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Judgment
Ld. Counsel appearing for the Applicant is present. The Order is pronounced in open court today.
ORDER
PER SHRI L.N. GUPTA, MEMBER (T)
The present application is filed under the Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity, the 'IBC, 2016') read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Meena Porwal & 64 Others (collectively, the 'Applicants/Financial Creditors') with a prayer to initiate the Corporate Insolvency process against M/s. Concept Horizon Infra Private Limited (for brevity, the 'Respondent/Corporate Debtor').
The Respondent namely, M/s. Concept Horizon Infra Private Limited is a Company incorporated on 02.07.2013 under the provisions of erstwhile Companies Act, 1956 with CIN U70200DL2013PTC254773, having its registered office at 8/11, First Floor, Jangpura Extension, New Delhi - 110014, which is within the territorial jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent is Rs. 25,00,000/- and Paid-up Share Capital is Rs.10,00,000/- as per the master data annexed with the Application.
It is stated by the Applicants that they had advanced term loans (of varying amounts) to the Respondent under identical Buyback Agreements attached to the application as Annexure 4 (Colly). To secure the Respondent's repayment obligations under the Buyback Agreements, a specified security interest was created in favour of each of the Financial Creditors in the form of contingent allotment (in the event of default) of specified commercial units, of value equivalent to approximately 1.5 times of the value of the principal advanced, in the 'ORIZZONTE' project being owned and developed by the Respondent. As per the respective Buyback Agreements, the Respondent had agreed to pay an assured monthly return of 1% of the principal amount to each of the Financial Creditors during the term of the Buyback Agreement. At the end of the term, the Respondent agreed to return the respective principal amounts, along with a premium of 16% of the principal amounts and service tax required to be paid by each of the Financial Creditors. In total, the Respondent availed of Financial Debt to the tune of Rs. 9,90,27,650/- from all the Financial Creditors herein put together.
It is further stated that the Respondent defaulted in making the respective payments to the Applicants, with the default being for different amounts and occurring on different dates for each of the Financial Creditors. The details of the defaults for each of the Financial Creditors are mentioned in Annexure 3 of the Application. Even prior to the default, in some cases the TDS deducted by the Respondent on the monthly returns due to the Applicants has not been deposited with the Income Tax Department, for which they were required to pay a penalty. It is submitted that the debt, in the present case, is a 'Financial Debt' in terms of Section 5(8) of the Code and the Applicants are financial creditors in terms of Section 5(7) read with Section 5(8) of the Code and the default has been committed by the Respondent in terms of the Section 3(12) of the Code. Hence, in view of the default by the Respondent in repayment of the outstanding financial debt, the Applicants are constrained to prefer the present application.
That the details of the total amount of debt, default and the date of default as claimed by the Applicants in the Part IV of the application, are reproduced below, for the sake of convenience.
PART-IV
| SL. NO. | PARTICULARS OF FINANCIAL DEBT | DETAILS |
|---|---|---|
| 1. | Total amount of debt granted date (s) of disbursement. | Total amount of debt granted to the principal borrower by all the applicants is Rs. 9,90,27,650/-. Details of exact amount of debt for each financial creditor/applicant along with relevant dates of disbursement are given in tabular form in Annexure 3. |
| 2. | Amount claimed to be in default and the date on which the default occurred. (Attach the workings for computation of amount and days of default in table form.) | The total amount which is due from the principal borrower as on 26th July 2019 is Rs.12,90,46,470.17/-. Workings and computation of the amount due and the days of default are given in tabular form in Annexure 3. |
From the perusal of the Part IV of the Application, it is observed that the Applicants have claimed a total amount of Rs.9,90,27,650/- as an unpaid financial debt as on 26.07.2019. They have relied on the Buyback Agreements to prove the existence of the financial debt.
Basing on the aforesaid facts and documents, the Applicants have prayed for initiation of CIRP against the Respondent.
On issuance of notice, the Respondent has filed its reply on 09.06.2022 and submitted the following:
The Applicants are allottees in the project 'ORIZZONTE' developed by the Respondent and do not meet the threshold requirement under the proviso to Section 7 of the Code and therefore, they have taken a complete U-turn claiming that they are Financial Creditors and have advanced loans under the Buy-Back Agreement.
This Tribunal vide order dated 05.10.2021, directed the Applicants to bring on record certain material, against which the Respondent had filed Company Appeal (AT) (Ins) No. 964/2021 before the Hon'ble NCLAT and contended that the order does not indicate any opinion on the merits or with regard to proviso to Section 7. Hon'ble NCLAT was pleased to observe vide order dated 24.11.2021 that "it shall be open for the Appellant to press their submission regarding the application being not competent which we hope and trust shall be considered and decided by the Adjudicating Authority in accordance with law."
The Clauses 6 & 7 of the agreement categorically explain the invocation of a buy-back scheme at the instance of an allottee, which entails not simply deposit of the cheques handed over to the allottee but to follow the steps, namely, (a) inform the developer about the intention to buy back; (b) hand over/ return all original documents/ receipts/ agreements to the developer after the lapse of 24 months period; and (c) to deposit the cheque within 30 days of lapse of 24-month period. It is submitted that the documents and information filed by the Applicants do not show the compliance of Clause 6 & 7 of the MOU and exercise of the buy-back option.
