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TMI Blog2021 (4) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... hich in the outside world is generally regarded as carrying authority to enter into transactions of the account in question. Agency is consensual not contractual. For creating a contract of agency, in view of Section 185 of the Contract Act, even passing of the consideration is not necessary. In the present case, all the Clauses of the Assignment Agreement and the Marketing Agreement entered into on 05.07.2013 and on 06.07.2013 is prior to the Apartment Buyer Agreement dated 14.02.2014. Whether there was any breach committed by HBPL of the terms of the ABA . Clause-C of the ABA stipulates that the developer shall deliver possession on or before expiry of 36 months from the date of execution of ABA ? - HELD THAT:- This documentary evidence on record substantiates the plea of the Home Buyer that there was never any injunction for any substantial period of time, preventing HBPL from continuing the construction activity of the Project. Therefore, the grounds raised by the Counsel for the Appellant with respect to Force Majeure , cannot be accepted. It is pertinent to mention that on a pointed query from the Bench it was admitted that the said Project is still incomplete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate Limited (hereinafter referred to as HBPL ), was admitted. While admitting the said Application, preferred by the second Respondent/the Home Buyer, the Learned Adjudicating Authority observed as follows; 14. It is an admitted fact that the M/s Horizon Concept Pvt. Ltd. (HCPL) is a marketing arm of the M/s Horizon Buildcon Pvt. Ltd. (HBPL). As per the terms and conditions mentioned at Clause-D of the Apartment Buyer Agreement dated 14.02.2014 executed between M/s Horizon Concept Pvt. Ltd. (HCPL) and Mr. R. Tarkeshwar Narayan, Financial Creditor the M/s Horizon Buildcon Pvt. Ltd. (HBPL) had empowered its marketing arm i.e. HCPL to market, sell and receive consideration amount on their behalf. Further, proceedings initiated before NCDRC and the remedy available under RERA Act are not an impediment in invoking the proceedings under Section 7 of IBC 2016. 15. From the submissions made during the final hearing and the clarifications submitted by the Financial Creditor, it is evident that CIR process against the Horizon Concept Pvt. Ltd. (HCPL) initiated by this Tribunal is in the matter of Richa Satsangi Anr. Versus M/s. Horizon Concept Pvt. Ltd. (IB- 84/ND/2019). Clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BA . The Allottee paid an amount of ₹ 32,34,108/- out of a total sale consideration of ₹ 49,76,500/-, directly to HCPL . No money has been disbursed in the account of the HBPL and therefore there is no privity of contract between the Allottee and HBPL . As there is no disbursal of money against consideration for time value of money from the Allottee to HBPL there exists no Financial Debt . Since the disbursal by the Allottee has been made into the account of HCPL , the Home Buyer is the Financial Creditor for HCPL and not HBPL . There is no provision for Group Insolvency in India and therefore, Application against HBPL is not maintainable though HCPL is the marketing arm of HBPL . There cannot be two CIRP Proceedings in respect of the same claim and default. The Financial Creditor had filed a similar Application against HCPL against the same claim and default which was subsequently withdrawn by him after the admission of this Application. Dr. Vishnu Kumar Agarwal V/s. M/s. Piramal Enterprise Ltd. has laid down that second Application for the same set of claim and default cannot be admitted against two or more Corporate Debtors . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety, wherein HBPL has 64% share of the entire super built-up area of the said Complex. The Collaboration Agreement also provides that the permission to transfer the ownership of Flats to the perspective Flat Buyers out of the allocated share (64% of the Project), shall be done by the developer, which shows that only HBPL holds the Right, Title and Interest in the said Project. An Agreement dated 06.07.2013 entered into between HBPL and HCPL is for the sole purpose of marketing the Residential Flats and the marketing Agreement especially provides that HCPL is responsible for the marketing related facilities of HBPL and will enter into arrangements on behalf of the parent Company HBPL . HCPL has no Right, Title and Interest in the said Project. HCPL only works in the capacity of a marketing arm and front of HBPL , which is evidenced from the fact that only HBPL can execute all documents which are required under law for valid execution of the sale deed of Plots in the Project. HCPL and the Financial Creditor entered into an Apartment Buyer Agreement, the covenants of which have to be read as a whole. Clause-A specifically provides that HBPL has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.2014 in Writ C No. 53983 of 2014, the Noida authorities gave an undertaking not to proceed with the show cause Notice till pendency of proceedings before the statutory authorities. Even in Order dated 03.07.2015 in Writ C No. 36329 of 2015, the Hon ble High Court granted injunction against the Noida Authorities