Case Law Details
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.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
Nikhil Khanna and 87 Ors. (for brevity, the “Applicants”) have filed the present application under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency process against Spaze Towers Private Limited (for brevity, the “Respondent”).
2. The Respondent namely, Spaze Towers Private Limited is a Company incorporated on 27.01.2006 under the provisions of the Companies Act, 1956 with CIN U45201HR2006PTC096709 having its registered office at Tower C, SPAZEDGE Sector-47, Gurugram-Sohna Road Gurugram-122002, which is situated within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent Company is Rs. 25,00,00,000/-, and the Paid-up Share Capital is Rs.19,80,00,000/-, as per the data mentioned in the application.
3. It is averred by the Applicant that the application is filed by a total of 88 Applicants, who had, individually/jointly, booked a total of 80 (eighty) commercial office space in the Project of the Corporate Debtor namely, “Spaze Corporate Parkk” situated at Sector 69,70, Gurgaon, Haryana (“Project”). As per the details available on the website of Haryana Real Estate Regulatory Authority, there are 561 office spaces in the Project and therefore, the present Application complies the provisions of the Insolvency and Bankruptcy Code, (Amendment) Act, 2020 which provides that a Section 7 application for a real estate project must be filed either by 10% or 100 allottees of the same project, whichever is less.
3.1 The Applicants had considered and agreed to purchase the office spaces since the Respondent had guaranteed an investment return scheme to the Applicants against each office space. Based on this scheme and the assurances given by the Respondent, the Applicants purchased a total of 80 (eighty) units in the Project. The Applicants were allotted different office spaces in Tower A and Tower B of the Project of the Respondent and separate Memorandum of Understanding(s) (“MoUs”) were executed with respect to each office space. The terms of all the MoUs entered were identical with certain variations in relation to the sale consideration of each office space (Clause 1 and 2), the details of the payments made to the Respondent (Clause 3), the rate at and the formula as per which the assured return were payable (Clause 2 read with Clause 9) etc.
3.2 The present application has been filed by the Applicants on account of the default committed by the Respondent in payment of the investment return as stated under the MOU(s). Clause 2 of the MoUs is reproduced below for ready reference:
“…That the First Party will give an investment return @ Rs. 55/- per sq. ft. per month w.e.f. 01.04.2011, of the super area till such time the office space is leased out (but subject to clause 7 & 9) on behalf of the Second Party by the First Party.”
Clause 9 of the MoUs provided the way the investment returns agreed between the Applicants and the Respondent were payable after the office spaces are leased out. Each office space was to be leased out either at the rate of Rs. 55/- per sq. ft. per month or at Rs. 65/- per sq. ft. per month as agreed under each MoU and specified the formula to calculate the investment returns towards each office space.
3.3 The Respondent executed a lease deed with M/s OFCSPC Worldwide Private Limited (“Lessee”) in terms of Lease Deed dated 30.09.2019 (“Lease Deed“) without prior consultation with the Applicants for a rent-free period of 6 (six) months.
3.4 Vide letter dated 17.10.2020, it was informed by the Respondent to the Applicants that the Lessee has terminated the Lease Deed against which the Respondent and the Lessee have also invoked the arbitration clause as mentioned in the Lease Deed. Since there is no valid lease deed and no lessee, the Respondent ought to have continued to pay assured investment returns to the Applicants, however, the Respondent stopped making payment towards the monthly investment returns since 30.09.2019. As from the conduct of the Respondent, it is apparent that in order to absolve its liabilities under the MoUs, it had entered into a bogus Lease Deed with a sham company and thereby, stopped making payments towards the assured investment returns.
4. The particulars of the unpaid Financial Debt including the total amount of default and the date of default as claimed by the applicants in Part IV of the application read thus:
5. Thus, as per Part IV of the application (ibid), the Applicants have claimed an outstanding financial debt of Rs. 8,30,34,600/- and relied on 30.09.2019, as the “date of default”.
6. To buttress their plea, the Applicants have relied on the following documents:
(i) Copy of Form A-H filed by the Respondent with HRERA.
