Mr. Vicky Motilal Vani & Ors. vs M/s. Malind Properties Private Limited

Per: Manoj Kumar Dubey, Member (Technical)

The present Petition is filed on 21.02.2022 under Section 7 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘IBC/Code’) by Mr. Vicky Motilal Vani & Ors. (hereinafter referred to as ‘Petitioner/Financial Creditor’) to initiate the Corporate Insolvency Resolution Process (‘CIRP’) against M/s. Malind Properties Private Limited (hereinafter referred to as ‘Respondent/Corporate Debtor’).It is noticed that there are 23 applicants in all, who are allottees of 29 units in the Residential Project developed by the Corporate Debtor; the applicant Mr. Vicky Motilal Vani being the lead applicant who is allotted six flats in the Project.Mr. B.P. Venkata Raghu Babu is the applicant no.2;holding the authorisation and Power of Attorney from all the other unit holders to file this application under Section 7. The aforesaid is supported by an affidavit dated 3.02.2022. The details of the applicants /financial creditors, along with the date of agreement & delivery is given as under:

The Corporate Debtor viz., M/s. Malind Properties Private Limited is a Company incorporated on 08.11.2005 under the provisions of Companies Act, 1956 with CIN: U45200KA2005PTC062549 having its registered office at No.87-A, Purva Parkridge Mahadevapura Post, Garudacharpalya – 560 048, which falls within the territorial jurisdiction of this Adjudicating Authority. The Authorised Share Capital of the Respondent/Corporate Debtor is Rs.3,10,00,000/- and the Paid-up Share Capital is Rs.3,04,79,500/- as per the Company Master Data attached at Annexure-C of this Petition.

Brief facts of the case, as mentioned in the instant Petition, which are relevant to the issue in question, are as follows:

i). The Financial Creditors had made booking in a project being developed by the Corporate Debtor herein namely, ‘Malind Tropika Gardens’ 69/2,Village,Anekal Taluk,Chandapura,Bangalore 560099 (herein after referred as the ‘Project’). The Corporate Debtor has entered into a Joint Development Agreement dated 02.03.2007 with the owner of the land on which the project is proposed to be constructed. Thereafter, Construction agreements were executed by and between the Financial Creditor and the Corporate Debtor. The Financial Creditors were allotted different unit numbers, the details of which are described in Annexure A.

ii). Furthermore each of the Financial Creditors entered into agreements for sale with the owners of the land. Pursuant to such agreements, the Financial Creditors made payments to the Corporate Debtor for the purpose of construction and sale of the flats. There were a total of 23 applicants having been allotted 29 units filing this application jointly, as reflected from Form 1.

iii). Although the Corporate Debtor commenced construction, in October, 2015, the construction activity came to a standstill. Despite repeated requests, the Corporate Debtor did not resume construction activity and cited shortage of funds as the reason, thus leaving the Financial Creditors aggrieved.

iv). The Corporate Debtor repeatedly approached the Financial Creditors with requests for additional funds. The Financial Creditors have paid the consideration as per their respective agreements in a timely manner.

v). Given the lack of progress in construction despite timely payment by the Financial Creditors and the frivolous excuses provided by the Corporate Debtor, the Financial Creditors lost faith in the Corporate Debtor.

vi). Contrary to various commitments and assurances provided to the Financial Creditors, the Corporate Debtor has failed to complete the stages of construction. To the grave disappointment of the Financial Creditors, the project is still at a very nascent stage. The Financial Creditors understand that the Corporate Debtor does not have a valid and subsisting registration for the project under the Real Estate (Regulation & Development) Act, 2016. It has been reliably learnt that the sanction plan of the Project has also lapsed.

vii). The Financial Creditors have made multiple attempts to contact the Corporate Debtor and seek resolution, but to no avail. The Corporate Debtor has misused the patience and trust placed by the Financial Creditors till date. The Corporate Debtor has no intention to honour the Agreements for sale and construction and deliver the flats.

viii). Prior to the filing of the present Application, the Financial Creditors have reported default of their respective financial debt to the information utility. Despite receipt of intimation from the information utility, the Corporate Debtor has continued to remain unresponsive. The report of default is hence deemed to be authenticated.

ix). It is stated that the Corporate Debtor has committed default of financial debt of a total amount of Rs.6,81,31,524/-, and has expressed lack of sufficiency of funds to complete the project. Hence, the Financial Creditors, despite having invested their lifetime savings/availed loans towards paying the Corporate Debtor, are not likely to receive their respective flats. Nor has the Corporate Debtor returned the amounts paid by the Financial Creditors.

x). It is further stated that the Corporate Debtor has remained inactive since 2015. It has ceased to carry on operations and has not been filing its statutory returns. It is just and necessary to commence the CIRP in respect of the Corporate Debtor, so that the Financial Creditors are able to receive possession of constructed flats for which they have made payment. For all these reasons, the Financial Creditors have filed the present Company Petition before this Adjudicating Authority U/S.7 of the Code.

