64e7f41526f16c36d9cdbe5908078faa

Per: SAMEER KAKAR, MEMBER (TECHNICAL)

Above applications have been filed by Tharuvai Ramachandran Ravichandran, Resolution Professional of JBM Homes Private Limited (for brevity 'Corporate Debtor-1') and JBM Shelters Private Limited (for brevity 'Corporate Debtor-2') under Section 33(2) of the Insolvency Bankruptcy Code, 2016 seeking to pass an order of liquidation of both the Corporate Debtors and to appoint the Resolution Professional as the Liquidator.

Corporate Debtor – 1 is engaged in the business of developing and constructing real estate projects together with infrastructure in Chennai. Corporate Debtor -2 has stood as a guarantor for Corporate Debtor – 1.

CIRP in respect of Corporate Debtor – 1 was initiated by this Adjudicating Authority vide order dated 07.09.2021 in IBA/812/2020. Similarly, the CIRP in respect of the Corporate Debtor – 2 was initiated on 07.09.2021 in IBA/826/2020.

After initiation of CIRP by this Tribunal, the Applicant verified the claims and constituted the CoC in respect of the Corporate Debtor – 1 as follows:

First Form-G was issued on 15.12.2021. In response to the same, there were three Prospective Resolution Applicants (PRA). Since there were only 3 PRAs including suspended directors of the Corporate Debtor, the CoC published fresh Form-G on 26.01.2022.

Thereafter, vide order dated 11.03.2022 in IA(IBC)/120(CHE)/2022, the CIRP period was extended till 05.06.2022. In the interregnum, the time period for submission of the resolution plan was extended by the CoC till 16.05.2022 in the 12th CoC meeting held on 12.05.2022. Further, EMD of Rs.3.00 crore fixed earlier was reduced to Rs.25.00 lakhs.

Pursuant to the same, only one Resolution Applicant (the erstwhile Director) submitted the resolution plan. In the 16th meeting of the CoC held on 18.07.2022, the CoC with a requisite majority rejected the resolution plan of the suspended Director and resolved to liquidate the Corporate Debtor. Further, the CoC resolved to appoint the applicant herein as the Liquidator. The relevant resolution and the voting of the CoC are extracted below,

Based upon the Resolution passed with 95.97% voting share in the 16th CoC meeting held on 18.07.2022, the Applicant filed IA(IBC)/916(CHE)/2022 before this Tribunal seeking liquidation of the Corporate Debtor – 1 viz. JBM Homes Private Limited.

After initiation of CIRP by this Tribunal, the Applicant verified the claims and constituted the CoC in respect of the Corporate Debtor – 2 as follows:

Form-G was issued on 15.12.2021 and another Form-G was issued on 26.01.2022. Subsequently, the erstwhile director submitted a resolution plan, which was placed before the CoC. In the 15th CoC meeting held on 18.07.2022, the CoC members holding 99.04% voting rights resolved to reject the resolution plan and decided to liquidate the Corporate Debtor – 2 viz. JBM Shelters Private Limited. The respective resolution and voting are extracted hereunder.

Based upon the Resolution passed with 99.04% voting share in the 15th CoC meeting held on 18.07.2022, the Applicant filed IA(IBC)/972(CHE)/2022 before this Tribunal seeking liquidation of the Corporate Debtor – 2 viz. JBM Shelters Private Limited.

The Corporate Debtors in the present application are Real Estate Developers who were in the process of developing a project named as 'GST Grand' at Chennai. The CIRP in respect of both the Corporate Debtors commenced on 07.09.2021. The present applications have been filed seeking liquidation of the Corporate Debtors.

While dealing with the present applications we are guided by the followings :-

It is submitted that both JBM Homes Private Limited & JBM Shelters Private Limited developed a project called 'GST Grand' (hereinafter referred to as 'Project') at Vandalur, Chennai, consisting of 91 Residential Units and 10 Commercial Units. It is stated that around 40 flats were sold in the project, and in the interregnum, the CIRP in respect of both the Corporate Debtors was initiated by this Tribunal.

In the present case, the homebuyers have filed numerous applications before this Tribunal in relation to the rejection of their claim by the RP and also in relation to claim of ownership of flats, to which they are entitled. Further, even during the course of hearing, it was submitted by the home buyers, that the order of Liquidation of the Corporate Debtor will not maximize the value of the project nor will provide any fruitful solution to them.

