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TMI Blog2024 (4) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... EME COURT ] has been relied by the Adjudicating Authority. It is relevant to notice the facts and ratio of the judgment of Vishal Chelani, which has been relied by the Adjudicating Authority. Vishal Chelani and other were Homebuyers, who had filed their claim on the basis of order passed by UPRERA. They filed claim in Form-CA in the category of Homebuyers. The RP informed the Appellants that they should file their claims in Form-C as a Financial Creditor. The Appellants filed an Application before the Adjudicating Authority, claiming that they should be treated as Homebuyers and they be permitted to file claim in Form-CA, which Application was rejected. The allottees in Vishal Chelani s case were Applicants, who had also got order in their favour from RERA, but it was held by the Hon ble Supreme Court that their status as a Financial Creditor does not change and they were entitled to file their claim in Form-CA as a Financial Creditor . The above judgment of the Hon ble Supreme Court, which was relied by the Adjudicating Authority, clearly supports the submission of learned Counsel for the Appellant. The Appellant cannot be said to go out of the definition of allottees merely becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. vs. Parsvnath Landmark Developers Pvt. Ltd. Ors. under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ), in which direction was issued by the Adjudicating Authority to comply with the changed provisions under Section 7, second amendment ordinance. The Appellant withdraw the Application on 03.01.2020. (iii) As the developer failed to develop the Project and complete the same within the agreed time, the Appellant filed five different complaints under Section 31 read with Section 18 of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as the RERA Act, 2016 ) being Complaint Nos. 77, 78, 79, 80 and 81 of 2020 seeking refund of the amount paid by them along with interest in terms of the Flat Buyer Agreement dated 21.08.2007. All the five complaints were disposed of by Delhi RERA on 21.10.2022 allowing the complaints and directing the refund of the amount with interest. The Respondent was under obligation to refund the amount within 45 days of the order, but no amount was paid by the Respondent. (iv) On 03.08.2023, Appellants filed petition (IB) No.454(PB)/2023 under Section 7 praying for initiation of Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Creditor. It is submitted that Section 18 read with Section 2(d) of the RERA Act, 2016 makes it clear that person, who is granted refund of entire amount paid to the promoter for allotment of a real estate unit, does not remain allottee as the refund order is preconditioned by withdrawal from the Project. It is submitted that the Appellant are not Financial Creditors in the category of real estate allottees, but are Financial Creditor in the category of Decree Holders and therefore, they are not required to meet the threshold/ eligibility under Section 7, sub-section (1), 2nd Proviso. The learned Counsel for the Appellant also submits that judgment of Vishal Chelani Ors. vs. Debashis Nanda is distinguishable, since the said judgment was delivered in different context, i.e. granting benefit to the real estate allottees, who are holders of order by RERA. It is further submitted that above judgment of the Hon ble Supreme Court has not dealt with the three judges bench judgment of Kotak Mahindra Bank vs. A. Balakrishnan. 4. We have considered the submissions of learned Counsel for the Appellant and have perused the record. 5. Section 3 of the Code, defines creditors in Section 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms referred to in sub-clause (a) to (h) of this clause; 7. By Explanation to Section 5(8), expression allottee has the same meaning as assigned to it under Clause (d) of Section 2 of RERA Act, 2016. Section 2(d) of RERA Act, is as follows: 2(d) allottee in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent; 8. In Section 7 Application, the Appellants themselves have pleaded that complaints filed by them were allowed on 21.10.2022 and Corporate Debtor was directed to refund the amount, but the Corporate Debtor failed to make the payments. It is useful to notice following pleadings of the Appellant in their Section-7 Application: The Applicants upon realisation of the fact that Corporate Debtor is not going to hand over the possession of the units, initiated various legal actions (details thereof are separately atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covery Certificate dated 07.06.2017 and 20.10.2017 issued by Debts Recovery Tribunal against the borrower entities. The Application under Section 7 was filed on 05.10.2018 by the Kotak Mahindra Bank Ltd., which Application was admitted by Adjudicating Authority against which an Appeal was filed by the Borrower, which Appeal was allowed by this Tribunal on 24.11.2020, holding the Application as barred by time. An Appeal was filed in the Hon ble Supreme Court by Kotak Mahindra Bank Ltd., which Appeal was allowed and order passed by this Tribunal was setaside, restoring the order admitting Section 7 Application. The Hon ble Supreme Court in Kotak Mahindra Bank has also relied on its earlier judgment in Dena Bank vs. C. Shivakumar Reddy and Anr. (2021) 10 SCC 330. Paragraph 141 of the Dena Bank was quoted in paragraph 27 of the judgment, which is as follows: 27. This Court further went on to observe thus : (Dena Bank case [Dena Bank v. C. Shivakumar Reddy, (2021) 10 SCC 330] , SCC pp. 387-88, paras 136 141) 136. A final judgment and order/decree is binding on the judgment-debtor. Once a claim fructifies into a final judgment and order/decree, upon adjudication, and a certificate of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simpliciter would be included in the definition of the term financial debt . 