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2023 (12) TMI 486 - AT - Insolvency and BankruptcyAdmissibility of section 9 application - application filed under Section 9 by the Operational Creditor was an application filed in collusion with the Corporate Debtor or not - locus of Real Estate Regulatory Authority and Aquacity Consumer and Societies Welfare Society to file Company Appeal u/s 61 of IBC - Barter Agreement has already been declared as unfair practices by RERA - forged invoices - time limitation. Whether Real Estate Regulatory Authority has locus to file Company Appeal challenging the order dated 05.08.2022 under Section 61 of the I B Code? - HELD THAT - RERA on various complaints received from the allottees in the year 2021 has registered proceedings against the Corporate Debtor. A show cause notice dated 09.09.2021 was issued to the promoter of the project Aakriti Aquacity under Section 7 of the 2016 RERA Act as to why allottees should not be refunded deposit amount and compensation need to be paid and why action cannot be taken to revoke the registration of the project Aquacity for non-compliance of the Orders. Reply was submitted by the Corporate Debtor in October, 2021. Investigation Report from Financial Advisor was also obtained which report mentioned that the amount received by the promoter has not been deposited in the prescribed bank account and order dated 28th January, 2022 was passed by RERA against the Corporate Debtor and its Directors Mr. Raju Soni and Mr. Hemant Kumar Soni. In view of the sequence and events of the facts which took place and various proceedings drawn by RERA much prior to issuance of notice under Section 8 of the Code by the Operational Creditor, it is satisfied that Appeal filed by the RERA cannot be thrown out on the ground of locus. The RERA held to be aggrieved person within the meaning of Section 61 of the Code - the question has to be answered in affirmative holding that RERA has locus to file Company Appeal. Whether Aquacity Consumer and Societies Welfare Society, Appellant in Company Appeal has locus to file Appeal within the meaning of Section 61 of the I B Code? - HELD THAT - Appellant being association of the home-buyers of Real Estate Project who has already initiated proceedings for direction of the interest of the home-buyers is aggrieved person within the meaning of Section 61 of the Code and the Appeal filed by the Appellant cannot be dismissed on the ground of locus - question answered in affirmative holding that Aquacity Consumer and Social Welfare Society has a locus to file an Appeal under Section 61 of the Code against the Order dated 05th August, 2022. Whether the Corporate Debtor owed operational debt to the Operational Creditor on the basis of Barter Agreements and consequent invoices to enable the Operational Creditor to initiate proceedings under Section 9 of the I B Code? - HELD THAT - On the basis of Barter Agreement and consequent invoices, non-discharge of Barter Component by the Corporate Debtor shall not lead to any operational debt on basis of which payment of money can be demanded by the Operational Creditor from the Corporate Debtor. No operational debt was owed to the Operational Creditor in the facts of the present case hence initiation of proceedings under Section 9 by the Operational Creditor was contrary to the provisions of the IBC. Whether the application under Section 9 filed by the Operational Creditor was filed in collusion with the Corporate Debtor to save the Corporate Debtor from carrying out its statutory obligations? - Whether invoices which were filed along with the Section 9 application by the Operational Creditor were manufactured and forged invoices prepared for the purposes of the case, which were not genuine invoices? - HELD THAT - There was no Operational Debt due on the Corporate Debtor and the proceedings initiated by the Operational Creditor being wholly outside Section 8 and 9 of the Code, there are no necessity to enter into the above question for the purpose of the present case. Thus, Application filed under Section 9 by the Operational Creditor alleging Operational Debt was non-maintainable since there was no operational debt on basis of which payment of money could have been demanded by the Operational Creditor from the Corporate Debtor on account of non-discharge of Barter Component by the Corporate Debtor. At best, the Applicant was entitled for claiming allotment of units as per the Barter Agreement between the parties for which it was open for the Operational Creditor to take such remedy as permissible. However, Section 9 Application was clearly not maintainable, the Adjudicating Authority committed error in admitting Section 9 Application without adverting to the real nature of the transaction between the parties, which is the very basis of the Section 9 Application, the Order of the Adjudicating Authority just is unsustainable. The Order dated 05th August, 2022 admitting Section 9 Application set aside - appeal allowed.
Issues Involved:
1. Locus of Real Estate Regulatory Authority (RERA) to file an appeal. 2. Locus of Aquacity Consumer and Societies Welfare Society to file an appeal. 3. Existence of operational debt owed by the Corporate Debtor based on Barter Agreements. 4. Alleged collusion between the Operational Creditor and the Corporate Debtor. 5. Authenticity of invoices filed with the Section 9 application. Summary: Issue 1: Locus of RERA The Tribunal considered whether RERA has the locus to file an appeal under Section 61 of the IBC. RERA argued that the Section 9 application was collusive and aimed at circumventing RERA's orders. The Tribunal held that RERA has the locus to file the appeal as it is a statutory authority with the mandate to protect the interests of allottees and regulate the real estate sector. The Tribunal emphasized that RERA is an aggrieved person within the meaning of Section 61 of the IBC, given its regulatory actions against the Corporate Debtor and the impact of the moratorium on its proceedings. Issue 2: Locus of Aquacity Consumer and Societies Welfare Society The Tribunal examined whether the Aquacity Consumer and Societies Welfare Society, representing homebuyers, has the locus to file an appeal. The Society had previously obtained favorable orders from the National Consumer Disputes Redressal Commission (NCDRC) and the Supreme Court regarding refunds and interest. The Tribunal concluded that the Society is an aggrieved person within the meaning of Section 61 of the IBC, as its members are directly affected by the CIRP proceedings. Issue 3: Existence of Operational Debt The Tribunal analyzed whether the Corporate Debtor owed operational debt to the Operational Creditor based on Barter Agreements. The Barter Agreements involved an exchange of advertising services for real estate units, with a cash component already paid. The Tribunal found that non-discharge of the Barter Component (i.e., non-allotment of units) does not constitute an operational debt. The Tribunal emphasized that the IBC's definition of operational debt involves a right to payment in monetary terms, not barter. Consequently, the Tribunal held that there was no operational debt owed to the Operational Creditor, making the Section 9 application non-maintainable. Issue 4: Alleged Collusion Given the finding that no operational debt existed, the Tribunal deemed it unnecessary to address the issue of alleged collusion between the Operational Creditor and the Corporate Debtor. Issue 5: Authenticity of Invoices Similarly, the Tribunal did not find it necessary to adjudicate on the authenticity of the invoices filed with the Section 9 application, as the primary issue of operational debt was dispositive. Conclusion: The Tribunal allowed both appeals and set aside the order dated 05.08.2022 admitting the Section 9 application. The Tribunal concluded that the Section 9 application was non-maintainable as there was no operational debt owed by the Corporate Debtor to the Operational Creditor based on the Barter Agreements.
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