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2024 (3) TMI 928 - AT - Insolvency and BankruptcyAdmission of section 7 application - financial debt owed by the Corporate Debtor or not - default was committed by the Corporate Debtor in not carrying out the construction due to interim order or not. Whether Grandstar Reality Pvt. Ltd., auction purchaser under SARFAESI Act, 2002, on 17.06.2016/ 19.07.2016 can be held to be Financial Creditor of the Respondent allottees, who were issued allotment letters/ Builder Buyers Agreement by Akme Projects Ltd. (the predecessor of the Corporate Debtor)? - HELD THAT - The definition of Financial Creditor means that any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. The crucial word in the definition is any person to whom a financial debt is owed becomes a Financial Creditor. Further, the expression includes a person to whom such debt is legally assigned or transferred to is only incidence of further elaboration of person to whom the financial debt is owed. In the facts of the present case, there can be no denying that financial debt, which was owed by Akme to the allottees is now the debt owed by Grandstar Reality Pvt. Ltd. The Grandstar Reality Pvt. Ltd. is fully covered by the definition of Section 5, sub-section (7), who owed the debt towards the allottees. The financial debt can be owed in more than one manner. Assignment or transfers are two modes, which has been expressly included in the definition. In cases of amalgamation and demerger under the Companies Act, 2013 of a Corporate Debtor with another entity is obviously considered as Corporate Debtor on account of transfer/ vesting of assets and liabilities to the amalgamated/ transferee Company. Transferee Company cannot be permitted to escape the rigours of the Code by claiming that disbursement was not done to it directly. In the present case, where Grandstar Reality Pvt. Ltd. has taken over the Project under the SARFAESI Act, cannot escape the rigours of the Code and defeat the rights of the homebuyers under the Code - there is a financial debt and the filing of the Application by the allottees under Section 7 cannot be faulted on this ground. Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors. 2018 (3) TMI 1964 - SUPREME COURT , M/s Akme Projects Ltd. vs. YES Bank Anr.Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors.; in M/S. AKME PROJECTS LTD. VERSUS YES BANK LTD. ANR. 2016 (10) TMI 1397 - DELHI HIGH COURT ? - HELD THAT - The learned Counsel for the Respondent is right in her submission that even in additional affidavit filed on 19.01.2024 by the Appellant, no such facts have been stated, which may indicate that Grandstar Reality Pvt. Ltd. has been taking steps for completion of the Project. In the additional affidavit, the Appellant has placed reliance on letter dated 09.05.2023 issued by Tehsildar in terms of the order No.17/LAC dated 12.04.2023 passed by District Revenue Officer cum Land Acquisition Collector Gurugram. On looking into the said letters/ orders, it is clear that said orders were issued on a request made by one Om Prakash Yadav in the Rameshwar s case. Hence, order of the District Revenue Officer dated 12.04.2023 and letter dated 09.05.2023 by Tehsildar are not relevant for the present case - in the facts of the present case default was clearly proved on the part of the Grandstar Reality Pvt. Ltd. and the findings recorded by the Adjudicating Authority that Section 7 Application is complete and deserved to be admitted, does not warrant any interference. There are substance in the submission of learned Counsel for the Respondent that since the Project has been taken over by the Grandstar Reality Pvt. Ltd. in 2016 and it is now the obligation of Grandstar Reality Pvt. Ltd. to continue the Project, the filing of the claim by the allottees against the CIRP of Akme Project, cannot preclude the allottees from agitating their claim by filing Application under Section 7 against the Grandstar Reality Pvt. Ltd., who has taken over the Project. There is no error in the order of the Adjudicating Authority admitting Section 7 Application. The Appeal is dismissed.
Issues Involved:
1. Whether Grandstar Reality Pvt. Ltd., as an auction purchaser under SARFAESI Act, 2002, can be held to be a Financial Creditor of the Respondent allottees. 2. Whether no default was committed by the Corporate Debtor due to interim orders passed by various courts and tribunals. Summary: Issue 1: Financial Creditor Status The Builder Buyers Agreement was entered between Akme Projects Ltd. and the allottees between 2012 to 2015. The SARFAESI proceedings initiated by YES Bank led to the auction purchase by Grandstar Reality Pvt. Ltd. The Sale Confirmation Advice and Sale Certificate issued by YES Bank explicitly stated that the rights of lawful allottees on respective units were not undergoing any change in the auction process and that the successful bidder would be required to honor and acknowledge all lawful allotments. The Flat Buyer's Agreement included successors, executors, administrators, and assigns within its definition of the "Company," thereby encompassing Grandstar Reality Pvt. Ltd. The Appellant's obligations included all obligations under the Flat Buyer's Agreement, making Grandstar Reality Pvt. Ltd. a Financial Creditor under Section 5(7) of the Code. Issue 2: Default Due to Judicial Orders The Appellant argued that no default was committed due to various judicial orders. However, the judgment of the Hon'ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors. (2018) clarified that the land in question was not covered by the judgment. Despite this, no steps were taken by Grandstar Reality Pvt. Ltd. to carry out the construction or seek necessary clarifications. The orders of the Delhi High Court and DRT did not preclude the Appellant from taking steps towards the completion of the Project. The Appellant's inaction indicated a clear default, and the Adjudicating Authority's finding of default was upheld. Conclusion: The National Company Law Appellate Tribunal upheld the Adjudicating Authority's order admitting the Section 7 Application, concluding that Grandstar Reality Pvt. Ltd. owed a financial debt to the allottees and had committed default. The Appeal was dismissed.
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