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2021 (8) TMI 18 - Tri - Insolvency and BankruptcyMaintainability 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 - The bench notes that the applicant is basically an allottee in the Real Estate project. Therefore, the agreement cited by the Financial Creditor is effectively an allotment letter of the flat with the schedule of the payment of the flat. Further, the return of investment as provided in Clause 10, does not provide for any fixed return but is conditional upon completion of the project. It has also provided that the payment will not be due in the event of force majeure issue. The Bench is clear that the petitioner is an allottee and the flat purchaser in a Real Estate Project as the petitioner has been allotted flat no. 1902 in the said project - Therefore, an allottee in a real estate project is a Financial Creditor. However, under Section 7 for the purposes of initiation of CIRP there is a threshold limit with regard to number of allottee who can jointly file petition to initiate CIRP against the Corporate Debtor. There is no iota of doubt that the applicant in this case who is an allottee and who has applied singly for commencement of CIRP against the Corporate Debtor does not meet the bench mark of jointly filling by 100 allottee or not less than 10% of number of allottee. Therefore, this petitioner filed by the single homebuyer does not qualify as a fit Application as per Section 7 of IBC, 2016 as amended from time to time to be considered under CIRP. This bench dismisses the petition of a single allottee to commence the CIRP against the Corporate Debtor - petition dismissed.
Issues Involved:
1. Default in payment by Corporate Debtor. 2. Jurisdiction under Real Estate Regulation Act (RERA) vs. Insolvency and Bankruptcy Code (IBC). 3. Determination of Financial Creditor status. 4. Applicability of force majeure. 5. Threshold for initiating Corporate Insolvency Resolution Process (CIRP) by allottees. Detailed Analysis: 1. Default in Payment by Corporate Debtor: The Financial Creditor filed the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), alleging that the Corporate Debtor defaulted on a payment of INR 30,36,344, which includes principal, interest, and tax. The Financial Creditor had invested INR 95,15,940 in a real estate project based on assurances from the Corporate Debtor. However, no progress was made in obtaining necessary approvals for the project, prompting the Financial Creditor to seek a refund as per the agreement. 2. Jurisdiction under RERA vs. IBC: The Corporate Debtor argued that the case falls under the Real Estate Regulation Act (RERA) and not the National Company Law Tribunal (NCLT). According to Section 12 and Section 18 of RERA, any person who has paid money for a real estate project can seek a refund if there is a delay or non-compliance with project terms. The Corporate Debtor contended that the Financial Creditor, being an allottee, should seek recourse under RERA. 3. Determination of Financial Creditor Status: The Financial Creditor claimed to be an investor, not a homebuyer, citing Clause 10 of the agreement, which allowed for a refund with interest if project approvals were not obtained within a specified period. However, the Tribunal noted that the agreement was essentially an allotment letter for a flat purchase, with a payment schedule typical of a homebuyer agreement. The Tribunal concluded that the Financial Creditor was indeed an allottee in the real estate project. 4. Applicability of Force Majeure: The Corporate Debtor invoked force majeure, claiming that delays in obtaining approvals were beyond their control. The Tribunal acknowledged that the agreement provided for a refund only if the delay was not due to force majeure. However, the Tribunal did not delve deeply into whether force majeure applied in this case. 5. Threshold for Initiating CIRP by Allottees: Under the IBC, an allottee is considered a Financial Creditor. However, the Insolvency and Bankruptcy (Amendment) Act, 2020, mandates that for real estate projects, a CIRP petition must be filed jointly by at least 100 allottees or 10% of the total allottees, whichever is lower. The Tribunal found that the Financial Creditor, being a single allottee, did not meet this threshold. Consequently, the petition was dismissed as it did not qualify under the amended Section 7 of the IBC. Conclusion: The Tribunal dismissed the petition for initiating CIRP against the Corporate Debtor, citing that the Financial Creditor, as a single allottee, did not meet the required threshold under the amended IBC provisions. The appropriate recourse for the Financial Creditor would be under RERA, given the nature of the agreement and the status of the Financial Creditor as an allottee.
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