Taking into consideration the difficulties faced by the homebuyers, this Tribunal vide order dated 02.11.2022, was impelled to appoint Learned Senior Counsel R. Sankaranarayanan to form a committee to address the issue of the Home Buyers.

Learned Senior Counsel R. Sankaranarayanan appraised this Bench on 10.01.2023 and stated that according to his estimate, if a sum of Rs.9.00 Crore is made available to the Corporate Debtor, the project can be completed and possession of the various units can be given to the respective Home Buyers.

Pursuant to the same, one of the common Financial Creditor of both the Corporate Debtor viz. LIC Housing Finance Limited filed a memo dated 06.04.2023 under Diary No.1556, wherein it proposed the following action plan to secure the interest of the Home Buyers. The details of the same are extracted hereunder;

During the hearing held on 28.04.2023, it was submitted by the Learned Senior Counsel Mr. Sankaranarayanan, that the proposed action plan was placed before the home buyers for their consent. However, 19 home buyers did not accord their consent in respect of the aforesaid Action Plan. The details regarding the total flats sold and unsold and the details in relation to homebuyers who gave the consent are tabulated hereunder:

Among 19 home buyers who have not given their consent, the RP provided the contact details of 11 home buyers who hold a total of 13 flats. Thereafter, this Bench directed the RP to convene a meeting of the said 11 home buyers to avail their consent.

In pursuant to the same, RP filed an additional affidavit dated 31.05.2023, reporting the developments in the meeting held on 08.05.2023. A perusal of the same would show that 8 more home buyers who have Rs.2,61,95,957/- dues, gave the consent for the proposed action plan.

Thus, it could be seen that majority of the home buyers have accorded their consent in relation to the action plan proposed by the Financial Creditor. Further, from the table as reproduced supra, it could be seen that a total number of 69 flats have been sold. However, the possession of the said 69 flats have not been handed over to the homebuyers. Also, out of the said 69 flats, there are receivables to the tune of Rs.8,16,11,881/- which are required to be paid by the homebuyers. In the action plan submitted by the Financial Creditor, it could be seen that a sum of Rs.6.02 Crores (estimated with contingency of 10%) is required to complete the pending works and obtaining the completion certificate.

It is also seen from the record of proceedings dated 11.08.2023, that no conclusion was reached at the meeting headed by Learned Senior Counsel R. Sankaranarayanan. The said order is extracted hereunder:

It is seen from the order extracted supra that the title deeds with respect to various parties owned by the Corporate Debtor are lying with Reliance Home Finance Limited.

It is to be noted here that this Tribunal has recently adjudicated an application i.e. IA(IBC)/978(CHE)/2023 filed by one Ms. Lakshitha S Jain. This Tribunal vide its order dated 09.08.2023 directed the RP to admit the claim of Ms. Lakshitha S Jain to the tune of Rs.84,36,000/- and further directed the RP to take steps to register respective UDS on her behalf. It is also seen that Ms. Lakshitha S Jain has paid the entire amount for two flats, i.e. one at 8^th Floor and the other at 9^th Floor.

If the claim of Ms. Lakshitha S Jain is admitted, then the number of Sold flats would be revised to 71 and the number of Unsold flats would be revised to 30. The RP / Liquidator shall treat the two flats of Ms. Lakshitha S Jain as 'Sold Flats' under 'Excluded Assets' and as such the same shall be dealt with accordingly.

Upon hearing the Learned Counsel for the homebuyers and the Financial Creditors, it becomes clear that if a sum to the tune of approximately Rs.6.02 Crore is available in the coffers of the Corporate Debtor, the project GRT Grand can be completed and handed over to the homebuyers. On the contrary, if we order for liquidation of the Corporate Debtor, the home buyers will be put into undue hardship and would be losing their dwelling units in addition to the money already paid. It is a well settled law that the interest of the homebuyers is of paramount importance and hence their interest has to be safeguarded at any cost.

In the case of Chitra Sharma and Ors v. Union of India and Ors. (2018) 18 SCC 575 the Hon’ble Supreme Court has highlighted the need for protection of homebuyers. Further, in the case of Amish Jaysukhlal Sanghrajka v. Akshar Shanti Realtors (P.) Ltd, the Hon’ble Supreme Court reiterated the similar view, that the homebuyers’ rights shall not be violated.

