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2021 (4) TMI 145 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - transfer of immoveable property - comes under scope of IBC or not - Financial Creditors or not - existence of debt and dispute or not - HELD THAT - In the instant case, money was advanced by the Petitioners for the purchase of immovable property, which is of an agricultural land which cannot be transferred as per Law. As rightly pointed out by the Respondent that dispute in respect of transfer of immoveable property needs to be adjudicated by Civil Court having territorial jurisdiction over same - It is relevant to point out here the judgment of Hon'ble Supreme Court of India in Pioneer Urban Land and Infrastructure Limited Anr. Vs. Union of India Ors. 2019 (8) TMI 532 - SUPREME COURT , wherein it is inter alia held that, a person who is genuinely not interested in purchasing a flat/apartment shall not be entitled to any remedy under this Code. It is relevant to observe here that even though the Petitioners are not able to demonstrate that the case falls within purview of the extant provisions of the Code, the fact remains that Respondent admittedly is in receipt of the money in question paid by the Petitioners. As rightly contended by the Petitioners, the Respondent, by knowing well about the nature of property and law on transfer of such property, have falsely represented and duped them to enter into the Agreement in question. It is not the case of Respondent that they have apprised the Petitioners about the issue they have raised now to oppose their claim. Therefore, though the case is not fit to initiate CIRP, it is fit case for the Petitioners to initiate appropriate Civil and Criminal proceedings against the Respondent for their misrepresentation and claim appropriate reliefs in those proceedings. The Petitioners have failed to make out any case so as to initiate CIRP in respect of the Corporate Debtor. However, the Petitioners can be granted liberty to initiate appropriate Civil and Criminal proceedings before jurisdictional Courts - Petition dismissed.
Issues Involved:
1. Whether the petitioners qualify as financial creditors under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. 2. Whether the petitioners meet the criteria for initiating Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. 3. Legality of the agreements and the enforceability of the claims made by the petitioners. 4. Jurisdiction and appropriate forum for resolving the dispute. 5. Whether the petitioners are entitled to initiate CIRP despite the presence of an arbitration clause in the agreements. Detailed Analysis: 1. Whether the petitioners qualify as financial creditors under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016: The petitioners argued that their investment falls within the ambit of "financial debt" as defined under Section 5(8) of the IBC, which includes the "time value of money." They cited Black's Law Dictionary and previous case law to support their claim that the transaction had a commercial effect of borrowing. However, the respondents contended that the petitioners do not qualify as financial creditors because the money paid was for the purchase of agricultural land, which does not constitute a financial debt under the IBC. The Tribunal agreed with the respondents, stating that the petitioners' payments were for the purchase of immovable property and did not involve the time value of money. 2. Whether the petitioners meet the criteria for initiating Corporate Insolvency Resolution Process (CIRP) against the corporate debtor: The respondents argued that the petitioners do not meet the criteria under the amended Section 7(1) of the IBC, which requires a minimum of 100 homebuyers or 10% of the total number of homebuyers in a project to jointly file a petition. The Tribunal noted that the petitioners did not meet this threshold and that their claims were related to the purchase of agricultural land, which further disqualified them from being considered financial creditors. Additionally, the Tribunal highlighted that the petitioners' claims did not meet the minimum default amount of Rs. One Crore as required by the IBC. 3. Legality of the agreements and the enforceability of the claims made by the petitioners: The Tribunal examined the Token Receipt Agreements and found that they were not legally enforceable as they did not constitute concluded contracts. The agreements were for the development of agricultural land, which is subject to various legal restrictions. The Tribunal also noted that the agreements included an alternative option for the corporate debtor to allot another plot or refund the amount, which the petitioners did not pursue. The Tribunal concluded that the agreements did not create a legally enforceable debt. 4. Jurisdiction and appropriate forum for resolving the dispute: The respondents argued that the appropriate forum for resolving the dispute was the Civil Court with jurisdiction over Raigad, Maharashtra, where the property is located. The Tribunal agreed, stating that disputes related to the transfer of immovable property should be adjudicated by the Civil Court. The Tribunal also noted that the presence of an arbitration clause in the agreements indicated that arbitration was the appropriate forum for resolving the dispute. 5. Whether the petitioners are entitled to initiate CIRP despite the presence of an arbitration clause in the agreements: The petitioners argued that the presence of an arbitration clause does not bar the initiation of CIRP. However, the Tribunal found that the issues raised in the case were more suited for arbitration and that the petitioners should have invoked the arbitration clause. The Tribunal emphasized that the petitioners' claims did not constitute a legally enforceable debt under the IBC and that the appropriate course of action was to pursue civil and criminal proceedings. Conclusion: The Tribunal concluded that the petitioners failed to make out a case for initiating CIRP against the corporate debtor. The petitioners were granted liberty to initiate appropriate civil and criminal proceedings before jurisdictional courts. The petition was rejected, with no order as to costs.
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