TaxTMI 
TaxTMI 
2023 (12) TMI 486
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...., Sr. Advocate for Promoters JUDGMENT ASHOK BHUSHAN , J. These two appeals challenges same order dated 05.08.2022 by which order the Adjudicating Authority (National Company Law Tribunal), Indore Bench, Court No.1 admitted Section 9 application filed by M/s D. B. Corp. Ltd., the Operational Creditor. Appellant in Company Appeal (AT) (Ins) No. 1172-1173 of 2022 is Regulatory Authority constituted under Section 20 of the Real Estate (Regulation and Development) Act, 2016. In Company Appeal (AT) (Ins) No. 1172-1173 of 2022 order dated 11.08.2022 appointment of Mr. Anil Goel, Interim Resolution Professional has also been challenged. Company Appeal (AT) (Ins) No. 1321 of 2022 has been filed by 'Aquacity Consumer and Societies Welfare Society' which claim to be association of 74 homebuyers who are aggrieved by the admission order dated 05.08.2022. Brief facts of the case giving rise to these appeals need to be first noted: (i) M/s AG8 Ventures Ltd. is a registered company developing various real estate projects in the State of Madhya Pradesh. M/s AG8 Ventures Ltd. (hereinafter referred to as 'Corporate Debtor') had obtained registration of 11 real estate projects from R....
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....ause Notices were also issued to the Corporate Debtor. Orders were also passed on 23.03.2022 by RERA revoking the registration of real estate project 'Aakriti Business Arcade' and directing for appointment of an agency for completion of the said project under Section 8 of the RERA Act, 2016. (v) Demand Notice under Section 8 dated 13.01.2022 was issued by D.B. Corp. Ltd. to the Corporate Debtor claiming payment of Operational Debtor in Form 3 dated 13.01.2022 claiming an operational debt of Rs.10,77,17,000/- with interest relying on various Barter Agreements entered between the Operational Creditor and the Corporate Debtor. (vi) An application under Section 9 was filed by the Operational Creditor before the Adjudicating Authority on 02.02.2022 claiming default of operational debt of Rs.10,77,17,000/- with interest consequent to the Barter Agreement entered between the Operational Creditor and the Corporate Debtor. The debt was claimed to be fell due from 13.02.2020. Some additional facts contained in Company Appeal (AT) (Ins.) No. 1321 of 2022 also need to be noted. (vii) The Appellant - Aquacity Consumer and Societies Welfare Society claiming to....
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....h Singh, learned counsel appearing for the Appellant in Company Appeal (AT) (Ins) No. 1321 of 2022. Shri Krishnendu Datta, learned senior counsel has appeared for the Operational Creditor - D. B. Corp. Ltd. Shri Aditya Gauri and Shri Amar Vivek, leanred counsel have appeared for the Resolution Professional. We have also heard Shri Neeraj Malhotra, learned senior counsel and other learned counsels who had filed different IAs in these Appeals. 3. Company Appeal (AT) (Ins) No. 1172-1173 of 2022 came for consideration before this Tribunal on 30.09.2022, on which date notices were issued in the Appeal and impugned order dated 05.08.2022 was stayed. Following order was passed on 30.09.2022: "ORDER 30.09.2022: Learned counsel for the Appellant submits that by the impugned order dated 05.08.2022 the Adjudicating Authority has admitted section 9 application filed by Respondent No.1 - 'M/s D.B. Corp. Ltd.' (Operational Creditor). It is submitted that the Section 9 proceedings were collusively initiated and because of the fact the Appellant, the Regulatory Authority, has passed orders against the real estate company - the Corporate Debtor, to avoid the consequences of sai....
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.... initiation of Section 9 proceeding, the cash component has already been paid to the Operational Creditor and against the Barter Component, the Operational Creditor had claimed allotment of units. Allotment of units under Barter Agreements cannot be operational debt to enable the Operational Creditor to initiate Section 9 proceeding against the Corporate Debtor. The invoices which were filed along with the Section 9 application were all forged and fabricated invoices prepared for the purposes of the case. It is submitted that invoices are claimed to be for year 2010 to 2017, however, the invoices which are filed along with Section 9 application even of the year 2010 contains column for CGST and IGST while the Goods and Services Tax came into force only on 01.07.2017. A bare look on the invoices reveal that the invoices have been prepared after 01.07.2017 for the purposes of the case. The Operational Creditor has fabricated the invoices with the sole purpose of initiating corporate insolvency resolution process against the Corporate Debtor. It is submitted that the invoices were never relied upon while issuing Demand Notice under Section 8. The Corporate Debtor and the Operational C....
