TaxTMI 
TaxTMI 
2024 (4) TMI 478
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....dingly disposed of. Company Appeal (AT) (Insolvency) No. 309 of 2024 This Appeal by Financial Creditor of the Corporate Debtor-Parsvnath Landmark Developers Ltd. (Respondent herein) has been filed challenging order dated 17.10.2023 passed by National Company Law Tribunal, New Delhi, Principal Bench rejecting Section 7 Application filed by the Appellant on the ground of non-compliance of Section 7, sub-section (1), 2nd Proviso. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The Respondent developed a Project 'La Tropicana Khyber Pass Delhi'. The Appellant made payment to the Respondent in the year 2007-2012 towards 4 units, which was allotted in favour of the Appellants by Respondent. (ii) On 11.02.2019, the Appellant filed petition being CP No.IB- 443(PB)/2019 titled as Rahul Gyanchandani & Ors. vs. Parsvnath Landmark Developers Pvt. Ltd. & Ors. under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code"), in which direction was issued by the Adjudicating Authority to comply with the changed provisions under Section 7, second amendment ordinance. The Appellant withdraw the Applica....
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....he view taken by the Hon'ble Supreme Court in the case of "Vishal Chelani & Ors. Vs. Debashis Nanda" (SUPRA) applies to the issue arising in the present petition regarding maintainability. We are bound by the view taken by the Hon'ble Supreme Court in the matter of "Vishal Chelani & Ors. Vs. Debashis Nanda", we have no option but to reject the petition as not maintainable; ordered accordingly. It is made clear that the present order will not stand in the way of the Petitioners to avail such remedies as are available to them in accordance with law." Aggrieved by the above order, this Appeal has been filed by the Appellants. 3. The learned Counsel for the Appellants challenging the impugned order submits that Adjudicating Authority committed error in not adverting to the provisions of Section 3, sub-section (10) of the Code. It is submitted that Section 3, sub-section (10), itself makes it clear that decree-holder is class of Financial Creditor. It is submitted that Section 18 read with Section 2(d) of the RERA Act, 2016 makes it clear that person, who is granted refund of entire amount paid to the promoter for allotment of a real estate unit, does not remain allottee as the re....
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...., including any forward sale or purchase agreement, having the commercial effect of a borrowing; Explanation. -For the purposes of this sub-clause, - (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, "allottee" and "real estate project" shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);] (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause;" 7. By Explanation to Sectio....
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....ERA Act, 2016. If it is accepted that merely by passing order by the RERA, they cease to be allottee, their right to recover the aforesaid amount cannot be prosecuted any further as allottee. Admittedly, the orders for refund has not been complied with, hence the Appellants continued to be allottee within the meaning of the Code and the RERA Act, 2016. 10. The submission that Appellants are no more allottees and their category has been converted as a Decree Holder as referred in Section 3, sub-section (10) also need to be considered. Section 3, sub-section (10) as quoted by us in preceding paragraph, defines the 'creditor', which includes Financial Creditor, Operational Creditor, Secured Creditor, Unsecured Creditor or a Decree Holder. Application under Section 7 can be filed only by Financial Creditors. A Decree Holder unless it is a Financial Creditor cannot institute Application under Section 7. We may notice the judgment of the Hon'ble Supreme Court in "Kotak Mahindra Bank Ltd. Vs. A. Balakrishnan & Anr - (2022) 9 SCC 186", in which case Kotak Mahindra Bank assignee of Financial Creditor has filed Section 7 Application, relying on Recovery Certificate dated 07.06.2017 and 20....
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....aragraph 41, while noticing the scheme of the Code, following was observed: "41. It is a settled principle of law that the provisions of a statute ought to be interpreted in such a manner which would advance the object and purpose of the enactment." 12. In paragraphs 53, 54, and 55, the Hon'ble Supreme Court held that liability in respect of 'claim' arising out of a recovery certificate would be a "financial debt". Paragraphs 53, 54 and 55 of the judgment are as follows : "53. Applying these principles to clause (8) of Section 5 IBC, it could clearly be seen that the words "means a debt along with interest, if any, which is disbursed against the consideration for the time value of money" are followed by the words "and includes". Thereafter various Categories (a) to (i) have been mentioned. It is clear that by employing the words "and includes", the legislature has only given instances, which could be included in the term "financial debt". However, the list is not exhaustive but inclusive. The legislative intent could not have been to exclude a liability in respect of a "claim" arising out of a recovery certificate from the definition of the term "financial debt....
