TaxTMI 
TaxTMI 
2025 (9) TMI 1543
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....n of Multi-storey Housing and Commercial Complex by entering into the Joint Development Agreement with M/s. Logix City Developers Ltd. ii. M/s. Dream Procon Private Limited approached the appellant for investment in the said project at Victory Ace, Plot No. GH-02, Sector 143, Expressway Gautambudh Nagar, NOIDA. iii. 6 Articles of Agreement were entered between the appellant and corporate debtor, where appellant agreed to invest in residential units (6 in number) in the project Victory Ace. Article of Agreement were entered in 2015 and again on 13.04.2017. iv. Appellant's case is that the amount of Rs. 37 Lakhs was paid for one unit. The appellant initiated arbitration proceedings against the corporate debtor and award dated 28.08.2019 was issued in favour of the appellant against the corporate debtor. Prior to the issuance of the aforesaid award, an application under Section 7 was filed against the corporate debtor by Priyanshi Arora a homebuyer, the Corporate Insolvency Resolution Process (CIRP) proceedings were initiated by order dated 06.09.2019 against the corporate debtor. v. Public announcement was made by the Resolution Professional (RP) i....
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....creditor, it had no jurisdiction to reclassify the appellant's claim as unsecured financial creditor. Adjudicating authority committed error in relying on the judgment of the Hon'ble Supreme Court in the matter of 'M/s. RPS Infrastructure Ltd.' Vs. 'Mukul Kumar & Anr.' in Civil Appeal 5590/2021. In any event, appellant is at least liable to be classified as creditor in a class/allottee by virtue of Articles of Agreement. 5. Learned counsel for the RP refuting the submissions of the appellant submits that no security interest was created in favour of the appellant. Appellant in claim 'Form-C' dated 28.10.2019 has stated that there is a security interest in favour of the appellant on the said units in the project, however, no material was provided by the appellant except the arbitration award. Arbitration award dated 28.08.2019 is admittedly only a money decree and Clause (v) on which the appellant places reliance merely retrains the corporate debtor from allotting or alienating or dealing with or disposing of the units which cannot be said to create any security interest in the assets. Appellant has not provided any document showcasing creation of any security interest in favour ....
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....'s claim filed in Form CA need to be accepted as Financial Creditor in class i.e. a homebuyer. In response to the publication made by the IRP, Appellant submitted its claim in Form C dated 28.10.2019. Total amount of claim as claimed in Column 4 in Form C is as follows:- 4. Total amount of claim (including any interest as at the insolvency commencement date) 1. Total in Principal - Rs 2,77,00,000 2. Total due interest @2.5% per month (up to 31.01.2019) Rs. 2,51,95,200 3. Check Bounce penalty at 1% per month-Rs. 51606 4. Expense of Arbitration Arbitrator's fees -Rs. 9,48,416 including (Expenses borne by M/s Star Maxx properties, as per clause 13 of the Agreements) Total Claim: Rs. 5,38,95,222 (Rupees Five crores thirty eight lakhs ninety five thousand two hundred and twenty two only) (As per the Arbitration Award Dt.28.08.2019 in ARB Case No. 1 of 2019, before Ld. Sole Arbitrator Mr. MC Mehra, Additional District & Session Judge(Retd.)) 8. In Column 8 which provides for details of any security held, the value of the security, and the date it was given, Appellant has referred to Agreements of year 2015 and Agreement dated 17.04.2017. Column 8 o....
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....o Residential Unit (Flat) No. Area (sq.ft) Floor 1. A1-001 1475 Ground AND WHERES the first party has agreed to allot the said Residential area at "Victory Ace", Plot No. GH-02, Sector- 143, Expressway, Gautam budh Nagar, Noida, Uttar Pradesh" to the second party (the allottee) and the second party has agreed to acquire the ownership of above said unit In the above said project for total consideration of Rs. 37,00,000/- (Rupees. Thirty Seven Lacs Only) including of IDC, EDC, Service Tax, life time maintenance charges/expenses or any other government/non government tax as applicable. The second party has paid to the first party as below against the said residential area. In pursuance of above agreement, the first party and the second party have agreed to deal on the following terms and condition: That in pursuance of the meeting held and the agreement between the first party and the second party, the second party has paid a sum of Its. 37,00,000/- (Rupees. Thirty Seven Lacs Only) towards entire value of the Residential Unit and the first party has allotted the above said Residential in favour of the second party as per details below:- ....
