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TMI Blog2020 (8) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount which has been made by Rajesh Goyal. and the amount as will be generated from dues of the Allottees (Financial Creditors) during the Corporate Insolvency Resolution should be deposited in the account of the Company (Corporate Debtor) to keep the Company a going concern. The amount can be utilized only by issuance of cheque signed by the authorised person of the Company (Corporate Debtor) with counter signature by the Interim Resolution Professional. The Bank in which the Corporate Debtor (Company) has account the amount should be deposited only for the purpose of completion of the Project. Banks will allow the cheques for encashment only with the counter signature of the Interim Resolution Professional. ii. The flats/apartments should be completed in all aspect by 30th June, 2020. All internal fit outs for electricity, water connection should be completed by 30th July, 2020. The allottees are directed to deposit their balance amount and pay 90% without penal interest, if not deposited, by 15th March, 2020. The Allottees in whose favour possession has been offered and clearance has been given by the competent authority are bound to pay the cost for registration and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st as financial creditor or do not cooperate with the Interim Resolution Professional/Resolution Professional, the Adjudicating Authority (National Company Law Tribunal) will complete the Insolvency Resolution Process. Appeal disposed off. - Company Appeal (AT) (Insolvency) No. 1056 of 2019 & I.A. Nos. 4033 & 4303 of 2019 - - - Dated:- 5-2-2020 - [Justice S.J. Mukhopadhaya] Chairperson And (Justice Venugopal M.) Member(Judicial) For the Appellant : Mr. Sunil Kumar, Senior advocate with Mr. Chandra Shekhar Yadav, Ms. Gitanshi Arora, Mr. Vivek Kohli, Mr. Sandeep Bhuraria, Mr. Aman Anand, Mr. Parth Kaushik, Ms. Mahima Malhotra, Mr. Monish Surendran and Ms. Malvika Jain, Advocates For the Respondents: Mr. Sumesh Dhawan Ms. Apoorva, Mr. AbhinavAgnihotri and Mr. Vedant Singh, Advocates for Indiabulls Mr. Amandeep Singh, Advocate for Home Buyers Association Mr. Rishabh Jain, Advocate for Interim Resolution Professional Mr. Praful Jindal, Advocate for Applicants Mr. Rajesh Gupta and Mr. Anubhav Mehrotra, Advocates Mr. Parvesh Bahuguna, Advocate Mr. Sudeep Shrotirya and Mr. Govind Keshav, Advocates ORDER Ms. Babita Gupta, Mr. Manoj Kumar Gupta and Ms. Sweta Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (excluding Taxes) against such bookings. Against this sum of money received, the Corporate Debtor has spent more than 600 crores on construction, licenses, marketing as per the following details. While these collections and expenses have been incurred over the last 6 odd years, the consolidated figures, based on the unaudited accounts for the Financial Year 2018-19 are as under : Particulars Amount (INR) (In Crores) Percentage (%) Collection of Phase-I/II/III 595.75 TOTAL 595.75 16.12% Land Cost 96.09 48.35% Construction Cost 288.10 7.56% Finance Cost 45.04 6.06% Marketing Cost 36.15 11.51% Salaries Exp. 68.60 7.74% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im Resolution Professional, it having expertee of real estate project , so the Appellate Tribunal asked to give the time-frame of completion of the flats/apartments and the common area facilities. During the pendency of the appeal, the project remained functional on receipt of investment and cooperation of Promoter. The result was that out of 706 flats/apartments of the Winter Hills 77, Gurgaon project, for which 624 flats/apartments were booked, before time and within the period of corporate insolvency resolution process 453 allottees, who paid their respective consideration amount in full were allowed possession on receipt of fees etc. registration of Sale Deed in favour of 92 allottees were completed. So some more time was allowed and matter was disposed of. 7. In the case of Flat Buyers Association Winter Hills 77, Gurgaon (Supra) this Appellate Tribunal observed : PROBLEMS IN FOLLOWING CERTAIN PROCESS IN THE CASES OF INFRASTRUCTURE COMPANIES (FOR ALLOTTEES): 3. The Parliament made amendment of Section 30(2) (4) of the I B Code to give weightage to the Secured Creditors which came into force on 16th August, 2019. 4. In Committee of Creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de would apply in addition to RERA. 6. The following are the problems which have now cropped up. There is a difference in Form B and Form C for submission of proof claims by the Operational Creditors and the Financial Creditors. Prior to the Notification dated 27thNovember, 2019, Form B which is for submission of proof of claims by Operational Creditors before the Interim Resolution Professional, did not have any column for details of any security held by them, unlike Form C which had such a separate column. The inclusion of this column vide the aforesaid notification acknowledges the fact that Operational Creditors can also be secured and that earlier, due to absence of any such specific column, the Operational Creditors were deprived from submitting their claims and to state whether any security is held by them either by annexing it by way of supplementary documents. Hence, there was a need for this inclusion. 7. On the other hand, since inception of the Insolvency and Bankruptcy Code, 2016, at the time of liquidation, Forms B C provided column for details of any security held by Operational Creditors and the Financial Creditors . 8. The allottees (Home ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. In Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta Ors. (2019 SCC OnLine SC 1478) , Hon ble Supreme Court observed as follows: 90. In Swiss Ribbons (supra) this Court was at pains to point out, referring, inter alia, to various American decisions in paras 17 to 24, that the legislature must be given free play in the joints when it comes to economic legislation. Apart from the presumption of constitutionality which arises in such cases, the legislative judgment in economic choices must be given a certain degree of deference by the courts. In para 120 of the said judgment, this Court held: 120. The Insolvency Code is a legislation which deals with economic matters and, in the larger sense, deals with the economy of the country as a whole. Earlier experiments, as we have seen, in terms of legislations having failed, trial having led to repeated errors , ultimately led to the enactment of the Code. The experiment contained in the Code, judged by the generality of its provisions and not by so- called crudities and inequities that have been pointed out by the petitioners, passes constitutional muster. To stay experimentation in things eco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the project and time frame for providing common area facilities like Swimming Pool, Club House etc. as per the agreement. They were directed to provide a chart showing the amount as due from different allottees and default, if any, committed by allottee(s). The progress report has also been taken on record. 