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TMI Blog2021 (3) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... form 1 in terms of rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 accompanied with required information, documents and records as prescribed under the Rules. Existence of debt and default or not - HELD THAT:- In the present case neither the possession of the flats has been given to the applicant nor the corporate debtor has returned even the amount collected from the applicant since the year 2014. It is pertinent to mention here that the corporate debtor in its reply has itself admitted that ₹ 2,48,88,466 is still due and payable to the applicant out of the amount paid by applicant for the said allotment. There is thus sufficient material on record to conclude that the respondent/corporate debtor has committed default in repayment of the financial debt - There is no denial of default and the amount of default exceeds much more than ₹ 1,00,000. Once there is a debt and default and the application is complete, the Adjudicating Authority is bound to admit the application preferred under section 7 of the Code. Though considerable period has since lapsed, the possession of the space has not been given to the applicant. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. 4. It is submitted that as per the agreement it was agreed between the parties that if the construction was not complete within 36 months from the date of the agreement, the applicant would be entitled to receive rent of ₹ 45 per sq.ft. for every month of such delay. The applicant made complete payment of ₹ 10,53,76,287 on July 3, 2014 after deducting service tax ; however, the respondent failed to hand over the possession of the premises to the applicant within 36 months of the execution of the agreement. Consequently, the respondent became liable to make rental payments to the applicant, however, the same was not done. Thereafter, the respondent issued a memorandum of understanding on June 1, 2017 recording that the respondent would buy back the premises from the applicant for a consideration of ₹ 16,25,00,000 but the respondent failed to make timely payments. 5. On January 30, 2018 the respondent paid ₹ 4,60,00,000 to the applicant and the remaining amount is still unpaid. The applicant issued legal notice to respondent for payment of remaining amount. It is submitted that respondent vide letter dated February 28, 2018 and March 12, 2018 admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 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 real estate buyers. The Amendment Act leaves no doubt that real estate buyers are financial creditors . Accordingly, allottees/real estate buyers being financial creditors in terms of Explanation to section 5(8)(c) of the Code, can initiate CIRP against the defaulting builder or developer. 12. Further, the hon'ble Supreme Court in the case of Pioneer Urban Land and Infrastructure Ltd. v. Union of India reported in [2019] 217 Comp Cas 1 (SC) ; [2019] SCC Online SC 1005 while upholding constitutional validity of the Insolvency and Bankruptcy (Second Amendment) Act, 2018 held that the allottees/home buyers were included in the main provision, i. e., section 5(8)(f) with effect from the inception of the Code, the Explanation being added in 2018 merely to clarify doubts that had arisen. 13. In view of the proposition of law settled by the hon'ble Supreme Court allottees/real estate buyers are to be regarded as financial creditors in terms of section 5(8)(f) of the Code. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant has furnished details/receipts given by the respondent and copy of agreements executed between the parties, in support of disbursement of amount to the respondent/corporate debtor. 21. It is also appropriate to mention here that under section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA) if the promoter fails to complete or is unable to give possession of the apartment, plot or building in accordance with the terms of the agreement for sale, he must return the amount received by him in respect of such apartment, etc., with such interest as may be prescribed and must, in addition, compensate the allottee in case of any loss caused to him. 22. Similarly, under section 19 of the RERA, the allottee shall be entitled to claim possession of the apartment, plot or building, as the case may be, or refund of amount paid along with interest in accordance with the terms of the agreement for sale. 23. However, in the present case neither the possession of the flats has been given to the applicant nor the corporate debtor has returned even the amount collected from the applicant since the year 2014. It is pertinent to mention here that the corporate debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, I. A. No. 270 is disposed of. 28. Mr. Deepak Arora, with registration number IBBI/IPA-002/IPN00122/ 2017-18/10291, and e-mail id [email protected] is appointed as the interim resolution professional. 29. We direct the applicant/financial creditor to deposit a sum of ₹ 2,00,000 with the IRP to meet out the expenses to perform the functions assigned to him in accordance with regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 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, shall be subject to adjustment towards resolution process cost as per rules and shall be paid back to the financial creditor. 30. In pursuance of section 13(2) of the Code, we direct that public announcement shall be made by the IRP immediately (in 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 and Bankruptcy Code, 2016. 31. We also declare moratorium in terms of section 14 of the Code. The necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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