That simply because an agreement of allotment of unit, provides for an exit/refund mechanism, does not make it into a financing arrangement. It is averred that the judgment dated 31.08.2021 in IB-231(ND)/2019 is not applicable to the facts of the present case as in that matter the Financial Creditor had cancelled the Buyback Agreement and the allotment of the unit was cancelled by the Corporate Debtor, which is not the case herein. Further, in the said case, due notice was given to the Respondent by way of legal notices, informing the CD of the invocation of buy back (before) presentation of the cheques, which is not the case herein.
The Applicants are 'allottees', who had booked their respective units in the project 'Orizzonte' ("Project") for the sale consideration in terms of the "MoUs" executed between each of the Applicants and the Respondent as an 'allottee'. Further, the MOUs categorically mentions the unit and area booked by the allottees. The Applicants have wrongly taken a stand that they are not 'allottees' within the definition of Section 5(8)(f) of the IBC and are not required to meet the minimum eligibility threshold but are mere Financial Creditors. The IBC does not make any distinction between allottees, who have entered into buy-back or are given assured returns and those who are not. The amendment dated 17.08.2018 in the IBC inserted an 'Explanation' to Section 5(8) (f), which brought all allottees within the definition of allottees.
It is further averred that the stand taken by the Applicants that the transaction entered into was only a financial transaction is false and without any basis. The Respondent, being a developer, has duly registered the Project under RERA and is required to report the number units booked, amounts received etc. periodically in terms of RERA Act.
The Applicants have not been treated as 'financer' in the balance sheets of the Company and none of the allottees have raised their objection at any point of time regarding the same. Furthermore, the units booked by the Applicants are still reflecting in the CRM records maintained by the Respondent as allottees and amounts are also outstanding from some of the Applicants. Since, the Applicants are allottees as per section 5(8)(f) of the Code, they ought to comply with the conditions laid down in IBC (Amendment) Act 2020 dated 28.12.2020.
The Applicants have filed rejoinder on 01.09.2022 and reiterated all the facts as submitted in the application and further submitted that:
The Respondent is not disputing that it has defaulted in repayment of the principal amounts, payment of 1% assured monthly returns, and 16% premium amount as provided in the respective Buyback Agreements. Moreover, it is also not in dispute, that no allotment letters were issued to the Applicants by the Respondent. The only defense of the CD is that the Applicants are allottees and not financial creditors and they do not meet the threshold under the proviso to Section 7(1) of the IBC.
The Applicants have relied on the judgment dated 31.08.2021 in (IB)231(ND)/2019 titled Brijesh Garg v. ALM Infotech City Pvt. Ltd. passed by the Adjudicating Authority. The relevant extract of the same is reproduced below:
“14.But once ... the petitioner has opted for the buyback policy as per the agreement and after cancellation of the unit or after the invocation of buyback policy, the Corporate Debtor has agreed to pay the certain amount, in that case; in our considered view, that amount will not come under the category of “financial debt” under Section 5(8)(f) Explanation (i) of IBC, 2016. Rather, that amount will be treated as “financial debt” under Section 5(8)(f) of IBC i.e., any amount raised under any other transaction having the commercial effect of a borrowing.”
Therefore, having exercised the option of buy-back, the Applicants in the present case are Financial Creditors; the amount invested by them is financial debt under Section 5(8)(f) of the IBC; and they are not required to meet the threshold as contemplated by the second proviso to Section 7(1) of the IBC. The applicants further rely on para 24 of counter affidavit of the respondent, which indicate that the agreements were in the nature of financing contracts:
“24.I say that perusal of the terms of the MOU also makes it clear that the Petitioners and the Respondent entered into agreement for allotment of unit in the Project and as a lucrative offer, a buy-back option was given to the Petitioners which was required to be duly exercised.”
Even if the Applicants fall under the same class of creditors namely, allottees with assured returns, the applicants fulfil the 10% threshold required under the proviso to Section 7(1) of IBC. Since, as per the CD’s own affidavit, there are 566 allottees to whom it pays assured returns and the no. of Applicants in the present petition is 65.
In compliance of the Order dated 05.10.2021, the Applicants have filed the Affidavit dated 19.12.2021, wherein a table containing inter alia the details of the date of presentation of cheques, date of their bouncing and memos, along with copies of the bank account statements of some of the Applicants have been produced.
There is no requirement/condition precedent for the Applicants to separately inform the CD that they intend to ‘continue with the buy-back offer’ as they were merely required to encash the cheques within the period of 30 days after the expiry of 24 months, which would sufficiently indicate their intention to ‘continue with the buy-back offer’. The provision that the Applicants hand over/return the original MOUs (Buyback Agreements) or any other documents issued to them, is merely an ancillary requirement and cannot be the sole indicator towards the Applicants' wish to 'continue with the buy-back offer'.
It is stated that the applicants are financial creditors u/s 5(8)(f) of the IBC and not 'allottees' as there was never any "categorical allotment of unit by the Respondent in favour of the Applicant allottees" and no "demarcated unit was booked by the allottee". This shows that the Security Interest was created in favour of each of the Applicants in the form of contingent allotment and the Applicants always intended to invoke the buy-back option.