their proceedings. At no point of time had HBPL been stopped from moving forward with the Projects, hence the defense under Clause 33 which provides for Force Majeure , is an afterthought. An FIR has been lodged by the Director of HCPL against the Appellant herein on 10.08.2016 against HCPL employee for offences committed during the period 05.10.2012 to 10.08.2016. The Financial Creditor has already withdrawn the Application filed against HCPL and given an undertaking before the Learned Adjudicating Authority that no Claim has been preferred before the IRP of HCPL . Hence it is wrong to assert that two separate Applications were filed for the same default and same set of claims. The Allottees are not speculative investors and are awaiting completion of their flats as they have invested their hard-earned money in this Project. Assessment: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, Sector-86, Phase-II, Tehsil Dadri, District Gautam Budh Nagar, U.P. (2) The ASSIGNOR agrees that in future if ASSIGNEE will require the ASSIGNOR to execute and get registered any or all Sale Deeds in respect of the flats sold by assignee for which the assignee has received the payments, out of 64% flats on land measuring 23114 square meters in village Illahabans, Sector 86, Phase II, Tehsil Dadri, District Gautam Budh Nagar, U.P. then ASSIGNOR shall execute and get registered each and every Sale Deed for each and every flat with office of Sub-Registrar concerned as desired and required by the ASSIGNEE. 9. This Assignment Agreement establishes that HBPL would utilize the services of HCPL qua the 64% share of the Flats in Project Horizon IRIDIA. It is only HBPL which would execute and get registered any or all sale deeds in respect of the Flats sold by HCPL for which HCPL has received the payments. Marketing Agreement: 10. A Marketing Agreement was entered into between HBPL and HCPL on 06.07.2013 with the main purpose of creation of HCPL , reproduced as hereunder; For the Marketing purpose of the above said project a subsidiary of HB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the construction of the Said Group Housing and make it ready of occupation and possession in all respects on or before expiry of 36 months form the date of execution of the agreement unless the construction of the same is stopped or delayed on account of factors beyond its control, as has been stipulated in the latter part of this agreement. D. That, Horizon Buildcon Pvt. Ltd. empowered it s marketing arm and group of company M/S Horizon Concept Pvt. Ltd. to market the Said dwelling unit, enter into agreement to sell, collect the payments against the Said Unit, executing and registering the Conveyance Deed and also do such other acts/deeds as may be necessary for confirming upon the Allottee a marketable tile to the Said Unit free from all encumbrances. The Conveyance Deed shall be in the form and content as approved by the Developer s legal advisor and shall be in favour of the Allottee. Provided that the Conveyance Deed shall be executed only upon receipt of full consideration amount of the Said Unit, Stamp Duty and Registration Charges and receipt of other dues as per these presents. E. The Allottee after visiting the site and satisfying himself with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the total Super Area of all the Apartments in the Said Building; and exclusive use of the reserved covered parking space. Tower Orange Apartment No. 104 Floor No. FIRST FLOOR Super Area 1150.00 Sq. Ft. (106.84 Sq. Meters approx.) @ 850 Rate ₹ 3610.00/- per Sq. Ft. (38,858/ per Sq. Meters) amounting to Total Basic Sale Price (₹ 41,51,500/-) (Payment Details as per Annexure E). PARKING Nos. 1.00 for Price ₹ 2,00,000/-. 1.2. The Basic Sale Price is escalation-free, save and except increases which the intending Allottee(s) hereby agrees to pay, due to increase in Super Area, external development chares increases on account of additional fire safety measures undertaken increases in all types of securities to be paid by the Intending Allottee(s), deposits and charges and increase thereof for bulk supply of electrical energy and all other increases in cost/charges specifically provided for in this Agreement and/or any other charges which may be levied or imposed by the Government/statutory authorities from time to time. 1.3. The Developer/Company may allow, at its sole discretion, a rebate for early payments of installments payable by the intending Allot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , MONTH AND YEAR FIRST ABOVE WRITTEN. (Emphasis Supplied) 13. This Apartment Buyer Agreement establishes that HBPL has all the rights to construct the project; that it has promised to deliver the possession of Flats within 36 months from the date of ABA ; that HCPL is only the marketing arm of HBPL that HBPL has agreed in its role as a developer to sell the Flats to the intending Allottees; the maintenance of the building is to be done by HBPL only HBPL has a right to make additional construction and further provides for a mode of payment but does not specify whether HCPL is the end user. It is significant to mention that as per Clause 50.3 the Allottees covenants with the developer to pay from time to time and at all time the amounts which the Allottee is liable to pay