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2024 (6) TMI 90 - AT - Insolvency and BankruptcyMaintainability of section 7 application - Fulfillment of the threshold of 100 allottees u/s 7 of the Code or not - Validity of possession and issuance of Occupancy Certificate. - Real Estate Project. - Project comprised of IT/ ITES office, Residential Units, Commercial Spaces and other facilities - NCLT admitted the application of the allotees. Maintainability of section 7 application - Fulfillment of the threshold of 100 allottees u/s 7 of the Code or not - HELD THAT - The issue that for fulfilling the threshold under Section 7, it is number of allottees which is relevant and not the number of financial creditors is well settled. The Hon ble Supreme Court in Manish Kumar vs. Union of India And Anr. 2021 (1) TMI 802 - SUPREME COURT has laid down that ' As long as there are independent allotments made to him or his family members, all of them would qualify as separate allottees and they would count both in the calculation of the total allotments, as also in reckoning the figure of hundred allottees or one-tenth of the allottees, whichever is less.' Thus, for finding out as to whether threshold is fulfilled or not under Section 7 has to be look into number of allottees. A copy of the application which has been filed by the allottees indicate that in the application, document of the financial creditors including copy of the agreement were brought on record. Annexure-D Part-I which contains a list of financial creditors, along with details of allotted units was filed which indicate that in Column 4, unit number of each financial creditor has been mentioned. Validity of possession and issuance of Occupancy Certificate - HELD THAT - On looking into the Report of the IRP, it was clearly mentioned that there were no possession of the unitholders noticed except Unit No.10A in the IT Block which was open and in possession of PAN Security Services and BLS Developer Pvt. Ltd. In paragraph 12, the aforesaid statement has been made by the IRP. Paragraph 12(e) which was relied by the Appellant only mentions that the status of the possession of the units in the commercial block could not be determined. However, Flex Boards/notices of various professionals/businesses were affixed in some of the units in the said tower/block. Thus, it is clear that for none of the units have been given Occupation Certificate or Completion Certificate and application for Occupancy Certificate is pending. In this context, we may also refer to the reply filed by the Respondent/allottees. Respondent has brought on record letter dated 16.11.2021 issued by the Greater Noida Industrial Development Authority to the allottees which was in reference to request of the allottes for completion certificate. There being no Occupancy Certificate issued by Greater Noida Authority and as per the Report of the IRP, Occupancy Certificates are pending - When no valid possession has been handed over to the allottees, we are not persuaded to accept the submission of the appellant that names of 23 units need to be deleted from the name of applicants who had filed Section 7 application. No Dues and No Claim Certificate relied by the appellant and Sub-Lease Agreement is not a ground on which the name of those who have given No Dues and No Claim Certificate should be deleted from number of the applicants who have filed Section 7 application. Adjudicating Authority has also in the impugned order has held that the construction is incomplete and the applicant fulfils the threshold of minimum 100 allottees. Adjudicating Authority also rejected the submission raised before it that 36 unitholders who have claimed assured return are speculative allottees and their names should be deleted from the application. The Adjudicating Authority did not commit any error in admitting Section 7 application. Taking the note of the fact that the interim order was passed by this Tribunal on 21.02.2023 and this appeal is being decided on 31.05.2024, we direct for exclusion of period from 21.02.2023 till 31.05.2024 in the CIRP of the Corporate Debtor. There is no merit in the appeal. The appeal is dismissed subject to exclusion of time from 21.02.2023 till 31.05.2024.
Issues Involved:
1. Admission of Section 7 application. 2. Fulfillment of the threshold of 100 allottees. 3. Validity of No Dues and No Claim Certificates. 4. Status of possession and completion of the project. 5. Interim order and continuation of CIRP. Summary: 1. Admission of Section 7 Application: The appeal was filed by a Suspended Director of the Corporate Debtor challenging the order dated 07.02.2023 by the Adjudicating Authority (NCLT), Principal Bench, New Delhi, which admitted a Section 7 application filed by the Respondents-allottees of a Real Estate Project. The Corporate Debtor, M/s. Vardhman Estates & Developers Pvt. Ltd., failed to complete the project and handover possession, leading to the application by 117 Financial Creditors representing 104 allotted units. 2. Fulfillment of the Threshold of 100 Allottees: The Corporate Debtor argued that the threshold of 100 allottees u/s 7 of the IBC was not met, claiming the calculation should be based on units, not applicants. However, the Adjudicating Authority found the number of allottees crossed the threshold of 100. The Hon'ble Supreme Court in "Manish Kumar vs. Union of India And Anr.- (2021) 5 SCC" clarified that the number of allottees, not units, is relevant for fulfilling the threshold. The amended application included 146 Financial Creditors representing 122 allotted units, thus meeting the required threshold. 3. Validity of No Dues and No Claim Certificates: The Corporate Debtor presented No Dues and No Claim Certificates from some Financial Creditors, arguing these should exclude them from the Section 7 application. However, the Adjudicating Authority and the Tribunal found that these certificates did not negate the status of the allottees. Agreements remained valid, and the certificates merely indicated a waiver of certain claims, not a relinquishment of allottee status. 4. Status of Possession and Completion of the Project: The IRP's report indicated that no Occupancy or Completion Certificates were issued, and significant construction work was pending. The Tribunal noted that even if possession was claimed for some units, without valid Occupancy Certificates, these allottees retained their status. The project was incomplete, and the Corporate Debtor's claim of possession was not substantiated. 5. Interim Order and Continuation of CIRP: An interim order on 21.02.2023 directed the IRP to ensure the Corporate Debtor ran as a going concern and to take steps for project completion with the assistance of suspended directors/ex-management. The CoC was not to be constituted. The Tribunal dismissed the appeal, directing the exclusion of the period from 21.02.2023 to 31.05.2024 in the CIRP of the Corporate Debtor, allowing the CIRP to proceed in accordance with law.
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