2020 (9) TMI 835 - Tri - Insolvency and Bankruptcy

Dispensation of office objection raised by the Registry regarding the aspect of record of default with the information utility (NESL) - Rule 11 of the NCLT Rules, 2016 - 'Home Buyers', whether fall within other creditors as a residuary class? - HELD THAT - Since the Petitioner has filed the appropriate documents in support of debt and default raised in the instant Company Petition and following the law as cited by the Learned Counsel, we are inclined to dispense with objections raised by the Registry, as prayed for. Application allowed.

Summary

Issues:
1. Interpretation of Regulation 9A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
2. Consideration of home buyers as "other creditors" in insolvency proceedings.
3. Examination of accounting treatment of advances received from home buyers by developers.
4. Dispensing with office objection regarding default record with the information utility (NESL).

Analysis:
The judgment by the National Company Law Tribunal, Bengaluru Bench, involved a petition filed under Rule 11 of the NCLT Rules, 2016, seeking to dispense with office objections raised by the Registry regarding default record with the information utility (NESL). The counsel for the Petitioner argued that home buyers should be considered as "other creditors" under Regulation 9A of the Insolvency and Bankruptcy Board of India Regulations. Referring to the case of Pioneer Urban Land and Infrastructure v. Union of India, the counsel highlighted that advances from home buyers cannot be treated as financial liabilities based on accounting standards. The Tribunal considered the submissions and relevant provisions, including Regulation 9A, which outlines the procedure for claims by other creditors, and ruled in favor of the Petitioner.

The Tribunal noted that the Petitioner had submitted appropriate documents supporting the debt and default raised in the Company Petition. Following the arguments presented by the counsel and the legal provisions cited, the Tribunal decided to overrule the office objections raised by the Registry and allowed the petition. The judgment emphasized the importance of adhering to the law and considering the specific circumstances of the case, especially regarding the treatment of home buyers' advances and their classification as creditors in insolvency proceedings. The decision to dispense with the office objection regarding default record with the information utility (NESL) was based on a thorough analysis of the relevant regulations and legal principles governing such matters.