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Judgment
ORDER
This is an Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Applicants (FCs) who are being developed by M/s Gayatri Hospitality & Realcon Limited to initiate Corporate Insolvency Resolution Process against Corporate Debtor (CD). The total amount of debt due is Rs. 1,03,55,225 (Rupees one crore three lakh Fifty Five Thousand two Hundred and Twenty Five only/-)
incorporated on 07.07.2010 under the Companies Act, 1956 having CIN: U70101DL2010PLC05416. The Authorized Share capital of CD is Rs 1,00,00,000/- and its paid-up share capital is Rs. 67,88,400/-. The CD has been allotted a plot measuring 71530.40 sq. meter for developing the plot no. GH-11, Sector 01 in the ein CD was empowered by a lease agreement with Greater Noida Industrial Development Authority to develop the allotted plot and build a group housing society for the prospective buyers.
BRIEF SUBMISSIONS OF LEARNED COUNSEL APPEARING FOR THE APPLICANTS ARE AS FOLLOWS:
In the present Application, Applicant Nos. 1 to 8 have paid an aggregate amount of Rs. 1,03,55,225/- as consideration for allotment of units to A agreement between CD with each Applicant. Working for computation of amount and days of default in tabular form has been annexed as Annexure III. It is submitted by the Applicants that the CD has been charging interest at 24% per annum from the Applicants as per clause 11 of BBA (Builder Buyer Agreement) in case of delay in disbursement.
It is contended by the Applicants that they are entitled for refund with interest at the same rate in terms of section 2 (za) (i) of RERA (Real Estate Regulation and Development Act, 2016. The dates on which the Applicants disbursed such amount has been given in the main application from page number 36 to42. Applicants submitted that despite such disbursement, the CD failed to deliver possession of the said units to the Applicants till date which is in contravention of the respective agreements.
It is further submitted that the complaint has also been filed by association of homebuyers M/s Gayatri Aura Social Welfare Association against the CD M/s Gayatri Hospitality and Realcon Limited and Greater NOIDA authority in RERA for cancellation of registration of promoter of CD in view of continued violation of UP Apartment Act 2010 and for appointment of another developer in consultation with the State Government and association of homebuyers.
Applicant in its written submissions dated 03.01.2024 have further stated that before(sic) (against) the date of entry that is 8/7/ 2022, CD had updated on RERA website that only five 2 BHK and only seven 3 BHK flats have been booked. Therefore, the petition fulfills the statutory threshold. The Applicants submitted that even otherwise at present before the admission of the petition there are total of 107 homebuyers as Petitioners. The homebuyers have filed 3 impleadment applications based on the disclosure of total number of allotment made by the CD from time to time. The details of the impleadment applications and number of homebuyers are given below:
Applicants submitted that the default committed by the CD is due to non-completion of project in time as per clause 16 of BBA. The CD was required to complete the project within 40 months from the date of allotment letter with the grace period of 6 months. Applicants further submitted that CD has also failed to justify why it assured the construction of project in 40 + 6 months to all the homebuyers when as per its own admission it was aware since 2011 that it does not have physical possession of vacant land.
Applicants submitted that the project is substantially incomplete. It is also borne out as per the Architect Certificate submitted by the CD with RERA Authorities that the project is incomplete and substantial work is still pending. Architect Report dated 31.12.2021 is annexed as Annexure A-2 at page 23, volume I- Affidavit dated 13.04.2022. On 14.03.2023, the CD submitted that the flat could be delivered by January 2024 which was doubted by the Applicants. Only two towers are complete out of 10 + 1 towers which shows the fraud the CD played on this honorable court.