under this Agreement, thereby establishing that the end receiver is the developer, the developer divides the rebates to be given for early payments etc. 14. Learned Counsel appearing for the Appellant placed reliance on the ratio laid down by the Hon ble Supreme Court in Anuj Jain Interim Resolution Professional for Jaypee Infratech Ltd. V/s. Axis Bank Ltd. 2020 SCC OnLine SC 237 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting any facility or the security of the Corporate Debtor , it cannot be stated that the Corporate Debtor owes them any Financial Debt within the meaning of Section 5(8) of the Code and hence such Lenders of JAL do not fall in the category of Financial Creditors of the Corporate Debtor JIL . The facts in the instant case are distinguishable as the matter relates to whether the Home Buyer falls within the definition of Section 5(7) of the Code vis- -vis HBPL , when the amounts were collected by its marketing arm, for and on behalf of HBPL . The point for consideration herein is not whether a third party to whom a Corporate Debtor does not owe a Financial Debt cannot become its Financial Creditor and hence the aforenoted Judgement cannot be made applicable to the facts of the instant case with respect to this issue. 16. At this juncture, it is relevant to refer to the principle laid down by the Hon ble Supreme Court in Chairman, LIC and Ors. V/s. Rajiv Kumar Bhasker (2005) 6 SCC 188 in which the Hon ble Supreme Court has noted as hereunder; 24. In that limited sense, the employers would be the agents of the insurer. In Bowstead Reynolds on Agency, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of HBPL . The definition of agent and principal in Section 182 of the Contract Act, 1872 is crystal clear. The principal and agent will be held to have consented if they have agreed to a state of facts on which the law imposes the consequences which result from agency, even if they do not recognize it themselves and even if they have professed to disclaim it. In this case, there is an express consent to the creation of HCPL given by one party to another and it can be safely stated that there is an existence of an agent relationship. The principal in this case has placed the agent in a position (Marketing Agreement), which in the outside world is generally regarded as carrying authority to enter into transactions of the account in question. Agency is consensual not contractual. For creating a contract of agency, in view of Section 185 of the Contract Act, even passing of the consideration is not necessary. In the present case, all the Clauses of the Assignment Agreement and the Marketing Agreement entered into on 05.07.2013 and on 06.07.2013 is prior to the Apartment Buyer Agreement dated 14.02.2014. At the cost of repetition even the ABA specifies that HBPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise to a Claim as defined under Section 3(6)(b) of the Code. 20. The Hon ble Supreme Court in Pioneer Urban Land and Infrastructure Ltd. Anr. V/s. Union of India Ors. (2019) 8 SCC 416, in Para 77 has laid down as follows; 77. A perusal of these definitions would show that even though the petitioners may be right in stating that a borrowing is a loan of money for temporary use, they are not necessarily right in stating that the transaction must culminate in money being given back to lender. The expression borrow is wide enough to include an advance given by the homebuyers to a real estate developer for temporary use i.e. for use in the construction project so long as it intended by the agreement to give something equivalent to money back to the homebuyers. The something equivalent in these matters is obviously the flat/apartment. Also of importance is the expression commercial effect aim. Piecing the threads together, therefore, so long as an amount is raised under a real estate agreement, which is done with profit as the main aim, such amount would be subsumed within Section 5(8)(f) as the sale agreement between developer and home buyer would have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of HBPL and therefore, the amounts paid by the Home Buyers would fall within the definition of Section 5(8) as it carries the essential elements of disbursal and consideration for time value of money. Therefore, we are of the considered view that HBPL is the Corporate Debtor and the second Respondent the Financial Creditor and the amount involved is the Financial Debt as defined under the Code. We find force in the contention of the Learned Counsel appearing for the Appellant that the CIRP ought to be confined only to that particular Project and it cannot affect any other Project of the same Real Estate Company. We are of the considered view that the asset of the Corporate Debtor Company of that particular Project is to be maximized for balancing the Creditor such as Allottees , Financial Institutions and Operational Creditors of that particular Project. 24. Lastly, we address ourselves to the contention raised by the Learned Counsel for the Appellant that though HBPL HCPL are two separate legal entities, two CIRP cannot be maintained in respect of the same claim and default. Learned Counsel placed reliance on the Judgement of this Tribunal in Dr. Vis ..... 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