Mr. Dhirendra Nath & Ors vs M/S JC World Hospitality Private Limited

Per- Dr. Deepti Mukesh, Member (J)

The Present Application is filed under section 7 of Insolvency and Bankruptcy Code, 2016 (for brevity 'IBC', 2016') read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity 'the Rules') by Mr. Dhirendra Nath & Ors (for brevity 'Applicant') with a prayer to initiate the Corporate Insolvency process against M/S JC World Hospitality Private Limited (for brevity 'Corporate Debtor').

The Applicants herein are the home buyers and all have invested in the same project of the corporate debtor namely "JC World Mall". The Corporate Debtor is a private limited company incorporated under the provisions of the Companies Act, 1956 on 18.09.2012 having CIN U92412DL2010PLC211303 as per Master Data and having registered office at E-2/3, Vasant Vihar, New Delhi-110057. The Authorized Share Capital of the Corporate Debtor is Rs. 10,00,00,000/- and Paid Up Share Capital is Rs. 98,00,000/- as per Master Data of the company.

The Applicant submits that the corporate debtor had preferred a writ petition bearing no. 840 of 2019 before the Hon'ble Supreme Court, challenging the constitutional validity of the 2018 amendment in the code, in terms of which the real estate allottees were brought under the purview of the code. The challenge to the constitutional validity of the said amendment has now been decided by the Hon'ble Supreme Court in the matter of "Pioneer Urban Land And Infrastructure Limited & Anr. V Union Of India & Ors" vide its judgment dated 09.08.2019, upholding the constitutional validity of the said amendment.

The Applicants have submitted that the corporate debtor had launched a project namely "JC World Mall" situated at Plot No. 1, C1-K, Japyee Greens Wish Town, Sector 128, Noida-201304. It is stated that all the Financial Creditors had booked their respective units under the said project. As per the terms and conditions of the application forms, the corporate debtor was required to offer possession of the units to the allottees within 2.5 years from the date of the provisional allotment letter i.e from 16.10.2014. The corporate debtor was required to provide possession of the unit to the applicants by December, 2016. The relevant extracts of the said clause is being reproduced hereinunder for ready reference:

The Applicants submits that the corporate debtor had issued Provisional Allotment Letters to the allottees, according to which the corporate debtor was to pay to the Financial Creditors, assured rent at different rates per month for a minimum period of 9 years from the date of handover of possession, but the corporate debtor has failed to provide the same to the applicants. The relevant extracts of the said clause is being reproduced hereinunder for ready reference:

It is submitted by the Applicants that the despite of various follow ups with the corporate debtor regarding the status of construction of the project, the corporate debtor kept evading giving concrete answers to the applicants, but in various meetings, the corporate debtor kept giving false assurances regarding the completion of the said project. The corporate debtor had failed to handover possession within the stipulated time and hence, the applicants vide their letters requested the corporate debtor to refund the entire amount deposited along with interest, but the corporate debtor did not repay the said amount to the applicants. To substantiate the non-payment by the corporate debtor, bank account statements of all applicants are annexed with the application.

The Applicants submits that the corporate debtor has failed to handover the possession of the units to the applicants and also not paid the amount due to the applicants. The following chart shows the respective amounts due to the applicants:

Therefore, the total amount of default by the corporate debtor is Rs 3,42,35,576/- (Rupees Three Crore Forty-Two Lakhs Thirty-Five Thousand Five Hundred and Seventy-Six Only).

The Applicants has submitted that the corporate debtor has replied vide letters dated 25.01.2018 & 19.12.2018 to the applicant and has stated as follows:

The Corporate Debtor has replied to the application and has asserted that the financial creditors herein have filed cases in RERA, U.P. for the same cause and the Ld. RERA authority has passed the order to handover the possession of the units on or before 31.12.2019 and to pay the interest for the delayed period at the rate equal to MCLR (Marginal Cost of Lending Rate) + 1%. The Ld. RERA authority has further instructed to financial creditors to wait till the date 31.12.2019 in a case titled Puneet Bhardwaj vs Ms. Rita Dixit.

The Applicants have filed a rejoinder controverting the averments made in the reply and has asserted that the RERA has no overriding effect while deciding application under I & B Code as this Hon'ble tribunal has to adjudicate whether a default has been committed by the corporate debtor or not. The fact regarding the assurance of the corporate debtor that it shall complete the project by December, 2019 has not seen light of the day.

Having heard the ld. counsel of both the parties, it is concluded that the Real Estate (Regulation And Development Act), 2016 is an act brought in force to protect the interest and to regulate the working and functioning of the real estate sector, so as to ensure that the buyers are not cheated by the developers and to ensure that the projects falling under RERA are completed within time and that amount(s) may be refunded to the buyers; when demanded by them in terms of the agreement entered into between the parties, whereas the purpose of the Insolvency & Bankruptcy Code, 2016 is to ensure that the companies that are in financial distress either have a change in management or are liquidated depending upon the interest gathered by it in the market. Further, the relief(s) demanded by the applicants in the instant matter before the Ld. RERA, Noida are sperate from the relief claimed by the applicants before this Hon'ble Tribunal. Additionally, the powers granted to these Tribunals are also separate and distinct from each other, the major relief that can be granted by this Hon'ble Tribunal is to initiate the CIRP upon ascertaining default having been committed by the corporate debtor. The matter was listed for clarification for appraisal about handing of possession to allottees in December 2019 as claimed by the corporate debtor. The applicant has submitted the order of RERA dated 22.10.2019 observing that the corporate debtor has not arranged for any builder or co-developer for the said project nor has maintained escrow account with funds for the project. The completion of the project looks impossible to be completed by December 2019.

The application is complete as per the requirements of section 7 of the code. Further the date of default occurred from 19.12.2018 and hence the debt is not time barred and the application is filed within the period of limitation.

The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.

The Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the financial debt beyond doubt. In the light of above facts and records the present application is admitted.

The Applicant has named the Insolvency Resolution Professional, to be appointed by the order of Tribunal, as Mr. Manish Gupta, with registration number IBBI/IPA-001/IP-P01131/2018-19/11826 (email - [email protected]) as the Interim Resolution Professional subject to the condition that no disciplinary proceedings are pending against such an IRP named who may act as an IRP in relation to the CIRP of the Respondent and specific consent is filed in Form 2 of Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority) Rule, 2016 in relation to specifically the corporate debtor and the applicant herein and make disclosures as required under IBBI (insolvency Resolution Process for Corporate Persons) Regulations, 2016 within a period of one week from the date of this order.

We direct the Financial Creditor to deposit a sum of Rs. 2 lacs with the Interim Resolution Professional namely Mr. Manish Gupta to meet out the expense to perform the functions assigned to him in accordance with regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within three days for the date of receipt of this order by the financial Creditor. The amount however be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor.

As a consequence of the application being admitted in terms of Section 7(5) of IBC, 2016 moratorium as envisaged under the provisions of Section 14(1) shall follow in relation to the Corporate debtor prohibiting proviso (a) to (d) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(4) of the Code shall come in vogue.

In terms of above order, the Application stands admitted in terms of Section 7(5) of IBC, 2016. A copy of the order shall be communicated to the Applicant, Corporate Debtor as well as IRP above named by the Registry. In addition, a copy of the order shall also be forwarded to IBBI for its records. Applicant is also directed to provide a copy of the complete paper book to the IRP. A copy of this order be also sent to the ROC for updating the Master Data. ROC shall send compliance report to the Registrar, NCLT.