2020 (10) TMI 12 - Tri - 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 - HELD THAT - The facts, as narrated by the Parties in the Petition, it establishes that the instant Petition is filed to recover the sale consideration rather than to initiate CIRP in terms of provisions of Code. In terms of Agreements in question, the Petitioners are entitled for delivery of Apartment in question, within stipulated period, however, subject to justifiably delay. The Respondent have satisfactorily explained the reasons for delay in completion of Projects. Since the Respondent has expressed its readiness to deliver the Apartment in question, on expeditious basis, on par with other similarly situated Parties, the Petitioners are not entitled to seek initiation of CIRP against Corporate Debtor. The Petition itself is misconceived. The Adjudicating Authority is not recovery forum, and the Corporate Debtor is still a going concern, even during present economic crisis, and thus it cannot be disturbed by way of initiating proceedings under the provisions of Code. It would be just and proper to dispose of the instant Petition by directing the Corporate Debtor to handover the possession of the Apartment in question to the Petitioners, immediately on its completion - petition is hereby disposed of by directing the Corporate Debtor to handover the possession of the Apartment in question, on its completion, to the Petitioners, as committed by it.

Issues Involved:
1. Maintainability of the Petition under Section 7 of the IBC, 2016.
2. Compliance with the Amendment to Section 7 of the IBC, 2019.
3. Entitlement of the Petitioners to recover the sale consideration or seek delivery of the apartment.
4. Delay in completion of the project and reasons for the delay.
5. Alternative remedies available to the Petitioners under the Agreements.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition under Section 7 of the IBC, 2016:
The Petitioners filed C.P (IB) No. 408/BB/2019 under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for a default amount of ?1,35,13,891. The Respondent argued that the Petition is not maintainable as it seeks to recover the sale consideration rather than initiate CIRP. The Tribunal concluded that the Petitioners are entitled to the delivery of the apartment rather than recovering the sale consideration, thus rendering the petition misconceived.

2. Compliance with the Amendment to Section 7 of the IBC, 2019:
The Respondent contended that the Petition does not comply with the amendment to Section 7 of the IBC, which requires that an application by financial creditors who are allottees under a real estate project must be filed jointly by not less than 100 allottees or 10% of the total allottees, whichever is less. The Tribunal agreed with the Respondent, noting that the Petitioners failed to meet the criteria prescribed by the amendment, thereby making the petition non-maintainable.

3. Entitlement of the Petitioners to recover the sale consideration or seek delivery of the apartment:
The Tribunal observed that the Agreements in question entitled the Petitioners to the delivery of the apartment rather than recovering the sale consideration. The Respondent had satisfactorily explained the reasons for the delay in the completion of the project and expressed readiness to deliver the apartment upon completion. The Tribunal directed the Corporate Debtor to hand over the possession of the apartment to the Petitioners upon its completion.

4. Delay in completion of the project and reasons for the delay:
The Respondent cited several reasons for the delay in completing the project, including previous CIRP proceedings and the outbreak of COVID-19. The Tribunal found these reasons satisfactory and noted that the Respondent had resumed construction activities and was committed to completing the project expeditiously.

5. Alternative remedies available to the Petitioners under the Agreements:
The Tribunal highlighted that the Agreements contained provisions for dispute resolution through Specific Performance and Arbitration. The Tribunal noted that the Petitioners chose to invoke the provisions of the IBC instead of pursuing these alternative remedies. The Tribunal emphasized that the Adjudicating Authority is not a recovery forum and that the Corporate Debtor is still a going concern, even during the current economic crisis.

Conclusion:
The Tribunal disposed of C.P (IB) No. 408/BB/2019 by directing the Corporate Debtor to hand over the possession of the apartment to the Petitioners upon its completion. The Petition was found to be misconceived and non-maintainable under the amended provisions of Section 7 of the IBC. No orders as to cost were issued.

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