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TMI Blog2019 (10) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondents : Onkar Nath, Adv. JUDGMENT M.M. Kumar, C.J. (President) 1. Mr. Ravinder Aggarwal including nine others claiming to be 'Financial Creditors' have filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') with a prayer to trigger the Corporate Insolvency Resolution Process in the matter of MSA Developers Private Limited, who is stated to be the 'Corporate Debtor'. 2. The Petitioners are allottees of a real estate project. The petitioners are ex-facie financial creditors in terms of the provisions of Section 5(8)(f) and explanation inserted by the Second Amendment Act, 2018 w.e.f. 06.06.2018. The challenge to the aforesaid amendment has been repelled by Hon'ble the Supreme Court in the judgment rendered in the case of Pioneer Urban Land and Infrastructure Limited and Another v. Union of India Ors. (Writ Petition (Civil) No. 43 of 2019, decided on 09.08.2019). Therefore, no doubt is left that the petitioners are Financial Creditors. 3. The Respondent company-the Corporate Debtor, MSA Developers Private Limited (CIN U70200DL2013PTC252698) was incorporated on 24.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) That the developer shall complete the development/construction of the Flat within 36 months from the date of starting of excavation/signing of agreement which may vary for +_ 6 months. No claim by the way of damages/compensations shall lie against the developer in case of delay in handing over the possession and developer shall be entitled to a reasonable extension of time for the delivery of possession of the flat to the Allottee. (b) ................ (c) In case of delay in construction of the flat for reasons other than force majeure condition, the Developer shall pay a sum at the rate of ₹ 5/- (Rs. Five Only) per sq. ft of super area per month for the delayed period, which shall of any/all damages, compensation, claim for delayed possession . 7. As per clause 3 of the Annexure-'D' namely Special Scheme attached with the allotment letters/builder buyer agreements, the petitioners were offered a special 'buy back' scheme whereby they had an option to sell the flats back to the Corporate Debtor after a period of 42 months from the date of execution of the allotment letters/builder buyer agreements. The relevant clause 3 incorporated in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is incorrect, false and misleading. The petitioners have not placed any document pertaining to the entries in a Bankers Books in accordance with the Bankers Books Evidence Act, 1891. 4. The whole purpose of insolvency code is to first attempt revival of the beleaguered corporate debtor failing which the process of liquidation is the inevitable consequence. Insolvency proceedings is sought to be initiated with the sole purpose and intent to coerce such corporate debtor to repay which may lead to its unnatural death in place of its revival or resolution. Such proceedings may be avoided where the alternative offer are more viable alternate options for resolution of dispute. 12. Before embarking upon the legal issues, we deem it appropriate to first refer to the material clauses of the agreement. According to clause 19(a) of the allotment letters/builder buyer agreements the Corporate Debtor had proposed to handover the possession of the flats within thirty six months from the date of starting of excavation/signing of agreement with grace period of six months. It is further postulated by clause 19(c) of the allotment letters/builder buyer agreements that in case the Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not delivering the possession within the reasonable period even after expiry of thirty six months plus grace period of six months. The amount in fact become payable on the completion of period of thirty six months plus grace period of six months and; a maximum period of further one year could be granted. The possession should have been offered by February, 2018 and therefore, the principal amount along with compensation and interest becomes payable. 14. For Corporate Insolvency Resolution Process Part-II (chapter-I) has been carved out and in Section 5 (8) (f) of the Code the expression 'financial debt' has been defined to mean a debt along with interest, which is disbursed against the consideration for the time value of money and includes any amount raised under any other transaction including the sale or purchase agreement, which has commercial effect of a borrowing. The explanation has clarified that any amount raised from an allottee under a 'real estate project' was to be considered as an amount having the commercial effect of a borrowing and the expression 'allottee' and the 'real estate project' are to have the meanings respectively assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the Corporate Insolvency Resolution Process is triggered and efforts in that direction are made. Even this petition could be withdrawn after admission if requirement of Section 12A of the Code are fulfilled. Even before constitution of CoC the CIR Process could be withdrawn by filing an application under Rule 11 of NCLT Rules, 2016. In that regard the parties have to fulfil the requirements of law as laid down by Hon'ble the Supreme Court in Swiss Ribbons Pvt. Ltd. Anr. v. Union of India Ors. (Writ Petition (Civil) No. 99 of 2018 decided on 25.01.2019. 16. If some homebuyers are satisfied with the breach of obligation then it cannot be a lawful ground to resist those who have vested right to invoke the provisions of Section 7 of the Code. Such a course is wholly unwarranted and would not be sustainable in the eyes of law. 17. The objections raised on behalf of the Corporate Debtor also do not warrant any serious consideration. It is already observed that the object of the Corporate Insolvency Resolution Process is to rescue a fund starving body corporate from the financial stress as is discussed in para 15 of the order and it is not understood as to how the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure A-8). Even the receipts confirming the payment of amount issued by the Corporate Debtor to individual petitioner have been placed on record [Annexure A-6 (colly)]. Therefore, the objection is frivolous and is wholly unsustainable and is hereby rejected. 20. It is pertinent to mention that on account of stay order passed by Hon'ble the Supreme Court in Pioneer Urban Land and Infrastructure Limited's case on 11.03.2019, hearing in this matter was deferred on various occasions. 21. Learned Counsel for the petitioner has argued that all requirements of Section 7 of the Code for initiation of Corporate Insolvency Resolution Process by a Financial Creditors stand fulfilled and other conditions prescribed by Rule 4 (1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. It is further submitted that the details of default along with its dates have been clearly stated in part IV along with all the minute details. There is overwhelming evidence to prove default. The name of the resolution professional has also been specified. 22. We may now examine the provisions of Section 7 (2) and Section 7 (5) of IBC which read as under:- Init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 27. It is made clear that the provisions of moratorium shall not apply to (a) such transactions which might be notified by the Central Government in consultation with any financial regulator; (b) a surety in a contract of guarantor to a Corporate Debtor. Additionally, the supply of essential goods or services to the Corporate Debtor as may be specified is not to be terminated or suspended or interrupted during the moratorium period. These would include supply of water, electricity and similar other services or supplies as provided by Regulation 32 of IBBI (Insolvency Resolution Process for Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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