As far as the contention relating to balance sheet is concerned, the sums advanced by the Applicants have been treated as 'Advances from Customers' under the 'Other Long Term liabilities' head. Clearly, the Applicants have been classified as financers by the respondent itself, therefore, the present application is fit to be admitted.
We have heard the submissions made by the Counsel and perused the documents placed on record. The Respondent has raised an objection on the maintainability of the Application on the ground that the Applicants are neither meeting the threshold in terms of number specified in Proviso to Section 7 nor they can be considered as Financial Creditors on the basis of Buy Back Agreement. Hence, we would like to examine the maintainability of the Application. At this juncture, we refer to the MoU executed between the parties -
ANNEXURE - 4 (COLLY)
INDIA NON JUDICIAL
Government of National Capital Territory of Delhi
e-Stamp
सत्यमेव जयते
Certificate No.: IN-DL20656404812713N Certificate Issued Date: 26-Jun-2015 04:13 PM Account Reference: IMPACC (IV)/ dI721003/ DELHI/ DL-DLH Unique Doc. Reference: SUBIN-DLDL72100338402371278959N Purchased by: CONCEPT HORIZON INFRA PVT LTD Description of Document: Article 5 General Agreement Property Description: Not Applicable Consideration Price (Rs.): 0 (Zero) First Party: CONCEPT HORIZON INFRA PVT LTD Second Party: Not Applicable Stamp Duty Paid By: CONCEPT HORIZON INFRA PVT LTD Stamp Duty Amount(Rs.): 100 (One Hundred only)
...Please write or type below this line...
MEMORANDUM OF UNDERSTANDING
This Agreement is executed on this 15th Day of July, 2015 BY AND BETWEEN:
M/s. Concept Horizon Infra Pvt. Ltd.
AND
Mrs. Meena Porwal
AND
Mr. Ritesh Kumar Porwal
Statutory Alert:
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is executed at Delhi on 15th Day of July, 2015
BY AND BETWEEN:
M/s. Concept Horizon Infra Pvt. Ltd., a company incorporated under the Companies Act, 1956 having its Regd. Office at F-68, Preet Vihar, New Delhi - 110092 and corporate office at B-131, Sector - 2, NOIDA, U.P. - 201301, through one of its Director Mr. Suninder Sandha S/o Mr. J.S. Sandha (hereinafter referred to as the Developer or "CHIPL" which expression shall unless repugnant to the context or meaning thereof, be deemed to mean and include its nominees, administrators, legal representatives, successors and assigns of the First Part)
AND
Mrs. Meena Porwal D/o Mr. Surya Prakash Toshniwal R/o 102/115, Silver Oaks Apartments, DLF Phase-1, Gurgaon, Haryana 122002.
AND
Mr. Ritesh Kumar Porwal S/o Mr. Milap Chand Porwal R/o 102/115, Silver Oaks Apartments, DLF Phase-1, Gurgaon, Haryana 122002.
(hereinafter referred to as 'Allottee(s)'/Applicant(s), which expression unless repugnant to the context or subject shall mean and include his/her heirs, successors nominees, administrators, legal representatives, successors and assigns of the Second Part)
The "CHIPL" and "ALLOTTEE(s)/APPLICANT(s)" shall hereinafter individually be referred to as "Party" and collectively as the "Parties".
CONCEPT HORIZON INFRA PVT. LTD.
Authorised Signatory
WHEREAS the Developer is a real estate company and is having all the rights of Construction and Development of the entire project in the name of "Orizzonte" at Plot no. 22, Knowledge Park - III, Greater Noida, Uttar Pradesh, India after having obtained the rights from M/s Premier Information Technology Parks Pvt. Ltd., having title over the aforesaid land vide lease deed dated 22.03.2006 executed in favour of M/s Premier Information Technology Parks Pvt. Ltd. executed by Greater Noida Industrial Development Authority. The Developer having absolute rights as aforesaid vide MOU dated 07.06.2013 executed between the developer and M/s Premier Information Technology Parks Pvt. Ltd.
Whereas, the Applicant has approached the developer and applied for the allotment of a banquet hall in the upcoming Project of the developer known as "Orizzonte" (hereinafter referred to as "Said Project") located at Plot no. 22, Knowledge Park - III, Greater Noida, Uttar Pradesh, India vide application form dated 01/07/2015.
NOW THIS MOU WITNESSETH AS FOLLOWS:
1.That Applicant has approached the developer and booked a banquet admeasuring 460 sq. feet (hereinafter referred to as the said unit) @ Basic Sale Price of Rs. 5500/- psf in the said project and paid a booking amount of Rs. 16,86,667/- (Rupees Sixteen Lac Eighty Six Thousand Six Hundred Sixty Seven Only) & Service Tax amount of Rs. 70,840/- (Rupees Seventy Thousand Eight Hundred Forty Only) vide cheque no. 561891 dated 24/06/2015 drawn on Citi Bank which is equivalent to 67% of the BSP, as per the offered payment plan which has been provisionally allotted to the Allottee(s) by the developer.
