2020 (7) TMI 144 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - possession of apartment with stipulated time limit - HELD THAT - In the present case, the Respondent emphatically contends that it could not commence construction despite approval of the building plan dated 23rd July 2013, as the said approved imposed certain pre-conditions including but not limited to (a) obtaining grant of approval by Ministry of Environment and Forest, (ii) Fire Safety Approval before the commencement of construction. The Respondent obtained environmental approval on 12th December 2013, and the said approval reiterated the requirement for approval of the Fire Department. Therefore, the Respondent applied for Fire Safety Approval on 23rd October 2013, before starting any construction - Adjudicating Authority accepted the contention of the Respondent and held that there was no default on the part of the Corporate Debtor and further observed that the financial Creditor has also failed to prove that any debt was due and payable by the Corporate Debtor. It is on record that the Corporate Debtor/Respondent was to handover the possession of the apartment within 60 months, i.e. 42 months (commitment period) 6 months grace period 12 months extended period from the date of approval of building plan and on fulfilment of the pre-conditions imposed thereunder as per clause 13.3 to 13.5 of the Agreement - It is noticed that the despite the approval of building plan on 23rd July 2013 project could not be started due to the certain pre imposed conditions, including but not limited to obtaining the grant of approval by Ministry of Environment and Fire Safety approval, before the commencement of construction. The Respondent obtained the environmental approval on 12th December 2013 and the said approval reiterated the requirement of approval by the Fire Department. Therefore, the Respondent applied for the Fire safety Approval on 23rd October 2013, and before starting any construction, approval from the Fire Department, in terms of Section 15 of the Haryana Fire Safety Act, 2009 was material for the fulfilment of the obligations of the Respondent and commencement of construction. Accordingly, the date of handover of possession is to be computed from the date of grant of Fire Safety Approval, i.e. dated 27th November 2014. There are no justification for the interference with the Impugned Order - appeal dismissed.

Summary

Issues Involved:
1. Default in delivery of possession.
2. Applicability of legal precedents.
3. Determination of default and financial debt.
4. Adjudicating Authority's interpretation of the Agreement.
5. Compliance with statutory provisions under the Insolvency and Bankruptcy Code (I&B Code).

Detailed Analysis:

1. Default in Delivery of Possession:
The Appellant, a Financial Creditor, booked a unit in a real estate project developed by the Respondent. Despite timely payments totaling ?1,59,29,016/-, the Respondent failed to deliver possession by the promised date of July 2017. The Appellant terminated the agreement on 08th December 2018 and sought a refund with interest, claiming a financial debt of ?2,07,57,385/-.

2. Applicability of Legal Precedents:
The Appellant argued that the Adjudicating Authority ignored established legal principles. They cited the Supreme Court's decision in *Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan*, which held that a homebuyer cannot be forced to wait indefinitely for possession. Additionally, the Appellant referenced the National Consumer Disputes Redressal Commission's ruling in *Abhishek Khanna v. Ireo Grace Realtech (P.) Ltd.*, emphasizing the frustration of the Builder Buyer Agreement due to delayed possession.

3. Determination of Default and Financial Debt:
The Adjudicating Authority rejected the Application under section 7 of the I&B Code, reasoning that the building approval dated 23rd July 2013 had several preconditions, with the final approval for fire safety granted only on 27th November 2014. The proposed possession date was thus extended to 27th November 2019. The Respondent contended that they applied for the Occupational Certificate on 05th July 2018 and received it on 31st May 2019, fulfilling their obligations. The notice of possession was given within the stipulated time, and many units were ready for possession, with some already occupied.

4. Adjudicating Authority's Interpretation of the Agreement:
The Authority accepted the Respondent's argument that the possession timeline should be calculated from the date of fire safety approval, not the initial building plan approval. The Authority found no default by the Corporate Debtor and noted that the Appellant failed to prove any debt due and payable under section 3(12) and section 3(11) of the I&B Code.

5. Compliance with Statutory Provisions under the I&B Code:
The Appellant's reliance on the Supreme Court's decision in *Ireo Grace Realtech (P.) Ltd. v. Subodh Power* was noted, where the date of possession was determined as 27th May 2018. However, the Adjudicating Authority emphasized that the Appellant's intention seemed to be the recovery of money rather than resolution for possession. The Tribunal referenced the amendment to section 7 of the I&B Code, requiring joint applications by a minimum number of allottees, which, although not applicable to this case, highlighted the need to assess the intent behind filing such applications.

Conclusion:
The Tribunal upheld the Adjudicating Authority's decision, concluding that there was no default by the Corporate Debtor. The appeal was dismissed, with no order as to costs, emphasizing that the delay was not attributable to the Respondent but to compliance with statutory preconditions. The Tribunal also stressed the importance of determining whether the allottees sought possession or merely a refund, aligning with the Supreme Court's guidance in *Pioneer Urban Land & Infrastructure Ltd.*