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TMI Blog2021 (11) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... tor'). 2. The Applicants states had purchased commercial office spaces in the project developed by the Corporate Debtor namely "Spaze Corporate Parkk " situated in Gurgaon at Sector 69 and 70 and are financial creditors within the meaning of explanation to Section 5(8)(f) of the IBC. The applicants state that the total number of office spaces in both the towers of the project are 353 with a total area of 2,63,605 sq. ft. it is further submitted that the present application has been filed by 40 Financial Creditors who have purchased a total of 70 office spaces in the project of the Corporate Debtor. Thus it is submitted that the applicants herein, constitute 10% of the total number of allottees complying the Amendment dated 13.03.2020. 3. The corporate Debtor is private company limited by shares incorporated on 27.01.2006, under the provisions of Companies Act, 1956 bearing CIN No. U45201DL2006PTC145529 having registered office at A-307, Ansal Chambers 13 Bikaji Cama Place New Delhi 110066. The Corporate Debtor, company involved in the business of building complete constructions or parts thereof civil engineering. 4. The Applicants state that they had purchased commercial off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the Corporate Debtor to exempt itself from the liability of paying assured investment returns to the Financial Creditors by leasing the office spaces as rent-free for a period of 6 (six) months. In this regard, it is stated that the prevailing/current rentals in the vicinity of the Project are much lower. Therefore, solely to avoid payment of the investment return as agreed under Clause 9 of the MoUs, the Corporate Debtor had executed this Lease Deed. Moreover, the Corporate Debtor has previously been delaying the payments with respect to the investment returns for the office spaces as agreed between Financial Creditors and the Corporate Debtor under the MoUs. A perusal of the letters dated 11.10.2019 would admittedly show the amounts pending and due by the Corporate Debtor to the Financial Creditors. 7. The Applicants submits that legal Notices were sent to the Corporate Debtor from 07.12.2019 to 03.03.2020 with respect to their respective office spaces to the Corporate. Debtor, raising the following issues: (a) non-payment of investment return; (b) rent free lease period of 6 (six) months; (c) executing the Lease Deed without obtaining the Occupation Certificate; (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Corporate Debtor has paid the Assured Return to the Applicants herein from the commencement date, prescribed in the MoUs, till the date of leasing out of the units - i.e., upto 30.09.2019. The Corporate Debtor submits that the Applicants herein are speculative investors holding multiple Units in the same Project, and axe only interested in profiting from market value changes and are not concerned with the possession of their respective Units. The Applicants are not interested in the taking the delivery of their units rather they are motivated to coerce the Corporate Debtor to refund the basic consideration paid along with an exorbitant rate of interest. 11. It is submitted that the Corporate Debtor has, till date paid an amount to the tune of Rs. 31,26,30,371, which is gross of TDS, to the Applicants herein in light of the Clause 2 and 9 of the MoUs. The applicable TDS has been deducted and the necessary certificate has also been issued to the Applicants herein. A comprehensive statement showcasing the computation of the Assured Return payable to the Applicants, along with the amounts provided to the Applicants is annexed. Further, the accounts of each of the Applicants in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess) Actual monthly Rental (if less than Rs. 55/- per sq. ft. per month) = Rs. A multiplied by Rs. 110.29 sq. ft.), towards and by way of compensation to the Second Party for the lower rental guaranteed. In case the proposed office space is leased out by the First Party so as to give a monthly return in excess of the investment return of Rs. 55/- per sg. ft of super area, the agreed sale consideration of the proposed office space shall stand increased by the amount calculated by the formula given below (Actual monthly rental - (less) Assured monthly return of Rs. 55/- per sq. ft. = Rs. A/2 and multiplied by Rs. 110.29 per sq. ft.)." 13. It is submitted by the Corporate Debtor that on bare perusal of the formula reproduced hereinabove, as provided in the Clause 9 of the MoUs, it would reflect that the formula is required to be solely utilized in a situation when the Unit of the allottee is leased out on a rate that is lower or higher, as the case may be, than the rate that is prescribed in the MoUs, Rs. 55 or Rs. 65 per sq. ft. Further, the applicability of the amount computed vide the aforesaid formula is limited solely for the adjustment of the agreed sale consideration of the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not less than ten per cent of the total number of such allottees under the same real estate project, whichever is less. In light of the above, it is humbly submitted that the current application has been filed by only 40 allottees of the Project and hence, this application is not maintainable on this ground alone. 