2.That after the expiry of 24 (Twenty Four) Months from the date of execution of this MOU, the applicant must get its complete amount refunded from "CHIPL" along with a premium of Rs. 2,69,867/- (Rupees Two Lac Sixty Nine Thousand Eight Hundred Sixty Seven Only) apart from receiving 1% (one percentage) of return per month for which "CHIPL" shall issue 24 Post Dated Cheques of Rs. 16,867/- (Rupees Sixteen Thousand Eight Hundred Sixty Seven Only) each to the Applicant
CONCEPT HORIZON INFRA PVT. LTD.
Meena Porwal
TRUE COPY after deducting applicable TDS. That the developer shall issue cheques to the Allottee(s) for the monthly returns on signing of this MOU and shall also issue a post dated cheque in favour of the Applicant(s) for the refund amount.
3.That the Developer has as aforesaid agreed to buy back the rights, interest and title of the Allottee(s) in aforesaid unit, to which Allottee(s) has / have agreed on the ongoing terms and conditions and the conditions provided hereinafter.
4.That "CHIPL" shall refund an amount of Rs. 19,56,834/- (Rupees Nineteen Lac Fifty Six Thousand Five Hundred Thirty Four Only) in total inclusive of Basic Amount of Rs. 16,86,667/- (Rupees Sixteen Lac Eighty Six Thousand Six Hundred Sixty Seven Only) & premium amount of Rs. 2,69,867/- (Rupees Two Lac Sixty Nine Thousand Eight Hundred Sixty Seven Only) & service tax amount of Rs. 70,840/- (Rupees Seventy Thousand Eight Hundred Forty Only) to the applicant for which the developer has issued a post dated cheque to the Applicant(s) bearing no. 9283 9288 9289 dated 15/07/2017 drawn on Punjab Sind Bank.
5.That after receiving the amount of Rs. 19,56,834/- (Rupees Nineteen Lac Fifty Six Thousand Five Hundred Thirty Four Only) & service tax amount of Rs. 70,840/- (Rupees Seventy Thousand Eight Hundred Forty Only) from "CHIPL" and upon the execution of documents pertaining to buy back of the said unit, the applicant shall be left with no right, title or interest, whatsoever, in the said unit and shall be deemed to have surrendered all its rights towards the same.
6.That the Allottee(s) undertakes to return/hand over (in original) all receipts issued by the Developer to the Allottee(s) and/or all/any other documents / MOU etc. executed and/or to be executed between Developer & Allottee(s) on expiry of the period of 24 months from the date of execution of this MOU.
7.That in case the applicant fails to encash the aforesaid cheque no. 9287, 9288, 9289 as stated above within a period of 30 (thirty) days and/or fails to return all the
CONCEPT HORIZON INFRA PVT. LTD. Authorised Signatory
Meena Porwal documents categorically mentioned in Paragraph 6 of this MOU from the date of expiry of 24 months, the obligation on the part of "CHIPL" to continue with the buy-back offer shall automatically stand terminated and the "CHIPL" shall not be responsible to get honoured the aforesaid cheque no. 9287 9288, 9289.
8.That after 30 days from the expiry of 24 months, CHIPL would stand discharged of all its obligations/duties under this instant MOU and the same cannot be enforced upon by the Allottee(s) through any means whatsoever. However, the CHIPL would continue to exercise its rights being conferred upon it on execution of this Memorandum of Understanding.
9.That the Applicant(s) shall be left with no right, title or interest in the aforesaid unit after the encashment of the refund cheque and/or after 30 days from the expiry of 24 months and the all the rights title and interest in the aforesaid unit shall vest with "CHIPL" exclusively.
10.That in case of 3 (three) consecutive defaults by the developer in payment of monthly committed returns, the applicant is at liberty to retain the unit allotted to him/her/them at "Orrizoote" in case the developer fails to clear the default within 30 days from the date of third consecutive default after paying only the additional charges as mentioned in the application form and the applicant is not liable to pay any further BSP charges.
11.In case the Allottee(s) opts for cancellation of this MOU/allotment under this MOU, prior to the expiry of time/duration as mentioned in Clause 8 of this agreement. The Developer shall be at liberty to deduct an amount equivalent to 15% of the total amount paid by the Allottee(s) at the time of signing of this agreement. The Developer shall also deduct the amount equivalent to the monthly committed returns paid to the Allottee(s) in case of a cancellation.
12.That the Allottee(s) hereby undertakes that neither the Allottee(s) nor his/her legal heirs, successors-in-interest, agents, representatives and permitted assignees shall claim any right, title or interest on the aforesaid unit or against the developer in
CONCEPT HORIZON INFRA PVT. LTD. Authorised Signatory
Meena Porwal case the Allottee(s) fails to exercise its rights under the instant MOU and/or on satisfaction of the instant MOU. The Allottee(s) further undertakes to indemnify the Developer for any loss, damage or injury caused to developer due to such action or claim raised by the Allottee(s) or on his behalf.
13.That in case of default by the Developer, the applicant can retain the unit as per clause 10 and that the Applicant will receive the rental lease @ Rs. 41.25 psf per month for a period of the lease of 9 years which can be extend further.
14.That any subsequent understanding / MOU on the variation / modifications / amendments to this MOU shall only be by way of Written document and which shall be added to this MOU as an addendum.
15.That in case of any provision of these Terms & Conditions of this MOU is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part of such provision and the remaining part of such provision and all other provisions hereof shall continue to remain in full force and effect.
