Case Law Details
Tek Chand Narula Vs Vatika Ltd. (NCLT Chandigarh)
In a recent ruling by the National Company Law Tribunal (NCLT) Chandigarh, Tek Chand Narula v. Vatika Ltd., the issue of whether a single real estate allottee can initiate insolvency proceedings without meeting the threshold limit has been decisively addressed. This case sets a significant precedent concerning the applicability of the Insolvency and Bankruptcy Code, 2016 (IBC) to individual allottees in real estate projects.
The crux of the matter revolved around the petitioner, who had purchased eight commercial units in a project by the respondent. These units were allotted to the petitioner through distinct letters of allotment, accompanied by builder-buyer agreements outlining various clauses, including assured returns and leasing arrangements.
Clause 12 of the builder-buyer agreement stipulated the terms of assured returns to the buyer, which were contingent upon the full payment of the basic sale consideration and an agreement to lease out the commercial units. Notably, the developer retained the authority to negotiate and finalize leasing arrangements, collect rents, and manage the property, with the buyer assuming responsibility for associated expenses and liabilities.
The petitioner sought to initiate Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, arguing that the assured returns constituted a debt owed to them. However, the NCLT, drawing on precedents and legal provisions, rejected the petition on the grounds that it failed to satisfy the minimum threshold requirement mandated by the IBC.
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