2021 (2) TMI 1290 - AT - Insolvency and Bankruptcy

Reversal of CIRP - Degree of completion of construction work - HELD THAT - It emerges from the Proposed Settlement Plan that the construction work had been awarded to M/s Era Infra Engineering Limited for completion of Phase-I of the project comprising of Tower 1 to 12. But the contract stood terminated and Indsao Infratech was engaged as the new contractor in January, 2016 to complete the construction work. 70% of the construction work is stated to have been completed. As regards the main grievance of the Homebuyers of the Project viz. Orion Galaxy i.e. restart of construction work and its completion besides payment of dues of DGTCP and others, a revival plan has been offered covering page 13 to 15 of the Proposed Settlement Plan. Let the Appellant/Promoter file a revised settlement plan removing this ambiguity and elucidating the factual position in this regard and also explaining how it proposed to generate/ arrange funds for completion of the project within a definite timeframe, it being gathered from the Report filed by the Interim Resolution Professional that the Promoter has agreed to infuse a sum of Rs.5 Crore which by no means can be said to be an adequate amount to either start or complete the project. Let the Revised Proposed Settlement Plan be filed by the Appellant/ Promoter within two weeks. List the appeal for hearing on 16th March, 2021 at 12 00 Noon.

Summary

Issues involved:
1. Completion of construction work in Towers 1 to 12
2. Proposed plan by Promoter for completing construction
3. Infusion of funds by Promoter and loan arrangement
4. Request for revision of rates by existing contractor
5. Amount receivable from buyers and sale of unsold flats
6. Homebuyers' approach to restart construction activities
7. Preference for Reverse CIRP or Corporate Insolvency Resolution Process
8. Ambiguity in the Proposed Settlement Plan
9. Requirement for a revised settlement plan
10. Decision on adopting Reverse CIRP or Corporate Insolvency Resolution Process

Analysis:
1. The Revised Status Report filed by the Interim Resolution Professional (IRP) indicates that 70% of the construction work in Towers 1 to 12 has been completed. The Promoter has agreed to infuse Rs.5 Crore and arrange a loan of Rs.15 Crore to complete the construction. The existing contractor is willing to continue but requests a revision of rates due to cost escalation.

2. The total amount receivable from buyers of Towers 1 to 12 is Rs.120.38 Crore, with the potential sale of 18 unsold large flats to generate additional funds. 74 Homebuyers have approached the Resolution Professional to restart construction immediately, with differing opinions on proceeding with Reverse CIRP or Corporate Insolvency Resolution Process due to trust issues with the Promoter.

3. The Proposed Settlement Plan reveals discrepancies in the total cost to complete Phase-I of the project, leading to ambiguity. The Promoter is directed to file a revised settlement plan within two weeks, clarifying the factual position and detailing how funds will be generated to complete the project within a specific timeframe.

4. The decision on whether to adopt Reverse CIRP or restore Corporate Insolvency Resolution Process will be made after reviewing the revised Proposed Settlement Plan. The Appellant/Promoter is required to share the proposed plan with counsel for the Homebuyers and the appeal is listed for hearing on a specified date.