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....ditor but subsequently in the list of creditors uploaded by the Resolution Professional, security was shown as 'nil'. Appellant has relied on minutes of the CoC meeting held on 23.12.2019 in which minutes under Agenda Item No.3, CoC has taken note of the list of creditors. Agenda Item No.3 is as follows:- "AGENDA ITEM NO. 3 To take note of the list of Creditors The IRP apprised the member with the following details of the claims received & admitted by him and voting for the second meeting of the Committee of Creditors: Sr. No. Name of the Financial Creditor Claim Amount Voting % Remarks Submitted (Rs.) Admitted (Rs.) 1 Home Buyers (FCin class) 3,53,17,78,271 2,67,83,99,469 95.49 Secured Against the Flat Purchased & mentioned in Builder Buyer Agreement 2 Moneywise Financial Services Private Limited 7,25,19,134 7,25,19,134 2.59 Secured-Against the following 22 units in Victory Ace Residential Project Al-401,802,1003,1101,1102,1603 A2 00003, 101,201, 301,801, 1003, B1-101, 201, 501, 1001, 1402, B2-1401, 1402, CI 1001. 1201, C2 1001 3 M/s Star Mas Properties 5,38,95,222 5,38,95,222 1.9....
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....essway, Gautambudh Nagar, Noida, U.P.; wherein the Claimant has paid the entire sale consideration. 22. Pending application, if any, stands disposed off. A copy of this award is to be sent free of cost to both the parties. File be consigned to the record room." 14. Clause 5 of the Arbitral Award has referred to be treated as security. List of creditors has been uploaded by the Resolution Professional as on 17.06.2020 which is brought on record at Page 211 of the paper book which is as follows:- "LIST OF FINANCIAL CREDITORS AS ON 06.09.2019 (UPDATED UPTO 17TH JUNE, 2020) S. No. Name of Creditor Total Claimed Amount (In Rs. ) Total Claim Admitted (In Rs. ) Status of Claims Voting % SECURITY INTEREST 1 Moneywise Financial Services Private Limited 72,519,134 72,519,134 Admitted 2.20% As per Annexure-A 2 M/s Star Max Properties 53,895,222 53,895,222 Admitted 1.64% NIL DREAM PROCON PRIVATE LIMITED (UNDERGOING CORPORATE GOLVENCY RESOLUTION PROCESS) LIST OF FINANCIAL CREDITORS AS ON 06.09.2019 (UPDATED UPTO 17TH JUNE, 2020) S. No. Name of Creditor Total Claimed Amount (In Rs. ) Total Cl....
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....be sold to other financial creditors." 15. The above list indicate that security of Appellant was mentioned as 'nil' and security with regard to various homebuyers was mentioned as 'nil'. Secured creditor and security interest is defined in Section 3 of the IBC. Section 3(30) defines 'secured creditor' and Section 3(31) defines 'security interest' which are as follows:- "3. Definitions. - (30) "secured creditor" means a creditor in favour of whom security interest is created; (31) "security interest" means 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 performance of any obligation of any person: Provided that security interest shall not include a performance guarantee" 16. The question to be answered is as to whether the transaction i.e. Arbitral Award dated 28.08.2019 (Clause V as noted above) or Articles of Agreement can be held to create a security interest. When we look into the Arbitral Award Cla....
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....efore the Bankruptcy proceedings has obtained by that attachment any charge or lien upon the attached property. In the Full Bench case of Anand Chandra Pal v. Panchi Lal Sarnia, it was considered that the judgment-creditor who had obtained an attachment had a charge or lien upon the attached property; and that view is also expressed, at any rate, by one of the Judges in the Full Bench case of Shib Kristo Shaha Chowdhry v. Kishen Chand Golecha. But in the case of Soobul Chunder Law v. Russick Lall Mitter it is distinctly laid down that the attachment creates no charge upon the property and that view is supported by a recent case before the Judicial Committee of the Privy Council, which is Moti Lal v. Karrabuldin, where it is distinctly held that attachment under Chapter XIX of the Code of Civil Procedure merely prevents alienation and does not give title. In advising Her late Majesty their Lordships say thus: "Attachment, however, only prevents alienation, it does not confer any title." I think, therefore, it must be taken that the attaching creditor here did not obtain by his attachment any charge or lien upon the attached property, and if so, no question as to th....
