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TMI Blog2019 (11) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Notice (page - 46) in October, 2018 to take benefit of the provisions of IBC. The expression 'allottee' and the expression 'real estate project' are to be understood on the basis of Clause - d and Clause - z(n) of Section 2 of Real Estate (Regulation and Development) Act, 2016 which expressions have been defined in the said Act - Even if there would have been a regular agreement of sale executed between the parties for a unit in existing building, if there was a default, it would at the most create a debt to be recovered but would not create financial debt . The explanation added by the legislature in Section 5(8) has been added for specific purpose to protect allottees in development projects Company Appeal (AT) (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... innacle Business Park which was constructed by the Respondent and she wanted to buy another unit from the Respondent. The case as was put up before the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) and as is stated before us is that on 6th August, 2016 with this object, the Appellant advanced ₹ 50 Lakhs to the Respondent as token money and rest of the amount was to be paid in parts after execution of the Agreement. The learned Counsel states that the Appellant deposited ₹ 49,50,000/- in the account of Respondent and deducted ₹ 50,000/- TDS as can be seen from the document at page - 44 of the Paper Book. Copy of TDS Certificate has been placed at page - 45. Learned Counsel states that no Agreement as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited by the Appellant as can be seen in the entry at page - 58 of the Paper Book. It is stated that the transaction was for a unit in building which was already in existence and it was in the nature of party trying to enter into an Agreement of sale which did not take place and thus, the Counsel states that it cannot be said to be financial debt which was recoverable. It is argued that the amendment to Section 5 Sub-Section (8) came in June, 2018 and thereafter, the Appellant sent Notice (page - 46) in October, 2018 to take benefit of the provisions of IBC. Sub-Section (8) of Section 5 reads as under:- (8) financial debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; 5. The expression 'allottee' and the expression 'real estate project' are to be understood on the basis of Clause - d and Clause - z(n) of Section 2 of Real Estate (Regulation and Development) Act, 2016 which expressions have been defined in the said Act as under:- (d) allottee in relation to a real estate project, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person and includes a financial debt and operational debt; 6. Even if there would have been a regular agreement of sale executed between the parties for a unit in existing building, if there was a default, it would at the most create a debt to be recovered but would not create financial debt . The explanation added by the legislature in Section 5(8) has been added for specific purpose to protect allottees in development projects Company Appeal (AT) (Ins) No.1047 of 2019 which are going into problems. It is not for enforcing specific performance of Contract of existing property. 7. We do not find any reason to take a different view from that of Adjudicating Authority where it found that the financial debt was not established. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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