2023 (10) TMI 751 - AT - Insolvency and Bankruptcy

Admission of section 7 application - seeking grant of interim relief for commencement of the project - It was contended that with the introduction of Strategic Partner, Corporate Debtor shall complete the project under the supervision of the IRP in a time bound manner which shall be beneficial to the homebuyers/allottees and to the creditor without having to undergo any haircut. HELD THAT - From the sequence of the events and submissions made by Learned Counsel for the parties, it is clear that the project of the Appellant which is Belvedere , Sector-79, Noida having an area of 30,000 Sq. Mtr. is a project which can be very well revived under the supervision of the IRP with the assistance and co-operation of the promoters and the strategic finance provider. EKA Life a strategic project partner has offered to provide finance even before filing of this Appeal and the ground taken in the Appeal is that EKA Life the strategic project partner is ready to provide interim finance of Rs.75 Crores which shall sufficient to carry out the completion of the project which will be beneficial to both homebuyers as well as the Financial Creditor. Having passed a detailed order on 25.07.2023 for carrying out the construction in the project as per directions contained therein, there are no reason to modify the said direction and now permit any other interim finance provider who has now come up offering to provide interim finance to the project. The cost of interim finance as offered by EKA Life is now equal to the one offered by Zenious Global Media Pvt. Ltd. - it is satisfying that there are no grounds made out to issue any modification of our order dated 25.07.2023 and we are of the view that the construction of the project need to be proceeded further as per the direction on 25.07.2023. After commencement of the construction in the project, receivables in the project have to be deposited in the RERA designated account i.e. 70% and 30%. Although in the Master Agreement, as noted above, certain clauses have been indicated with regard to payment of dues of Aditya Birla Finance Limited , the promoters, IRP and interim finance provider in consultation with the Aditya Birla Finance Limited need to submit a fresh proposal as to how and in what manner the dues of Aditya Birla Finance Limited shall be cleared out of the project. Thus, the commencement of the project is needed to serve the interest of homebuyers as well as creditors - List the Appeal on 04.12.2023.

Summary

Issues Involved:

1. Admission of Section 7 Application by homebuyers.
2. Proposal for project completion with interim finance.
3. Extension of time for interim finance infusion.
4. Comparison of interim finance offers.
5. Implementation of the construction project and financial arrangements.

Summary:

1. Admission of Section 7 Application by homebuyers:
The appeal was filed by the suspended director of the corporate debtor, challenging the order dated 16.06.2023 by the NCLT, New Delhi Bench, admitting the Section 7 Application filed by Mr. Neerav Bhatnagar and 79 other homebuyers.

2. Proposal for project completion with interim finance:
The appellant proposed to complete the construction under the supervision of the IRP with a strategic project partner, EKA Life Limited, offering interim finance of Rs.75 Crores. The introduction of the strategic partner was aimed at completing the project in a time-bound manner, benefiting homebuyers and creditors without any haircut.

3. Extension of time for interim finance infusion:
EKA Life Limited requested an extension of 30 days to infuse the interim finance amount of Rs.20 Crores. The tribunal extended the time from 25.08.2023 to 14.09.2023, when the bank draft of Rs.20 Crores was deposited.

4. Comparison of interim finance offers:
Aditya Birla Finance Limited (ABFL) submitted a better financial offer for the project. The IRP compared the cost of interim finance from different providers, noting EKA Life's interest rate at 18% p.a. and Zenius Global Media Private Limited at 15% p.a. The tribunal accepted the appellant's submission to bear the 3% excess interest, making EKA Life's offer equal to Zenius Global Media's.

5. Implementation of the construction project and financial arrangements:
The tribunal directed the IRP to ensure construction as per the MoU and submit a status report every eight weeks. The appellant was to cooperate with the IRP and arrange Rs.75 Crores interim finance. The project phases were to be completed by January 2025 and January 2026, respectively. The tribunal emphasized the need for a fresh proposal to clear ABFL's dues from the project receivables.

Conclusion:
The tribunal disposed of IA No.4103 of 2023, impleading ABFL as Respondent No.4 and directed all concerned parties to act per the order dated 25.07.2023. The IRP and promoter were to take steps for renewal of project registration and necessary permissions, with a status report to be filed monthly. The appeal was listed for 04.12.2023.