9911796707
TMI Blog2020 (8) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... te should be jointly treated to be one for the purpose of initiation of CIRP and hence this Application under Section 7 is not maintainable. The Applicant had issued notice to the Respondent under Section 8, terming it as an Operational debt . Be that as it may, this Application seeking initiation of CIRP by one partner of JDA against the other, only jeopardizes the interests of the allottees. Apart from the fact that the Joint Development Agreement entered into, is a contract of reciprocal rights and obligations, both parties are admittedly Joint Development Partners , who entered into a consortium of sorts for developing an Integrated Township and for any breach of terms of contract, Section 7 Application is not maintainable as the amount cannot be construed as Financial Debt as defined under Section 5(8) of the Code. The Appellant cannot be termed to be a Financial Creditor as envisaged under Section 5(7) of the IBC, 2016 - Appeal dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) NO. 550 of 2020 - - - Dated:- 18-8-2020 - [Justice Jarat Kumar Jain Member (Judicial); [Dr. Ashok Kumar Mishra] Member (Technical) And [Ms. Shreesha Merla] Member (Technical) For Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rejected. It is however being made clear that these observation shall in no way preclude the Financial Creditor from invoking any other legal right accruing in their favor. 2. Succinctly put, the facts in the case are that both the parties with a specific purpose of developing an Integrated Township in Ludhiana had entered into various Agreements briefly enumerated as follows; Buyer s Agreement dated 19.11.2005. Floor Space Index (FSI) Purchase Agreement dated 09.12.2005. Joint Development Agreement dated 25.01.2006, (hereinafter referred to as JDA). Master Development Agreement dated 12.04.2011, (hereinafter referred to as MDA). Addendum dated 13.04.2011 to the MDA. 3. It is submitted by the Appellant that as per clause 2 of the MDA sharing ratio in Project Development between the Appellant and the Respondent in the Project was 75% and 25% respectively. It is stated that as per clauses 5 and 6 of the MDA, payments of statutory dues and project costs incurred by the Appellant was to be paid by the Respondent to the Appellant equivalent to its share in the Project. It is averred that as per clauses of the MDA 6.7 and 14, it is the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olitaire s Residential Plots in favor of any allottee/third party purchaser. (emphasis added) c) Clause 4 of the Addendum to MDA: 4. The parties agree that notwithstanding anything provided in the Agreement, the parties shall jointly sell, transfer the Balance Acquired land and shall be entitled to allocation of the proceeds therefrom ( Balance Acquired Land Proceeds ) in proportion of their entitlement to the Balance Acquired Land i.e. in proportion to the area of 5.07 acres for Solitaire and 11.79 acres for Vipul. The Parties also agree that the Balance Acquired Land Proceeds shall be utilized as provided in the clause 5 of thus Addendum. Further; the parties agree that the Balance Acquired Land Proceeds shall be deposited in an account opened for this purpose by Vipul and jointly by authorized representatives of both Solitaire and Vipul. The parties also agree that the Balance Acquired Land Proceeds shall be utilized as provided in the Clause 5 of this Addendum. (emphasis added) d) Clause 3.4.9 of the MDA: 3.4.9. Notwithstanding any transfer/assignment of Solitaire s SCO units to any third party, Solitaire shall continue to be liable and responsibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art payment of ₹ 26,10,211/- and the balance amount of ₹ 1,11,24,693/- is due and payable; with a collective reading of clause 6.2, 6.7 of MDA read with clause 1 of the Addendum proves that there is a provision of interest at 18% p.a. categorizing the transaction to be a Financial transaction against the consideration of time value of money; that the Hon ble supreme Court in Pioneer Urban Land and Infrastructure and Anr. V/s. Union of India and Ors. (2019) 8 SCC 416 and in Anuj Jain V/s. Axis Bank Ltd. 2020 SCC OnLine SC 237 (205) has observed that the essential elements of disbursal, and that too against the consideration for time value of money, needs to be found in the genesis of any debt before it can be treated as Financial debt within the meaning of Section 5(8) of the Code and in the present case the factum of both disbursal and against the time value of money has been admitted by the Respondent. 