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2023 (3) TMI 177 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP u/s 7 - money lent to Corporate Debtor or not - Homebuyer or Lender? - It is submitted that the Learned Adjudicating Authority rejected the application by holding that the Appellant is a homebuyer and do not fall under the category of lender, who lent the money to the Corporate Debtor on the understanding that the amount which was paid to be treated as loan amount and not as homebuyer. HELD THAT - It is clear that the Corporate Debtor in the capacity as seller and developer and the Appellant being the purchaser entered the said agreement. The covenant of the agreement emphasises that the project / cottages will take approximately 30 months to complete and the same will be delivered after completion of construction. The total consideration of each cottage mentioned as Rs. 76,33,000. /-. In Clause 14 of the Agreement to Sell, the Corporate Debtor / Seller has given a buy back option to the Appellant/ Buyer for the said property as per the terms mentioned there at. The Appellant and the Corporate Debtor also entered Assured Return Agreement dated 22.07.2016, whereby it is stated that the Corporate Debtor will pay @ 16% per annum of BSP received or Rs. 28,949/- as Assured Return rate for a total period of 30 months or till possession whichever is later. There is no doubt that the Appellant had purchased two cottages and to that effect entered Agreement to Sell and also entered an agreement for Assured Return dated 22.07.2016. From the perusal of the said document, it is crystal clear that the Appellant is a homebuyer and paid an amount of Rs.45,00,000/- pursuant to the agreement and terms conditions as mentioned there at. The bone of contention of the Appellant is that the Appellant cancelled the Agreement to Sell by a Cancellation Agreement dated 20.11.2018 - From the perusal of the said Cancellation Agreement dated 20.11.2018 annexed as Annexure A-11 at pages 152 to 155, we find that the only signature of the buyer affixed on each page of the said document, however, there is no signature affixed by the Corporate Debtor and there are no signatures of the witnesses. Therefore, this Tribunal reluctant to decide its authenticity and validity. The Hon ble Supreme Court in the matter of MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER 2021 (1) TMI 802 - SUPREME COURT , whereby the Hon ble Supreme Court upheld the above amendment and therefore, the Adjudicating Authority need to follow the provision of law scrupulously while entertaining the petitions of this nature. Thus, it is unequivocal that the Appellant is a homebuyer and there is no such documentary evidence to establish that the Appellant is a Financial Creditor, who lent the money to the Corporate Debtor within the meaning of Section 5(7) of the I B Code, 2016. Appeal dismissed.
Issues:
1. Interpretation of the Insolvency & Bankruptcy Code, 2016 regarding the classification of a homebuyer as a financial creditor. 2. Requirement of minimum threshold for financial creditors in the case of homebuyers under Section 7(1) of the I&B Code. 3. Validity and enforceability of cancellation agreements in real estate transactions. 4. Adherence to legal provisions and precedents in insolvency resolution proceedings. Analysis: 1. The Appellant contended that they should be considered a lender instead of a homebuyer due to the financial transactions with the Corporate Debtor. However, the Tribunal found that the Appellant's status as a homebuyer was evident from the agreements entered into for the purchase of cottages and the assured return agreement, establishing them as a homebuyer, not a financial creditor. 2. The Adjudicating Authority rejected the Appellant's application citing the minimum threshold requirement for financial creditors under Section 7(1) of the I&B Code. The Tribunal upheld this decision, emphasizing the need for strict adherence to the legal provisions, as highlighted in the Supreme Court's judgment in Manish Kumar Vs. Union of India & Anr. 3. The validity of the cancellation agreements was questioned, with the Respondent claiming they were fabricated. The Tribunal noted the absence of the Corporate Debtor's signatures on the cancellation agreements, leading to doubts about their authenticity and enforceability, further supporting the dismissal of the Appeal. 4. The Tribunal concluded that the Appellant failed to establish themselves as a financial creditor and did not meet the threshold requirements for initiating insolvency proceedings. The decision of the Adjudicating Authority was deemed appropriate and in compliance with legal provisions and precedents, resulting in the dismissal of the Appeal. Conclusion: Based on the detailed analysis and interpretation of the legal provisions, the Tribunal found no grounds to interfere with the Adjudicating Authority's decision. The Appeal was dismissed as lacking merit, with no costs imposed.
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