TaxTMI 
TaxTMI 
2025 (8) TMI 723
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.... passing a common impugned order of date 05.06.2024, thus for the sake of convenience both appeals are being disposed of by passing this common order. 2. CA (AT) (Ins) No. 1660 of 2024 has been preferred by the appellants who are the Directors of M/s Propertree Real Estate Solutions Pvt. Ltd. under Section 61 (1) of the IBC, 2016 against order dated 05.06.2024 passed by the National Company Law Tribunal, New Delhi, Court No. II in IA No. 4354 of 2023 filed in CP (IB) No. 505/ND/2022, against the impugned order whereby the IA No. 4354 of 2023 pertaining to their claim of Rs. 81,05,211/- as Financial Debt has been rejected by the Tribunal. 3. CA (AT) (Ins) No. 1659 of 2024 has been filed by the M/s Propertree Real Estate Solutions Pvt. Ltd. against the same impugned order whereby the IA No. 4356 of 2023 moved by the appellant pertaining to the admission of its claim of Rs. 49,96,236/- to be treated as financial debt has been rejected by the Tribunal. 4. Brief facts necessary for the disposal of the aforesaid both appeals are that M/s Unibera Developers Pvt. Ltd. were subjected to CIRP on an application moved by an operational creditor M/s Mahi Build Home Pvt. Ltd. under Sect....
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....d unit and a builder buyer agreement was also executed on 10.09.2013. The CD was supposed to handover the unit to the appellant within a period of 36 months from the date of execution of that agreement. 9. The appellants case as further stated by them is that the appellant kept acting as authorised broker of the CD and have sold several units as a result of which the CD owed liability of commission which was due and payable in favour of the appellant company and with regard to this, two separate credit notes of Rs. 5,74,800/- and Rs. 10,69,585/- of date 10.03.2015 and 02.07.2015 were issued by the CD towards the allotted flat/units against the part adjustment of the commission/brokerage payable by the corporate debtor to the appellant company. Thus, amount of Rs. 15,05,580/- stood paid by the Company to the Corporate Debtor towards the consideration of this flat/unit and in this way total amount of Rs.17,05,580/- stood paid by the CD towards the consideration of the flat/unit to the CD. 10. It is also stated by the appellants that the appellants company sold about 101 flats and with regard to the Commission of the same have raised an invoice of Rs. 99,77,449/- on 01.10.2016. ....
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....cluding tax and also a receipt of the same dated 19.02.2022 and a letter dated 19.02.2022 was also issued showing the adjustment of the amounts due on the CD. The CD however, did not deliver the possession of the allotted flats to the appellants and appellant along with other 102 homebuyers filed a Company Petition bearing CP IB No. 642 of 2022 under Section 7 of the IBC however during the pendency of the said petition the CIRP of the CD commenced vide order dated 13.01.2023 of the NCLT and Mr. Ashok Kumar Jalan was appointed as the IRP. In pursuance of the publication of Form A appellants submitted their claims in form CA on 23.01.2023 for an amount of Rs. 81,05,211/- and after exchange of various emails with the IRP the appellant was included in the list of financial creditors with 0.44% voting share, however on 14.07.2023, after about more than four months, the newly appointed Resolution Professional informed via email that the claim of the appellant cannot be considered under Form CA i.e. as a financial creditor in class of homebuyer/allottee and when the claim of the appellant was not found favour by the IRP the appellants moved aforementioned two applications before Adjudicat....
