2018 (11) TMI 1664 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - financial creditor - Section 7 of the Insolvency and Bankruptcy Code, 201 - alleged failure on the part of the borrower and the Corporate Debtor to maintain the financial discipline and default in the payment of the Pre- EMI interest/EMI in terms of Loan Agreement and Tripartite Agreement - cancellation of allotment and refund of loan amount - when allotment of Flat in the name of the borrower has not been cancelled, whether respondent builder is bound to refund the loan amount/allotment consideration to the applicant lender as claimed, at the back and without leave of the borrower/allottee? HELD THAT - Admittedly in the present case the allotment in question has not been cancelled. Accordingly, determination of cancellation amount due to the borrower and refund thereof by respondent builder directly to the applicant lender does not arise at this stage, before cancellation of the allotment. The application dismissed.

Issues Involved:
1. Jurisdiction of the Tribunal.
2. Authorization of the applicant to file the application.
3. Loan agreement and tripartite agreement details.
4. Alleged default by the respondent.
5. Respondent's contention on the maintainability of the application.
6. Legal implications of non-cancellation of the allotment.
7. Contractual obligations and rights under the tripartite agreement.
8. Adjudication of the dispute.

Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal confirmed its territorial jurisdiction over the National Capital Territory (NCT) of Delhi as the registered office of the respondent corporate debtor, M/s. Rudra Buildwell Projects Private Limited, is located in New Delhi. Therefore, the Tribunal is the appropriate Adjudicating Authority for initiating the Corporate Insolvency Resolution Process (CIRP) under Section 60(1) of the Insolvency and Bankruptcy Code, 2016 (the Code).

2. Authorization of the Applicant to File the Application:
The applicant, M/s. Indiabulls Housing Finance Ltd (IHFL), provided a certified copy of its Board Resolution dated 7th July 2017, authorizing Mr. Devbrat Mitra, Legal Manager, to appear on behalf of the company in cases pertaining to the Insolvency and Bankruptcy Code, 2016. This authorization was deemed valid for filing the present application.

3. Loan Agreement and Tripartite Agreement Details:
The loan agreement dated 6th April 2015 was executed between IHFL and the borrowers, Mr. Davendra Singh and Ms. Sushma Rajput, for a loan amount of ?73,23,391. A tripartite agreement was also executed on the same date between IHFL, the corporate debtor, and the borrowers. According to this agreement, the corporate debtor was jointly and severally liable for the payment of pre-EMI interest until the commencement of EMI.

4. Alleged Default by the Respondent:
IHFL alleged that the borrower and the corporate debtor failed to maintain financial discipline and defaulted on the payment of pre-EMI interest/EMI as per the loan and tripartite agreements. Consequently, IHFL issued a demand notice to the corporate debtor for the recall of the loan facility, cancellation of the allotment of the mortgaged property, and refund of the outstanding amount.

5. Respondent's Contention on the Maintainability of the Application:
The respondent argued that the application was not maintainable under the Code. They contended that their responsibility was limited to the payment of interest for 24 months, which had already been discharged. The respondent also emphasized that the real estate sector was under financial pressure, and the construction of the project was at an advanced stage, making it impractical to cancel the allotment.

6. Legal Implications of Non-Cancellation of the Allotment:
The Tribunal noted that the allotment of the flat in favor of the borrower had not been canceled despite the notice and reminder sent by IHFL. The Tribunal emphasized that this forum was not the appropriate place to examine why the allotment was not canceled or who was in breach of the contract.

7. Contractual Obligations and Rights Under the Tripartite Agreement:
The Tribunal examined several clauses of the tripartite agreement, including Clause 4, which outlined the joint and several liability of the borrower and the builder for the interest payment during the liability period. Clause 15 specified that in the event of default, the builder was to cancel the allotment and refund the loan amount to IHFL. However, since the allotment had not been canceled, the Tribunal concluded that the conditions for direct payment from the builder to IHFL had not been met.

8. Adjudication of the Dispute:
The Tribunal concluded that the application was premature as the allotment had not been canceled, and therefore, the refund by the builder directly to IHFL did not arise. The Tribunal dismissed the application but clarified that this order should not prejudice the applicant's rights before any other forum.

Conclusion:
The application for initiating the Corporate Insolvency Resolution Process against the respondent corporate debtor was dismissed. The Tribunal emphasized that the observations made in this order should not affect the applicant's rights in any other legal proceedings.

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