7. Learned Counsel for the Respondent submitted that the Learned Adjudicating Authority was right in observing that the Appellant does not fall within the definition of Financial Creditor as envisaged by the Code, that the contract shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Government charges and current Solitaire dues which was refused by the Appellant vide letter dated 23.05.2012. It is submitted that a letter was written by the Respondent on 09.04.2018 calling upon the Appellant to convey the components and the Appellant instead of replying to the same, as a counter blast, issued the demand notice dated 17.04.2018 and filed this present Application under Section 7 seeking initiation of CIRP on account of alleged Financial debt of ₹ 1,11,24,693/-. 10. Heard both sides. The brief point that falls for consideration in this Appeal is whether the amount claimed by the Appellant can be construed as a Financial debt as defined under Section 5 (8) of the IBC and if the Appellant falls within the ambit of the definition of Financial Creditor as defined under Section 5 (7) of the Code. 11. Sections 5 (7) and 5 (8) read as follows; (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 the consideration for the time value of money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of 25% in the project and in the project land. In the entire body of the notice the Appellant has addressed the principal amount as Operational debt . 13. The contention of the Learned Counsel appearing for the Appellant is that the terms of the MDA and Addendum to MDA categorically prove that the Corporate Debtor is only a Collaborator and not an Investor , in the light of the contractual relationship which is evidenced from the MDA and its Addendum. For better understanding of the case, clause 6.7 of the MDA, based on which clause, the Appellant is claiming a debt of ₹ 1,11,24,693/- is detailed as here under; 6.7 The following amounts aggregating to ₹ 4,68,31,394/- (Rupees four crores sixty eight lacs thirty one thousand three hundred and ninety four only) as detailed in a statement annexed hereto as Annexure-XIV shall be paid by Solitaire to Vipul within 45 days (with a grace period of 15 days) from the Execution Date ( Current Solitaire s Dues ): (a) An amount of ₹ 1,11,24,693/- (Rupees one crore eleven lacs twenty four thousand six hundred and ninety three only) towards part of Solitaire s Share of Cost as set out in Clause 6.2 above; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is relevant to mention that in the Addendum to the Master Development Agreement clause 4 states as follow; 4. The parties agree that notwithstanding anything provided in the Agreement, the Parties shall jointly sell/transfer the Balance Acquired Land and shall be entitled to allocation of the proceeds therefrom ( Balance Acquired Land Proceeds ) in proportion to their entitlement to the Balance Acquired Land i.e. in proportion to the are of 5.07 acres for Solitaire and 11.79 acres fir Vipul. Further, the Parties agree that the Balance Acquired Land Proceeds shall be deposited in an account opened for this purpose by Vipul and jointly operated by the authorized representatives of both Solitaire and Vipul. The Parties also agree that the Balance Acquired Land Proceeds shall be utilized as provided in Clause 5 of this Addendum. (Emphasis Supplied) 18. Clause 2.3 of the MDA emphasizes that the entire Integrated Township Development will be completed within 12 months with a grace period of 90 days, failing which, Vipul shall compensate, for such delay calculated at ₹ 75/- per month, per square yard of the total area Solitaire Residential Plots. Clause 3.2.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Joint Venture . The terms and conditions with respect to institutional areas and common areas also reflect that the cost would be share between Vipul and Solitaire at the rate of 75% and 25% and therefore viewed from any angle, the Joint Development Agreement entered into between both the parties reflects a commercial transaction in the nature of a Joint Venture wherein there is division of Profits and Costs. 22. It is pertinent to mention that the Appellant has admitted that it is a Joint Partnership Agreement . This emphasizes that the parties have a mutual right to control the enterprise involving mutual duties and obligations. Further, this Tribunal while dealing with a Joint Venture in a real estate Project, in Mamatha V/s. AMB Infrabuild Pvt. Ltd. and Ors. dated 30.11.2018, has held as follows; 14. If the two Corporate Debtors collaborate and form an independent corporate unity entity for developing the land and allotting the premises to its allottee, the application under Section 7 will be maintainable against both of them jointly and not individually against one or other. 23. In the light of this Principle, we observe that in such a kind of a Joint ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
