2019 (10) TMI 1355 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - H ELD THAT - The form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code. We are satisfied that a default amounting to lacs of rupees has occurred. As per requirement of Section 4 of the Code if default amount is one lac or more then the CIR Process would be issued. The application under sub section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Application admitted - moratorium declared.

Issues Involved:
1. Determination of the Petitioners as Financial Creditors under the Insolvency and Bankruptcy Code, 2016.
2. Territorial jurisdiction of the Tribunal.
3. The validity of the builder buyer agreements and the obligations of the Corporate Debtor.
4. The objections raised by the Corporate Debtor against the initiation of the Corporate Insolvency Resolution Process (CIRP).
5. Compliance with the procedural requirements under Section 7 of the Insolvency and Bankruptcy Code, 2016.
6. Appointment of the Interim Resolution Professional and declaration of moratorium.
7. Directions for cooperation from the ex-management and other personnel of the Corporate Debtor.

Detailed Analysis:

1. Determination of the Petitioners as Financial Creditors:
The petitioners, who are allottees of a real estate project, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 to initiate the Corporate Insolvency Resolution Process (CIRP) against MSA Developers Private Limited, the Corporate Debtor. The tribunal confirmed that the petitioners are financial creditors as per Section 5(8)(f) of the Code, supported by the Supreme Court judgment in Pioneer Urban Land and Infrastructure Limited v. Union of India, which upheld the amendment including allottees as financial creditors.

2. Territorial Jurisdiction:
The Corporate Debtor, MSA Developers Private Limited, has its registered office in Delhi. Therefore, the Tribunal has territorial jurisdiction under Section 60(1) of the Code.

3. Validity of Builder Buyer Agreements and Obligations of the Corporate Debtor:
The petitioners entered into builder buyer agreements with the Corporate Debtor between 2013-2015 for purchasing residential flats in the project "MSA Circuit Heights." The agreements stipulated that the flats would be handed over within 36 months, with a grace period of 6 months. The Corporate Debtor failed to deliver possession even after the extended period, constituting a breach of contract. The agreements also included a buy-back scheme, which the petitioners opted for due to the delay.

4. Objections Raised by the Corporate Debtor:
The Corporate Debtor raised several objections:
- Ongoing construction and monitoring by the Delhi High Court.
- Allegations that petitioners are speculative buyers.
- Lack of documentary evidence for the claimed amount.
- Initiation of insolvency proceedings as a coercive measure.
The Tribunal found these objections unconvincing, noting that the petitioners had waited beyond the maximum stipulated period and had valid claims supported by documentary evidence.

5. Compliance with Procedural Requirements:
The Tribunal examined the application under Section 7 of the Code and found it complete. The petitioners provided all necessary documents, including builder buyer agreements, bank statements, and receipts confirming payments. The Tribunal was satisfied that a default had occurred, and the application met all procedural requirements.

6. Appointment of Interim Resolution Professional and Declaration of Moratorium:
The Tribunal appointed Shri Rabindra Kumar Mintri as the Interim Resolution Professional. A moratorium was declared under Section 14 of the Code, prohibiting the institution of suits, transferring assets, and other actions against the Corporate Debtor. The Interim Resolution Professional was directed to make a public announcement and perform his duties as per the Code.

7. Directions for Cooperation from Ex-Management:
The Tribunal directed the ex-management and other personnel of the Corporate Debtor to cooperate with the Interim Resolution Professional. They were required to provide all necessary documents and information within one week.

Conclusion:
The Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process against MSA Developers Private Limited. The Interim Resolution Professional was appointed, and a moratorium was declared to facilitate the resolution process. The objections raised by the Corporate Debtor were dismissed, and the Tribunal emphasized the need for cooperation from the ex-management to ensure a smooth resolution process.

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