Application for Insolvency Proceedings against Corporate Debtor for Financial Debt and Default: NCLT admits Application [Read Order]
The NCLT admitted the petition filed by the Financial Creditors and initiated CIRP against the Corporate Debtor
Insolvency proceedings – Financial Debt – NCLT – Corporate Debtor – taxscan
Insolvency proceedings – Financial Debt – NCLT – Corporate Debtor – taxscan
In a recent case, the National Company Law Tribunal ( NCLT ) admitted the has application for insolvency proceedings against a corporate debtor for financial debt and default. The Tribunal initiated insolvency proceedings Corporate debtor noting that it failed to deliver possession of the residential units within the stipulated time frame.
Mr Manish Aneja, a Financial Creditors, approached the NCLT under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( IBC ) and sought to initiate a Corporate Insolvency Resolution Process ( CIRP ) against M/s Revital Reality Private Limited, (“Corporate Debtor”). The petition was filed on the grounds of defaulting on a payment of Rs. 31,22,62,345/-.
The Financial Creditors, initially 147 unit-holders of a real estate project named 'Basera,' booked residential units under the Affordable Group Housing Policy 2013. The Corporate Debtor failed to deliver possession of the units within the stipulated time frame. The Financial Creditors proposed Gaurav Katiyar as the Interim Resolution Professional.
The Financial Creditors contended that they fulfilled their obligations by making payments according to the agreement but the Corporate Debtor failed to deliver possession as per the agreed terms. They argued that the default fell within the purview of Section 7 of the IBC and that the delay cannot be excused by force majeure events.
The Tribunal observed that Section 7 outlines the minimum threshold limit for Financial Creditors who are allottees under a real estate project. It states that such an application must be filed jointly by not less than one hundred of such allottees or not less than ten per cent of the total number of allottees, whichever is less.
It found that the Financial Creditors made payments to the Corporate Debtor as per the agreements which substantiated the existence of a debt. Further found that the Corporate Debtor's failure to obtain the Occupancy Certificate within the stipulated time indicated a deficiency in services and confirmed the default.
The two member bench of Mahendra Khandelwal (Judicial Member) and Dr Sanjeev Ranjan (Technical Member) observed that even considering any grace period mentioned in the agreement, the default occurred before the excluded period and did not solely fall within it. Therefore, the NCLT admitted the petition filed by the Financial Creditors and initiated CIRP against the Corporate Debtor.
To Read the full text of the Order CLICK HERE
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