16. It is submitted by the Corporate Debtor that on the execution of the Lease Deed dated 30.09.2019, as per Clause 17 of the MoUs, the Corporate Debtor stands discharged from the obligations provided in the respective MoUs. The Applicants herein are also claiming Assured Return for the time period when the lease commenced with OFSCPC Worldwide Private Limited -i.e., 30.09.2019, even though as per clause 17 no obligation for payment of any Assured Return whatsoever, exists after the execution of the Lease Deed with OFSCPC Worldwide Private Limited. The veracity of the alleged amount claimed by the Applicant comes substantially in question. Hence, it is apparent that no amount was outstanding towards the Applicant on the date of default, and in reality an amount to the tune of Rs. 1,83,86,483/-. Stands outstanding from the Applicant to the Corporate Debtor. Clause 17 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 are annexed. It is pertinent to state that the Hon'ble Supreme Court, vide judgement dated 9th August, 2019 in Pioneer Urban Land and Infrastructure Ltd. Vs. Union of India, has emphasized that Code is not meant to be a recovery mechanism "42. It is also important to remember that the Code is not meant to be a debt recovery mechanism...Thus, any allottee/home buyer who prefers an application under Section 7 of the Code takes the risk of his flat/apartment not being complete in the near future, in the event of there being a breach on the part of the developer... Thus, given the bona fides of the allottee who moves an application under Section 7 of the Code it is only such allottee who has completely lost faith in the management of the real estate developer who would come before the NCLT unclear the Code hoping that some other (developer takes over and completes the project.." 19. It is submitted by the Corporate Debtor that the Corporate Debtor has obtained the Occupation Certificate for both the Towers A & B, and has offered possession to the allottees with units in these towers. True copy of Occupation Certificate dated 28.01.2020 in relation to Towers A 8a B is annexed. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot, in fact, want to go ahead with its obligation to take possession of the flat/apartment under RERA, but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it Hence, in such situations recourse is provided under Section 65 of the Code, wherein the real estate developer can also point out that the insolvency resolution process under the Code has been Invoked fraudulently, with malicious intent, or for any purpose other than the resolution of insolvency." Further, in this regard it is pertinent to showcase the tenant of law emphasized in para 34 and 35 of the judgment, of the Hon'ble National Company Law Appellate Tribunal in Navin Raheia Vs. Shilpa Jain and Others Company Appeal (ATI (Insolvency) No. 864 of 2019 wherein while affirming the views of the Hon'ble Supreme Court In Pioneer Urban Land & Infrastructure Ltd. (Supra), the Appellate Tribunal has observed that: "34. As per the aforesaid decision of the Hon'ble Supreme Court the 'Corporate Debtor can refer to Section 65 and point out that insolvency resolution process has been Invoked fraudulently, with malicious intent, for any purpose other than me resolution or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ima fade establishing 'default' and therefore the present Section 7 Applications ought to be dismissed as being non-maintainable. 23. Both the parties were heard and the order was reserved. The Learned Counsels for both the parties were directed to file written submissions. The Applicants filed their written submission dated 13.03.2021 and has placed the following submissions: a. The claim of the Financial Creditor in the Section 7 application is mainly two-fold: i. monthly investment return as per Clauses 2 and 5 of the Memorandum of Understandings ("Moth"); and ii. guaranteed monthly rental on leasing of the office space as per Clause 9 of the MoUs. b. The claim of the Financial Creditors in the Section 7 application arises out of the MoUs which were executed in 2010-2012 between the Corporate Debtor and the Financial Creditors. All the MoUs are verbatim similar for all the Financial Creditors as only the unit number, area of the unit and the total sale consideration are different. That as per Clauses 2 and 3 of the MoUs, the Financial Creditors had paid 100% of the total sale consideration to the Corporate Debtor at the time of booking itself i.e. 2010-2012. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the MOU. The Corporate Debtor claimed in the said letter IFMS charges, which were actually to be paid as per Clause 12 of the MOU only after the expiry of the first lease (which had not happened as on 11.10.2019), also additional Fire Fighting Charges and External Electrification charges were claimed which were actually payable only as per Clause 11 of the MOU i.e. from the date of execution of sale/conveyance deed. Also, under one head the Corporate Debtor asked for 'Miscellaneous Charges" which were non-explanatory, arbitrary and contrary as per MOU. Similarly, Sales consideration as per Clause 1 of the MOU is 100% paid and also acknowledged by the Corporate Debtor in Clause 3 of the MOU, still "Basic Cost including GST" was wrongfully demanded and adjusted. e. That also the Corporate Debtor has taken a defence that when the lease was terminated by the lessee on 06.06.2020, the