(ii) Copy of details of each of the Applicant and the amounts.
(iii) Copies of few MOU(s) entered between Respondent & Applicants.
(iv) Letters dated 11.10.2019 sent by Respondent to the Applicants.
(v) Copy of the Lease Deed dated 30.09.2019 executed between the Respondent and the Lessee for the project.
(vi) Copy of the letter dated 17.10.2020 sent by the Respondent to the Applicants.
(vii) Copy of the order dated 28.10.2021 passed by Tribunal in the matter of Vandana Raheja & Ors vs Spaze Towers Private Limited (C.P No. (IB) 889/2020).
(viii) Copy of the calculation sheets of each Applicant for default.
7. Based on the facts mentioned and the documents above, the Applicants have prayed for the initiation of CIR Proceedings against the Respondent.
8. On issuance of the notice, the Respondent filed its Reply dated 19.12.2022, Written Submissions dated 19.12.2023 followed by a Note of Arguments dated 31.05.2024 stating mainly the following:
8.1 There are 561 office spaces (“units”) in the Project of the Respondent namely, “Spaze Corporate Park” situated at Sector 69, 70, Gurugram, Haryana (“Project”), out of which the Applicants claim to have jointly/individually booked 81 units as stated in the “MoU” dated 08.04.2011 (only annexed for Petitioner No. 16 and Petitioner No. 80). In terms of Clause 2 of the MoU, each office space was to be leased out at an investment return either @ Rs 55/- per sq. ft. or Rs. 65/- per sq. ft. per month of the super area w.e.f. the specific date varying in each MoU of the Applicants till such time the office space is leased out, payable by the Respondent and in terms of the same. Admittedly, the Respondent duly paid the assured returns for a period of 08 years i.e., from 2011 till 2019 to the Applicants. Further, as per Clause 17 of the MoU, the Respondent shall stand completely discharged the assured investment returns, once the office spaces are leased out.
8.2 The Respondent duly received the Occupancy Certificate on 28.01.2020 and post which even the Completion Certificate was issued by the Directorate of Town and Country Planning (DTCP), Haryana on 25.06.2021. Therefore, as on the date of the filing of the captioned Application, the entire Project of the Respondent is complete in all aspects and even various units have already been sold to a number of third parties and are currently up and running as on date. It is also submitted that the Respondent executed a Registered Lease deed dated 30.09.2019 (“Lease Deed”) with M/s OFCSPC Worldwide Private Limited (“Lessee”) in respect of all the units for a rent-free period of six months. Pertinently, there was no requirement under the MoU for the Respondent to seek any approval of the Applicants before leasing the Units of the Project in favour of the Lessee and as such once the Lease Deed was executed, the Respondent was discharged of its obligation of making payments of assured returns to the Applicants in terms of Clause 17 of the MoU and as such no alleged default in payments of assured returns to the Applicants, post 30.09.2019 can be attributed upon the Respondent. Subsequently, Respondent vide letter dated 17.10.2020 informed Applicant No. 54 that the Lessee had terminated the Lease Deed and thereafter, offered the possession of the Units to the Applicants, however, the Applicants are deliberately not willing to take the possession of the Units.
8.3 The Hon’ble Supreme Court in Pioneer Urban Land & Infrastructure Ltd. Vs. Union of India (UOI) and Ors., (2019) SCC OnLine SC 1005 has also observed that there can be situations when an allottee who has knocked at the doors of the National Company Law Tribunal is a speculative investor and not a person who is genuinely interested in purchasing a unit. In such a situation it is the duty of the developer to point out and showcase that in a real estate market which is falling, the allottee does not, in fact, want to go ahead with its obligation to take possession of the unit under RERA but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it. Hence, in such situation, recourse is provided under Section 65 of the Code, wherein the real estate developer can also point out that the insolvency resolution process under the Code has been invoked fraudulently, with malicious intent, or for any purpose other than the resolution of insolvency.