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....0/- were paid to the appellant and for the rest of the balance amount i.e. 1,25,00,000/- two units namely Unit No. 1204 in Tower No. -5A, Unibera Tower and Unit bearing No. T-5, 2301 in the same project were allotted to the appellant company. 20. It is further the case of the Respondent that no Builder Buyer Agreement was signed with regard to Unit 1204 in Tower-5A and the Builder Buyer Agreement dated 10.09.2013 had already been cancelled on 07.06.2017 by the CD and the underline transactions between the parties were of the nature of supply of services and was thus the debt due on CD was of the nature of operational debt. Submissions of Ld. Counsel for the parties 21. We have heard Ld. Counsel for the parties and have perused the record as well as the written submissions filed by them. 22. Ld. Counsel for the appellant submits that as one of the unit was allotted to the appellant by the CD after taking Rs. 50,000/- and Rs. 1,50,000/- pertaining to which the receipts were also issued, the appellant for all purposes are the homebuyers/allottees and keeping in view the amended definition of the financial creditor as provided under Section 5(8) (f) of IBC they are allottee....
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....eo Ramchandra Patil vs. Vishal Ghisulal Jain, bearing CA (AT) (Ins) No. 821 of 2021. "Arenja Enterprise Pvt. Ltd. vs. Edward Keveter (Successors) Pvt. Ltd. bearing CA (AT) (Ins) No. 528 of 2020 submits that neither RP nor the Tribunal has committed any error in treating the claim of the appellant as operational debt as the underline transactions was required to be seen and in this case as the unit allotted earlier was cancelled by the CD due to non-payment of balance money and thereafter only the amount due on the CD pertaining to the brokerage services rendered by the appellant was adjusted towards the consideration of 2 units (flats) allotted to the appellant in the project of the CD, the main transaction between the parties was of the nature of operational creditor and thus no illegality or to say any irregularity has been committed by the tribunal or RP. It is also highlighted that the appellant himself had filed an application before the tribunal under Section 9 of the IBC admitting himself as operational creditor and thus the appellant is 'estopped' from changing his stance by virtue of the principle of 'estoppel'. Analysis and Discussion 28. Having heard Ld. Counsel fo....
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....tained under Section 2(d):- "2(d) "allottee" in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent; By an amendment made in the I&B Code by Act 26 of 2018, 'allottees of real estate' have also come within the definition of Financial Creditors. Explanation added in the Section 5(8)(f) is as follows: - "[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);]" Hon'ble Supreme Court in Pioneer Urban Land and Infrastru....
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....vance payments made by allottees. In real estate projects, money is raised from the allottee, being raised against consideration for the time value of money. Even the total consideration agreed at a time when the flat/apartment is non-existent or incomplete, is significantly less than the price the buyer would have to pay for a ready/complete flat/apartment, and therefore, he gains the time value of money. Likewise, the developer who benefits from the amounts disbursed also gains from the time value of money. The fact that the allottee makes such payments in instalments which are co-terminus with phases of completion of the real estate project does not any the less make such payments as payments involving "exchange" i.e. advances paid only in order to obtain a flat/apartment. What is predominant, insofar as the real estate developer is concerned, is the fact that such instalment payments are used as a means of finance qua the real estate project. One other vital difference with operational debts is the fact that the documentary evidence for amounts being due and payable by the real estate developer is there in the form of the information provided by the real estate developer compul....
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....is supplied ) That this is against consideration for the time value of money is also clear as the money that is "disbursed" is no longer with the allottee, but, as has just been stated, is with the real estate developer who is legally obliged to give money's equivalent back to the allottee, having used it in the construction of the project, and being at a discounted value so far as the allottee is concerned (in the sense of the allottee having to pay less by way of instalments than he would if he were to pay for the ultimate price of the flat/apartment). 76. Sub-clause (f) Section 5(8) thus read would subsume within it amounts raised under transactions which are not necessarily loan transactions, so long as they have the commercial effect of a borrowing. We were referred to Collins English Dictionary & Thesaurus (2nd Edn., 2000) for the meaning of the expression "borrow" and the meaning of the expression "commercial". They are set out hereinbelow: "borrow. -vb 1. to obtain or receive (something, such as money) on loan for temporary use, intending to give it, or something equivalent back to the lender. 2. to adopt (ideas, words, etc.) from another sour....
