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TMI Blog2020 (10) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions shows that a Financial Creditor is a person to whom a financial debt is owned and includes a person to whom a debt is legally assigned or transferred. The applicants claimed themselves to be Financial Creditors because according to him a financial debt is owned by the Corporate Debtor. The plain reading of Section 5(8) shows that a financial debt means a debt along with interest which disbursed against the consideration of time value and money and includes any of the Clause (a to i) under Section 5(8) of IBC, 2016. Mere plain reading of the Clause 21 of the Supplementary Collaboration Agreement shows that both the applicants/owners and the developer/Corporate Debtor shall execute and register the sale deed and the other documents in respect of the flat, car parking etc. in favour of the intending purchaser therefore, when we shall read this Clause along with the definition of Promoter then we are of the considered view that the applicants are not the Financial Creditors rather they are the promoters along with developer hence, on the basis of allotment of flats in terms of the Supplementary Collaboration Agreement, in our view, the applicants cannot be treated as Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , filed a statutory claim with the IRP for considering their claim as Financial Creditor. It was further submitted that applicants are the owner of agricultural lands vide registered sale deeds. Both the applicants entered into separate Supplementary Collaboration Agreements with the Corporate Debtor on 17.05.2011. On the basis of the agreement, the applicants and the Corporate Debtor agreed to share the project in a ratio of 45:55 respectively and the share of the parties are to be determined after the completion of construction and development work. Further, as per the Clause 20 of the agreement, the developer shall complete the construction and development work of the said group housing project within 42 months from the date of signing of this agreement. If the handing over of possession of owner's share is delayed beyond the expiry of the said period of 42 months, then the developer shall compensate the owner for the owner' share of 45 per cent at the rate of ₹ 30/- per sq. ft. per month to the applicant companies till the date of development work is completed and share of applicant of the said project is not completed. Further, the applicants again entered into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Corporate Debtor and taken into consideration various provisions of this IBC, 2016 and Regulations made thereunder and bases on legal opinion received as advised by the CoC in its first meeting dated 17th June 2019, alongwith provisions of several other allied acts but express our inability to treat you as Financial Creditor entitling you to be a part of CoC simply on the ground that you have been allotted flats in this project of Corporate Debtor. In view of the above, you claim as Financial Creditor stands rejected. 4. Further it is submitted by the Applicants that since the applicants are allottees under a real estate project, therefore, they come under the definition of under Section 8(f) read with Section 2(d) of the Real Estate (Regulation and Development) Act, 2016. Further, in the IBC, there are two types of creditors i.e. Financial and Operational and the applicants are covered under the definition of Financial Creditor. Therefore, the applicants are the Financial Creditors and on the basis of the facts the applicants relied upon the Section 8(f) read with Section 2(d) of the Real Estate (Regulation and Development) Act, 2016. 5. Although the Resolution Professi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al public. Explanation:- For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder. b. The Hon'ble Apex Court recently in the matter of Pioneer Urban Land Infrastructure Limited and Anr. Vs. Union of India Ors. W.P. (Civil) No. 42 of 2019 has reiterated what it has already held in the matter of Swiss Ribbons Pvt. Ltd. Anr. Vs. Union of India Ors. W.P. (Civil) No. 99 of 2018 that real estate allottees are those who make payments to the corporate debtor in lieu of services rendered i.e. construction of an apartment, but in the present case no amount was disbursed to the corporate debtor in lieu of construction of an apartment or any other consideration was given, although the applicants in their applications have claimed that their land was given in consideration but in reality the applicants themselves are the owners of the land t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the clause 17 of the supplementary agreement. It is further submitted that that in lieu to the amount paid by the Corporate Debtor to the applicant under the said supplementary agreement, the built up area to be allotted to the applicant was also reduced by the Corporate Debtor. c. The applicant has also transferred absolute development rights in the said land of the applicant to the Corporate Debtor. It is further submitted that the transfer of the development rights, possession and execution of a power of attorney in the favor of the Corporate Debtor to deal with the land of the applicant and thereby, develop and construct the said project upon the land of the applicant and make profit from the same serves as part consideration given by the Applicant. It is submitted that it is only due to such aforementioned part considerations in the form of development rights, execution of power attorney/license to deal with the said land of the applicant, transfer of possession of the said land and etc. It is submitted that it is due to said part consideration, to Corporate Debtor had managed to obtain the license from DTCP, Haryana and thus, create further rights in the buildup are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer will get 55 per cent whereas the owner's share was 45 per cent and as per the agreement, the land shall be under the possession and control of the applicants but thereafter a subsequent agreement was executed on 18.03.2013 and according to the supplementary agreement in terms of Clauses 8, 9 10, new terms and conditions were fixed and the terms and conditions are stated below: 8. That in terms of the said Collaboration Agreement the built up/saleable areas falling to the share of the Owner was 45 percent of the total built up/saleable area. However, the Developer has now assured and represented to the Owner that the proposed apartments in the said Group Housing Colony (in addition to having specifications as given in Annexure 'B' annexed hereto) would be furnished by Christopher Guy and the furnishing of each Apartment will tentatively cost over ₹ 3400/- per square foot. As such the parties have now agreed to revise their sharing in the built up/Saleable area constructed on the said land in the following manner: Owner's Allocation: 30% Developer's Allocation: 70% 9. In the light of the provisions of Clause above the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment failing to the share of Owner's Allocation as specified in Annexure-C. The allotment letter(s) so issued shall besides mentioning the Tower Number and the Floor Number shall also specify the Apartment Number and area thereof. The ratio of Super Area to covered area for the Owner's Allocation shall be uniform for the entire Group Housing Colony. 