Applicants submitted that on 12/7/23 after hearing the arguments, on a proposal made by CD directed that discussion be done between the Applicants and the CD to explore an amicable settlement. On 24/7/23, the Applicant homebuyers held an internal meeting and unanimously rejected the proposal of the CD. On 26/7/23, on a proposal made by CD to conduct a meeting between the CD and all the homebuyers, NCLT directed to hold the meeting and appointed an Advocate Commissioner to evolve a viable solution. Against the order dated 26.07.2023, Applicants filed an appeal before NCLAT and ble NCLAT on 14.08.2023 while disposing of the appeal stated that:
that in view of the fact that the meeting is going to take place before the next date fixed before the Adjudicating Authority, we see no reason to interfere with the order. We, however, make it clear that the outcome of the meeting as submitted before the Adjudicating Authority shall be for the consideration of the Adjudicating Authority to take an appropriate decision in accordance with law. We further make it clear that the outcome of the meeting shall be without prejudice to rights of
Applicants contended that the debt owed to Applicants is of Rs. 14,78,67,918 and debt is also owed by CD to many other homebuyers. Only two out of 11 towers are complete and the promoter of the CD has 17 FIRs pending against them and criminal proceedings are on-going and that the CD had made several false statements regarding the completion of project before several authorities. CD has unilaterally modified the list of Allottees despite submitting the list of allottees earlier before this CD has even attempted to hijack the whole voting process by dummy voting. The CD has on several occasion resisted in assisting the learned local commissioner in doing a complete verification of the allottees on one excuse or the other. Therefore, it is clear that debt is admitted, the default is real and the Applicant homebuyers fulfill the requirement. The conduct of CD is to play fraud on court and hence Applicant pray that insolvency process be initiated against the CD
BRIEF REPLY AND WRITTEN SUBMISSIONS FILED ON BEHALF OF THE CORPORATE DEBTOR ARE AS FOLLOWS:
CD vide its reply dated 15.02.2022 and written submissions dated 04.12.2023 submitted that section 7 petition is non maintainable and deserves to be dismissed as no date of default has been mentioned in the application.
CD further submits that this application is not maintainable as it fails to meet the criteria provided under proviso Section 7(1). CD states that on date of filing of present company petition i.e. 11.1.2019, the total number of residential units that were allotted by CD in the project were 888 units, but Section 7 application was initially filed by 8 applicants. All the applicants are themselves defaulters. Despite multiple reminders by CD, no payment what so ever was made by applicants towards the remaining amount for the flat and consequently their allotment of residential apartment had already been cancelled. CD further submitted that as on 18.11.2022, total number of allottees in the project is 1124. The screenshots from the UPRERA website also show that the total number of allotments made by the CD till date is 1124. From page 6 to 13 of the written submissions dated 04.12.2023, CD has provided a list of applicants who ceased to be allottee even before filing of section 7 application.
CD was pleased to direct the CD to have a meeting with all the 1124 homebuyers in the presence of counsel for petitioners/Applicants and CD and a Court Commissioner was appointed to chair the meeting. Accordingly, meetings were held between the CD and the homeuyers. Notice where in CD made the proposal (extracted later in this order) is annexed as Annexure 40 volume 3 of additional affidavit filed on 01.12.2023.
Construction schedule as proposed by CD is as follows (page number 16 of written submission):
CD further submitted that substantial construction has taken place in the project specially after induction of co-promoter i.e. M/s Floral Homes private limited. Further 58 allottees have taken possession in tower A and B. Further, tower E and F are on the verge of completion and will take another 9 to12 months for the same. CD contended that CD has in fact applied for Occupancy Certificate for both Towers A and B and is still pending approval.
ANALYSIS AND FINDINGS
On perusal of the documents it is found that the Corporate Debtor has entered into a joint venture with M/s Floral Homes and it has been added as a co-promoter/co-developer of the project in question. For this, CD has submitted an additional affidavit filed on 1st December, 2023. It is pertinent to mention that Floral Homes has a real estate experience of more than 25 years. Further CD in its Written Submissions dated 04.12.2023 stated that on 20.06.2023 SWAMIH Investment Fund has accorded final approval to invest amount of Rs.300 Crores along-with additional capital of 67 crores. Relevant portion of the Sanction letter of SWAMIH Fund and final approval is annexed as Annexure R-33 and R-32 in Affidavit dated 01.12.2023. Same are extracted below:
Email of final approval dated 20.06.2023 is extracted below:
Looking at the interest of various homebuyers, various orders have been passed by this Adjudicating Authority. One such order was order dated 14.03.2023, relevant part of which is extracted below:
Pursuant to the appointment of Advocate commissioner vide Order dated 14.03.2023, the Advocate Commissioner took up the responsibility and has filed 03 reports. First report is dated 10.04.2023; 2nd report is dated 7.10.2023 and the 3rd report is dated 29.10.2023. All the reports are taken on file and have been shared with all the respective parties.
On 26.07.2023, Ho with 1124 home buyers and a Court Commissioner was appointed to chair the meeting. Order dated 26.7.2023 is extracted below:
The aforesaid order was challenged by applicants before NCLAT and NCLAT upheld the order passed by this Adjudicating Authority.
