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2021 (4) TMI 353 - AT - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Flat Buyer is a Financial Creditor or not - Whether HBPL falls within the ambit of the definition of Corporate Debtor , as defined under Section 3(8) of the Code? - HELD THAT - In the instant case HBPL as a Principal has created HCPL its marketing arm vide an Assignment Agreement dated 05.07.2013 and Marketing Agreement dated 06.07.2013 wherein HCPL was authorized to enter into Agreements/arrangements on behalf of HBPL and issue Allotment Letters/Builder Buyer Agreement and other related documents for and on behalf of HBPL . The definition of agent and principal in Section 182 of the Contract Act, 1872 is crystal clear - In this case, there is an express consent to the creation of HCPL given by one party to another and it can be safely stated that there is an existence of an agent relationship. The principal in this case has placed the agent in a position (Marketing Agreement), which in the outside world is generally regarded as carrying authority to enter into transactions of the account in question. Agency is consensual not contractual. For creating a contract of agency, in view of Section 185 of the Contract Act, even passing of the consideration is not necessary. In the present case, all the Clauses of the Assignment Agreement and the Marketing Agreement entered into on 05.07.2013 and on 06.07.2013 is prior to the Apartment Buyer Agreement dated 14.02.2014. Whether there was any breach committed by HBPL of the terms of the ABA . Clause-C of the ABA stipulates that the developer shall deliver possession on or before expiry of 36 months from the date of execution of ABA ? - HELD THAT - This documentary evidence on record substantiates the plea of the Home Buyer that there was never any injunction for any substantial period of time, preventing HBPL from continuing the construction activity of the Project. Therefore, the grounds raised by the Counsel for the Appellant with respect to Force Majeure , cannot be accepted. It is pertinent to mention that on a pointed query from the Bench it was admitted that the said Project is still incomplete - there is a breach of the terms of the ABA specifically Clause-C giving rise to a Claim as defined under Section 3(6)(b) of the Code. Explanation (i) to Section 5(8) of IBC specifically provides that in amounts raised from an Allottee under a Real Estate Project shall be deemed to be an amount having a commercial effect of borrowings . Explanation (ii) further provides that the term Allottee and Real Estate Project used in IBC shall have the meaning as provided under Clauses (d) and (zn) of Section 2 of Real Estate (Regulation and Development Act, 2016) - Under RERA Section 2(k) defines promoter as a person who constructs or causes to be constructed an independent building or a building consisting of an Apartments or converts existing building apart from into an Apartment for the purpose of selling all or some of the Apartments to other persons and includes as assignee . HBPL is the Corporate Debtor and the second Respondent the Financial Creditor and the amount involved is the Financial Debt as defined under the Code - the asset of the Corporate Debtor Company of that particular Project is to be maximized for balancing the Creditor such as Allottees , Financial Institutions and Operational Creditors of that particular Project. The Learned Adjudicating Authority has rightly observed that the Petition filed by the second Respondent against HBPL is maintainable - Application disposed off.
Issues Involved:
1. Whether the Flat Buyer is a 'Financial Creditor' vis-a-vis 'HBPL'. 2. Whether 'HBPL' falls within the ambit of the definition of 'Corporate Debtor' under Section 3(8) of the Insolvency and Bankruptcy Code (IBC). 3. Whether the Corporate Insolvency Resolution Process (CIRP) should be confined to the specific project 'IRIDIA' only. 4. The applicability of the principle that two CIRP proceedings cannot be maintained for the same claim and default. Issue-wise Analysis: 1. Whether the Flat Buyer is a 'Financial Creditor' vis-a-vis 'HBPL': The Tribunal examined the role of 'HBPL' and 'HCPL' and the agreements between the parties, including the Collaboration Agreement, Assignment Agreement, Marketing Agreement, and Apartment Buyer Agreement (ABA). The ABA dated 14.02.2014 clearly stipulates that 'HBPL' is the developer with all rights to construct the project 'IRIDIA'. 'HCPL' is identified as the marketing arm of 'HBPL', authorized to collect payments on behalf of 'HBPL'. The Tribunal concluded that the amounts paid by the Home Buyer to 'HCPL' are, in essence, for 'HBPL', making 'HBPL' the 'Corporate Debtor' and the Home Buyer a 'Financial Creditor'. 2. Whether 'HBPL' falls within the ambit of the definition of 'Corporate Debtor' under Section 3(8) of the IBC: The Tribunal referred to various clauses in the agreements to establish that 'HBPL' is the entity responsible for the construction and delivery of the flats. The Tribunal noted that 'HBPL' committed a breach by not delivering possession within the stipulated 36 months, thereby constituting a default. The Tribunal also referenced the Supreme Court's judgment in 'Pioneer Urban Land and Infrastructure Ltd. & Anr. v. Union of India & Ors.', which clarified that amounts raised from Allottees under real estate projects are deemed to have the commercial effect of borrowings. Hence, 'HBPL' falls within the definition of 'Corporate Debtor'. 3. Whether the CIRP should be confined to the specific project 'IRIDIA' only: The Tribunal agreed with the Appellant's contention that the CIRP should be confined to the specific project 'IRIDIA'. The Tribunal emphasized that the assets of the 'Corporate Debtor' related to that particular project should be maximized for balancing the interests of creditors, including Allottees, Financial Institutions, and Operational Creditors of that specific project. 4. The applicability of the principle that two CIRP proceedings cannot be maintained for the same claim and default: The Tribunal addressed the contention that two separate CIRP proceedings cannot be maintained for the same claim and default, referencing the judgment in 'Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprise Ltd.'. However, the Tribunal distinguished the facts of the current case, noting that the second Respondent had withdrawn his claim before the IRP of 'HCPL' and had filed an application to withdraw the Insolvency Petition against 'HCPL'. Therefore, the Tribunal held that the Petition against 'HBPL' is maintainable. Conclusion: The Tribunal upheld the Impugned Order passed by the Learned Adjudicating Authority, admitting the Section 7 Application against 'HBPL'. The Tribunal, however, specified that the CIRP should be confined to the project 'IRIDIA' only. No order as to costs.
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