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2023 (8) TMI 1362 - Tri - Insolvency and BankruptcyMaintainability of petition - Financial creditor or not - allottee holding a decree from RERA would fall under the class of Home Buyers within category of Financial Creditor or not - HELD THAT - This bench is of the considered view that decree would be categorised as either financial or operational debt depending on the nature of the underlying claim which stands crystallised through the arbitral or court the nature of the debt due under decree would depend on the nature of transaction from which the decretal debt has arisen - In the present case the applicant had obtained a Decree from RERA in capacity of allottee in a Real Estate Project and allottee in Real Estate Project is covered under the definition of Financial Debt contained in under Explanation to Section 5(8)(f) of the Code. Accordingly, the applicant, being holder of a decree in capacity of allottee is a Financial Creditor. In the present case, it is not in dispute that the threshold prescribed under second proviso to section 7(1) of the Code is not met in the present case, the application could not have been maintainable had the applicant filed this application without obtaining decree under RERA. Accordingly, the applicant cannot be allowed to claim eligibility to file application u/s 7 in terms of section 4 of the Code, because if it is made permissible it would tantamount to circumventing the provisions of second proviso to section 7(1) of the Code. In other words, what is not permissible directly shall become permissible via RERA decree route. Accordingly, this bench feels that present petition is hit by bar under second proviso to section 7(1) of the Code. This bench is of the view that in such circumstances, that the present case deserves to be dismissed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Petition dismissed.
Issues involved:
The issues involved in the judgment include the application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) in the case of a Corporate Debtor, the nature of the debt, and the eligibility of the applicant to file the application under the specified provisions. Details of the Judgment: Issue 1: Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 The applicant, a Financial Creditor, filed an application under Section 7 of the I&B Code against the Corporate Debtor for non-compliance with an order related to the purchase of flats. The total outstanding amount due and payable to the Corporate Debtor was specified, along with the date of default as per the application. Despite several attempts to resolve the matter, the Corporate Debtor failed to execute the necessary agreement, leading to the application for initiating CIRP. Issue 2: Nature of the Debt and Eligibility of the Applicant The bench analyzed the nature of the debt and the applicant's eligibility to file the application. Referring to relevant legal precedents, the bench determined that the applicant, as a decree holder under RERA in a Real Estate Project, qualifies as a Financial Creditor. However, it was crucial to ascertain whether the applicant falls under the class of Home Buyers and if the threshold limit prescribed under the Code applies. The bench concluded that the second proviso to section 7(1) sets a specific threshold for Home Buyers, which the applicant did not meet without obtaining the RERA decree. Therefore, the bench held that the application was not maintainable under the specified provisions. Conclusion: Based on the analysis of the facts presented, the bench decided to dismiss the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The order specified the dismissal of the petition filed by the Financial Creditor for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. It was emphasized that the dismissal should not prejudice the petitioner's rights before any other judicial forum, and the observations made in the order should not be construed as an expression of opinion on the merits of the case.
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