9. In this Appeal, the Interim Resolution Professional was directed to collate the claims and on the basis of voting share of the allottees to find out whether the allottees agrees with the proposal for investment by Promoter as an outsider Financial Creditor and to allow this to co-operate with Insolvency Resolution Professional to complete the project and allottee, if any, who wants the refund. 10. The Interim Resolution Professional after conducted the voting of the allottees (Financial Creditors) and the voting share and the decision has been recorded as under: 12. That the detail of total number of allottees entitled for proposal and exercised their option is as under: Particulars Possession Refund Total no. of allottees 1450 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 Tower E Within 180 days from the start of work 07 Tower M Within 180 days from the start of work 08 Tower G Within 180 days from the start of work 09 Tower H Within 180 days from the start of work (ii) The second party also undertakes to start work within 30 days (+-) 10 days from the date of order passed by Hon ble NCLAT in all respect allowing the construction at the project site. 12. Mr. Rajesh Goyal (Promoter) who appear in person accepted that the Promoter will make investment as Financial Creditor to keep the Corporate Debtor (company) as a going concern. Summary of sources of funds and time period to infuse such investment shown as under: Summary of Sources of Funds and time period {Total 70 Crores (approx.) S.No Particulars Amount in crores 30 Days 60 Days 90 Days Total 1 Sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount released by the Bank/Financial Institution on production of certificate. (b) The interest will be paid only on completion of the flats and its allotment to the allottees, by sale of unsold apartment/apartments. It may be paid within 180 days, the time period has provided or by 30th August, 2020, the last date for completion of the project. 15. Mr. Rajesh Goyal, who is present in the Court, undertakes that he will immediately infuse a sum of ₹ 5.38 Cr. plus 0.50 Cr. i.e. ₹ 5.88 Cr. within a week. 16. Mr. Rajesh Goyal (Promoter) also agrees to pay to all the Financial Institutions such as Allahabad Bank , Punjab National Bank and Indiabulls etc. The dues of all the Financial Institutions and time of payment has been shown as under: The dues of financial institutions (Principal only), as existing on the day of declaration of the account as NPA or 19th September, 2019 the date on which the insolvency petition against the corporate debtor was admitted as the case may be, shall be paid in the following time frame: No. Sl. Name of Financial Institutions the Amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors, operational creditors are different for such separate project. Therefore, all the asset of the company (Corporate Debtor) are not to be maximized. The asset of the company (Corporate Debtor real estate) of that particular project is to be maximized for balancing the creditors such as allottees, financial institutions and operational creditors of that particular project. Corporate Insolvency Resolution Process should be project basis, as per approved plan by the Competent Authority. Any other allottees (financial creditors) or financial institutions/ banks (other financial creditors) or operational creditors of other project cannot file a claim before the Interim Resolution Professional of other project and such claim cannot be entertained. So, we hold that Corporate Insolvency Resolution Process against a real estate company (Corporate Debtor) is limited to a project as per approved plan by the Competent Authority and not other projects which are separate at other places for which separate plans approved. For example in this case the Winter Hill 77 Gurgaon Project of the Corporate Debtor has been place of Corporate Insolvency Resolution Process. If the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany as a going concern and complete the project within the time frame. In view of the fact that part of the infrastructure (Apartments/Flats) has already been completed, the allottees (Financial Creditors) were the main beneficiaries of the infrastructure have already reached settlement with the Promoter and the fact that the Promoter as an outsider financial creditor has agreed to invest the amount, not from the account of the Corporate Debtor but from other sources to keep the infrastructure as a going concern, we in exercise of inherent powers conferred under Rule 11 of the NCLAT Rules, 2016, pass the following order: i. Rajesh Goyal (Promoter) is directed to cooperate with the Interim Resolution Professional and disburse amount (apart from the amount already disbursed) from outside as Lender (financial creditor) not as Promoter to ensure that the project is completed within the time frame as given by him. The disbursement of amount which has been made by Rajesh Goyal. and the amount as will be generated from dues of the Allottees (Financial Creditors) during the Corporate Insolvency Resolution should be deposited in the account of the Company (Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Corporate Insolvency Resolution Process, the Interim Resolution Professional can also sell the unsold flats/apartments, by way of a Tripartite Agreement between the Purchaser, Interim Resolution Professional/Resolution Professional and Promoter (Rajesh Goyal). The proceeds as may be generated from such sale should be utilized for completion of the project, payment to Financial Institutions/Banks, Operational Creditors and interest as is payable to the allottees whose principal amount is to be refunded. Once the project is completed, the Interim Resolution Professional will move application before the Adjudicating Authority (National Company Law Tribunal) with the report of completion and ask for disposal of application under Section 7 of the I B Code filed by Ms. Babita Gupta, Mr. Manoj Kumar Gupta and Ms. Sweta Gupta (Allottees Financial Creditors). vii. However, if the Promoter fails to comply with the undertaking and fails to invest as financial creditor or do not cooperate with the Interim Resolution Professional/Resolution Professional, the Adjudicating Authority (National Company Law Tribunal) will complete the Insolvency Resolution Process. The appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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