The home buyers are the worst affected persons in these situations wherein they would be left without a remedy once the process under IBC starts, since moratorium under Section 14 of IBC, 2016 comes into force. The liquidation proceedings become the last resort for the homebuyers who have put in their hard-earned investments to secure a home for themselves. The Hon’ble Supreme Court in the matter of M/s. Shantistar Builders v. Narayan Khimalal Totame, (1990) 1 SCC 520 has held that a home for the family is a basic human yearning and it is a part of right to life, which is a fundamental right guaranteed under Article 21 of Constitution of India.

Under these circumstances, this Tribunal is required to pass an order, keeping in mind the paramount importance and interest of the homebuyers, and also the object of IBC, 2016.

Thus, in order to protect the interest of the homebuyers, and also in order to do complete justice and, keeping in view of the intricate and unique facts and circumstances of the present case, we are of the opinion that in the project ‘GRT Grand’, 71 flats that are sold, should be kept outside the purview of ‘Liquidation Estate’ (Excluded Assets) of both the Corporate Debtors.

The detail order in relation to how the excluded assets are to be treated as dealt with in the latter portion of this order.

Hence, by excluding these 71 flats from the project 'GRT Grand', the Liquidation process in relation to (i) JBM Homes Private Limited and (ii) JBM Shelters Private Limited is required to be ordered.

It is already stated that only one Resolution Applicant (the erstwhile Director) submitted the resolution plan and in the CoC meetings of both the Corporate Debtor, it was resolved with a requisite majority of more than 66% to reject the Resolution Plan and to liquidate both the Corporate Debtors.

Form-H has been filed. The proposed Liquidator, Tharuvai Ramachandran Ravichandran has also filed his written consent to act as the Liquidator of the Corporate Debtor and also on verification from the IBBI Website, it is seen that the Authorization for Assignment (AFA) for the RP is valid up to 06.12.2023. However, the IBBI vide its power vested under Section 34(4)(b) has recommended that an Insolvency Professional other than the RP / IRP shall be appointed as Liquidator, in all the cases where an order of Liquidation is passed.

As a consequence, the Corporate Debtors viz. (i) JBM Homes Private Limited and (ii) JBM Shelters Private Limited is required to be ordered for liquidation as per Section 33(1)(a) of IBC, 2016. We hereby appoint Mr. Venkataraman Subramanian with Reg. No. IBBI/IPA-002/IP-N01068/2020-2021/13433 (email id:- [email protected]) as the common Liquidator of both the Corporate Debtors viz. (i) JBM Homes Private Limited and (ii) JBM Shelters Private Limited, to carry out the liquidation process subject to the following terms of the directions.

The details of the flats sold and unsold in the 'GRT Grand' project are extracted hereunder:

In order to carry out the process and for completion and handing over of the 71 sold flats to the homebuyers, this Tribunal passes the following orders and directions;

a. 100% of the balance receivables by the Registered homebuyers, who have taken possession / keys of the flat or by unregistered homebuyers who have taken possession / keys of the flat;

b. 95% of the balance receivables by the registered homebuyers who have not taken possession / keys of the flat. The balance 5% can be paid at the time of handing over the respective units;

c. Unregistered homebuyers / allottees who have not taken possession of the units or do not have a registered sale deed in their favour, will have to intimate the RP within 7 days, whether they are interested in registering the flat; and if yes, they pay 95% of the sale consideration on registration. The balance 5% can be paid at the time of handing over of the respective units. If the customers are not interested in registering the flat and would like to cancel the sale, the same can be cancelled and the flat should be allowed to be resold and the proceeds from the re-sale should be utilized for completion of the pending work. Refund for such uninterested homebuyers shall be made from the proceeds available in the 'GRT Grand' account, only after completion of the entire project and obtaining a completion certificate and not before.

d. If no intimation is received from the unregistered homebuyers, within a period of 14 days, the allotment should be treated as cancelled and the flat should be allowed to be resold and the proceeds from the re-sale should be utilized for completion of the pending work. Refund for such uninterested homebuyers shall be made from the proceeds available in the 'GRT Grand' account, only after completion of the entire project and obtaining a completion certificate and not before.

With the above said directions, IA(IBC)/972(CHE)/2022 and IA(IBC)/919(CHE)/2022 stand disposed of.