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....filing of Section 9 application itself indicate that it has collusively done to benefit the Corporate Debtor and save him from discharging his statutory obligation. 7. Shri Krishnendu Datta, learned senior counsel appearing for the Operational Creditor refuting the submission of learned counsel for the Appellant submits that RERA has no locus to file the Appeal as RERA is a regulatory authority which could have no grievance against initiation of CIRP against the Corporate Debtor by the impugned order dated 05.08.2022. It is submitted that mention of CGST and IGST in the invoices prior to 01.07.2017 were due to reason that invoices were printed from a new software which contains CGST and ITST number. It is, however, submitted that with regard to invoices prior to 01.07.2017 column of CGST and IGST are nil. The Operational Creditor is a responsible newspaper and Barter Agreement is common media practice. The RERA has itself declared the Operational Creditor as allottee on the basis of Barter Agreement. It is submitted that invoices were issued in pursuance of Barter Agreement which was agreement for services rendered by the Operational Creditor and is covered within the definition....
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....of the I& B Code? 4. Whether the application under Section 9 filed by the Operational Creditor was filed in collusion with the Corporate Debtor to save the Corporate Debtor from carrying out its statutory obligations? 5. Whether invoices which were filed along with the Section 9 application by the Operational Creditor were manufactured and forged invoices prepared for the purposes of the case, which were not genuine invoices? Question No. I 12. Section 61 of the I&B Code, 2016 provides for an Appeal by "any person aggrieved by the Order of the Adjudicating Authority". Section 61, sub-Section (1) uses the expression "any person aggrieved". Learned Counsel for the Operational Creditor has questioned the locus of the Real Estate Regulatory Authority to file an Appeal under Section 61 of the Code challenging the Impugned Order dated 05th August, 2022. The submission is that the Appellant is a Real Estate Regulatory Authority under the Real Estate Regulation and Development Act, 2016 and has only regulatory role as contained in the enactment. By Order of the Adjudicating Authority initiating 'Corporate Insolvency Resolution Process' against the Corporate Debtor a....
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....ns of authority for promotion of Real Estate Sector. One of the functions entrusted to the Authority is protection of interest of the allottees, promoters and real estate agents. Section 34 of the Act provides that function of the authority shall include, to register and regulate Real Estate Project and Real Estate Agent registered under the Act. Real Estate Regulatory Authority thus is statutorily entrusted to promote the real estate sector and to protect the interest of the allottees. 17. In the facts of the present case where Regulatory Authority has come up in the Appeal questioning the very maintainability of Section 9 Application and further alleging that Section 9 Proceedings are collusive proceedings between Corporate Debtor and Operational Creditor, can it be said that it has no locus to file an Appeal? 18. The obvious consequences of admission of Section 9 Application and declaration of moratorium is that all proceedings before RERA against the Corporate Debtor has to come to a grinding halt. RERA is a statutory authority under Section 20 sub-section (2). RERA is a body corporate and is entitled to sue or to be sued in its name. RERA is thus fully competent to sue i....
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....Application which was filed by the Canara Bank. This Tribunal took the view that Canara Bank had already filed an Appeal challenging the Order of the Adjudicating Authority in which notices have been issued by this Tribunal. The Appeal filed by the IBBI was held not to be maintainable. In paragraph 5 and 6 of the Judgment, following has been observed by this Tribunal: "5. At the outset, Counsel for the Appellant has been asked as to how the Appellant Board is an aggrieved person especially when the aggrieved person (Canara Bank) has already filed the appeals i.e. CA (AT) (Ins) No. 68 & 69 of 2023. In merely requested that the present appeal may be re-notified to be heard along with aforesaid two appeals on 17.03.2023. However, from the perusal of the memorandum of appeal, we could not find the cause of concern much less the grievance of the Appellant for preferring the present appeal especially when the appeals have already been filed by the aggrieved person. In this regard, we may also refer to an order passed by this Tribunal in the case of Insolvency and Bankruptcy Board of India Vs. Wig Associates Pvt. Ltd. & Ors., 2018 SCC Online NCLAT 386, in which the Tribunal has r....
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.... in paragraph 42 to 49 of the Order: "42. Keeping in view the facts available on record in the case and the information provided by the appellant to the Authority from time to time, on the basis of the above discussion, this Authority comes to the conclusion that: i. 37 orders regarding refund of deposited amount and payment of compensation have not been complied with by the appellant and 13 orders have been complied with only partially. Thus, the appellant has violated rule 18. ii. From the date of coming into force of section 4 of the Act, 01.05.2017 till date, 70 percent of the amount received from the allottees has been received by the appellant as per section 42) clause (1VD) of the Act PROJECT LO REAL ESTATE has not been deposited in the special bank account created for the project as per clause (1) (D) of section 4 (2) read with rule 5. As on 30th September, 2021, ln the special bank account created for the project, the amount required by section 4 (2) clause (1) (D) read rule:5 is only zero as compared to the amount of Rs 7718 lakh. Thus, the appellant has continuously contravened the provisions of this section after the commencement of section 4 ....
