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TMI Blog2022 (8) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 7 of the Code, 2016 qualifies the test of limitation since the possession of the units in the project 'Casa Italia' are not handed over till date, which is in breach of the Builder Buyer Agreement and therefore, amounts to continuing default committed by the Corporate Debtor. Whether the petitioners are entitled to maintain the present petition being homebuyers and meet the threshold limit of 100 of such allottees or 10% of the total number of such Allottees? - HELD THAT:- In order to initiate the CIRP against a corporate debtor on an application filed by financial creditors who are allottees under Section 7 of the Code, 2016, it must primarily qualify the threshold limit of not less than 100 of such allottees under the same real estate project or not less than 10% of the total number of such allottees under the same real estate project, whichever is less as envisaged under second proviso to the Section 7(1) of the Code - this instant petition has been jointly filed by 26 allottees out of total of 69 allottees i.e., more than 10% in the 'Casa Italia' project, which satisfies the criteria as provided in second proviso to the Section 7(1) of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc. - The doctrine of lifting the corporate veil can be invoked, if the public interest so requires or if there is allegation of violation of law by using the device of a corporate entity. Thus, M/s. Cosmic Structures Limited was indirectly controlled by the same directors, who are controlling the management of the corporate debtor and ultimate beneficiary of the impugned transaction is the respondent corporate debtor i.e., M/s. Som Resorts Private Limited herein. Thus, the instant petition is filed in the proforma prescribed under Section 7 of the Code, 2016 read with Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and is complete. There is a debt of more than Rs. 1 crore i.e., above the threshold limit as envisaged under Section 4 of the Code, 2016 and the same is in default. Petition admitted - moratorium declared. - Company Petition No. (IB)-67(ND)/2022 - - - Dated:- 2-8-2022 - Dharm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n handing over the possession of the unit and failed to refund the deposits of the Petitioner. e) The petitioners submit that the Hon'ble High Court of Delhi vide order dated 11.01.2017 in Winding Up Petition No. 152/2016 titled Rajni Anand vs. Cosmic Structures Ltd. had appointed an Official Liquidator for the Cosmic Structures Limited, consequent to which, the official Liquidator had sealed the project 'Casa Italia' property bearing number ML-9/1, Vasundhara, Ghaziabad considering that the property belongs to Cosmic Infrastructure Pvt. Ltd. f) The petitioners submit that the petitioners had approached the Economic Offence Wing, of the Delhi Police on 30.01.2017 for registering a criminal case against the Corporate Debtor and its promoters directors i.e., Mr. Anuj Gaur, Mr. Rahul Bhardwaj, Mr. Deepak Gupta, Mr. Sandeep Pahwa. The petitioner further submits that pursuant to the complaint, Economic Offence Wing of the Delhi Police registered an FIR No. 108/2017 dated 14.06.2017 u/s. 420/406/409 R/w. 120-B of the IPC and filed charge sheet against the Corporate Debtor and its promoters directors. g) The petitioners submit that after consideration and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode, 2016 and the Corporate Debtor is in default in payment of Rs. 15,37,19,463/- (Rupees Fifteen Crores Thirty-Seven Lacs Nineteen Thousand Four Hundred Sixty-Three Only) including interest @ 18% p.a. out of Rs. 6,60,18,065/- (Rupees Six Core Sixty Lac Eighteen Thousand and Sixty-Five) is the principal amount of debt. 3. The corporate debtor has filed its reply cum objections and the averments of the corporate debtor in the reply are stated in brief as below:- a) The Respondent submits that the Respondent vide agreement dated 10.10.2013, gave the marketing rights to M/s. Cosmic Structures Limited ('CSL') for a period of one year only, wherein as per the covenants of the agreement, M/s. Cosmic Structures Limited shall be entitled to 10% of the sale consideration as its service fee/commission. The Respondent further submits that the agreement does not permit M/s. Cosmic Structures Limited to enter into any agreement with the home buyer or to receive consideration from the buyers in its own name and the agreement clearly stipulates that the sale consideration shall only be received by way of cheques drawn in the name of the respondent. b) The Respondent submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was obliged to provide the copies of allotment agreements and/or receipts evidencing the proof of allotment to them by Cosmic and proof of payment by them towards the allotment to Cosmic. f) The respondent submits that in the absence of any payments by the petitioners and due to the fact that the money was yet not released from the official liquidator, since the petitioners had failed