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....ant to notice the facts and ratio of the judgment of Vishal Chelani, which has been relied by the Adjudicating Authority. Vishal Chelani and other were Homebuyers, who had filed their claim on the basis of order passed by UPRERA. They filed claim in Form-CA in the category of Homebuyers. The RP informed the Appellants that they should file their claims in Form-C as a Financial Creditor. The Appellants filed an Application before the Adjudicating Authority, claiming that they should be treated as Homebuyers and they be permitted to file claim in Form-CA, which Application was rejected. It is useful to note paragraph-7 of the order of this Tribunal in Company Appeal (AT) (Insolvency) No.991 of 2022 filed by Vishal Chelani & Ors. vs. Debashis Nanda Resolution Professional Bulland Buildtech Pvt. Ltd., where order of Adjudicating Authority was noticed, which is as follows: "7. The said application was contested by the RP before the Tribunal in which the Tribunal has taken the following view:- "We are unable to accept the contention of the applicants that they may be permitted to file a claim in Form-CA and direction be given to the RP to consider the claim in Form-CA. ....
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....erm "financial debt", when such a liability in respect of a "claim" simpliciter would be included in the definition of the term "financial debt" 11. On the other hand, Counsel appearing on behalf of the RP has submitted that there is no error in the 'impugned order' which may require any interference by this Tribunal. It is submitted that as per scheme of the Act and the 'Regulations' the Appellant after obtaining a decree from the UPRERA regarding refund of their amount, invested for the purpose of purchase of the flat, shall fall within the definition of a Financial Creditor and not in a class of creditor for the purpose of putting up their claim as such before the RP. 12. It is further submitted that the Hon'ble Supreme Court in the same decision in the case of Kotak Mahindra (Supra) has decided that in case the Recovery Certificate is issued, the holder of the Recovery Certificate would be a Financial Creditor. He has referred to the Para 84 of the said decision which is reproduced as under :- "84. To conclude, we hold that a liability in respect of a claim arising out of a Recovery Certificate would be a "financial debt" within the meaning of clause ....
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....on of the Recovery Certificate is to be considered as a Financial Creditor. 19. The submission made by the Counsel for the Appellant in regard to the observations made in Para 51 of the aforesaid decision would not be of any help to him because ultimately conclusion has been drawn in Para 84 of the aforesaid judgment. 20. No other point has been raised. 21. In view of the aforesaid discussion, we do not find any merit in the present appeal and the same is hereby dismissed. No cost." 15. Against the dismissal of their Appeal, Visahl Chelani & Ors. filed an Appeal before the Hon'ble Supreme Court being Civil Appeal No.3806 of 2023. The Hon'ble Supreme Court in the aforesaid case noticed the rival submissions of the parties. The RP before the Hon'ble Supreme Court reiterated its view that the Appellants were only 'Financial Creditor' and not 'creditors' of a class. The learned Counsel for the Appellants before the Hon'ble Supreme Court relied on judgment of NCLT, Mumbai Bench-IV in Mr. Natwal Agrawal (HUF) vs. Ms. Ssaksh Developers & Builders Pvt. Ltd. The arguments of the Appellants have been noted in paragraph 3 of the judgment, which is as follows: ....
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....professional resisted the appeal and contented that the appellants cannot be permitted to secure two benefits. Having approached the UPRERA, they fell into a different sub-class of home buyers, who were entitled to specified amounts and, therefore, were unsecured creditors, as compared with allottees who had not invoked RERA remedies. It is submitted that such home buyers relinquished their rights under Section 18 of the RERA Act." 17. The Hon'ble Supreme Court after noticing the amendment of 2018 in sub-section 8(f) of Section 5, laid down following in paragraph-6, which is as follows: "6. It is thus evident that with the introduction of the explanation home buyers and allottees of real estate projects were included in the class of "financial creditors" - because financial debt is owed to them. On a plain reading of Section 5 (8)(f) no distinction is per se made out between different classes of financial creditors for the purposes of drawing a resolution plan. Consequently, the reasoning of the Mumbai Bench of NCLT "Mr. Natwar Agrawal(HUF)" is correct in the opinion of this Court." 18. The view of RP was disapproved by the Hon'ble Supreme Court and it was held that ....