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....eep the Authority informed from time to time about the findings of its investigation, so that the Authority can take legal action accordingly. 48. Necessary action should be taken by the Secretary, Authority as per clause (a), (b) and (c) of section 7(4) of the Act. 49. In exercise of the power conferred by clause (d) of section 7(4) of the Act, the appellant is directed that the authority selected by the authority under section 8 for completion of the project the proper financial help will be provided." 25. In view of the sequence and events of the facts which took place and various proceedings drawn by RERA much prior to issuance of notice under Section 8 of the Code by the Operational Creditor, we are satisfied that Appeal filed by the RERA cannot be thrown out on the ground of locus. The RERA held to be aggrieved person within the meaning of Section 61 of the Code. 26. Thus, the Question No. I has to be answered in affirmative holding that RERA has locus to file Company Appeal (AT) Ins. No. 1172-1173 of 2022. Question No. II 27. The Appellant who has filed Company Appeal (AT) Ins. No. 1321 of 2022 is association of home buyers of a registered Real ....
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....as follows : Part-IV PARTICULARS OF OPERATIONAL DEBT 1 TOTAL AMOUNT OF DEBT, DETAILS OF TRANSACTION ON ACCONT OF WHICH DEBT FELL DUE, AND THE DATE FROM WHICH SUCH DEBT FEE DUE The Operational Creditor is in the business of publishing various newspapers, periodicals and other literary and publications in print and non-print media and authorised licensee of radio broadcasting and is operating FM Stations throughout India and the Corporate Debtor is engaged in the business of acquiring, developing, constructing and sale of real estate projects. The Corporate Debtor was desirous of conducting extensive advertising campaign of its various projects and for which the Operational Creditor and Corporate Debtor entered into various barter agreements, the details of which are mentioned as under : Sr. No. Date Total Consideration 1. 13.08.2019 25,50,000/- 2. 15.10.2017 1,31,15,000/- 3. 02.06.2016 1,90,83,772/- 4. 01.08.2014 30,50,000/- 5. 28.03.2014 3,00,00,000/- 6. 25.03.2013 2,00,00,000/- 7. 01.10.2012 1,50,00,000/- 8. 18.07.2011 2,00,00,000/- 9. 29.09.2010 2,00,00,000/- Copies of Barter ....
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....aid legal notice, the Corporate Debtor had admitted that they are trying to make the remaining payment in respect of the unit not allotted but they deliberately denied the payment of interest on delayed possession of 22 units. Copy of reply to legal notice is enclosed herewith and marked as Annexure A-7. Thereafter, Demand Notice in Form 3 under rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for payment of outstanding debt was sent to Corporate Debtor by email dated 13.01.2022. Simultaneously, said demand notice was also sent by speed Post on 13.01.2022 at the registered office of the Corporate Debtor and the same was duly delivered on 14.01.2022 and the said demand notice has not been disputed or replied by the Corporate Debtor till date. Copies of Demand Notice dated 13.01.2022 alongwith email, postal receipt and consignment report are enclosed herewith and are marked as Annexure A-8 (Colly). Debt falls due with effect from 13.02.2020. 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM)  ....
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....o advertise in DBCL Media, the Owner & Advertise has agreed to barter and transfer the Said Unit (defined below) and getting the sale deed thereof registered in favour of DBCL simultaneously with execution of this Agreement." 33. Article 2 of Barter Agreement provides for agreement to advertise. Clause 2.3 that owner & advertiser shall be entitled to publish, order, advertise in DBCL Media for aggregate of Rs. 25,50,000/- out of which Rs. 2 Lakhs shall form the cash component and Rs. 23, 50, 000/- thousand shall form the Barter Component. Clause 2.3 is as follows: "2.3 Pursuant to this Agreement and subject to conditions precedent as provided for in clause 2.1 hereinabove, the Owner & Advertiser shall be entitled to publish advertisements in DBCL Media for the Aggregate Commitment of Rs. 25,50,000/- (Rs. Twenty Five Lakhs and Fifty Thousand Only) including GST, out of which Rs. 2,00,000/- (Rs. Two Lakh Only) shall form the cash component ("Cash Component") and Rs. 23,50,000/- (Rs. Twenty Three Lakhs and Fifty Thousand Only) shall form the barter component (Barter Component). The bifurcation of total Cash Component and Barter Component in INR would be as per Schedule I (....
