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2019 (11) TMI 1591 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - existence of default or not - efficacious remedies are available to the financial creditors or not. Time limitation of application - HELD THAT - It is noted that various communications have been sent by the corporate debtor to the financial creditors by which the rights and the claims of the financial creditors are confirmed. In this connection, a reference may be made to the communication dated December 20, 2016 sent by the corporate debtor to the financial creditors for deposit of the amount of VAT of ₹ 3,00,615. Further, on December 22, 2016 an e-mail was sent by the corporate debtor to the financial creditors attaching the statement of account for the unit allotted to the financial creditors. There is another communication sent by the corporate debtor to the financial creditors on March 5, 2019 with the request to collect the refund cheque for an amount of ₹ 1,51,34,908. In view of these communications, the application is not barred by limitation - issue decided in favour of the financial creditors and against the corporate debtor. Whether the financial creditors have defaulted in making the payments? - HELD THAT - On perusal of the record placed on file, the financial creditors have paid an amount of ₹ 2,75,55,186 against the total sale consideration of ₹ 3,80,10,000 against the subject property, which is a substantial payment. However, due to non-performance of the corporate debtor the balance payments were not made by the financial creditors, as the corporate debtor failed to honour the commitment in terms of the agreement, which provides that the possession of the subject property was to be handover to the financial creditors by first week of February 2016. In view of it, the financial creditors cannot be said to be defaulters - the issue stands decided in favour of the financial creditors and against the corporate debtor. Whether other efficacious remedies are available to the financial creditors? - HELD THAT - Learned counsel for the financial creditors has referred to the judgment of the hon'ble apex court given in Pioneer Urban Land and Infrastructure Ltd. v. Union of India 2019 (8) TMI 532 - SUPREME COURT , wherein it was observed that the remedies available under the Code, Consumer Protection Act, and RERA are concurrent remedies. Therefore, the financial creditors are not legally barred to invoke the provisions of the IBC, 2016 in the case on hand - the issue is decided in favour of the financial creditors and against the corporate debtor. Thus, the corporate debtor has not handed over the possession of the subject property to the financial creditors, as the construction work could not be completed within the stipulated time and there is no proof for extension of time by the concerned authority. Therefore, there is debt, due and payable, which the corporate debtor failed to pay. Thus, the default on the part of the corporate debtor is ascertained based on the documentary evidenced placed on record by the financial creditors - the application of the financial creditors is complete in all respect. Application admitted - moratorium declared.
Issues Involved:
1. Whether the application is time barred? 2. Whether the financial creditors have defaulted in making the payments? 3. Whether other efficacious remedies are available to the financial creditors? Issue-wise Analysis: Issue No. 1: Whether the application is time barred? The Tribunal noted that various communications had been sent by the corporate debtor to the financial creditors, confirming their rights and claims. Specifically, a communication dated December 20, 2016, requested a VAT deposit of ?3,00,615, followed by an email on December 22, 2016, attaching the statement of account. Another communication on March 5, 2019, requested the financial creditors to collect a refund cheque for ?1,51,34,908. These communications confirmed the ongoing acknowledgment of debt, thereby ruling that the application is not barred by limitation. Hence, Issue No. 1 was decided in favor of the financial creditors. Issue No. 2: Whether the financial creditors have defaulted in making the payments? The corporate debtor argued that the financial creditors had delayed balance payments and thus were defaulters. However, the Tribunal found that the financial creditors had paid a substantial amount of ?2,75,55,186 against the total sale consideration of ?3,80,10,000. The financial creditors withheld the balance due to the corporate debtor's failure to honor the commitment of handing over possession by February 2016. Therefore, the Tribunal concluded that the financial creditors could not be considered defaulters. Issue No. 2 was decided in favor of the financial creditors. Issue No. 3: Whether other efficacious remedies are available to the financial creditors? The corporate debtor contended that alternative remedies were available under the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Consumer Protection Act, 1981. In response, the financial creditors cited a Supreme Court judgment stating that remedies under the Code, Consumer Protection Act, and RERA are concurrent. Thus, invoking the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) was legally permissible. Consequently, Issue No. 3 was decided in favor of the financial creditors. Conclusion: The Tribunal concluded that the corporate debtor had failed to hand over possession of the subject property within the stipulated time, and there was no proof of an extension of time by the concerned authority. This established the debt as due and payable, which the corporate debtor failed to pay, confirming the default. The financial creditors' application was found to be complete, and the name of the proposed resolution professional, Mr. Jugraj Singh Bedi, was accepted. Consequently, the application was admitted, and the Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor, to be completed within 180 days. The Interim Resolution Professional (IRP) was directed to take charge immediately and make the necessary public announcements. Moratorium Declaration: A moratorium was declared effective from the date of the order until the completion of the CIRP, prohibiting: - Institution or continuation of suits or proceedings against the corporate debtor. - Transferring, encumbering, or disposing of any assets of the corporate debtor. - Actions to foreclose, recover, or enforce any security interest. - Recovery of any property occupied by the corporate debtor. The supply of essential goods or services to the corporate debtor shall not be terminated during the moratorium period. The IRP was directed to comply with relevant sections of the IBC, 2016, and the corporate debtor's management was instructed to cooperate fully with the IRP. Order Pronouncement: The order was pronounced in open court, with no order as to costs. A copy of the order was to be provided to the corporate debtor free of cost.
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