Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases IBC IBC + Tri IBC - 2021 (5) TMI Tri This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2021 (5) TMI 112 - Tri - IBC


Issues Involved:
1. Whether the Application was filed under Section 7 of I&B Code, 2016 by the Applicants in the capacity of Allottees of Apartments or on the basis of Arbitral Award as Decree Holders?
2. Whether the Application is barred by limitation?
3. Whether the Application is maintainable against the Corporate Debtor/builder alone since the project is a joint venture by the Corporate Debtor and M/s. Cherupushpam Films (P) Ltd?

Issue-wise Detailed Analysis:

Issue No. 1: Capacity of Applicants (Allottees vs. Decree Holders)
The Applicants contended that they entered into an agreement with the Corporate Debtor and M/s. Cherupushpam Films (P) Ltd to purchase apartments, and the Corporate Debtor acknowledged the sale consideration. The Respondent argued that the Application was filed by the Applicants as 'decree holders' and not as 'allottees'. The Tribunal examined Section 5(7) and Section 5(8) of the I&B Code, 2016, which define 'Financial Creditor' and 'Financial Debt'. The Tribunal found that the debt was disbursed against the consideration for the time value of money, including amounts raised from allottees under a real estate project, thus having the commercial effect of a borrowing. Therefore, the Applicants were considered as Financial Creditors.

Issue No. 2: Limitation
The Corporate Debtor argued that the Application was barred by limitation as the default occurred over three years prior to the date of filing. The Applicants countered that the default date should be considered as the date when the Corporate Debtor failed to deliver possession after receiving notice. The Tribunal noted that the Corporate Debtor failed to deliver possession and did not produce any documents showing that possession was offered within the stipulated time. The Tribunal referred to the Supreme Court judgment in Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd., which held that the limitation period begins from the date of default. Since the default occurred over three years before the filing date, the Application was deemed time-barred.

Issue No. 3: Maintainability Against Corporate Debtor Alone
The Respondent contended that the Application was not maintainable against the Corporate Debtor alone since the project was a joint venture with M/s. Cherupushpam Films (P) Ltd. The Applicants argued that they could proceed against any one of the partners of the joint venture. The Tribunal examined the joint venture agreement and found that both parties were jointly responsible for the construction and development, sharing costs and profits. The Tribunal referred to the NCLAT judgment in Mamatha v. AMB Infrabuild Pvt. Ltd., which held that in a joint venture project, both parties should be treated as one for the purpose of initiating CIRP. Therefore, the Application was not maintainable against the Corporate Debtor alone.

Conclusion:
The Tribunal concluded that the Applicants failed to succeed in their Application on all three issues. Consequently, the Application IBA/31/KOB/2020 was dismissed for being devoid of merit.

Dated the 21st day of April, 2021.

 

 

 

 

Quick Updates:Latest Updates