The explanation added by the legislature in Section 5(8)(f) has been added for specific purpose to protect allottees in development projects which are going into problems, It is not for enforcing specific performance of Contract of existing property – Monica Ramesh Shah Vs. AI Fara’A Properties Pvt. Ltd. – NCLAT New Delhi
NCLAT held that the expression ‘allottee’ and the expression ‘real estate project’ are to be understood on the basis of Clause – d and Clause – z(n) of Section 2 of Real Estate (Regulation and Development) Act, 2016. Keeping in view the object with which Explanation was added in Section 5(8) of IBC and definitions of ‘allottee’ and ‘real estate project’, considering the facts of the present matter, what appears is that the transaction was an attempt to enter into an agreement of sale in existing building. It was a project completed and executed and cannot be still referred to as a real estate “project”. Section 3(11) defines debt as “(11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;”
Even if there would have been a regular agreement of sale executed between the parties for a unit in existing building, if there was a default, it would at the most create a “debt” to be recovered but would not create “financial debt”. The explanation added by the legislature in Section 5(8) has been added for specific purpose to protect allottees in development projects which are going into problems. It is not for enforcing specific performance of Contract of existing property. We do not find any reason to take a different view from that of Adjudicating Authority where it found that the financial debt was not established. We find no reason to entertain the present Appeal. We decline to admit the Appeal. The Appeal stands disposed of accordingly.