That any dispute or differences between the Parties hereto relating to or arising out of this MOU shall be resolved by the parties by amicable negotiation and if no mutual settlement can be arrived at on any dispute in the interpretation of any clause of this MOU or rights and/or duties of the parties to this MOU, the same shall be referred to the arbitration be a Sole Arbitrator to be appointed and nominated by "CHIPL" in accordance with provisions of Arbitration and Conciliation Act, 1996 and whose decision shall be final and binding on both the Parties and the place of arbitration shall be New Delhi. IN WITNESS WHEREOF the parties hereto have signed this MOU on the date and place first mentioned hereinabove.
It is contended by the Respondent that the Clauses 6 & 7 of the MOU categorically explain about the invocation of a buy-back scheme at the instance of an allottee, which entails not simply deposit of the cheques handed over to an allottee but to follow the steps, namely, (a) inform the developer about the intention to buy back; (b) hand over/return all original documents/ receipts/ agreements to the developer after the lapse of 24 months period; and (c) to deposit the cheque within 30 days of lapse of 24-month period. It is stated that the Applicants have not complied with the Clause 6 & 7 of the MOU and exercised the buy-back option accordingly. Per Contra, it is stated by the Applicants in their Rejoinder that there is no requirement/condition precedent for the Applicants to separately inform the Respondent that they intended to 'continue with the buy-back offer' as they were merely required to encash the cheques within the period of 30 days after the expiry of 24 months, which would sufficiently indicate their intention to 'continue with the buy-back offer'. The provision that the Applicants to hand over/return the original MOUs or any other documents issued to them, was merely an ancillary requirement and cannot be said to be the sole indicator that the Applicants wished to 'continue with the buy-back offer'.
Now, at the cost of repetition, we would like to revisit the relevant clauses of the MOU, which are reproduced below –
"2.That after the expiry of 24 (Twenty-Four) Months from the date of execution of this MOU, the applicant must get its complete amount refunded from "CHIPL" along with a premium of Rs. 2,69,867/- (Rupees Two Lac Sixty-Nine Thousand Eight Hundred Sixty-Seven Only) apart from receiving 1% (one percentage) of return per months for which "CHIPL" shall issue 24 Post Dated Cheques of Rs. 16,867/- (Rupees Sixteen Thousand Eight Hundred Sixty-Seven Only) each to the Applicant after deducting applicable TDS. That the developer shall issue cheques to the Allottee(s) for the monthly returns on signing of this MOU and shall also issue a post-dated cheque in favour of the Applicant(s) for the refund amount.
3.That the Developer has as aforesaid agreed to buy back the rights, interest and title of the Allottee(s) in aforesaid unit, to which Allottee(s) in aforesaid unit, to which Allottee(s) has / have agreed on the ongoing terms and conditions and the conditions provided hereinafter.
4.That "CHIPL"shall refund an amount of Rs. 19,56,534/- (Rupees Nineteen Lac Fifty-Six Thousand Five Hundred Thirty-Four Only) in total inclusive of Basic Amount of Rs. 16,86,667/- (Rupees Sixteen Lac Eighty-Six Thousand Six Hundred Sixty-Seven Only) & premium amount OF Rs. 2,69,867/- (Rupees Two Lac Sixty-Nine Thousand Eight Hundred Sixty-Seven Only) & service tax amount of Rs. 70,840/- (Rupees Seventy Thousand Eight Hundred Forty Only) to the applicant for which the developer has issued a post-dated cheque to the Applicant(s) bearing no. XXXX, XXXX, XXXX dated 15.07.2017 drawn on Punjab & Sind Bank.
5.That after receiving the amount of Rs. 19,56,534/- (Rupees Nineteen Lac Fifty-Six Thousand Five Hundred Thirty-Four Only) & seine tax amount of Rs. 70,840/- (Rupees Seventy Thousand Eight Hundred Forty Only) from “CHIPL” and upon the execution of documents pertaining to buy back of the said unit, the applicant shall be left with no right, title or interest, whatsoever. in the said unit and shall be deemed to have surrendered all its rights towards the same.
6.That the Allottee(s) undertakes to return/hand over (in original) all receipts issued by the Developer to the Allottee(s) and/ or all/ any other documents / MOW etc. executed and/or to be executed between Developer & Allottee(s) on expiry of the period of 24 months from the date of execution of this MOW.
7.That in case the applicant fails to encash the aforesaid cheque no. XXXX, XXXX, XXXX as stated above within a period of 30 (thirty) days and/or fails to return all the documents categorically mentioned in Paragraph 6 of this MOU from the date of expiry of 24 months, the obligation on the part of “CHIPL” to continue with the buyback offer shall automatically stand terminated and the “CHIPL” shall not be responsible to get honoured the aforesaid cheque no. XXXX, XXXX, XXXX. (Emphasis placed)
From perusal of the clause 3 (Supra), it is clear that on the execution of the MOU itself, the Respondent/Developer had agreed to buy back the rights, interest and title of the Allottee(s) of the concerned units and in pursuance thereof it had already issued post-dated cheques to the Applicants as detailed in the Clause 2. Further, the MoU has left it to the Applicants to exercise their rights for redemption of the amount advanced to the Respondent, by depositing cheques on expiry of 24 months from date of execution of this MOU, which as per the Clause 2 of the MOU, applicants must get (their refund back) including the principal amount, premium amount and service tax amount. Further, there is no explicit clause by which the Applicants were obligated to intimate the Respondent regarding invocation of the Buy Back option. Hence, in our view, the moment the cheques were presented by the Applicants, it was an indicator that Buy Back option has been exercised by the Applicants. As regards to the non-handing over of documents, not only there is no such condition precedent in the MOU but also it would be wrong to expect from the Applicants to hand over the documents, who have not received payment of their amounts due.
