2021 (5) TMI 136 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor not only failed to hand over the possession of the flats till date but also failed to return the monies invested by the Petitioners - Financial Creditors - Existence of debt and dispute - HELD THAT - The Corporate Debtor has clearly defaulted in handing over the possession of the flats to the Petitioners within the mentioned period of the said Agreement and also, defaulted in returning the monies of the petitioners when failed to give possession of the flats. The Bench has no hesitation in concluding that there is a debt and that the Corporate Debtor has committed a default and therefore, it is a fit case for admission. This Bench, on perusal of the documents filed by the Petitioner, is of the view that the Corporate Debtor defaulted in repaying the financial assistance availed. The order of the Consumer Redressal Forum, Rajasthan, directing the Corporate Debtor to deliver the flats, payment of interest and execution of Sale Deed in favor of Petitioner further confirm the admitted position of debt and default by the Corporate Debtor - the existence of debt and default is reasonably established by the Petitioner as a major constituent for admission of a Petition under Section 7 of the Code. Application admitted - moratorium declared.

Issues Involved:
1. Corporate Insolvency Resolution Process (CIRP) initiation.
2. Agreement to Sell and possession of flats.
3. Consumer Disputes Redressal Commission order.
4. Delay in project completion and force majeure.
5. Debt confirmation and interest claims.
6. Extension of time for project completion.
7. Admission of CIRP petition.

Issue-wise Detailed Analysis:

1. Corporate Insolvency Resolution Process (CIRP) Initiation:
The Petitioners sought the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016, due to a default amounting to ?34,76,19,780/-. The Tribunal noted that the Corporate Debtor failed to hand over possession of the flats or return the invested monies, establishing a clear case of default.

2. Agreement to Sell and Possession of Flats:
The Petitioners entered into an 'Agreement to Sell' dated 19.12.2012 with the Corporate Debtor, paying ?32,00,000/- each for flats to be delivered within 48 months plus a 12-month grace period. The Corporate Debtor failed to deliver the flats or return the invested amounts, leading to the initiation of the CIRP.

3. Consumer Disputes Redressal Commission Order:
An earlier order by the Consumer Disputes Redressal Commission, Rajasthan, directed the Corporate Debtor to execute sale deeds and pay interest at 24% per annum from 12.12.2015 until possession was handed over. Despite this order, the Corporate Debtor neither handed over possession nor returned the invested monies.

4. Delay in Project Completion and Force Majeure:
The Corporate Debtor cited several reasons for the delay, including a CBI case against a shareholder's husband, COVID-19, and pending matters before the Rajasthan High Court. They argued that these constituted force majeure conditions, entitling them to a reasonable extension of time for project completion.

5. Debt Confirmation and Interest Claims:
The Corporate Debtor contended that interest was awarded only in one specific case by the Consumer Disputes Redressal Commission and not for other Petitioners, disputing the interest claims. However, the Petitioners argued that the Corporate Debtor had acknowledged the debts and that the flats remained incomplete and uninhabitable.

6. Extension of Time for Project Completion:
The Corporate Debtor requested a two-year extension to complete the construction and hand over possession, citing force majeure and other uncontrollable delays. The Tribunal, however, found that the Corporate Debtor had defaulted on its obligations under the Agreement to Sell.

7. Admission of CIRP Petition:
The Tribunal concluded that the Corporate Debtor had defaulted in handing over possession and returning the invested monies, establishing the existence of debt and default. Consequently, the Tribunal admitted the petition under Section 7 of the Code, initiating the CIRP.

Findings:
The Tribunal found that the Corporate Debtor had clearly defaulted in handing over possession of the flats and returning the invested monies. The clauses of the Agreement to Sell were examined, confirming the defaults. The Tribunal admitted the petition, prohibiting actions against the Corporate Debtor's assets, and appointed an Interim Resolution Professional to carry out the CIRP functions.

Order:
The Tribunal ordered the initiation of the CIRP, prohibiting suits or proceedings against the Corporate Debtor, transferring or disposing of assets, and recovery actions. The supply of essential goods and services to the Corporate Debtor was to continue uninterrupted. The Tribunal appointed an Interim Resolution Professional and directed the Registry to communicate the order to both parties immediately.

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