During the course of proceedings, Ld. Sr. Counsel Mr. P. Nagesh for the Respondent/CD sought time to submit a proper proposal for resolution of the matter. Pursuant to various meetings held between CD and Homebuyers, a detailed proposal by CD was put forward for e-voting in September 2023 wherein 746 out of total 1124 allottees participated and an overwhelming majority of 604 allottees (81%) purportedly voted in favour of Resolution offered by the Corporate Debtor and approved the same. Advocate Commissioner also filed a report dated 07.10.2023 before this Adjudicating Authority bringing on record the e-voting result which is annexed as Annexure R-25 (Report of Advocate Commissioner dated 7.10.2023). This report of the Advocate Commissioner has been disputed by petitioners stating that the e-voting results are not reliable as a lot of dummy voting was resorted to by the CD.
Pursuant to the report of Advocate Commissioner, this Adjudicating Authority has passed an order on 09.10.2023 which is extracted below:
In compliance of the abovementioned order, Advocate Commissioner filed its verification report dated 29.10.2023 in which following points are raised:
On the issue of casting of votes, Advocate Commissioner in its report stated as follows:
It is submitted by the Advocate commissioner in its report that out of 107 petitioners in the present section 7 application, only 6 petitioners have voted in favour of the viable solution shared by the Corporate Debtor. The objections, concerns, issues raised by the dissenting homebuyers forms the part of the report submitted by Advocate Commissioner.
CD in its reply to the report dated 01.12.2023 stated that there are glaring contradictions in the report of the court commissioner itself with regard to the files handed over and verified by him. Further, CD stated that there are discrepancies in the Advocate Commissioners report dated 29.10.2023 with regard to genuine allottees.
Further, CD stated that there is no set parameter by the Advocate Commissioner for declaring an allottee as genuine. It is averred by the CD that Advocate Commissioner on one hand declared an allottee to be genuine on the basis of certain documents whereas on the basis of the same set of documents has stated that the genuineness of those allottees cannot be ascertained.
Thereafter, an additional affidavit dated 01.12.2023 has been filed on behalf of the CD/promoter i.e. (Hariom Dixit, s/o/ Omkar Dixit (director/promoter and Authorized signatory of CD). The hard copy of the affidavit dated 01.12.2023 was submitted before us during hearing and they have also filed the soft copy on the DMS.
As per the Affidavit dated 01.12.2023, the Corporate Debtor has consented to implement the proposal. Relevant portion of the proposal is extracted below:
TABLE I
However, we are not convinced by the Reply (reply to the report dated 01.12.2023) of the CD. The report of the Advocate Commissioner is categorical that CD did not provide the relevant files/information to the Advocate Commissioner to verify the genuineness of the allottees. Further, the Advocate Commissioner has cast serious doubt on the integrity of the e-voting process and has raised the issue of substantial dummy voting.
On perusal of the report we find that CD has not substantially cooperated with the Advocate Commissioner in the verification process and did not provide the proper/complete documents for the successful completion of the verification process. Dummy voting and issue of genuineness of homebuyers has been raised in the instant case which has the tendency to cause prejudice to the parties which ultimately frustrate the purpose and objectives of the code.
We could not locate the Architect Report dated 13.12.2021 nor Affidavit dated 13.04.2022 03.01.2024 (para 8 ibid). However, on perusal of the additional Affidavit dated 01.12.2023 submitted by the CD, Architect Certificate dated 30.09.2023 annexed at the end of the affidavit as Annexure R-44, tabular chart of the current status of the project, it seems that out of 11 towers ( A, B, C, D, E, F, G,H, I, J and studio), in 7 towers, not even 25 % (average) work has been completed. Substantial work in the towers is still pending. Relevant extract from the Affidavit with respect to the current status of the project is extracted below:
On perusal of the documents on record, it is evident that allotment letter/receipts were received by many of applicant/homebuyers in the year 2012. Further, disbursal of money was since 2012. CD contended that project could not be completed on time because initially it did not receive the vacant possession due to encroachment of farmers , then it got the zero period from GNIDA till 2017 and then due to COVID 19 pendemic force majure clause came into operation. But the fact remains that, till date substantial work of the project is still pending. We as an Adjudicating Authority are not convinced with the proposal put forward by the CD. The timeline as proposed by the CD (extracted on page 19, table I) is also not convincing. We cannot overlook the dummy e-voting resorted to by the CD, as is borne out by the Advocate 29.10.2023. This has raised serious doubt in our mind about the bona-fides of the CD.