Thus, it has been proven to the satisfaction of this Adjudicating Authority that the Buy Back option was exercised by the parties. In addition to this, we find no specific letters of Allotment on record which could depict that particular units were allotted to the Applicants. The allotment seems to have been made of a virtual space without any boundary demarcated.
Further, the amount owed to the Applicants has been shown as 'Advances from Customers' under the `Other Long-Term liabilities in the Balance Sheet of the Respondent for the Financial Year 2016-17, which indicates that the said transactions has a commercial effect of borrowing. At this juncture, we refer to the Judgement dated 09.09.2019 of the Hon'ble Supreme Court passed in the matter of Pioneer Urban Land and Infrastructure & Anr Vs Union of India & Ors WRIT PETITION (CIVIL) NO. 43 OF 2019 -
65.And now to the precise language of Section 5(8)(f). First and foremost, the sub-clause does appear to be a residuary provision which is “catch all” in nature. This is clear from the words “any amount” and “any other transaction” which means that amounts that are “raised” under “transactions” not covered by any of the other clauses, would amount to a financial debt if they had the commercial effect of a borrowing. The expression “transaction” is defined by Section 3(33) of the Code as follows:
(33)“transaction” includes an agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor; As correctly argued by the learned Additional Solicitor General, the expression “any other transaction” would include an arrangement in writing for the transfer of funds to the corporate debtor and would thus clearly include the kind of financing arrangement by allottees to real estate developers when they pay instalments at various stages of construction, so that they themselves then fund the project either partially or completely. (Emphasis placed)
Therefore, we are of the view that the Applicants herein are not the Allotees and therefore, they are not required to meet the threshold requirement prescribed under proviso to Section 7 of IBC, 2016. Rather, the Respondent/Developer having agreed to buy back the rights, interest and title of the Allottee(s) of the concerned units on execution of the MOU itself, issuance of the post-dated cheques by the Respondent to the Applicants in lieu of the Buy Back option, and acknowledgement of advances/transactions in the Balance Sheet of the Respondent read with the Judgement of the Hon'ble Supreme Court (Supra), in our considered view, the Applicants are "Financial Creditors" in terms of Section 5(8)(f) of the Code. Accordingly, the Application is maintainable.
Now, we will examine whether there is any default on the part of the respondent? In order to demonstrate that the respondent has defaulted in payment of the financial debt, the applicants have filed affidavit dated 19.12.2021. Through these affidavits, the applicants have placed details of the cheques, issued by the respondent, and dishonored on deposit, due to insufficient funds. The applicants vide affidavit dated 19.12.2021 have provided the following details regarding the financial debt, deposit of cheques and their dishonor by the bank and default :
TABLE CONTAINING INFORMATION OF FINANCIAL CREDITORS
| ANNEXURE | NAME | Agreement Date | Maturity Date/Default Date | Date of deposit/presentation of PDCs (on or before) | Date of cheque bounce | Principal Advanced (Rs.) | Total Outstanding along with 16% interest until 26-07-2019 (Rs.) | Remarks |
|---|---|---|---|---|---|---|---|---|
| ANNEXURE 9 (COLLY.) | SANTOSH PANDITA AND MAHARAJ KRISHEN PANDITA [At S.Nos. 3 and 4 in the Memo of Parties] | 27-11-15 | 27-11-17 | 26-12-17 | 26-12-17 | 1,686,667.00 | 2,651,679.51 | |
| ANNEXURE 10 (COLLY.) | MAHARAJ KRISHEN PANDITA & SANTOSH PANDITA [At S.Nos.3 and 4 in the Memo of Parties] | 26-10-15 | 26-10-17 | 24-11-17 | 27-11-17 | 1,686,667.00 | 2,680,709.04 | |
| ANNEXURE 11 (COLLY.) | RG Sharma (HUF) [At S.No.5 in the Memo of Parties] | 19-11-15 | 19-11-17 | 05-12-17 | 06-12-17 | 1,686,667.00 | 3,086,795.30 | |
| ANNEXURE 12 (COLLY.) | SITA KANAPARTI (K DASARADHA RAMAIAH) [At S.No.7 in the Memo of Parties] | 07-11-15 | 07-11-17 | 07-12-17 | 07-12-17 | 971,667.00 | 1,785,633.27 | |
| ANNEXURE 13 (COLLY.) | KRISHNA G WAGH [At S.No. 18 in the Memo of Parties] | 14-07-15 | 14-07-17 | 04-08-17 | 04-08-17 | 971,667.00 | 1,586,462.45 | |
