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TMI Blog2024 (7) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Adjudicating Authority dismissed the Section 7 application filed by the Appellants for initiating Corporate Insolvency Resolution Process ('CIRP' in short) against M/s Orris Infrastructure Pvt Ltd - Corporate Debtor. Aggrieved by this impugned order, the present appeal has been preferred by the Appellants. 2. We have heard Shri Rajat Malhotra, Learned Advocate appearing on behalf of the Appellants and Shri P. Nagesh, Learned Sr. Advocate representing the Respondent. 3. The Learned Counsel for the Appellants while making his submissions submitted that the Corporate Debtor - Orris Infrastructures Pvt Ltd was developing a commercial building/complex known as Floreal Tower, Gurgaon. The Corporate Debtor had entered into an Agreement with the Appellants on 24.04.2010 (hereinafter referred to as 'MOU') for providing Monthly Assured Return ('MAR' in short). Clauses 2, 4, 5 and 6 of the MOU dated 24.04.2010 stipulated that MAR would continue to be paid by the Corporate Debtor for 36 months after the completion of the building or till the office space was leased out on completion, whichever is earlier, by the Corporate Debtor. 4. Further submission was made that the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their capacity as allottees of the Floreal Tower project but predicated on the MOU dated 24.04.2010 and that the Appellants are claiming the sum not paid by them as allottees but for the amount which has become due and payable on account of MAR. Emphatically asserting that MAR Plan was entirely independent of the terms of allotment, it was stated that the investment arrangement was distinct from an allotment simpliciter. The Appellants have relied on the judgment of this Tribunal in Nikhil Mehta and Sons Vs. AMR Infrastructure Ltd in CA(AT)(Ins) No. 07 of 2017 wherein it was held that a recipient under an identical assured return investment scheme is a Financial Creditor in terms of the said agreement and not as allottees. It was articulated that the moment there is an assured return clause, and the Corporate Debtor defaults to make good the due that arises out of the said clause, a Section 7 application can be filed dehors the capacity of the Financial Creditor as an allottee. 7. Making rival submissions, the Learned Counsel for the Respondent while admitting that the two parties had entered into an MOU dated 24.04.2010 and Space Buyers Agreement (SBA) dated 26.04.2010, stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellants were required to modify their Section 7 application within the stipulated time frame given to conform to the second proviso of amended Section 7. Having not done so, the petition is liable to be dismissed as not maintainable. 10. We have heard both the parties and perused the records carefully. The primary and foremost issue for our consideration is whether the present Section 7 application filed by the Appellants is maintainable or not in view of the threshold introduced by Amendment Act 1 of 2020 of the IBC which expressly provides that a Section 7 application is required to be filed jointly by not less than 100 allottees under the same real estate project or not less than 10% of the total number of allottees, whichever is less. 11. It is the case of the Appellants that their Section 7 application is not hit by the above-mentioned amendment by Act 1 of 2020 of the IBC since they had not approached the Adjudicating Authority as allottees. The present application has not been filed for default by real estate developer under terms of allotment but for reasons of default under an independent and separate agreement executed between the two parties for MAR. The present pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the financial creditor, as may be notified by the Central Government may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. Provided that.............. Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten percent of the total number of such allottees under the same real estate project, whichever is less : Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act 2020, such application shall be modified to comply with the requirements of the first or second provisos as the case may be within thirty days of the commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r RERA, the threshold provided under the second proviso to Section 7(1) would have been applicable. Submission was also pressed that this distinction between an assured return investor and an allottee simpliciter involved in a real estate transaction is not artificial as these two types of investors in real estate projects are not of the same genus. In support of their contention that this investment arrangement is distinct from an allotment simpliciter, the Appellants have relied on the judgment of this Tribunal in Nikhil Mehta supra. 16. Coming to our analysis and findings, we are of the considered view that on a plain reading of the provisions contained in the definition clause under RERA Act as outlined at preceding para 14 supra, a commercial space/unit allottee is covered under the purview of 'allottee' under RERA Act. By virtue of Explanation (ii) to Section 5(8)(f) of IBC, the same interpretation is to be adopted for an 'allottee' under IBC. 17. Extending this interpretation, we notice that the Adjudicating Authority has correctly held that even a commercial space or unit allotted to Assured Returns Class of Creditors is also covered in the ambit of an 'allottee'. After t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sub-section 8(f) of Section 5, laid down following in paragraph- 6, which is as follows: "6. It is thus evident that with the introduction of the explanation home buyers and allottees of real estate projects were included in the class of "financial creditors" - because financial debt is owed to them. On a plain reading of Section 5 (8)(f) no distinction is per se made out between different classes of financial creditors for the purposes of drawing a resolution plan. Consequently, the reasoning of the Mumbai Bench of NCLT "Mr. Natwar Agrawal(HUF)" is correct in the opinion of this Court." 18. The view of RP was disapproved by the Hon'ble Supreme Court and it was held that when underlying claim of an aggrieved party specifically in the form of a Court order or decree, that does not alter or disturb the status of the converted party. Following was held in paragraphs 8 and 9 of the judgment: "8. The Resolution Professional's view appears to be that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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