10. From the perusal, it appears that by subsequent agreement, both the Applicants are allotted 9 flats each and as per terms and conditions, a separate letter of allotment is issued and on the basis of that the applicants claimed themselves to be the Financial Creditors. Before making any comments on the contention of the applicants, we would like to refer Section 5(7) and 5(8) of the Code and the same is quoted below: Section 5(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; Section 5(8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes-- (a) money borrowed against the payment of interest; (b) any am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Apex Court given in Pioneer Urban Land and Infrastructure Limited Another V Union of India [Supreme Court of India in WP (Civil) 43/2019] and upon which the Ld. Counsel for the RP in course of his arguments placed reliance. The Hon'ble Apex Court in Para 61 of the Judgment defined the word disbursed, the relevant portion is quoted below: 61. The definition of financial debt in Section 5(8) then goes on to state that a debt must be disbursed against the consideration for time value of money. Disbursement is defined in Black's Law Dictionary (10th ed.) to mean: 1. The act of paying out money, commonly from a fund or in settlement of a debt or account payable. 2. The money so paid; an amount of money given for a particular purpose. In the present context, it is clear that the expression disburse would refer to the payment of instalments by the allottee to the real estate developer for the particular purpose of funding the real estate project in which the allottee is to be allotted a flat/apartment. The expression disbursed refers to money which has been paid against consideration for the time value of money . In short, the disbursal must be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that share it was agreed that 9 flats will be given to each of the applicants. It is also matter of fact that the developer has to construct the apartments on the land of the applicants and the said land is still under the possession and control of the applicants because as per the agreement after the completion of the project, the applicants were required to execute the sale deed in favour of the person who purchased the flat from the developer. As per the conditions of the subsequent agreement, nowhere in the agreement, it is mentioned that the title and possession of the land is given to the developer rather the same is retained by the applicants. We further find that in lieu of the agreement also the applicants has received ₹ 8 crores and that has also been admitted by the applicants. Of course, the contention of the applicants is that they have received the same as a security amount, therefore, on the basis of the aforesaid discussion, we find that although in view of the decision of the Hon'ble Apex Court given in Pioneer Urban Land and Infrastructure Limited Another V Union of India [Supreme Court of India in WP (Civil) 43/2019], the disbursement is only for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Creditor only when any money has been raised from him because Hon'ble Apex Court held that the disbursal must be in terms of money, therefore, when we shall read the definition of allottee given in the Real Estate (Regulation and Development) Act, 2016 then we are of the view that unless the money has been raised from the allottee by the developer under real estate project, the allottee cannot be treated as Financial Creditor. So we find, no force in the contention raised on behalf of the Ld. Counsel for the applicants that since the flats are allotted to them through different allotment letters therefore, they are the allottees and on the basis of that they are Financial Creditors. 17. At this juncture, we would also like to refer the decision of coordinate bench of NCLT given in Jagdish Kumar Sharma and Ors. V. RC Realcon Pvt. Ltd. CP (IB)-856/ND/2019 under the similar circumstances and the money paid for renewal of license cannot form Financial Debt under Section 5(8) (f) of the Code. 18. At this juncture, we would also like to refer the arguments raised on behalf of RP, who in course of his argument submitted that the applicants are a Promoter and not a Financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the RP who in course of his arguments submitted that in the Supplementary Collaboration Agreement both the owners and developer shall execute and register the sale deed are the documents. 20. In light of those submissions, we would like to quote that Clause 21 of the agreement and that is quoted below: 21. That the Owner and Developer shall also execute and register the sale deed(s) or such document(s) or instrument(s) including Apartment Buyer's Agreement in favor of the intending purchaser(s) of unit(s)/space(s) car parking etc. in respect of the units, floor space(s) etc. forming part of allocation of both Developer Owner agreed to be sold to different intending purchaser(s), at the cost and expense of the said intending purchaser(s) and shall give the said intending purchaser(s) title and interest as may be permissible by present or future laws on the terms and conditions of this agreement of Owner's allocation to the Owner pursuant to completion of all the 4 Towers in the proposed Group Housing Colony by the name 'Monde de Provence' and after obtaining the occupation certificate by the Developer. 21. Mere plain reading of the Clause 21 of the ..... 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