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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 ..... 2016, (in short 'the IBC') against the first Respondent/'Corporate Debtor' Horizon Buildcon Private 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of possession was three years i.e. 14.02.2017, from the date of the 'ABA'. The Allottee paid an amount of Rs. 32,34,108/- out of a total sale consideration of Rs. 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Creditor' had filed a similar Application against 'HCPL' against the same claim and default which was subsequently withdrawn by him after the admission of this Application.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 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into between 'HBPL' and the Co-operative Society, 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of booking the Flat. In the Order dated 15.02.2014 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Illahabans, 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 HBPL, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 price, specifications, ownership record of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 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 Rs. 3610.00/- per Sq. Ft. (38,858/ per Sq. Meters) amounting to Total Basic Sale Price (Rs. 41,51,500/-) (Payment Details as per Annexure E). PARKING Nos. 1.00 for Price Rs. 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 Allottee(s) by discounting such early payments. The provision for rebate and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 support of his case that the amount paid by the Home Buyer does not fall within the definition of 'Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor' 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-à-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, 17th Edn., at p. 307, it is stated: "Where a person, by words or conduct, represents or permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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' is the developer which has the Rights, Title and Interest in the said Project IRIDIA. Therefore, the pleadings in the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the "commercial effect" of a borrowing, in that, money is paid in advance for temporary use so that a flat/apartment is giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Vishnu Kumar Agarwal' V/s. 'M/s. Piramal Enterprise Ltd.' Company Appeal (AT) (Insolvency) No. 346 of 2018, wherein it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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