9911796707
TMI Blog2020 (1) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner has also placed on record copies of cheques and receipts given by the respondent; in support of the disbursement of the amount to the respondent corporate debtor - Since the amount has been raised from the petitioner/allottee under a real estate project, petitioner being allottee/home buyer is regarded as a financial creditor in terms of Section 5(8)(f) of the Code. Petitioner gave advance to the real estate developer and thereby financed the real estate project at hand. Money that is disbursed is no longer with the allottee, but is with the real estate developer who is legally obliged to give money's equivalent back to the allottee. Not only the debt has a commercial effect of borrowings and come within the scope of 'financial debt' but also the petitioner clearly comes within the definition of 'financial creditor'. It is reiterated that the Form-1 filed in the present case under Section 7 of the Code read with Rule 4 of the Rules, shows that the Form is complete in all respect and there is no infirmity in the same. It is further seen that no disciplinary proceeding is pending against the proposed IRP. Whether respondent corporate debtor has committed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Extension, Uttar Pradesh. 4. Believing upon the presentation by the directors of the corporate debtor, applicant made an initial payment of ₹ 1,00,000/- via cheque number 002766 dated 16.10.2015 drawn on Allahabad Bank to the respondent for booking an under-construction flat in their project 3 Dimension . 5. Subsequently the financial creditor made a further payment of ₹ 3,50,000/- for booking the under-construction flat in the project 3 Dimension , there by the total amount paid was ₹ 4,50,000/-. 6. Copy of cheques and receipts have been placed on record to show that a total sum of ₹ 4,50,000/- was disbursed to the respondent as per the following details: I. ₹ 1,00,000/- via Cheque No. 002766, dated 16.10.2015 drawn on Allahabad Bank. II. ₹ 1,00,000/- vide Cheque No. 002767, dated 05.11.2015 drawn on Allahabad Bank, Khasra No. 368, Near Bus Stand, Khera, Najafgarh, New Delhi - 110043. III. ₹ 1,50,000/- vide Cheque No. 002768, dated 02/12/2015 drawn on Allahabad Bank, Khasra No. 368, Near Bus Stand, Khera, Najafgarh, New Delhi - 110043. IV. ₹ 1,00,000/- vide Cheque No. 002777, dated 27/04/2016 drawn on Allahabad Bank, Khasra No. 368, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieu of the expenses for the substituted service and was also directed to file reply within 10 days. 13. However, respondent preferred neither to pay cost nor to file reply and even did not put in appearance on 22.05.2019. Accordingly, respondent was proceeded ex parte. On the next two dates of hearing no one appeared on behalf of the respondent. Consequently, the arguments of the petitioner were heard in the absence of respondent and the matter was reserved for orders. As the matter was uncontested, the contentions and the documents relied upon by the petitioner remained unrebutted. 14. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely, (a) Financial creditor (b) Operational creditor, and (c) Corporate debtor itself. 15. The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the Financial Creditor is delineated under Section 7 of the Code, wherein only Financial Creditor / Financial Creditors can file an application. As per Section 7(1) of the Code an application could be maintained by a Financial Creditor either by itself or jointly with ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter - indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) and (h) of this clause.' (Emphasis Given) 17. Clause (8) of Section 5 of the Code has been amended by the Insolvency and Bankruptcy (Second Amendment) Act, 2018 with effect from 6th June, 2018. In view of the explanation inserted in the revised definition, it has been abundantly made clear that 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 and thus will come within the definition of 'Financial Debt' under the Code. Definition of 'Financial Debt' has been amended to remove any cloud and to specifically include dues of the home buyers. Amendment Act leaves no doubt that home buyers are Financial Creditors . Accordingly, allott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded as a financial creditor in terms of Section 5(8)(f) of the Code. Petitioner gave advance to the real estate developer and thereby financed the real estate project at hand. Money that is disbursed is no longer with the allottee, but is with the real estate developer who is legally obliged to give money's equivalent back to the allottee. Not only the debt has a commercial effect of borrowings and come within the scope of 'financial debt' but also the petitioner clearly comes within the definition of 'financial creditor'. 22. As a sequel to the aforesaid discussions the petitioner being a financial creditor can invoke Corporate Insolvency Resolution Process under Section 7 of the Code against the respondent corporate debtor in case of default in repayment of the financial debt. 23. Initiation of Corporate Insolvency Resolution Process by Financial Creditor is regulated by the provision engrafted in Section 7 of I B Code, which reads as under: 7. Initiation of corporate insolvency resolution process by financial creditor. - (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Dealing with the ambit and scope of Section 7 of the Code in the case of Innovative Industries Ltd. v. ICICI Bank Ltd. [2017] 84 taxmann.com 320/143 SCL 625, the Hon'ble Supreme Court has observed as under: 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part TV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p as per the requirement of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7(3)(b) of the Code. 27. It is reiterated that the Form-1 filed in the present case under Section 7 of the Code read with Rule 4 of the Rules, shows that the Form is complete in all respect and there is no infirmity in the same. It is further seen that no disciplinary proceeding is pending against the proposed IRP. 28. The next question comes for consideration is whether respondent corporate debtor has committed default in payment of the financial debt. 29. In this regard it is seen that the applicant has placed copy of cheques along with receipt issued by the respondent company to establish disbursement of ₹ 4,50,000/- to the respondent company. There was execution of Apartment Buyers Agreement between the parties and allotment agreement in favour of the applicant which has been placed on record. There are photographs on record to prove the contention of the applicant that the construction on the project site has stopped. The applicant has also claimed that the respondent has not contacted nor made any communication with the applicant. The applicant further alleged that alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2016. The needful shall be done within three days from the date of receipt of this order by the Financial Creditor. The said amount however be subject to adjustment towards Resolution Process cost as per rules and shall be paid back to the Financial Creditor. 35. In pursuance of Section 13(2) of the Code, we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Explanation to Regulation 6(1) of the IBBI Regulations, 2016) with regard to admission of this application under Section 7 of the Insolvency Bankruptcy Code, 2016. 36. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of Section 14(1)(a), (b), (c) (d) of the Code. Thus, the following prohibitions are imposed: (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any Court of law, Tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