| ANNEXURE 14 (COLLY.) | SUMITRA SINGH & SURENDRA PRASAD SINGH [At S.No. 22 and 23 in the Memo of Parties] | 09-09-15 | 09-09-17 | 18-09-17 | 18-09-17 | 971,667.00 | 1,821,871.08 |
| See ANNEXURE 7 (COLLY.) in Affidavit dated 25.10.2019 | OLIYA DAS SAIN [At S.No.25 in the Memo of Parties] | 05-10-15 | 05-10-17 | 13-10-17 | 16-10-17 | 971,667.00 | 1,805,901.87 | |
| ANNEXURE 15 (COLLY.) | KETAN NANOLAL DATTANI [At S No. 27 in the Memo of Parties] | 29-07-15 | 29-07-17 | 02-08-17 | 02-08-17 | 971,667.00 | 1,847,667.48 | |
| ANNEXURE 16 (COLLY.) | GARGI MAZUMDER & JOY MAZUMDER [At S.No. 33 and 34 in the Memo of Parties] | 23-12-15 | 23-12-17 | 28-12-17 | 28-12-17 | 971,667.00 | 1,552,031.05 | |
| ANNEXURE 17 (COLLY.) | RANCHI LAL GUPTA [At S.No. 37 in the Memo of Parties] | 13-05-15 | 13-05-17 | 20-05-17 | 20-05-17 | 1,500,000.00 | 2,915,342.17 | |
| ANNEXURE 18 (COLLY.) | ANIRRUD SHARMA [At S.No.61 in the Memo of Parties] | 19-11-15 | 19-11-17 | 05-12-17 | 05-12-17 | 1,686,667.00 | 3,086,795.30 | |
| ANNEXURE 19 (COLLY.) | PRASHANT KUMAR PANDEY [At S.No.64 in the Memo of Parties] | 01-06-15 | 01-06-17 | 30-05-17 | 30-05-17 | 1,500,000.00 | 2,446,776.77 | |
| ANNEXURE 20 (COLLY.) | ADITYA YADAV [At S.No.65 in the Memo of Parties] | 20-08-15 | 20-08-17 | 05-09-17 | 05-09-17 | 971,667.00 | 1,536,942.53 | |
| See ANNEXURE 6 (COLLY.) in Affidavit dated 25.10.2019 | MEENA PORWAL & RITESH KUMAR PORWAL [At S.Nos. 1 and 2 in the Memo of Parties] | 15-07-15 | 15-07-17 | 09-10-17 | 09-10-17 | 1,686,667.00 | 2,730,599.73 | |
| See ANNEXURE 8 (COLLY.) in Affidavit dated 25.10.2019 | PAUL GREGORY ARANJO [At S.No. 38 in the Memo of Parties] | 17-09-15 | 17-09-17 | 28-11-17 | 28-11-17 | 5,060,000.00 | 8,430,098.93 |
| ANNEXURE 21 (COLLY.) | AMIT RANIWALA [At S.No. 19 in the Memo of Parties] | 15-12-15 | 15-12-17 | 22-02-18 | 22-02-18 | 1,686,667.00 | 2,600,214.03 | |
| ANNEXURE 22 (COLLY.) | ATUL RANIWALA & ANNANYA RANIWALA [At S.Nos. 11 and 12 in the Memo of Parties] | 17-12-15 | 17-12-17 | 21-02-18 | 21-02-18 | 1,686,667.00 | 3,060,122.76 | |
| ANNEXURE 23 (COLLY.) | RAM KUMAR SUNDARAGI [At S.No. 54 in the Memo of Parties] | 01-10-15 | 01-10-17 | 10-11-17 | 10-11-17 | 971,667.00 | 1,570,088.99 | |
| ANNEXURE 24 (COLLY.) | SHUMAN GOPAL CHATTERJI [At S.No. 49 in the Memo of Parties] | 09-06-15 | 09-06-17 | 11-07-17 | 11-07-17 | 1,686,667.00 | 3,249,454.81 | |
| ANNEXURE 25 (COLLY.) | PRANAV SWARDOP [At S.No. 62 in the Memo of Parties] | 01-12-15 | 01-12-17 | 19-03-18 | 19-03-18 | 971,667.00 | 1,588,521.93 | Interest cheques deposited in June, November, December 2017 had bounced. |
| ANNEXURE 26 (COLLY.) | BELA SAHAI & RAJENDRA SAHAI [At S.No. 55 and 56 in the Memo of Parties] | 08-10-15 | 08-10-17 | 04-01-18 | 04-01-18 | 971,208.00 | 1,531,020.24 | Interest cheque deposited and bounced in May 2017. Other cheques not encashed as outward return charges were being levied by the Bank. |
| ANNEXURE 27 (COLLY.) | ASHOK JAWANT BHATTE & CHARUSHEELA ASHOK BHATTE [At S.Nos. 50 and 51 in the Memo of Parties] | 29-08-15 | 29-08-17 | 17-11-17 | 17-11-17 | 971,667.00 | 1,587,687.00 |
| ANNEXURE 28 (COLLY.) | ANIL SAHAI & OTHER (HUF) [At S.Nos. 24 in the Memo of Parties] | 25-06-15 | 25-06-17 | 1,686,667.00 | 2,349,790.56 | Interest cheque no. 8082 deposited and bounced in May 2017. Other cheques not encashed as interest cheque had bounced in May 2017 and and outward return charges were being levied by the Bank. | ||
| ANNEXURE 29 (COLLY.) | PHIROZE JAMSHEDJI DRIVER & CYRUS PHIROZE DRIVER [At S.Nos. 52 and 53 in the Memo of Parties] | 02-01-16 | 02-01-18 | 1,686,667.00 | 2,726,831.14 | Interest cheques deposited in May, August, October, November and December, 2017. Other cheques not encashed as all the interest cheques deposited between May and December 2017 had bounced and outward return charges were being levied by the Bank. |
| ANNEXURE 28 (COLLY.) | ANG SAHIM & OTHER (HUF) [At S.No. 24 in the Memo of Parties] | 25-06-15 | 25-06-17 | 1,686,667.00 | 2,349,790.36 | Interest cheque no. 8082 deposited and bounced in May 2017. Other cheques not encashed as interest cheque had bounced in May 2017 and not outward return charges were being levied by the Bank. | ||
