Speculative Investor cannot claim status & benefits as a Financial Creditor u/s 5(8)(f) of Insolvency Bankruptcy Code: NCLT
The Tribunal viewed that 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
NCLT – NCLT Chandigarh – National Company Law Tribunal – Insolvency Bankruptcy Code – taxscan
NCLT – NCLT Chandigarh – National Company Law Tribunal – Insolvency Bankruptcy Code – taxscan
The Chandigarh bench of the National Company Law Tribunal while adjudicating has held that a speculative investor cannot claim the status and benefits as a Financial Creditor by being an allottee under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 ( IBC, 2016 ).
Nikhil Khanna and 87 other people, the Applicants / Financial Creditors/ Allottees purchased a total of 80 (eighty) commercial office space in the Project of Spaze Towers Private Limited, Corporate Debtor. Memorandum of Understanding (“MoUs”) were executed with respect to each office. The Corporate Debtor had guaranteed an investment return scheme to the Applicants against each office space. However, the Corporate Debtor committed default which led to the filing of the application by the Financial Creditors.
A lease deed dated was executed between the Corporate Debtor and M/s OFCSPC Worldwide Private Limited, the Lessee without prior consultation with the Financial Creditors. The Corporate Debtor informed the Financial Creditors that the Lease Deed was terminated and invoked arbitration, but stopped paying assured investment returns on 30.09.2019. This suggested a bogus Lease Deed was created by the Corporate Debtor with a sham company to evade its MoU obligations. The Financial Creditors claimed an outstanding financial debt of Rs. 8,30,34,600/- and relied on 30.09.2019, as the “date of default”.
It was argued by the Financial Creditors that the remedies that are given to allottees are concurrent and such allottees would be in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as IBC. It was also argued that they fall within the definition of an allottee, and the amount paid by the Financial Creditors to Corporate Debtor falls within the definition of “Financial Debt”.
It was argued by the Corporate Debtor that there was no requirement under the MoU for it to seek any approval of the Financial Creditors before leasing the Units of the Project. It was also contended that once the Lease Deed was executed, the Corporate Debtor was discharged of its obligation of making payments of assured returns to the Applicants as per the MoU.
The two-member bench comprising Shri Harnam Singh Thakur (Judicial Member) and Shri L.N Gupta (Technical Member) observed that the Financial Creditors were to get assured/guaranteed returns upon the completion of the project which also reflects that assured returns were not for a fixed/definite period, rather they were to continue till happening of a certain event.
The Tribunal viewed that in the case Mrs. Nidhi Rekhan Vs M/s. Samyak Projects Private Limited, it was held that a Speculative Investor is not a Financial Creditor. Further observed that “the Applicants are only speculative investors interested in the recovery of assured returns, and not genuine allottees buying the office space/ units for actual use.
The Tribunal viewed that 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.
The NCLT rejected the application under Section 7 for initiating CIRP. Mr Sahej Mahajan appeared for the applicant and Mr Sumesh Dhawan, Ms Vatsala Kak & Mr. Shaurya Shyam appeared for the corporate debtor.
To Read the full text of the Order CLICK HERE
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