Initially entered into an agreement for purchase of flat and subsequently advance paid was converted into a loan, cannot change the basic nature of transaction and Financial Creditor will remain an allottee within the meaning of Sec. 2(d) of the RERA Act, 2016 and is required to comply proviso to Section 7(1) of IBC to initiate CIRP – Shreepati Build Infra Investment Ltd. Vs. Abhiyan Developers Pvt. Ltd. – NCLT Mumbai Bench

In this case, the Financial Creditor entered into an agreement with the Corporate Debtor for purchase of flat after the payment of a sum of Rs. 3,50,00,000/-. However, as all the permissions and/or approvals were not sought properly, the Corporate Debtor was unable to commence the construction for the same. Subsequently, the said amount was converted into a loan account by the Corporate Debtor and the same was to be repaid along with the agreed interest.
NCLT Mumbai Bench held that:
(i) Any agreement cannot change the basic nature of transaction and the Financial Creditor over here will remain an allottee within the meaning of Section 2(d) of the RERA Act, 2016.
(ii) The main Company Petition in the instant case was filed by a single allottee. The Applicant has not taken any steps to comply with the amended provisions of Section 7 of the Code, and the application is, therefore, deemed to be withdrawn before admission or the petition could have been filed jointly by not less than one hundred allottees or not less than 10% of the total number of allottees under the same real estate project.

Initially entered into an agreement for purchase of flat and subsequently advance paid was converted into a loan, cannot change the basic nature of transaction and Financial Creditor will remain an allottee within the meaning of Sec. 2(d) of the RERA Act, 2016 and is required to comply proviso to Section 7(1) of IBC to initiate CIRP – Shreepati Build Infra Investment Ltd. Vs. Abhiyan Developers Pvt. Ltd. – NCLT Mumbai Bench Read Post »