to provide the documentary proof as stated above. The respondent further submits that the petitioners had started raising baseless claims and were in willful and persistent breach of their obligation to provide the documentary proof of allotment and payments to M/s. Cosmic Structures Limited. In order to support their case, the respondent relied upon citation Pioneer Urban Land and Infrastructure Ltd. Anr. vs. Union of India Ors. (Writ Petition (Civil) No. 413 of 2019) and Anil Kumar Tusiani v. Rakesh Kumar Gupta and Anr. Company Appeal (AT) (Ins) No. 35 of 2019. g) The respondent submits that the petitioner rests their claim entirely on the Memorandum of Settlement dated 14.09.2018 and it is an admitted position that the said MoS was entered because the petitioners imprudently paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the units booked by the members of the Second Party (namely the Petitioners), shall be accepted by the first party (namely the corporate debtor). The petitioners further submit that the corporate debtor had acknowledged the amount invested by the petitioners in project 'Casa Italia' by the MoU dated 14.09.2018. e) The petitioners submit that non-completion of the project 'Casa Italia' has no connection with the submission of allotment documents with the corporate debtor. The petitioner further submits that the allotment documents has not been submitted with the corporate debtor by the petitioners for two primary reasons:- i. The project has been sealed by UP Awas and Vikas Parishad Construction Division vide order dated 14.07.2016, on the grounds of unauthorized construction, against the map approved by the relevant authority. ii. The Corporate Debtor has failed to open an escrow account, due to its failure to obtain necessary registration from RERA under the RERA Act, 2016. f) The Petitioners further submit that if the corporate debtor was aggrieved by the alleged breach of the MoU dated 14.09.2018 by the petitioner, the corporate debtor sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd meet the threshold limit of 100 of such allottees or 10% of the total number of such Allottees? III. Whether there was any relation between M/s. Cosmic Structures Ltd. and the Corporate Debtor i.e. M/s. Som Resorts Pvt. Ltd. and whether M/s. Cosmic Structures Ltd. was entitled to receive the amount from the Petitioners on behalf of the Respondent Corporate Debtor to book the units in project 'Casa Italia'? IV. Whether there was any default on the part of the Respondent Corporate Debtor in completion of the project 'Casa Italia' and in repayment of the amount to the Petitioners and whether on that basis corporate insolvency resolution proceedings can be initiated against this Corporate Debtor? V. Relief (s). POINT NO. I 8. Before going into the merits of the present case, this Adjudicating Authority after considering the averments made by the Petitioner in Pt. 2 of Part IV of the Form-1 and upon perusing the records submitted by the Petitioners, had raised a query to the Ld. Counsel of the Petitioners about the claim being barred by the law of limitation. 9. As regards the claim being barred by the law of limitation, the Ld. Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues. *********** 15. A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. Section 3 of the MOFA imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land., fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. 11. We find that the present petition filed under Section 7 of the Code, 2016 qualifies the test of limitation since the possession of the units in the project 'Casa Italia' are not handed over till date, which is in breach of the Builder Buyer Agreement and therefore, amounts to continuing default committed by the Corporate Debtor. POINT NO. II 12. Now, we deal with the merits of the present case. In order to initiate the CIRP against a corporate debtor on an application filed by financial credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raphs 26, 27 and 28:- 26. The definition of 'agent' and 'principal' is clear. An agent would be a person employed to do any act for another, or to represent other in dealings with third parties and the person for whom such act is done or who is so represented is called the principal. It may not be obligatory on the part of the Corporation to engage an agent in terms of the provisions of the Act and the rules and regulations framed thereunder, but indisputably an agent can be appointed for other purposes. Once an agent is appointed, his authority may be express or implied in terms of Section 186 of the Contract Act. 27. For creating a contract of agency, in view of Section 185 of the Indian Contract Act, even passing of the consideration is not necessary. The consideration, however, so far as the employers are concerned as evidenced by the Scheme, was to project their better image before the employees. 