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2019 (10) TMI 1350 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor committed default in making repayment of its dues - existence of debt and dispute or not - Time Limitation. Time Limitation - contention of the Corporate Debtor that the Petition is hit by Law of Limitation has to be accepted in view of the fact that the date of the default mentioned in the petition is 01.04.2014, but this petition was filed on 03.07.2019, which is more than three years after the date of default - HELD THAT - It is beneficial to refer the judgments of the Hon'ble Supreme Court on limitation in Insolvency Bankruptcy Petitions, viz. B. K. Education Services Pvt. Ltd. v. Parag Gupta Associates 2018 (10) TMI 777 - SUPREME COURT , Vashdeo R Bhujwani v. Abhyudaya Cooperative Bank Ltd. Anr. (2019 SCC OnLine SC 1159) and Sagar Sharma v. Phoenix ARC Limited MANU/SC/1357/2019 , wherein it was held that Article 137 of the Limitation Act will apply to the proceedings wherein three years is the limitation period. Hence, the Petition is liable to be dismissed as hit by limitation. This is a case where the Petitioner purchased five units from different projects of the Corporate Debtor. The Petitioner got substantial discount from the Corporate Debtor for some of the units. Further, the Petitioner has received a compensation of ₹ 15,00,000/- from the Corporate Debtor for the delay in giving possession of the Unit in this case - Since the Petitioner has purchased five units from different projects of the Corporate Debtor, the petitioner is a speculative investor to get maximum advantage of the booming real estate market at that time, and when the real estate market is in difficult time, he wants to come out of the clutches of liability staring on him by shifting the liability on the Corporate Debtor. Admittedly, the Flat is ready for possession but the Petitioner is adamant on taking refund. The interest of the Petitioner seems to be something other than the Flat. However, we refrain from making any comment on the motives of the Petitioner. In a project like this where hundreds of flat buyers are involved, when compensation of this magnitude is acceded as demanded or CIRP is ordered, we are afraid that it may lead to utter chaos in the real estate market in the country and it will affect the real estate sector wholly and a situation may arise that no investor will be forthcoming to invest in real estate sector - Admittedly the flat was ready and completion certificate was obtained on 13.04.18. We are of the view that petitions of this nature have to be dealt with in a macro economic perspective also, failing which it will scupper the prospects of real estate sector. Petition dismissed.
Issues Involved:
1. Limitation period for filing the petition. 2. Merits of the case regarding debt and default. 3. Petitioner's status as a speculative investor. 4. Impact on the real estate sector. Detailed Analysis: 1. Limitation Period for Filing the Petition: The Corporate Debtor contended that the debt is barred by limitation since the date of default is mentioned as 01.04.2014, and the petition was filed on 03.07.2019, which is more than three years after the date of default. The Tribunal accepted this contention, referencing judgments from the Hon'ble Supreme Court, including B. K. Education Services Pvt. Ltd. v. Parag Gupta & Associates and Vashdeo R Bhujwani v. Abhyudaya Cooperative Bank Ltd. & Anr., which held that Article 137 of the Limitation Act applies to Insolvency & Bankruptcy Petitions, with a limitation period of three years. Therefore, the petition was dismissed as being hit by limitation. 2. Merits of the Case Regarding Debt and Default: Despite the limitation issue, the Tribunal examined the merits of the case. The Petitioner sought the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for a default amounting to Rs. 5,85,35,387/-, including the principal amount and interest. The Corporate Debtor argued that the debt was not due as the Petitioner had not cleared the dues required for possession of the flat. They also contended that they had paid Rs. 15,00,000/- as partial compensation for the delay, which the Petitioner accepted. The Tribunal noted that the flat was ready for possession, and the Petitioner had not taken steps to complete the possession formalities. 3. Petitioner's Status as a Speculative Investor: The Tribunal observed that the Petitioner had purchased five units from different projects of the Corporate Debtor and received substantial discounts on some units. This indicated that the Petitioner was a speculative investor aiming to benefit from the booming real estate market. The Tribunal inferred that the Petitioner's intention was to extract more compensation rather than resolve the Corporate Debtor's insolvency. 4. Impact on the Real Estate Sector: The Tribunal expressed concern about the broader implications of admitting such petitions. It highlighted that in a project involving numerous flat buyers, granting compensation or ordering CIRP could lead to chaos in the real estate market, deterring future investments. The Tribunal emphasized that the flat was ready, and the Corporate Debtor had obtained the completion certificate. It concluded that petitions like this should be viewed from a macroeconomic perspective to avoid disrupting the real estate sector. Conclusion: The petition was dismissed on the grounds of being barred by limitation. Additionally, the Tribunal found that the Petitioner was a speculative investor seeking compensation rather than resolution. The Tribunal highlighted the potential negative impact on the real estate sector if such petitions were admitted. The Petitioner was granted liberty to approach the appropriate authority for claiming compensation if advised.
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