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....judgment which is as follows:- "57. Lastly, the liquidator had urged that without registration of charge, the same was unenforceable under liquidation proceedings. Section 77 of the Companies Act, 2013 reads as follows: "77. Duty to register charges, etc.-(1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation: Provided that the Registrar may, on an application by the company, allow such registration to be made within a period of three hundred days of such creation on payment of such additional fees as may be prescribed: Provided further that if registration is not made within a period of three hundred days of such creation, the company shall seek extension of time in accordance with Section 87: Provided also that any ....
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....g dues of the previous owner since electricity arrears do not automatically become a charge over the premises. Such an action is permissible only where the statutory conditions of supply authorise the recovery of outstanding electricity dues from a subsequent purchaser claiming fresh connection of electricity, or if there is an express provision of law providing for creation of a statutory charge upon the transferee." 44. This Court held that the creation of a charge need not necessarily be based on an express provision of the 2003 Act or plenary legislation, but could be created by properly framed regulations authorised under the parent statute. In these circumstances, the argument of PVVNL that by virtue of Clause 4.3(f)(iv) of the Supply Code, read with the stipulations in the agreement between the parties, a charge was created on the assets of the corporate debtor, is merited. A careful reading of the impugned order [Raman Ispat (P) Ltd. v. Paschimanchal Vidyut Vitran Nigam Ltd., 2018 SCC OnLine NCLT 25732] of the NCLT also reveals that this position was accepted. This is evident from the order of NCLAT which clarified that PVVNL also came under the definition of "secu....
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.... of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. 12. As held in Natwar Agrawal [Natwar Agrawal v. Ssakash Developers & Builders (P) Ltd., 2023 SCC OnLine NCLT 682] by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallised in the form of a court order or decree. That does not alter or disturb the status of the party concerned - in the present case of allottees as financial creditors. Furthermore, Section 238 IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the RP is artificial; it amounts to "hyper-classification" and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanced. 13. In view of the foregoing reasons, the impugned order [ Order dated 28-2-2023 by NCLAT, in Vishal Chelani v. Debashis Nanda, 2023 SCC OnLine Nclat 1118] is her....
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....s that can approach and seek remedies under RERA - no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. As held in Natwar Agarwal (HUF) (Supra) by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently, its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to "hyper-classification" and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanced." 7. In view of the law laid down by the Hon'ble Supreme Court, it is now well settled that the status of the party i.e. allo....
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....and which are produced by the plaintiff in court will be delivered to the defendants and that in default of payment as aforesaid, the plaintiff may apply to the court for passing a final decree for the sale of the plaint schedule property and that the money realised by such sale shall be applied in payment of the amount due under the decree, and the balance if any, shall be paid to the 1st defendant and that if the money realised by the sale of the plaint schedule property is insufficient for payment of the decree debt in full, the plaintiff shall be at liberty to apply for a personal decree against Defendants 2 to 5 for the balance and that the defendants will suffer cost hitherto incurred." After noticing the contents of the Decree, Hon'ble Supreme Court observed that right of the Company to deposit the decree amount was available till 28th August, 1982 and thereafter the matter had passed from the domain of the contract to that of judgment. In paragraph 16, following has been laid down: "16. From the above discussion, it follows that the right of the respondents including the Company represented by the Official Liquidator to deposit the decree amount was availa....
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.... to relief from the Company Court accordingly. 19. Reverting to the facts of this case, on the construction of the decree we have already held that the charge was kept alive till 28-8-1982 and thereafter in default of payment of decree amount the sale order would take effect. In this case, admittedly the decree amount was not paid before 28-8-1982, as such the matter had passed from the domain of contract to the realm of the judgment. The Official Liquidator filed application on 21-3-1983 seeking to declare the decree as void. By that date, what was operative in the decree was not a mere unregistered charge but an order for sale of mortgaged property for realisation of decree amount. The preliminary decree cannot therefore be said to be void and inoperative." The ratio of the above judgments of the Hon'ble Apex Court is that when charge though unregistered forms part of a decree, in executing the Decree, the plea of charge not being registered does not hold any water." 29. Present is a case where admittedly no charge has been registered by the corporate debtor or by the appellant but Respondents are not placing their claims on the ground that no charge was registered....