Amount deposited by Homebuyers in Corpus Fund towards maintenance of constructed apartments does not qualify as Financial Debt within the meaning of Section 5(8)(f) of IBC – Vasathi Anandi Owners Welfare Association v. Vasathi Housing Ltd. – NCLT Hyderabad Bench
Hon’ble NCLT Hyderabad Bench held that:
(i) In the matters of real estate projects, not every amount raised can be considered as financial debt. The amount raised should be from an ‘allottee’ and in relation to a ‘real estate project’.
(ii) The money @ Rs 100/sq.ft. collected towards ‘corpus fund’ cannot be said to have been raised under the real estate project. This distinction arises from the fact that this fund was not intended for the development of land into plots or apartments; instead, it was “towards the maintenance” of the constructed apartments.
(iii) A comprehensive examination of Section 5(8)(f) of the IBC, 2016, in conjunction with the aforementioned judgments, unequivocally establishes that the said amount does not meet the criteria for classification as Financial Debt.