Corporate Debtor and the lessee company invoked arbitration and finally an Award dated 01.10.2020 was passed whereby the 3-months' security deposit paid by the lessee company was to be forfeited by the Corporate Debtor. It is pertinent to point out that in the said arbitration, the Financial Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to sage itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise." g. The Applicant further submits that in Pioneer Urban Land and Infrastructure Ltd. v. Union of India [ (2019) 8 SCC 416] the Hon'ble Supreme Court has observed and held as under; "68. Thus, In order to be a "debt", there ought to be a liability or obligation in respect of a "claim" which is due from any person. "Claim" then means either a right to payment or a right to payment arising out of breach of contract, and this claim can be made whether or not such right to payment is reduced to judgment. Then comes "default" which in turn refers to non-payment of debt when whole or any part of the debt has become due and payable and is not paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the units of the Applicants. b. The amount claimed by the Applicants in the said application is arising out of Clause 2 and 9 of the MoU on account of Assured Return. The Corporate Debtor has been diligently paying the assured return since 2010-2011 till the units of the Applicants were leased out to OFCSPC Worldwide Private Limited as per Clause 16 of the MoU. A total of Rs. 31,26,30,371/- as Assured return has been paid to the applicants till 30.09.2019. The payment made by the Corporate debtor can b substantiated by the Statement and the ledgers of the Applicants which have been annexed with the reply. c. The units of the Applicants were duly leased out by the Corporate Debtor to OFCSPC Worldwide Private Limited taking into consideration the minimum guaranteed rate of Assured Return, no adjustment of the sale consideration was required. Moreover, on execution of the said lease deed all of the obligations of the Corporate Debtor, Inter alia, the payment of Assured return with respect to the units of the Applicants stood discharged as per Clause 17 of the MoU. In fact the Applicants are liable to pay the Respondent Company an amount to the tune of Rs. 1,83,86,483/- as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Sub-clause (h) of Clause 16 also confers the right of first leasing on the Corporate Debtor while categorically stating that the choice of the lessee and the lease rent etc. would be binding on the Applicants. A power of attorney is also provided in the said clause which states that the Applicant ratifies and confirms all acts done by the Corporate Debtor as its attorney with respect to the lease. The only obligation on the part of the Corporate Debtor was to notify the Applicants regarding the terms and conditions of the lease as per Clause 7 which was duly undertaken vide letters dated 11.10.2019. Thus, it is apparent that all of the necessary authority to enter into the lease with OFCSPC Worldwide Private Limited on behalf of the Applicants was already granted to the Corporate Debtor by the Applicants. Even the 6 month fit out period that has been prescribed under the Lease Deed dated 30.09.2019 is a market practice which is evident from a bare perusal of the copies of the lease deeds that are attached with the Reply wherein a lit out period of 6 months to 12 months has been provided. f. The Applicants are bent on pursuing a strategy to harass the Corporate Debtor and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 even though no amount was due and payable by the Corporate Debtor to the Applicants on the said date. Without prejudice to the above, in the Written Submission the Applicants are now claiming that Assured Return is payable by the Corporate Debtor to the Applicants from January 2019 onwards, and thus there is severe ambiguity even on the date of default. Thus, by presenting the present Application, the Applicants are trying to utilize the provisions of the Code to send a financially solvent company for Insolvency resolution which is clearly not the objective of the Code. The provisions prescribed under the Code are being blatantly misused to coerce unlawful monies out of the Corporate Debtor even after receipt of their respective units and more than twice the total consideration of their Units as Assured Return. 25. The date of default as per the application, is in the year 2019. The present application is filed on 20.06.2020. Hence, the application is within in the period and is not barred by limitation. 26. The registered office of the Corporate Debtor is situated at Delhi and therefore this tribunal has jurisdiction to entertain and try this application. 27. In order to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the office spaces are leased. We are of the view that once the Adjudicating Authority is satisfied as to the existence of the default and has ensured that the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the application. The Adjudicating Authority is not required to look into any other criteria for admission of the application. Accordingly the application is admitted. Hon'ble Supreme Court in the matter of M/S. Innovative Industries Ltd. V. ICICI Bank & Anr., (2018) 1 SCC 407, has held that: 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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