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TMI Blog2019 (3) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of default exceeds much more than 1 lakh. In view of Section 4 of the Code, the moment default is Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. There is sufficient material on record to conclude that respondent corporate debtor has committed default in repayment of the financial debt. The applicant clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed the money to the respondent corporate debtor as consideration for purchase of office unit. Though considerable long period has since lapsed even the principal amount disbursed has not been repaid by the respondent corporate debtor. The material on record reveals that there is no disciplinary proceeding pending against the proposed IRP. In the facts we are satisfied that the present application is complete and there has been a default in payment of the financial debt - Accordingly, in terms of Section 7 (5) (a) of the Code, the present application is admitted. - COMPANY PETITION (IB) NO. 967(PB) OF 2018 - - - Dated:- 8-2-2019 - MR M. M. KUMAR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry disclosures have been made by Amit Agrawal as per the requirement of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code. 5. The case of the applicant that an amount of ₹ 12, 21, 76,646.62/- is due and payable by respondent corporate debtor. It is submitted that the said debt or parts thereof has/have fallen due on various dates since 07.07.2016 on account of corporate debtor's default in completion of the allotted unit within time and the default in re-payment (despite demands) of amount paid by the financial creditor along with compound interest @ 18 % per annum from the actual dates of receipt of payment by the corporate debtor till date of repayment to /realization of the entire amount to the allottee /financial creditor, and penalty thereon as ordered by UPRERA for reasons of failure to deliver the Commercial Unit within stipulated time. 6. It is the case of the applicant that it agreed to purchase one commercial unit bearing B-2002 to be constructed as part of one project titled Delhi One to be developed by the Corporate Debtor and accordingly paid a sum of ₹ 4,97,20,400/- towards the said Commercial Unit B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under Clause 9.1 of the Agreement, the corporate debtor was to complete construction of Commercial Unit within 36 months from the date of execution of this Agreement which is subject to a further grace period of 180 days after expiry of the said period. In case of failure to complete construction within the period as above, Clause 9.10 of the Agreement provides that the Allotee(s) shall become entitled to opt for termination of the- Allotment /Agreement and seek refund of the actual paid up instalment after adjusting interest/ penalty on delayed payment. Such refund shall be made by the Developer within 90 days, alongwith annual interest calculated at base rate of State Bank of India to be calculated from respective date of payment till the date of refund. 9. The applicant further stated that the allottee advanced a further sum of ₹ 47,05,639.50 to the corporate debtor vide cheque dated 04.02.2013 against Commercial Unit B-2002, and the same was acknowledged vide receipt bearing number 6100000191 dated 06.02.2013. Additionally, sums of ₹ 44, 32,715.40/- and ₹ 46, 78,815/- were advanced to the corporate debtor by the allotte vide cheques dated 31.10.2013 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 9.10 of the Agreement-which provides for refund of money to an allottee on failure of the corporate debtor. 13. The applicant asserted that the Corporate Debtor did not respond to any of the aforementioned letters. Accordingly, the allottee vide letter dated 03.11.2017 exercised its right under Clause 9.10 of the Agreement and sought refund of its money along with interest. The corporate debtor neither replied to the allottee's letter nor made good the demand for refund with interest. (Annexure V). The allottee vide letter dated 01.12.2017 repeated its demand for refund of the entire amount paid to the corporate debtor along with interest. The Allottee further put the Corporate debtor to notice that its failure to honour the demand shall necessitate adjudication of the claim under the Real Estate (Regulation and Development)Act, 2016. The allottee sent one last reminder vide letter dated 25.01.2018 calling upon the corporate debtor to honour the terms of the agreement, and which reminder too was ignored by the corporate debtor. 14. Respondent corporate debtor has filed its reply on 09.10.2018 raising various objections against admission of the present petition. It is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has to prove the default. In other words, even if there is a clear default, the application under Section 7 of the Code is not maintainable in case the applicant is not a financial creditor. Therefore, in order to maintain the present application filed under Section 7 of the Code for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor, the present applicant has to satisfy that he comes within the definition of Financial Creditor . 20. Besides in the reply and counter affidavit, one of the main objection raised by respondent is that the applicant does not come under the definition of 'Financial Creditor' and the debt claimed is not a 'financial debt'. 21. The expressions Financial Creditor and Financial debt have been defined in Section 5 (7) and 5 (8) of the Code, which are reproduced below: 5. In this part, unless the context otherwise requires, - (7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to; (8) financial debt means a debt alongwith interest, if any, which is disbursed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zes home buyers as Financial Creditor . Accordingly, the home buyers can initiate Corporate Insolvency Resolution Process against defaulting builder or developer, as Financial Creditor in terms of Explanation to Section 5 (8) (c) of the Code with effect from 06.06.2018. 23. In the case of Rajendra Kumar Saxena v. Earth Gracia Buildcon (P.) Ltd passed in Appeal (AT) (Insovency) No. 187/2018 HOn'ble NCLAT has held that: By the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 No. 6 of 2018 dated 6th June, 2018 followed by the Act, in clause (8), in Sub clause (f), of Section 5 an explanation has been inserted as per which any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. Thereby, after amendment of the Act, the allottees of real estate project have been treated as 'Financial Creditors'. (Emphasis supplied). 24. In the present case the applicants had booked a office unit and advanced a sum of ₹ 4,10,68,472.29/- to the respondent corporate debtor. The various dates of disbursement of the principal amount including the details of the said office unit have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary -6-Company Appeal (AT) (Insolvency) No. 428 of 2018 proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communicate- (a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be. 26. The present application under Section 7 of the Code for initiative Corporate Resolution Insolvency Process has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchase of office unit. Though considerable long period has since lapsed even the principal amount disbursed has not been repaid by the respondent corporate debtor. It is accordingly reiterated that respondent corporate debtor has committed default in repayment of the outstanding financial debt which exceeds the statutory limit of rupees one Lakh. Besides it is also seen that the application filed in Form - I under Section 7 of the Code read with Rule 4 of the Rules is complete and there is no infirmity in the same. Moreover the material on record reveals that there is no disciplinary proceeding pending against the proposed IRP. In the facts we are satisfied that the present application is complete and there has been a default in payment of the financial debt and that no disciplinary proceeding is pending against the proposed IRP and therefore, the applicant financial creditor is entitled to initiate Corporate Insolvency Resolution Process under Section 7 of the Code. 34. Accordingly, in terms of Section 7 (5) (a) of the Code, the present application is admitted. 35. Mr. Amit Agrawal, having registration number IBBI / IPA - 02 / IP-N- 00185 / 2017-18 / 10456 resident of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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