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2022 (9) TMI 15 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors/allottees under a real estate project - transfer of corpus funds into the loan account - Financial Debt or not - existence of debt and dispute or not - HELD THAT - As per the facts in the present matter, it is clearly established that the Financial Creditors are the allottees under a real estate project and thus reference needs to be made to Section 7 of the Code - For the want of fulfilment of the criteria set by the Insolvency and Bankruptcy Code, 2016 in matter of Real Estate projects, this Petition cannot be allowed as it is filed only by a single allottee and cannot be considered as per the provision laid down in Section 7(1) of the Code. Under the Code, a minimum of 100 people or 10% of the total allotee must be there to initiate a proceeding in IB Code. There are no material to conclude that the Financial Creditors amount to minimum 10 percent. Accordingly, the Financial Creditors are not eligible to file a Petition before this forum. The present transaction was in pursuance of the sale agreement. There was no other agreement formed between the parties for amount claimed in default/amount transferred towards corpus fund, hence the given transaction of transfer of corpus funds into the loan account would not qualify as a financial debt as per the definition laid down in Section 5(8) - Applicant failed to qualify the threshold prescribed in the proviso laid down under section 7 (1). Therefore, this Petition is liable to be rejected. Petition dismissed.
Issues Involved:
1. Jurisdiction and eligibility to file under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Dispute regarding the payment of corpus fund and its classification as financial debt. 3. The impact of pending Consumer Complaint on the current petition. 4. Applicability of the Supreme Court judgment in Mobilox Innovations Pvt. Ltd. v/s Kirusa Software (P) Limited. Issue-wise Detailed Analysis: 1. Jurisdiction and Eligibility to File Under Section 7 of the Insolvency and Bankruptcy Code, 2016: The Financial Creditors filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal noted that the Financial Creditors are allottees under a real estate project. According to Section 7(1) of the Code, for real estate projects, an application must be filed jointly by not less than one hundred creditors in the same class or not less than ten percent of the total number of such creditors, whichever is less. The petition was filed by a single allottee, failing to meet the criteria set by the Insolvency and Bankruptcy Code, 2016. Therefore, the Tribunal concluded that the Financial Creditors are not eligible to file the petition as they do not amount to the minimum required ten percent. 2. Dispute Regarding the Payment of Corpus Fund and Its Classification as Financial Debt: The Financial Creditors argued that the Corporate Debtor failed to pay the corpus fund amounting to Rs.1,09,22,500/-, leading to their inability to use common amenities in the society. The Corporate Debtor contended that the amount was deposited in the loan account instead of the corpus fund account, and the society was informed to adjust the amount payable towards the corpus fund. The Tribunal found that the transaction was in pursuance of the sale agreement and not a separate agreement for the claimed amount. Consequently, the transfer of corpus funds into the loan account does not qualify as financial debt under Section 5(8) of the Code. 3. The Impact of Pending Consumer Complaint on the Current Petition: The Corporate Debtor highlighted that the Financial Creditors had filed a Consumer Complaint before the National Consumer Disputes Redressal Commission (NCDRC) for the same claim and failed to disclose this to the Tribunal. The Tribunal noted that the Financial Creditors approached the Tribunal with unclean hands, as the Consumer Complaint was already pending. This non-disclosure further weakened the Financial Creditors' position. 4. Applicability of the Supreme Court Judgment in Mobilox Innovations Pvt. Ltd. v/s Kirusa Software (P) Limited: The Corporate Debtor relied on the Supreme Court judgment in Mobilox Innovations Pvt. Ltd. v/s Kirusa Software (P) Limited, arguing that the pending Consumer Complaint warranted the dismissal of the petition. However, the Tribunal clarified that the cited judgment pertains to Section 9 of the Code, whereas the present petition was filed under Section 7. Therefore, the judgment was deemed incorrectly applied to the current case. Conclusion: The Tribunal concluded that the Financial Creditors failed to meet the eligibility criteria under Section 7(1) of the Insolvency and Bankruptcy Code, 2016, as they did not represent the required minimum percentage of allottees. Additionally, the transaction did not qualify as financial debt, and the non-disclosure of the pending Consumer Complaint further invalidated the petition. Consequently, the petition was rejected. Order: The petition bearing CP (IB) 4217/MB/2019 filed by the Financial Creditors under Section 7 of the IBC read with Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiating CIRP against the Corporate Debtor is rejected.
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