| ANNEXURE 29 (COLLY.) | PHIROZE JAMSHEDI DWYER & CYRUS PHIROZE DWYER [At S.No. 92 and 93 in the Memo of Parties] | 02-01-16 | 02-01-18 | 1,686,667.00 | 2,726,631.14 | Interest cheque deposited in May, August, October, November and December, 2017. Other cheques not encashed as all the interest cheques deposited between May and December 2017 had bounced and outward return charges were being levied by the Bank. |
| ANNEXURE 30 (COLLY.) | SINGIRUA PRASANNA COTTON MILLS LTD [At S.No. 26 in the Memo of Parties] | 31-12-15 | 31-12-17 | 1,500,000.00 | 2,708,164.19 | Interest cheque deposited and bounced in May 2017. Other cheques not encashed as outward return charges were being levied by the Bank. | ||
| ANNEXURE 31 (COLLY.) | SHANON CALDERIA [At S.No. 58 in the Memo of Parties] | 25-08-15 | 25-08-17 | 1,686,667.00 | 2,913,983.85 | Interest cheques deposited and bounced in May and June 2017. Other cheques not encashed as outward return charges were being levied by the Bank. | ||
| ANNEXURE 32 (COLLY.) | PATEL AJIT KUMAR CHOTALAL & RUPA PATEL [At S.No. 16 and 17 in the Memo of Parties] | 25-06-15 | 25-06-17 | 1,686,667.00 | 2,771,164.69 | Interest cheque deposited in May 2017 had bounced on 10-05-17. Other cheques not encashed as outward return charges were being levied by the Bank. |
| ANNEXURE 33 (COLLY.) | JOHN THOMAS [At S.No. 60 in the Memo of Parties] | 20-07-15 | 20-07-17 | 971,667.00 | 1,853,195.28 | Interest cheque deposited in May 2017 had bounced on 04-05-17. Other cheques not encashed as outward return charges were being levied by the Bank. |
From the above, it is evident that the cheques, presented by the Applicants pursuant to the terms of the MOU, were dishonored and the Respondent has defaulted in payments of the financial debt due to the Applicants. At this juncture, we would like to refer to the Judgment of Hon'ble Supreme Court passed in the matter of Innoventive Industries Ltd. Vs. ICICI Bank and Ors. – (2018) 1 SCC 407, whereby it is held that-
“The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an installment amount. For the meaning of “debt”, we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a “claim” and for the meaning of “claim”, we have to go back to Section 3(6) which defines “claim” to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority.”
(Emphasis supplied)
Since the applicants have been able to make out their case that the respondent has defaulted in payment of their financial debt and there is no disciplinary proceeding pending against the IRP proposed as evident from the Form-2 dated 12.06.2019 on record, this Tribunal is inclined to initiate the CIR Process against the respondent/ Corporate Debtor.
In the given facts and circumstances, the present Application being complete and the Applicants having established the default in payment of the Financial Debt by the Respondent/corporate Debtor for the default amount being above the threshold limit, the present Application is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. As a necessary consequence of the moratorium in terms of Section 14(1) (a), (b), (c) & (d), the following prohibitions are imposed, which must be followed by all and sundry:
(a)The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b)Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c)Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d)The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor.”
As proposed by the Financial Creditor, this Bench appoints Mr. Pankaj Khetan as IRP having Registration No. IBBI/IPA-002/IP-N00010/2016-17/10014 (Email: [email protected]), subject to the condition that no disciplinary proceedings are pending against the IRP so named and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. This Adjudicating Authority orders that:
“Mr. Pankaj Khetan, (E-mail:[email protected]) IRP, having Registration No. IBBI/IPA-002/IP-N00010/ 2016-17/10014, is directed to take charge of the CIRP of the Corporate Debtor with immediate effect. The IRP is directed to take the steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016.”
The Financial Creditor is directed to deposit Rs. 2,00,000/- (Two Lakh) only with the IRP to meet the immediate expenses. The amount, however, will 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.
A copy of this Order shall be communicated to the Financial Creditor, the Corporate Debtor and the IRP mentioned above by the Court Officer/Registry of this Tribunal. In addition, a copy of the Order shall also be forwarded by the Court Officer/Registry to the IBBI for their records.