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..... Schedule I giving details of Barter Component, cash component and total deal value. Schedule I of the Agreement is as follows : SCHEDULE I DBCL DELIVERABLES AND RATES Client AG 8 Ventures Limited Barter Component 23,50,000 Cash Component 2,00,000 Total Deal Value 25,50,000 Project Aakriti Nest Flat No. STUDIO APARTMENT FLAT NO. 205 Deal Period 23 Months Consumption 14th August 2019 to 13th August 2020 (Deliverables as per details below*) 14th August 2020 to 13th July 2021 (To be discussed and agreed upon mutual consent) As per Annexure A Barter Component (Amount in Rs.) 11,75,000 11,75,000 Cash Component at the time of Agreement (Amount in Rs) 2,00,000 Total agreed Spend for the First Year (Amount in Rs) 13,75,000 11,75,000 Total Agreed Spend for 23 Months (Term) ....
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....ate to a right to payment unless operational creditor has a claim i.e. a right to payment against the corporate debtor, no operational debt can arise to enable Operational Creditor to initiate proceeding under Section 9 of the Code. The claim of Section 8 and Section 9 also indicates that proceedings under Section 9 by Operational Creditor can be initiated for payment of unpaid operational debt. Section 8(1) uses expression "demanding payment of the amount involved in the default" whereas Section 8(2)(b) uses the expression "the payment of unpaid operational debt" thus non-payment of operational debt is sine qua non for giving any demand notice under Section 8 of the Code leading to Section 9 also makes it clear that after the expiry of period of 10 days from the date of delivery of notice, sub-section 1 of Section 8 of the Code states if the Operational Creditor does not receive payment from the Corporate Debtor, operational Creditor may file an application for initiating a Corporate Insolvency Resolution Process, thus not receiving the payment from the Corporate Debtor is a condition precedent for initiating Section 9 Application. 42. Learned Counsel for the Appellant Mr. Abhi....
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.... the IBC. The expression 'payment' the amount to be paid came for consideration before the Hon'ble Supreme Court one party asserted that expression payment referred only to payment in monetary terms whereas other party contended that payment is with respect to reference to discharge of obligation and that could be brought about by any of the methods permissible in law and not necessarily by way of payment in terms of money alone. In paragraph 162 of the Judgment, Hon'ble Supreme Court noticed the rival contentions of the parties with regard to expression payment which is as follows: "162. In the present case, the resolution plan has, in the first place, stated that according to the estimate of the resolution applicant, the liquidation value to be received by the dissenting financial creditors was likely to be nil but then, has provided for discharge of any likely obligation towards them in the manner that they shall be provided a proportionate share in the equity of Expressway SPV and land parcels but not any payment in terms of money. The dissenting financial creditor, ICICI Bank, is thoroughly dissatisfied with such a prescription whereby its dues shall be satisfied by a....
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....s successor entities. Such a method of payment could least be a step towards insolvency resolution. The same features, with necessary variations, would apply to the second part of clause (b) of sub-section (2) of Section 30 in regard to the dissenting financial creditors. The operational creditors as also the dissenting financial creditors are to be paid in terms of the amount to be determined with reference to Section 53 of the Code and are to be paid in priority, as described in Regulation 38(1) of the CIRP Regulations. 164.1. Therefore, when, for the purpose of discharge of obligation mentioned in the second part of clause (b) of Section 30(2) of the Code, the dissenting financial creditors are to be "paid" an "amount" quantified in terms of the "proceeds" of assets receivable under Section 53 of the Code; and the "amount payable" is to be "paid" in priority over their assenting counterparts, the statute is referring only to the sum of money and not anything else. In the frame and purport of the provision and also the scheme of the Code, the expression "payment" is clearly descriptive of the action of discharge of obligation and at the same time, is also prescriptive of....
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....ncial creditor himself chooses to accept any other method of discharge of its payment obligation but as per the requirements of law, the resolution plan ought to carry the provision as aforesaid." 47. To reiterate what was held by the Hon'ble Supreme Court in above paragraph is that expression payment only refers to the payment of money and not anything of its equivalent in nature of Barter; when construing the same expression of payment in Section 30(2), the Hon'ble Supreme Court has held that payment refers only to payment of money and not anything of its equivalent in the nature of Barter, the same interpretation has to be put to Section 8 and 9 also of the Code. 48. Thus, what can be an operational debt for purposes of Section 8 and 9 is an Operational Creditor which involve payment of money as noticed above the foundation of Section 9 Application is Barter Component under which agreement barter component remained unfulfilled and as per Barter Agreement against the Barter Component the Operational Creditor was entitled for allotment of the units and non-allotment of the units against the Barter Component cannot make the DB Corporation Limited as an Operational Creditor no....