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....homebuyers would or would not be included within Section 5(8)(f), it was best to set these doubts at rest by explicitly stating that they would be so covered by adding an Explanation to Section 5(8)(f). Incidentally, the Insolvency Law Committee itself had no doubt that given the "financing" of the project by the allottees, they would fall within Section 5(8)(f) of the Code as originally enacted. 101. Section 5(8)(f) as it originally appeared in the code being a residuary provision, always subsumed within it allottees of flats/apartments. The explanation together with the deeming fiction added by the amendment act is only clarificatory of this position in law". Hon'ble Supreme Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited Vs. Axis Bank Limited And Others (2020) 8 SCC 401 held as under: "The essentials for financial debt and financial creditor 46. Applying the aforementioned fundamental principles to the definition occurring in Section 5(8) of the Code, we have not an iota of doubt that for a debt to become "financial debt" for the purpose of Part II of the Code, the basic elements are that it ought to be a disbursal a....
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....agrave;-vis the corporate debtor. Therefore, for a person to be designated as a financial creditor of the corporate debtor, it has to be shown that the corporate debtor owes a financial debt to such person. Understood this way, it becomes clear that a third party to whom the corporate debtor does not owe a financial debt cannot become its financial creditor for the purpose of Part II of the Code. 50. A conjoint reading of the statutory provisions with the enunciation of this Court in Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17], leaves nothing to doubt that in the scheme of the IBC, what is intended by the expression "financial creditor" is a person who has direct engagement in the functioning of the corporate debtor; who is involved right from the beginning while assessing the viability of the corporate debtor; who would engage in restructuring of the loan as well as in reorganisation of the corporate debtor's business when there is financial stress. In other words, the financial creditor, by its own direct involvement in a functional existence of corporate debtor, acquires unique position, who could be entrusted with the task of ensuring ....
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.... Rs. 50,000/- and Rs. 1,50,000/- were paid by the appellant Company towards the booking of flat no. 201 in tower-IV of one of the project of the CD and two receipts in this regard were also issued in favour of the CD. It is also reflected that Builder Buyer Agreement was executed between the parties on 10.09.2013 with regard to flat no. 1204 in Tower-V for Rs. 33,75,600/- and the money paid earlier to the CD (Rs. 2,00,000/- (Rs. 50,000/-+1,50,000/-) and brokerage fee due on CD was adjusted in the consideration of this new flat. Thereafter the CD appears to have issued two credit notes of dated 10.03.2015 and 02.07.2015 of Rs. 5,74,800/- and Rs. 10,69,585/- towards the above flat for part adjustment of commission payable by the CD to the appellant company towards brokerage fee. 30. It is also reflected that credit notes mentioned above were issued by the CD pertaining to the brokerage of the appellant company, which was due on the CD till that point of time. Thus, it is clear that up to this extent except Rs. 2,00,000/- (Rs. 50,000/-+ Rs. 1,50,000/-) no amount was paid/disbursed by the appellant company and the remaining consideration of the flat was also paid with regard to the ....
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....the rest of the consideration for the two flats allotted, is shown by the adjustment of the brokerage/commission due on CD. 34. The other terms and conditions of the MoU are not important for us as the controversy before us is only with regard to the nature of the debt and not with regard to the other terms and conditions of the MoUs. Suffice is to say that settlement amount of Rs. 1,75,00,000/- was agreed between the parties and out of this Rs. 50,00,000/- were paid to the appellants by the CD and balance Rs. 1,25,00,000/- was adjusted as the consideration for allotment of two flats namely Tower-5A, 1204 and T-5, 2301 in one of the project of the appellant. Thus the money which was adjusted towards consideration of these flats was the brokerage fee which was due on the CD and no money was parted or disbursed by the appellants in lieu of these agreements for allotment of 2 flats. 35. It is also an admitted fact that another MoU dated 03.02.2022 was executed between the parties amending the terms of earlier settlement dated 25.11.2021. It is also admitted to the parties that on the basis of this settlement, on an appeal filed by the Suspended Directors of the CD, this Tribunal....