8.4 Without prejudice, it is stated that Applicants have invested in the Project of the Respondent in the capacity of speculative investors and therefore, cannot enjoy the status of Financial Creditor. Speculative investor is not a person who is genuinely interested in possessing units instead is keen to the benefits offered from any such lucrative agreement and hence, cannot be termed as allottee as per explanation attached to clause (f) of Section 5(8) of the Code. In the case of Mrs. Nidhi Rekhan v. M/s. Samyak Projects Private Limited, Company Appeal (AT)(Ins) No. 1035 of 2020 has observed that speculative investor cannot claim the status and benefits as a Financial Creditor by virtue of being an allottee under Section 5(8)(f) of the Code. In the present case, since the Applicants are speculative investors in the Project, they cannot be regarded as Financial Creditor and therefore, the captioned Application is liable to be dismissed with heavy costs.
8.5 The Applicants are relying upon their respective MoUs for the purpose of arm twisting the Respondent into paying the aforesaid alleged commercial dues, only on account of departmental delays, a delay which is explicitly excluded in the MoU under ‘Force Majeure’ of Clause 8 and as such cannot be recovered from Respondent. In Navin Raheja v. Shilpa Jain and Others, Company Appeal (AT) (Ins) No. 864 of 2019, Hon’ble Appellate Authority held that when there is immense Departmental delay in grant of completion/ occupation certificate by the competent authority that is beyond the control of the Respondent then there is no default on part of Respondent and Section 7 application is not maintainable as amount cannot be construed as ‘Financial Debt. Further stated that the process of obtaining necessary certifications like Occupation and Completion Certificate were under the control of respective concerned Government/Competent Authority and any delay on account of the actions/ inactions and omissions on part of Government/Authority was beyond reasonable control of Respondent.
8.6 The Applicants have placed reliance on the Order dated 28.10.2021 passed by the Ld. Adjudicating Authority, New Delhi in Company Petition (IB) 889 of 2020 titled as ‘Vandana Raheja & Ors. v. Spaze Towers Private Limited’ wherein the Adjudicating Authority admitted the Corporate Debtor into CIR Process, however, pertinently, the said reliance is completely misplaced, and the Applicants are only trying to mislead this Adjudicating Authority. The Ld. Adjudicating Authority, New Delhi reserved its Orders in the said Company Petition on 05.03.2021, whereas the Completion Certificate for the Project was granted to the Respondent only on 25.06.2021 and therefore, the fact that the Project is duly completed and Respondent has obtained the Completion Certificate was never placed before the Adjudicating Authority, New Delhi and as such the same could never be considered before passing the Admission Order. Admittedly, as on today, the Respondent has obtained the Completion Certificate for the Project and the Project is completed in all respects, with majority Units being already up and running by various Unit Holders. Thus, no insolvency can be initiated against the Respondent with respect to the Project, which is already completed.
8.7 As per the calculation sheets annexed by the Applicants themselves, various alleged dues with respect to the assured returns claimed by the Respondent fall within the period envisaged under Section 10A of the Code i.e., between 25.03.2020 to 24.03.2021. Furthermore, Section 10A of the Code prescribes that no Application under Section 7 shall ever be filed for an defaults which arose within the period prescribed under Section 10A and as such the captioned Application being inclusive of the alleged dues falling within such period, is liable to dismissed on this ground alone.
8.8 The captioned Application has been filed as a recovery suit for assured returns in form of commercial borrowings and not for possession of the commercial units. The Project was already complete and possession of units was already transferred and various businesses were already running at time of filing captioned Petition. Applicants’ agenda is only to extort money in manner of alleged assured returns which is not the purview of the Code and therefore is liable to be dismissed with costs as envisaged under Section 65 of Code. Further stated that Adjudicating Authority in many judgments has rejected Petitions filed under Section 7 of Code on grounds that CIRP cannot be initiated for recovery of dues as the Tribunal is not a recovery forum. In the case of M/s Design Worx Infrastructure India Pot. Ltd. v. Premier Restaurant Pot. Ltd., it was held that Insolvency Proceedings cannot be used as a debt recovery tool.
