2019 (2) TMI 1990 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - There is a debt which was payable and in terms of the settlement it was not paid and, therefore, the application under Section 7 was maintainable. Learned Counsel appearing on behalf of the group of allottees submits that in their cases also the Real Estate Owner ( Corporate Debtor) has failed to provide the flats and/or refund the amount. They have jointly applied as Resolution Applicants and their Resolution Plan is pending consideration. - Appeal dismissed.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Treatment of infrastructure allottee as a Financial Creditor.
3. Existence of due payable at the time of admission of the application under Section 7.

Analysis:
1. The judgment pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by an allottee of real estate against a Corporate Debtor. The National Company Law Tribunal admitted the application, which was subsequently challenged before the National Company Law Appellate Tribunal. The matter involved the constitution of the Committee of Creditors, submission of Resolution Plans, and consideration by the Committee of Creditors.

2. The issue of whether the infrastructure allottee should be treated as a Financial Creditor was raised. The appellant argued that the allottee should not be considered a Financial Creditor as the amount disbursed was against the consideration for time value of money for the flat. The appellant relied on a previous case to support their argument. However, the Tribunal held that the Respondent was rightly treated as a Financial Creditor by the Adjudicating Authority, despite the subsequent amendment to Section 5(8) of the I&B Code.

3. Another key issue was the existence of a due payable at the time of admission of the application under Section 7. The appellant contended that there was no due payable at that time, citing a letter from the Corporate Debtor suggesting a refund of the booking amount. However, it was revealed that postdated cheques provided to the appellant had bounced, indicating an unpaid debt. The Tribunal concluded that there was indeed a payable debt that was not settled as per the agreement, making the application under Section 7 maintainable.

4. Additionally, a group of allottees also faced similar issues with the Real Estate Owner failing to provide flats or refund amounts. They had jointly applied as Resolution Applicants, with their Resolution Plan pending consideration. Despite the arguments presented, the Tribunal declined to interfere with the impugned order dated 9th March, 2018, and dismissed the appeal without costs.