Samyak Projects Pvt. Ltd vs Ansai Housing Ltd

Heard Learned Counsel for the Appellant and Respondent.

This Appeal has been filed against the Order dated 22nd February, 2022 passed by the Adjudicating Authority by which Order Application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC in short) has been rejected.

Appellant filed an Application claiming Operational Debt owed by the Respondent which Application has been rejected. Learned Counsel for the Appellant submits that the Appellant has provided land to the Respondent who was developer and builder hence the Appellant has in fact provided a service to the Corporate Debtor and the Adjudicating Authority committed error in holding that there is no operational debt.

We have considered the submissions of Learned Counsel for the Parties and perused the record.

The Appellant and the Respondent entered into Four MoU and Three Joint  Development  Agreements  as  has  been  noticed  by  the  Adjudicating Authority in its Order. The Adjudicating Authority after hearing the parties and after noticing the clauses of one Joint Development Agreement (others being similar) has made following observations in Paragraph 17 and 20:

“17. On reading the various clauses of the JDA, which is almost identical in all the three JVAs, it appears to be a case of joint Development by proportionate participation of both the parties and sharing of the profits or the built-up area in the manner specified in the JVA. Nowhere, in the JVA, there is an indication to the effect that Respondent has to provide services to the Petitioner, if both are to share the project by putting the land and development works and sharing the land and technical support for development and share the profits, it can be only termed as a case of JV Project and not a case of service provider by one party or the other. It is also to be noticed that in case of dispute, it is a case for Arbitration between the parties in the JVA. We also find that there are clauses in the JVA which state even in respect of interest collected from customers for late payment, which should be shared between landowner and developer in a particular ratio. It therefore goes beyond mere construction and development, it goes further subsequent to the completion of the project, if the units are given to the intending purchaser and there is a delay in payment even that will be shared between parties. The revenue sharing concept which is the key to this JVA makes it very clear that it cannot be termed as a service owed by the Respondent to the petitioner; both will have to sail together or sink, because of the JVA. Furthermore, we also notice that at page 136 to 145, are the statements given by the respondent in the normal course of business, stating details of the property under development and the share of the petitioner under the JVA.

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The reading of it makes it clear that in terms of the JVA a substantial amount of Rs. 23,44,53,000/-has been received by the petitioner from the respondent/corporate debtor and there is a balance of Rs. 03,92,18,660/-. This should at best be termed as an ongoing business liability which should have been resolved between the parties in terms of the JVA. This makes it clear that it is not a case of debt but is a case of liability as between one partner and the other partners in the JVA.”

The Joint Development Agreement between the parties makes it clear that both the parties are to share profits according to the percentage and mechanism as provided therein. Present was the case of sharing revenue profit by both the parties. Present was not a case where any Operational Debt was owed by the Corporate Debtor to the Appellant so as to initiate Section 9 Application. Various clauses of the Joint Development Agreement have been noticed and Revenue, Sharing Concept is the key to the Joint Development Agreement and the Joint Development Agreement also contemplated arbitration between the parties in event of any dispute. It has been informed by the Learned Counsel for the Respondent that Arbitration Proceedings have already been initiated and are pending between the parties. We are of the view that no grounds have been made out to entertain this Appeal. The Appeal is dismissed.