54. In any case, we have already discussed hereinabove that the trigger point for initiation of CIRP is default of claim. Default is non-payment of debt by the debtor or the corporate debtor, which has become due and payable, as the case may be, a debt is a liability or obligation in respect of a claim which is due from any person, and a claim means a right to payment, whether such a right is reduced to judgment or not. It could thus be seen that unless there is a claim , which may or may not be reduced to any judgment, there would be no debt and consequently no default on non-payment of such a debt . When the claim itself means a right to payment, whether such a right is reduced to a judgment or not, we find that if the contention of the respondents, that merely on a claim being fructified in a decree, the same would be outside the ambit of clause (8) of Section 5 IBC, is accepted, then it would be inconsistent with the plain language used in the IBC. As already discussed hereinabove, the definition is inclusive and not exhaustive. Taking into consideration the object and purpose of the IBC, the legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in pursuant of that, all the applicants had submitted their claim in Form C, which were duly considered by the respondent/ R.P, and only on the ground that the entire claims of the applicants are not admitted and applicants are treated as a Financial Creditor on the basis of that decree and not as a Creditors of Class, we are unable to accept the submission of the applicants to direct the Resolution Professional to admit their claim in Form CA. 14. Against the order rejecting their Application permitting them to file the Claim in Form-CA, Appeal was filed in this Tribunal, which Appeal was dismissed on 28.02.2023. This Tribunal, rejecting the Appeal of Vishal Chenali Ors. observed following in paragraphs 8 to 21: 8. Aggrieved from the order of the Tribunal dated 08.06.2022 all the five Applicants have preferred this appeal. 9. Counsel for the Appellant has vehemently argued that the Tribunal has committed a patent error in holding them as Financial Creditor on the ground that the Appellants had already obtained a decree from the UPRERA regarding refund of their amount. 10. He has argued that the status of the Appellant would remain the same as Homebuyers within a class and shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be entitled to initiate CIRP, if initiated within a period of three years from the date of issuance of the Recovery Certificate. 13. We have heard Counsel for the Parties and perused the record with their able assistance. 14. There is no dispute that the Appellant had applied for Unit (Flat) in the project called Bulland Elevates floated by the Corporate Debtor. 15. There is also no dispute that the Appellant being the Home Buyers filed a complaint before the Uttar Pradesh Real Estate Regulatory Authority, Gautam Buddha Nagar (in short UPRERA). The said application filed at the instance of the Appellants was allowed by the UPRERA on 04.10.2019. The complaint No. NCR/144/04/0045/2019 was filed by Vishal Chelani against Bulland Buildtech Pvt. Ltd. under Section 31 of the UP Real Estates (Regulation Development Act, 216). Pursuant to the order dated 04.10.2019 passed by the UPRERA, a Recovery Certificate was also issued on 21.09.2020 under Section 40 of the Act, 2016 qua the refund of the amount with interest, invested by the Appellant for the purchase of the Flat. It has also come on record that execution was also filed on the basis of the Recovery Certificate. 16. During the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h home buyer allottees and another. He relies upon a decision of the NCLT, Mumbai Bench-IV, [Mr. Natwar Agrawal (HUF) vs. Ms. Ssakash Developers Builders Pvt. Ltd.] in CP(IB) No.21/MB-IV/2023 dated 02.08.2023, which inter alia held as follows: 3.2. Accordingly, this bench is of the considered view that decree would be categorized as either financial or operational debt depending on the nature of the underlying claim which stands crystallized through the arbitral or court the nature of the debt due under decree would depend on the nature of transaction from which the decretal debt has arisen. In the present case the applicant had obtained a decree from RERA in capacity of allottee in a Real Estate Project and allottee in Real Estate Project is covered under the definition of Financial Debt contained in under Explanation to Section 5(8)(f) of the Code. Accordingly, the applicant, being holder of a decree in capacity of allottee is a Financial Creditor. 3.3. At this juncture, this bench considers appropriate whether an allottee holding a decree from RERA would fall under the class of Home Buyers within the category of Financial Creditor or it would cease to be an allottee under the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. As held in Natwar Agarwal (HUF) (Supra) by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party - in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to hyper classification and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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