IA- 4163/2021 was filed for impleadment of 52 applicants in Section 7 application, IA- 3422/2021 was filed for impleadment of 22 applicants, IA- 499/2023 was filed for impleadment of 25 applicants. Together with Applicant homebuyers (8 in no.) in the Main CP 288/2019, the total no. of homebuyers comes out to be 107 homebuyers. Another IA 3534/2022 is for seeking impleadment of one homebuyer namely Ramit Saluja. Though, CD has stated that around 59-60 of these applicants do not qualify as allottees as their allotment has been cancelled but we find that many of these allotments have been cancelled by the CD after the filing of the application/impleadment applications, ostensibly on ground of non-payment of dues. In view of the poor progress of the project, we do not Accordingly, we ALLOW all the applications of impleadment namely IA- 4163/2021, IA- 3422/2021, IA-499/2023, IA 3534/2022 of the applicants and hence, all the applicants taken together form a class of creditors which collectively meet the threshold criteria of 10% or 100 in no. in accordance to the provisions of the code.
s to established. Applicants/Petitioners in Part IV from page no 36 to 44 of the Form 4 of their Application in CP 288/2019 have given the particulars of the financial debt, dates of disbursement. Copies of receipts of the said amounts are annexed along with the application, workings for computation of amount and days of default in tabular form has been annexed as Annexure III of the paper book. Further, copy of Builder Buyer Agreement between CD and the petitioner homebuyers are annexed as Annexure I(colly) and copy of allotment letters given by CD to the Applicants/petitioners are annexed with this Application.
As far as default is concerned, the fact of non-completion of project is reflected in the Architect certificate itself. Therefore, both the requirement of debt and default has been established. The application for initiating CIRP against the CD is within the period of limitation. Further, the name of IRP has been proposed by the Financial Creditor whose consent (Form 2; written communication by proposed Interim Resolution Professional )has been placed on record (Annexure AD @ page 305 of the paper book) stating that no disciplinary proceedings are pending against him. The application filed under section 7 of the Code, is otherwise complete and meets all other procedural requirements of the Code and regulations made thereunder.
ORDER
In light of the above facts and circumstances, it is hereby ordered as follows: -
The Application bearing (IB) 288(PB)/2019 filed by the applicant under Section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating CIRP against the Corporate debtor i.e. M/s Gayatri Hospitality and Realcon Limited is hereby ADMITTED.
As a consequence of the Application being admitted in terms of Section 7 of the Code, the moratorium as envisaged under the provisions of Section 14(1) of the Code, shall follow in relation to the Respondent/(CD) as per clauses (a) to (d) of Section 14(1) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(3) of the Code shall come into force.
The Financial Creditor has proposed the name of Mr. Anand Sonbhadra, registration number IBBI/IPA-001/IP-P00739/2017-18/11771, as the Interim Resolution Professional of the Corporate Debtor. The proposed Interim Resolution Professional has given his written communication in Form 2 as required under rule 9(1) of the Insolvency and Bankruptcy [Application to Adjudicating Authority] Rules, 2016 along with a copy of registration annexed as Annexure-AD (page num 305, vol 3 of the paper book.)
Mr. Anand Sonbhadra, Registration number IBBI/IPA-001/IP-P00739/2017-18/11771; Address: Flat no. 2183 Sector B, Pocket 2, Vasant Kunj, New Delhi-110070; Email id [email protected] is appointed as the Interim
In pursuance of Section 13(2) of the Code, we direct the IRP to make a public announcement immediately with regard to the admission of this application under Section 7 of the Code. The expression immediately means within three days as clarified by Explanation to Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
During the CIRP period, the management of the CD shall vest in the IRP/RP, in terms of Section 17 of the IBC. The officers and managers of the CD shall provide all documents in their possession and furnish every information in their knowledge to the IRP within one week from the date of receipt of this Order, in default of which coercive steps will follow. There shall be no further opportunity given in this regard.
and documents without any delay whatsoever. He is also free to take police assistance and this Court hereby directs the Police Authorities to render all assistance as may be required by the IRP in this regard.
The IRP or the RP, as the case may be shall submit to this Adjudicating Authority periodical report with regard to the progress of the CIRP in respect of the CD.
The FC shall deposit a sum of Rs 5,00,000/- (Rupees Five Lakhs only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are
The Registry is hereby directed to communicate a copy of the order to the FC, the CD, the IRP and the Registrar of Companies, NCR, New Delhi, by Speed Post and by email, at the earliest but not later than seven days from today, and upload the same on website immediately after pronouncement of the order. The Registrar of Companies shall update his website by updating the status of the CD and specific mention regarding admission of this petition must be notified.
The registry is further directed to send the copy of the order to the IBBI also for their record.
Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.