9. In rebuttal, the applicant has filed a Rejoinder dated 18.01.2023 to the reply filed by the Respondent, short written submissions dated 04.05.22 and written submissions dated 28.05.2024 stating mainly the following:
9.1 The present case of the Applicants is squarely covered by the Judgment dated 28.10.2021 of the Coordinate Bench i.e., National Company Law Tribunal, Bench-IV, New Delhi. (NCLT) in the matter of CP(IB) NO. 889 of 2020 titled as “Vandana Raheja & Ors. vs. Spaze Towers Private Limited”, which was for the same project, against the same Corporate Debtor, for the same duration of the pending assured return. All the defenses taken by the Corporate Debtor in the present Petition are the same which were taken in that matter.
9.2 The proceedings initiated by the Financial Creditors under the Code have been given an overriding effect and further, as per the decision of the Hon’ble Supreme Court in Pioneer Urban Land and Infrastructure Limited v. Union of India & Ors., it has been held that remedies that are given to allottees are concurrent remedies and such allottees would be in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code.
9.3 Therefore, by virtue of Section 2(d) of the RERA Act 2016, it becomes crystal clear that the Financial Creditors squarely falls within the definition of an allottee, and the amount paid by the Financial Creditors to Corporate Debtor falls within the definition of ‘Financial Debt as defined under Section 5(8)(f) of the Code and the Financial Creditors herein fall within the definition of ‘Financial Creditor’ as defined under Section 5(7) of the Code. Moreover, the claim made by the Financial Creditors have been duly upheld by the Hon’ble NCLAT in the matter of Nikhil Mehta and Sons v. AMR Infrastructure Ltd. wherein it was held that ‘Assured Return’ is covered within the meaning of ‘Financial Debt’ under Section 5(8)(f) of the Code and the creditors to whom the assured returns was due are covered within the meaning of ‘Financial Creditors’. It will not be out of the place to highlight that the law laid down by the Hon’ble NCLAT was validated by the Hon’ble Supreme Court in Pioneer Urban Land and Infrastructure Limited & Anr. V. Union of India & Ors.
9.4 The claim of the Respondent that the Occupancy certificate is obtained and the units are complete is false and wrong. In this regard, it is submitted that a Writ Petition bearing No. WP (C) No. 8523/2020 titled as “Vandana Raheja vs. Union of India & Ors.” was filed before the Hon’ble Delhi High Court with respect to the aforesaid project of the Corporate Debtor. The Hon’ble Delhi High Court vide its order dated 09.02.2021 appointed a local commissioner to inspect the construction of the project and identify whether the project is completed or not. The Local Commissioner report dated 22.02.2021 which contains the photographs of the unit clearly reveals that the project is still far from completion even after receiving the Occupation Certificate as on 28.10.2022. However, later the parties to the said Writ Petition settled the matter with the Corporate Debtor pursuant to which the Writ Petition was withdrawn. The Respondent merely to absolve itself from its obligation to pay the due investment returns to the Applicants has raised the frivolous defense that the construction of the Project is complete, despite the same being far away from completion. Further, the Respondent, solely to create a false impression that the Applicants are not willing to accept the possession, had falsely submitted before this Tribunal that the Project is complete. It is hereby reiterated that the Applicants are willing to accept possession but only the bare-shell structure is present & the Project is not in habitable state.
9.5 The letter dated 11.10.2019 was issued by the Respondent wherein they had informed about the fictitious lease to the allottees and raised and additional illegal demand to the allottees (though 100% payment was made in MOU). In the same letter, the Respondent had admitted the default in the payment of the assured return till April and sought to adjust the default assured return in the illegal demand.