28. It is well-settled that for the purpose of determining the legal nature of the relationship between the alleged principal and agent, the use of or omission of the word agent is not conclusive. If the employee had reason to believe that his employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and therefore, the petitioners cannot be penalized, even if, it be the case of the corporate debtor that M/s. Cosmic Structures Private Limited did not carry authority to execute the builder buyer agreement or to receive the payments for the units allotted in 'Casa Italia' project. 20. We further find that the builder buyer agreements for units in the project 'Casa Italia' are executed between the Corporate Debtor i.e., M/s. Som Resorts Private Limited as the developer and the Petitioners as the proposed space buyers, and, therefore the very document establishes beyond doubt that the said units were allotted as well as payments were received with the consent/knowledge of the corporate debtor. We therefore find no force in the corporate debtor's contention. 21. We find that one Mr. Sandeep Pahwa having DIN:06499522 is holding directorship in M/s. Som Resorts Private Limited as well as in M/s. Cosmic Structures Limited and on lifting the 'corporate veil' of M/s. Som Resorts Private Limited, we find that M/s. Cosmic Structures Limited and M/s. Som Resorts Private Limited are being managed either directly or indirectly by the same person namely Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion, that M/s. Cosmic Structures Limited was indirectly controlled by the same directors, who are controlling the management of the corporate debtor and ultimate beneficiary of the impugned transaction is the respondent corporate debtor i.e., M/s. Som Resorts Private Limited herein. 26. At this juncture, we find it relevant to refer Pioneer Urban Land and Infrastructure Ltd. Anr. vs. Union of India 65 Ors. (Writ Petition (Civil) No. 413 of 2019), wherein the Hon'ble Supreme Court held that:- Here again, what is unique to real estate developers vis- -vis. operational debts, is the fact that, in operational debts generally, 111 when a person supplies goods and services, such person is the creditor and the person who has to pay for such goods and services is the debtor. In the case of real estate developers, the developer who is the supplier of the flat/apartment is the debtor inasmuch as the home buyer/allottee funds his own apartment by paying amounts in advance to the developer for construction of the building in which his apartment is to be found. Another vital difference between operational debts and allottees of real estate projects is that an operational credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty to CSL shall be adjusted to the First Party towards the sale consideration for the booked spaces by the 31 members in the project called Casa Italia at ML-l, Sector - 9, Vasundhara, Ghaziabad, U.P. It is agreed between the First Party, Second party and Confirming Party that whatever amounts have been paid by the 31 members of the Second Party for booking/allotment of spaces in the project of Casa Italia, and any amount invested in any project of Cosmic by the members of the second party subsequently transferred to Casa Italia Project by the confirming party, paid either to CSL or the First Party, shall be adjusted by the First Party in the total sale consideration of the booked spaces by the said members. POINT NO. V - (CONCLUSION) 28. We accordingly observe that the citations Anil Kumar Tusiani v. Rakesh Kumar Gupta and Anr. Company Appeal (AT) (Ins) No. 35 of 2019, Ankit Goyal v. Sunita Agrawal and Anr. Company Appeal (AT) (Ins) No. 1020 of 2019 and Flat Buyers Association Winter Hills-77 Gurgaon v. Umand Realtech Pvt. Ltc. and Ors. Company Appeal (AT) (Ins) No. 926 of 2019 referred on behalf of respondent are not helpful and we come to the conclusion that M/s. Cosmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. There is a declaration made by him that no disciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India or elsewhere. In addition, further necessary disclosures have been made by Mr. Sumit Shukla as per the requirement of the IBBI Regulations. Accordingly, it is seen that the requirement of Section 7(3)(b) of the Code has been satisfied. 33. Mr. Sumit Shukla, having registration number IBBI/IPA-003/IP-N00064/2017-2018/10550 having email id: sumit_shuklafarediffrnail.com is appointed as an Interim Resolution Professional for corporate debtor. 34. In pursuance of Section 13 (2) of the Code, we direct that public announcement shall be made by the Interim Resolution Professional immediately (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 Bankruptcy Code, 2016. 35. We direct the applicants financial creditor to deposit a sum of Rs. 2 Lakhs with the Interim Resolution Professional namely Mr. Sumit Shukla to meet out the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14(3)(b) of the Code. 38. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, Rules and Regulations. 39. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day to day affairs of the 'Corporate Debtor'. In case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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