Nikhil Khanna Vs Spaze Towers Private Limited (NCLT Chandigarh)
Speculative investor cannot claim status and benefits of Financial Creditor: NCLT rejects CIRP Application
Nikhil Khanna and 87 other applicants filed a Section 7 application under the Insolvency and Bankruptcy Code, 2016 against Spaze Towers Private Limited (the Respondent), seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The applicants had collectively booked 80 office spaces in the “Spaze Corporate Park” project in Gurgaon, Haryana. They claimed default by the Respondent in payment of assured investment returns as per Memorandums of Understanding (MoUs) executed for these bookings.
Legal Proceedings: The Respondent argued that the applicants were speculative investors, not genuine allottees entitled to financial creditor status under the IBC. They contended that since obtaining the Occupation and Completion Certificates, the project was complete, and the lease agreements with a third party discharged their obligations to pay assured returns. They also cited the applicability of Section 10A of the IBC, barring applications for defaults occurring during a specified period.
Key Points of Contention:
- Nature of Applicants: The Respondent claimed the applicants were speculative investors, not genuine allottees, and thus ineligible for financial creditor status under the IBC.
- Project Completion: The Respondent argued that with the issuance of Occupation and Completion Certificates, the project was complete, and lease agreements further discharged their obligations regarding assured returns.
- Section 10A Bar: They asserted that defaults falling under Section 10A of the IBC cannot form the basis for initiating CIRP, which includes defaults within a specified period post-implementation of Section 10A.
Court’s Decision: After hearing both parties and examining the submissions:
- The court rejected the application under Section 7 of the IBC, ruling that the applicants, characterized as speculative investors, did not qualify as genuine allottees entitled to financial creditor status.
- It emphasized that the applicants’ claims primarily sought recovery of commercial dues under the guise of the IBC, which was not the intended purpose of the Code.
- The court noted that the project’s completion and subsequent actions, including the issuance of certificates and lease agreements, discharged the Respondent’s obligations as per the MoUs.
- Reference was made to previous judgments, including the one from the National Company Law Tribunal, New Delhi, which underscored similar issues regarding speculative investors and their eligibility for financial creditor status.
Conclusion: In summary, the court’s decision hinged on the characterization of the applicants as speculative investors rather than genuine allottees, thereby dismissing the Section 7 application under the IBC against Spaze Towers Private Limited. The judgment underscored the principle that the IBC is not meant to serve as a recovery tool for commercial dues, especially in cases involving speculative investments.