10. We heard the submissions of both the parties and perused the documents placed on record by both the parties, including the Written Submissions. The Respondent has objected towards the admission of the Application, inter alia, on the grounds that the Petition is not maintainable since the Applicants are Speculative Investors, seeking recovery of assured returns, which are outside the ambit of Financial Creditor as defined in IBC. Further, it has been argued that a portion of the alleged claims of the Applicants fall under Section 10A period, for which no application can ever be filed. It has also been brought to the notice of this Bench that the Project in question is complete and Project Completion Certificate issued by Directorate of Town and Country Planning (DTCP), Haryana on 25.06.2021 has been placed on record and even various units have already been sold to a number of third parties.
11. Per Contra, the applicants have contended that the Respondent had guaranteed an investment return scheme to the Applicants against each office space and accordingly, executed MOUs individually. The present application has been filed by the Applicants on account of the default committed by the Respondent in payment of the investment return as stated under the MOU(s). The Financial Creditors/ Allottees were supposed to get the assured return till the units are leased out at the assured rate, which never happened. The Respondent stopped paying the assured return to the Applicants from October 2019 and the lease agreement was entered without the consent of the Applicants with M/s OFCSPC Worldwide Pvt. Ltd. only in September 2019, wherein 6 months lease free period was given to the lessee without the consent of the applicants and the said lessee never paid a single penny of the lease to the Applicants but walked out of the lease agreement. Further, the Applicants have stated in their Written Submissions that they are covered by the Judgment dated 28.10.2021 of the Hon’ble Coordinate Bench i.e., National Company Law Tribunal, Bench-IV, New Delhi. (NCLT) in the matter of CP(IB) NO. 889 of 2020 titled as “Vandana Raheja & Ors. vs. Spaze Towers Private Limited”, which was for the same project against the same Corporate Debtor.
12. In this backdrop, we would like to examine the contention of both the parties. In order to determine the nature of transaction entered between the parties, we consider it necessary to visit one of the MOUs executed between the Applicants Mr. Apoorv Gulati S/o Mr. Manohar Lal Gulati and Mr. Manohar Lal Gulati S/o Late Sh. Hukam Chand Gulati and the Respondent herein, and placed on record by the Applicants in Volume III of the Application from Page No. 357 to 363, the relevant extracts of which are reproduced overleaf:
13. From a bare perusal of the MOU (ibid), it is observed that the Applicants were to get assured/guaranteed returns @ Rs. 55 per square feet per month, upon completion of the project, which also reflects that assured returns were not for a fixed/definite period of time, rather they were to continue till happening of certain event. Further, after completion of the project, the units were to be let out on lease with minimum rent of Rs. 55 to 65 per sq. feet. This indicates that Applicants have no intention to enjoy the possession over the units, rather they are interested in getting returns from their investment initially by way of assured returns, which had no specific due date and later, in the form of rentals. It is in this backdrop, we consider it worthwhile referring to the Judgement of the Hon’ble NCLAT in Company Appeal (AT) (Ins) no. 1035 of 2020 in Mrs. Nidhi Rekhan Vs M/s. Samyak Projects Private Limited, which has held that a Speculative Investor is not a Financial Creditor. The relevant paragraphs of the judgement read thus:
“12. We, therefore, now examine the various clauses of the Agreement entered between the Corporate Debtor Samyak Projects Private Limited and Mrs. Nidhi Rekhan who purports to be an allottee. The above-mentioned clauses 3, 4, 5 and 6 of the Agreement are primarily concerned with the “Down Payment” and an assured rate of return of 24% p.a. and the right of the First Party/Mrs. Nidhi Rekhan, to assign the flat to any of her nominees. Clause 7 is about the right of the allottee to cancel the booking after the specified period of one year. There is no clause in the agreement which relates to the construction/completion of the flats, the time stipulated for completion of construction, any penalty to be imposed on the developer/builder for delaying Case Citation: (2022) ibclaw.in 109 NCLAT