ltd., through its Interim Resolution Professional and Ors. (vide Comp. App (AT) (INS.) No. 926 of 2019), reported in (2020) SCC OnLine NCLAT 1199, wherein, at Paragraph 25, it is observed as under: 25. ''In Corporate Insolvency Resolution Process against a real estate, if allottees (Financial Creditors) or Financial Institutions/Banks (Other Financial Creditors) or Operational Creditors of one project initiated Corporate Insolvency Resolution Process against the Corporate Debtor (real estate company), it is confined to the particular project, it cannot affect any other project(s) of the same real estate company (Corporate Debtor) in other places where separate plan(s) are ....
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....'duality of ownership of a property', in view of Section 108 of the 'Transfer of Property, Act, 1882, as compared to 'Foreign Legislations'. 13. The Learned Counsel for the Appellants, points out that while the 'Agreement of Sale', is for the land on which, the 'Villa', is constructed, the 'Consideration Sum', was paid in respect of the 'Construction' and 'Sale'. Also that, upon 'Construction of the Villa', applying the 'Dual Ownership Principle', which is recognised in India, the 'Appellants', are accorded with the 'Ownership' of the 'Villa', and the land on which, the 'Villa', is constructed, and therefore, are seeking for the 'Conveyance of Title', to the 'Villa', since the same was already 'Completed', and only the 'formality', is the 'Registration' of the 'Schedule B' property, to and in favour of the 'Appellants'. 14. The Learned Counsel for the Appellants, comes out with a plea that after the Completion of the Construction of the 'Schedule B' Property, except, a few pending works, the 'Appellants / Petitioners', only after securing the permission of the 'Corporate Debtor', had taken 'physical possession' of the 'Schedule B' Property, since 2016. Moreover, the 'Appellan....
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....orate Debtor', had handed over the Possession of the 'Property' in question, to the 'Appellants', to carry out the 'Interior Works', no 'Sale Deed', was executed by the 'Corporate Debtor', in favour of the 'Appellants', before the 'Commencement of Corporate Insolvency Resolution Process' of the 'Corporate Debtor'. Also that, 'Construction Work' worth Rs.6 Lakhs, is yet to be completed. 21. According to the Respondent / Liquidator, a mere 'Agreement to Sell' or 'Possession over a Property', does not amount to the 'Ownership of that Property'. Besides this, an 'Instrument', which purports to 'Transfer the Title of the Property', is required to be 'Registered', and that the 'Title' does not pass, till the 'Registration', is effected. An 'Execution of Sale Deed', is an 'established fact', for 'Transferring the Ownership of a certain Asset'. 22. The Learned Counsel for the Respondent / Liquidator, refers to the decision of the Hon'ble Supreme Court of India, in the matter of Narandas Karsondas v. S.A. Kamtam & Anr., reported in (1977) 3 SCC at Page 247, wherein, it is observed as under: ''A contract of sale does not of itself create any interest in, or charge on, the prop....
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....hip by Court or Authority), whether such 'Assets', are 'Tangible' or 'Intangible', whether such 'Assets' are 'Encumbered' or 'Unencumbered'. Further, the 'Liquidator', upon forming the 'Liquidation Estate', under Section 36 of the 'Code', shall prepare an 'Asset Memorandum', in accordance with Regulation 34 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, within 75 days from the 'Liquidation Starting Date'. 26. According to the Respondent / Liquidator, the 'Appellants / Petitioners', in the 'Liquidation Proceedings', filed their 'Claim' in 'Form - G', for a Sum of Rs.6,65,191/- for the 'unfinished work', in the subject Property. Also that, the 'Liquidator', had enquired from the 'Appellants / Petitioners', if the Possession of the 'Subject Property', is with them, and that the 'Appellants / Petitioners', had informed the 'Liquidator' that they do not have Possession of the 'Subject Property', and that the 'Sale Deed', was not 'Registered', as the 'Construction Work', amounting to Rs.6 Lakhs, is yet to be completed. 27. The Learned Counsel for the Respondent / Liquidator, brings to the notice of this 'Tribunal', that the 'Appellants / Pe....
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....matter and having introduced the principal parties to this litigation with their respective interests, we may now indicate the major points, which arise for determination in view of diverse propositions advanced before us, coupled with the stipulations in the resolution plan in question and the modifications ordered by NCLT and NCLAT by way of the orders impugned. The principal points calling for determination in this batch are: G. As to whether the stipulation in the resolution plan for cancellation of certain agreements/sub-leases is unfair and the Adjudicating Authority has erred in not modifying the same? I. (i) As to whether, after approval of the resolution plan of NBCC by the Committee of Creditors, where homebuyers as a class assented to the plan, any individual homebuyer or any association of homebuyers could maintain a challenge to the resolution plan and could be treated as a dissenting financial creditor or an aggrieved person? (ii) As to whether the stipulations in the resolution plan stand in violation of the provisions of the Real Estate (Regulation and Development) Act, 2016? (iii) As to whether the resolution plan is violative of....
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....y and ought to be separated from the resolution plan; and any order on the resolution plan should not have an adverse impact on this project. It is submitted that in relation to the project in question, the resolution applicant is only to complete the finishing work which could be carried out by the IRP himself to avoid further delay whereas, if the resolution plan is followed, these homebuyers shall have to wait for another 18 months to receive possession of the completed flats which would add to their mental agony. 169.1. For the same reasons as above, the suggestion to keep any housing project which is already complete or nearing completion out of the purview of the resolution plan is required to be rejected. When approval of the resolution plan is to be voted by CoC; and its composition is specified by the Code, there is no such concept of keeping any particular homebuyer out of CoC even if the relationship of creditor and debtor subsists between him and the corporate debtor.'' 31. The Learned Counsel for the Respondent / Liquidator, points out that after selling the 'Assets of the Corporate Debtor', distribution of the 'Sale Proceeds', shall be made as per Section ....
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....ioners', so as to enable them to start the 'Interior Work', and that the 'Appellants / Petitioners', had incurred an 'Expenditure' of Rs.4,63,000/-, in this regard. 36. It cannot be gainsaid that only the 'Assets', that are charged as 'Security Interest(s)', will fall outside the ambit of 'Liquidation Proceedings'. Furthermore, this 'Tribunal', bears in mind that the 'Ownership of the Subject Property', rests with the 'Corporate Debtor'. Also, it cannot be brushed aside the 'Appellants / Petitioners', had in 'Form - G', preferred a Claim of Rs.6,65,191/- for the 'remaining work', to be completed in the 'Subject Property'. 37. Suffice it, for this 'Tribunal', to make a pertinent mention that the 'Units', are not charged to the 'Appellants / Petitioners'. The candid fact is that, an 'Agreement to Sell' or being in 'Possession', in respect of an 'Immovable Property' in 'Law', will not confer any 'Ownership Right', upon a 'Person'. 38. It cannot be gainsaid that in respect of a 'Sale of an Immovable Property', which is in 'Value of more than Rs.100/-', it is to be 'compulsorily Registered', as per Section 17(1)(b) of the Registration Act, 1908, in the considered opinion of thi....