In support of its submissions, the Petitioners inter alia filed copies of Allotment Letters, Agreements to Sell and Construction Agreement of the financial creditors. The applicants No.1 & 2 also filed NeSL Form C and report of default in respect of Flats Nos. D-109,D-406,D707,D708,D709,D809 and E-108 along with the Petition.

On 24.11.2022, this Adjudicating Authority directed the Petitioner’s Counsel to file the missing Construction Agreement in respect of Sr.Nos 4,8,12,13,15,16,17,19 and 23 along with other missing documents. He was also directed to file the details of all the 29 Petitioners with their corresponding flats nos by clearly mentioning the promised date of delivery in respect of each flat with reference to their respective agreement of Sale/Construction agreements with grace period allowed and missing Allotment Letters of allottees. The aforesaid compliance was made by the Petitioner Counsels vide diary no 385 dated 20.01.2023. The applicants memo is reproduced as under:-

One of Directors of the Corporate Debtor has filed an Affidavits vide diary no 3963 dated 19.09.2022 & diary no 415 dated 23.01.2023,expressing the no objection for admission of the application under Section 7, by inter alia contending as under:

Heard Shri.Abhijit Atur with Shri Srivatsa, learned Counsel for the Financial Creditors and Shri. Harikrishna Pramod for the Corporate Debtor. We have carefully perused the pleadings of the parties and extant provisions of the Code, and the Rules made there under.

In the present case, as per the documents produced by the Petitioners, the subject Project i.e., ‘Malind Tropika Gardens’ consisted of a total number of 76 Flats whereas the instant application is being filed by a total of 23 allottees which far exceeds the 10% of the total allottees in the Project and accordingly have satisfied the threshold limit condition. In fact, an affidavit filed by the Respondent dated 16.09.2022 and 23.01.2023 in para 7 and para 5 has admitted the debt.

The other issue to be examined is whether the CP is filed within the period of limitation. As per the documents of the respondents/Corporate Debtor itself the Project has to be completed and the flats are required to be delivered between June 2016 to June 2021. The Corporate Debtor had vide its affidavit dated 16.09.2022 and 23.01.2023 in Para 7 and Para 5 has admitted to the default that they were unable to complete the Project in time and all the allottees in the petition had transferred amounts to the Corporate Debtor. Considering the above and the judgement of Hon’ble Supreme Court cited by the applicant in memo filed on 20.01.2023; since the CP is filed on 21.02.2022, the same is within the period of limitation. Accordingly, for the reasons stated above, the C.P. is liable to be admitted.

In view of the facts and circumstances discussed above, the present Petition being complete and having established the default in payment of the financial debt and for the default amount being above Rs.1,00,00,000/-(Rupees One Crore Only), the Petition is admitted in respect of “Malind Tropika Gardens” Project of Respondent-M/s. Malind Properties Private Limited, under Section 7 of the IBC, 2016. Accordingly, moratorium is declared in terms of Section 14 of the Code. As a necessary consequences of the moratorium in terms of Section 14, the following prohibitions are imposed, which must be followed by all and sundry:

In Part-III of Form No.1, Mr. Ratnakar Shetty, Registration No. IBBI/ IPA-001/IP-P01630/2019-20/12718 has been proposed as Interim Resolution Professional (IRP). Form No.2 dated 10.02.2021 at page 885-887, wherein he has declared that no disciplinary proceedings are pending against him. However, since the Certificate of Registration is not filed, the IRP shall file the same within one week from the receipt of this Order.

The Law Research Associate of this Tribunal has checked the credentials Mr. Ratnakar Shetty and there is nothing adverse against him. In view of the above, we appoint Ratnakar Shetty, bearing Registration No. IBBI/IPA-001/IP-P01630/2019-20/12718, registered address at No.F507, Mantri Tranquil Apartment, Gubbalala Gate, Kanakapura Road, Bangalore – 560 061, e-mail: [email protected] as the Interim Resolution Professional. The IRP is directed to take the steps as mandated under the IBC, specially under Sections 15, 17, 18, 20 and 21 of IBC, 2016.

The Financial Creditor shall deposits a sum of Rs.2,00,000/- (Rupees Two Lakhs Only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors.

The Interim Resolution Professional shall after collation of all the claims received against Corporate Debtor and the determination of the financial position of the Corporate Debtor constitute a Committee of Creditors and shall file a report, certifying constitution of the Committee to this Adjudicating Authority on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days for filing the report of Constitution of the Committee. The Interim Resolution Professional is further directed to send regular progress reports to this Adjudicating Authority every fortnight.

A copy of the order shall be communicated to both the parties. The learned Counsel for the Petitioners shall deliver a copy of this order to the Interim Resolution Professional forthwith. The Registry is also directed to send a copy of this order to the Interim Resolution Professional at his e-mail address forthwith.