construction and other such provisions that are pertinent and germane to a housing development project and which are necessary for protecting the interest of the allottee. All such provisions are usual and necessary elements of a Builder-Buyer Agreement. We find from the said agreement that there is a “Down Payment” of Rs. 1 Crore with remaining balance of Rs. 11,90,000/- (Rupees Eleven Lakhs Ninety Thousand only) and an assured rate of return @ 24% per annum. In addition, the allottee is given the right, in its absolute discretion, to cancel or rescind the allotment of the flats/units booked through the agreement. The assured rate of return of 24% per annum is a very high rate of interest that a builder would not offer to an allottee even when she is making down payment. The Agreement in this case does not, therefore, have the necessary elements of a Builder-Buyer agreement. On the contrary, it is an agreement which is more in the nature of detailing and protecting an investment made by Mrs. Nidhi Rekhan, who is coming in the garb of an allottee. As has been held by this tribunal in the matter of Sudha Sharma versus Mansi Brar & Anr. [Company Appeal (AT) (INS) No. 83 of 2020] and the subsequent order of Hon able Supreme Court in Mansi Brar Fernandes versus Sudha Sharma and Anr. [Civil Appeal No. 3826/2020] which affirms the order of this Tribunal in Company Appeal (AT) (INS) No. 83 of 2020, we find that the purported allottee Mrs. Nidhi Rekhan, is actually a speculative investor earning a high rate of interest on her investment and is by no means interested in the construction, completion and possession of the said flats no. A–1201 and E–1301. Therefore, we have no hesitation in holding that Mrs. Nidhi Rekhan/Appellant cannot claim to be a “financial creditor” as defined under explanation (i) of section 5(8)(f) of the IBC. The facts in the matter of Pioneer Urban Land and Infrastructure (supra) support the facts of this case as in this case the Appellant is not a genuine allottee but an investor who has come as allottee with no intention of possessing the flats. The Ld. Counsel for Appellant has also referred to Pioneer Urban Land and Infrastructure (supra), particularly paragraph 67 wherein it is held that “…The expression “borrow” is wide enough to include an advance given by the home buyers to a real estate developer for “temporary use” i.e. for use in construction project so long as it is intended by the agreement to give “something equivalent” to money back to the home buyers.” It is noted by us that the Appellant in the instant case is not a genuine home buyer but someone who has invested a certain amount but is coming before us as a home buyer. We distinguish the above observation made in the Pioneer Urban Land and Infrastructure (supra) judgment as the Appellant is not a genuine home buyer and hence he cannot claim benefit as an “allottee” in a real estate project and hence will not be considered a financial creditor by taking recourse to Explanation (i) of section 5(8)(f) of the IBC.”
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“17. Thus, in our clear opinion, the Appellant, who is a speculative investor, cannot claim status and benefits as financial creditor under Explanation (i) of Section 5(8)(f) of the IBC, and is not interested in the financial well-being, growth and vitality of the Corporate Debtor, but is just interested in her investment and has come in the garb of an allottee. In such a situation, the Appellant is certainly not a financial creditor holding financial debt, which is in default of payment by the Corporate Debtor, and consequently we conclude that the Impugned Order does not require any interference. The appeal is, therefore, dismissed. There is no order as to costs.”
(Emphasis placed)
14. The Applicants have further contended that the present case of the Applicants is squarely covered by the Judgement of NCLT Court-IV, by which CIRP was ordered against the same Corporate Debtor in the matter of CP(IB) NO. 889 of 2020 titled as “Vandana Raheja & Ors. vs. Spaze Towers Private Limited, on similar facts. The Applicants have further stated that claim of the Respondent that the Occupancy certificate is obtained and the units are complete, is false and wrong.
Per contra, it has been argued by the respondent that that New Delhi Bench had reserved the Orders in the said Company Petition on 05.03.2021, whereas the Completion Certificate for the Project was granted by the authorities to the Respondent subsequently on 25.06.2021, a fact that was not available before the NCLT Delhi while adjudicating the said matter.
