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TMI Blog2025 (4) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.05.2024 passed by the adjudicating authority (National Company Law Tribunal, New Delhi Bench, Court-IV), admitting Section 7 application filed by the IDBI Trusteeship Services Limited in C.P. (IB) No.445/2023 and C.P. (IB) No.446/2023, respectively. 2. Brief facts giving rise to these appeals are: i. Shree Vardhaman Buildrop Pvt. Ltd., the principal borrower entered into Debenture Subscription Agreement with debenture holder company, DSS Infrastructure Private Limited and the promoters. ii. The debenture holder agreed to disburse a sum of Rs.35 crore to Shree Vardhaman Buildrop Pvt. Ltd. DSS Infrastructure Pvt. Ltd., the subsidiary company of Shree Vardhaman Buildprop Pvt. Ltd. stood as corporate guarantor in the above transaction. iii. M/s. Shree Vardhman Buildprop Pvt. Ltd. has been developing a low cost/affordable housing project called Shree Vardhman Mantra project on land measuring 11.262 acres situated at Village Badshahpur, Sector 67, Gurgaon, Manesar. iv. In the project, there were 1203 units out of which 1199 units were already sold, and there were four unsold units only. v. In the year 2016, occupancy certificate was applied which could be received only on 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication was filed against DSS Infrastructure Pvt. Ltd. on 02.08.2024 on which C.P. (IB) No. 446/2023 was registered. xvi. In Section 7 application notices were issued by the adjudicating authority. Shree Vardhman Buildrop Pvt. Ltd. and DSS Infrastructure Pvt. Ltd. filed their replies in respective Section 7 application. xvii. Adjudicating authority after hearing both the parties vide order dated 29.04.2024, admitted C.P. (IB) No. 445/2023 against the corporate debtor, Shree Vardhman Buildrop Pvt. Ltd. and by order dated 07.05.2024, admitted Section 7 application in C.P. (IB) No. 446/2023 against the corporate guarantor, DSS Infrastructure Pvt. Ltd. The suspended Directors of Shree Vardhman Buildrop Pvt. Ltd., as well as, DSS Infrastructure Pvt. Ltd. have filed these two appeals. 3. It shall be sufficient to refer to the pleadings in Comp. App. (AT) (Ins.) No.1026/2024, for deciding both the appeals. Facts and submissions in both the appeals being common. 4. Learned counsel for the appellant challenging the order, admitting Section 7 application submits that when the DTD was executed on 14.06.2016 out of 1203, 1199 units were already sold and the payment to debenture trustee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not questioning the debt and default. When the debt and default is proved as per the law laid down by the Hon'ble Supreme Court, the Section 7 application has to be admitted. Corporate guarantor having also failed to make the payment in spite of invocation of guarantee the CIRP against the corporate guarantor has also been rightly initiated. Learned counsel for the respondent has referred to the judgement of the Hon'ble Supreme Court in the matter of 'E.S. Krishnamurthy & Ors.' Vs. 'Bharathi Hi-Tecch Builders Private Limited' reported in (2022) 3 SCC 161 and in the matter of 'M. Suresh Kumar Reddy' Vs. 'Canara Bank & Ors.' reported in (2023) 8 SCC 387. The reason due to which the corporate debtor could not complete the construction cannot be a reason for resisting the admission of Section 7 application. The debt and default is an admitted fact, not a single instalment of principal or interest was paid in last five years. In the year 2021, additional money was disbursed of Rs.15 crore again. No payments have been received, tenure of debenture have already expired and after giving default notice, proceedings have been initiated. 6. We have considered the submissions of the counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have been held liable to discharge of the debt. It was held by this Tribunal that the constitution of project managing committee to assist and improve the operation and construction in no manner diminish the obligation of the corporate debtor to fulfil its payment obligation. In paragraphs 17, 18 & 19 of the judgement following was laid down: "17. The PMC was constituted for the purpose and object to monitor the project, to improve the sales and collections from the project and completing the construction of the project. PMC was constituted to improve the functioning of company qua the construction of the project. PMC in no manner has undertaken the obligation of the obligors towards repayment which is clearly reflected in Clauses 2.6 and 2.22 as extracted above. We, thus, do not find any substance in the submission of Shri Arun Kathpalia that after constitution of PMC in which there are three members of the financial creditors i.e. majority, blame for non-payment of due amount can be put on the financial creditor itself. The PMC was constituted to assist and improve the operations and construction of the project which in no manner diminish the obligation of the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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