2019 (9) TMI 1456 - Tri - IBC

Initiation of CIRP - default in handing over possession - it is contended by the CD that the FC for the termination of the agreement has relied upon a wrong clause, as invocation of clause 6.4 of the Agreement is completely misplaced on the part of the FC - HELD THAT - It is clearly evident that even after the offer of possession made in the year 2017 by the CD effective possession of the property contracted to each of the parties have not been given by the CD which is also admitted by CD, however, wants to consider exclusion of time of delay as beyond its control, which plea cannot be entertained. It is required to be kept in mind by this Tribunal the recent pronouncement made by the Hon'ble Supreme Court of India in the matter of Pioneer Land Infrastructure Ltd. another Vs. Union of India and others 2019 (8) TMI 532 - SUPREME COURT , wherein the Hon'ble Supreme Court after considering several objections raised by the Real Estate Developers as to whether a Home Buyer can be considered as an FC, has categorically come to the conclusion that Home Buyers can be considered as FCs, both prior to as well as subsequent to the amendment of Sec. 5(8) (f) of IBC 2016 by Amendment Act of 2018 incorporating the explanation to the said provisions as the Home Buyers finance the project significantly as developed by the Real Estate Developers. It is clearly evident that even after the offer of possession made in the year 2017 by the CD effective possession of the property contracted to each of the parties have not been given by the CD which is also admitted by CD, however, wants to consider exclusion of time of delay as beyond its control, which plea cannot be entertained - Petition admitted - moratorium declared.

Summary

Issues:
1. Application under Section 7 of Insolvency and Bankruptcy Code, 2016 filed jointly by three Petitioners.
2. Details of the Corporate Debtor (CD) and financial claims by the Petitioners.
3. Allegations of default by the CD in handing over possession of properties to the Petitioners.
4. Arguments and contentions presented by both parties regarding the termination of agreements and possession of flats.
5. Legal interpretation of Home Buyers as Financial Creditors (FCs) and their rights under the IBC 2016.
6. Decision on admitting the petition and initiating Corporate Insolvency Resolution Process (CIRP) for the CD.

Analysis:
1. The petition was filed under Section 7 of the IBC by three Petitioners, detailing the incorporation of the Corporate Debtor (CD) and financial claims by the Petitioners. The proposed Interim Resolution Professional (IRP) was named in the petition.
2. The Petitioners, as Financial Creditors, alleged default by the CD in handing over possession of properties, specifying the amounts due and outstanding compensation claims for delays by each Financial Creditor.
3. The Petitioners booked apartments in a project developed by the CD, and after delays in possession, sought termination of agreements and refund of principal amounts with interest, leading to the petition before the Tribunal.
4. The CD contended that possession was offered in 2017, and any delays were due to circumstances beyond their control, challenging the termination of agreements by the Petitioners.
5. The Tribunal referenced a recent Supreme Court judgment, establishing Home Buyers as Financial Creditors under the IBC, emphasizing their right to seek termination of agreements and refunds in case of default by the Real Estate Developers.
6. Considering the facts and legal precedents, the Tribunal admitted the petition, initiated the CIRP for the CD, appointed the proposed IRP, and imposed a moratorium under Section 14 of the IBC, directing adherence to relevant rules and regulations during the resolution process.