However, we observe that the Applicants have relied upon the Judgement of NCLT Court-IV by which CIRP of CD was ordered on 28.10.2021, whereas the Judgement of Hon’ble NCLAT in Mrs. Nidhi Rekhan Vs M/s. Samyak Projects Private Limited is of a subsequent date i.e., 31.01.2022, that too of a Superior Court, which is well suited on the facts of the case. Since, the Applicants are only speculative investors interested in recovery of assured returns, and not genuine allotees buying the office space/ units for actual use, in our considered view, the applicants herein cannot be treated as “Financial Creditors” under Explanation (i) of Section 5(8)(f) of the IBC, and CIRP cannot be triggered by them especially, in the factual backdrop that the project is completed and “Completion Certificate” dated 25.06.2021 issued by competent authority DTCP, Haryana has been placed by Respondent on record, which is reproduced overleaf:
Further, to substantiate its contention, the Respondent placed on record, vide IA No. 82/2024 dated 12.01.2024 (which was allowed and taken on record vide order of this Adjudicating Authority dated 28.02.2024), a list of running and functional shops, along with the names of their respective allottees, and copy of photos of the relevant project. Furthermore, Ld. Counsel for the Respondent also screen shared those photographs during the course of hearing. Hence, the contention of the Applicants that the Respondent has not obtained Occupancy
certificate and the units are not complete is found devoid of merits.
15. The Respondent has further contended that the Applicants have claimed amounts for the period specified under Section 10A of IBC, 2016. In order to examine this aspect, we visit the “Calculation Sheet” provided in Annexure C-8 by one of the (Lead) Applicants (page 455), which reads thus:
16. Thus, we find from the Calculation sheet (ibid) that the amounts claimed for the period from 10.04.2020 to 10.03.2021 by the applicants are falling within the period specified under Section 10A of IBC, 2016. Similar is the claim seen in calculation sheets filed for the other applicants. In this context, we refer to the Judgement of Hon’ble NCALT dated 31.10.2022 passed in the matter of Plus Corporate Ventures Pvt. Ltd. Vs Transnational Growth Fund Ltd. in Company Appeal (AT) (Insolvency) No. 1270 of 2022. The relevant extracts of the judgement are reproduced below:
“7. When we look into the proviso to Section 10A, the expression is “provided that no Application shall ever be filed for initiation of CIRP of a Corporate Debtor for the said default occurring during the said period” thus default which has been committed from 16.09.2020 to 28.02.2021, no Application could have ever been filed. The Appellant’s submission that cumulatively application can be filed taking all amounts, cannot be accepted. The said submission goes contrary to the statutory scheme delineated by Section 10A proviso as noted above. When Appellant could not have filed the Application for the default which was committed, the Adjudicating Authority did not commit any error in rejecting the Application as barred by Section 10A of the Code. In so far as the last two default on 31st March, 2021 and 30th April, 2021 is concerned, the Adjudicating Authority has noticed that the total amount of the aforesaid two defaults is only Rs. 37,50,000/- which is below the threshold as provided under Section 4 of the Code.
(Emphasis placed)
Thus, in the judgement (ibid). the Hon’ble NCLAT held that cumulative application taking all amounts including those falling under Section 10A of IBC goes contrary to the statutory scheme delineated by Section 10A proviso, hence cannot be accepted. Hence, in terms of the judgment (supra), we find that the claims of the applicants are not valid in the eyes of law.
17. In the sequel of the above said discussion, we conclude that the Applicants herein are not the “Financial Creditors” rather speculative investors seeking recovery of assured returns. It has been held in catena of judgments of Superior Courts that the Adjudicating Authority is not a recovery forum. Further, it has been found that the claims of the Applicants are contaminated with the demand pertaining to Section 10A period, which is not permissible under law. Hence, we have no other option but to dismiss the application.
18. Accordingly, the CP(IB) No. 70/Chd/Hry/2022 is dismissed. IA No. 81/2024
19. The present IA 81/2024 has been filed by the Applicant Mr. Rajiv Gupta under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, praying for intervention and impleadment in CP (IB) No. 70/Chd/Hry/2022 and take the facts, circumstances and annexures on record.
20. In view of the abovementioned order in the main CP(IB) No. 70/Chd/Hry/2022, the need to go into the merits of the IA is obviated and consequently, the IA rendered infructuous and is disposed of accordingly.
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