REI-Real Estate Project wise Insolvency

Whether in case of phase wise registration of Real Estate Projects under RERA, 2016, each RERA Registration constitutes a Real Estate Project for the purpose of calculation of threshold under Section 7 of IBC, 2016 for filing of Insolvency Petition? – Pankaj Mehta Vs. Ansal Hi-tech Township Ltd. – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT held that:

(i) The provisions of RERA are beneficial to the Home Buyers and are meant to protect them, from any Deviant / Fraudulent Action.
(ii) A mere perusal of Section 3(1) Explanation of the Real Estate (Regulation & Development) Act, 2016, points out that where the real estate project is to be developed in phases, every such phases shall be considered a standalone real estate project and the Promoter shall obtain Registration under RERA Act, for each phase separately.
(iii) In the present case on hand, the foremost aspect to be taken into account is the RERA Registration of the Projects of the Corporate Debtor for ensuring the initial limit for pressing into service of the ingredients of Section 7 of the Code.
(iv) In the present case, the Financial Creditors are from different numerous projects and they have not established their case, as Creditors of a class concerning any particular project registered with the Real Estate (Regulation & Development) Act, 2016 with a view to fulfil the requirement of 10% or 100 Allottees as envisaged as per Section 7 (1) of the Code, 2016.

Whether in case of phase wise registration of Real Estate Projects under RERA, 2016, each RERA Registration constitutes a Real Estate Project for the purpose of calculation of threshold under Section 7 of IBC, 2016 for filing of Insolvency Petition? – Pankaj Mehta Vs. Ansal Hi-tech Township Ltd. – NCLAT New Delhi Read Post »

CIRP can be initiated against Principal Borrower even during ongoing CIRP of Corporate Guarantor where Section 7 application filed by different financial creditors for different projects and filing of claim in the ongoing CIRP against Corporate Guarantor does not preclude the Financial Creditor from filing a CIRP application u/s 7 of IBC against Principal Borrower – Assets Care and Reconstruction Enterprise Ltd. Vs. Supertech ORB Project Pvt. Ltd. – NCLT Allahabad Bench

In this important case of Section 7 application, the issue is that whether the application filed by the Financial Creditor against Principal Borrower(Supertech Orb Project Pvt. Ltd., Corporate Debtor herein) is admissible in the light of the fact that CIRP has already been initiated against the Corporate Guarantor i.e. M/s Supertech Ltd.

NCLT Allahabad Bench held that:

(i) The CIRP initiated against M/s. Supertech Ltd. is by different financial creditors for different projects under the separate agreement.

(ii) The judgement in Dr. Vishnu Kumar Agarwal Vs. M/s. Piramal Enterprises Ltd. [2019] ibclaw.in 16 NCLAT does not apply here.

(iii) Filing of claim in the ongoing CIRP of Corporate Guarantor does not preclude the Financial Creditor from filing a CIRP application u/s 7 of IBC against Principal Borrower (Corporate Debtor).

(iv) The application under Section 7, has been admitted.

CIRP can be initiated against Principal Borrower even during ongoing CIRP of Corporate Guarantor where Section 7 application filed by different financial creditors for different projects and filing of claim in the ongoing CIRP against Corporate Guarantor does not preclude the Financial Creditor from filing a CIRP application u/s 7 of IBC against Principal Borrower – Assets Care and Reconstruction Enterprise Ltd. Vs. Supertech ORB Project Pvt. Ltd. – NCLT Allahabad Bench Read Post »

When CIRP was initiated against a Corporate Debtor as a whole, it cannot be modified only to one project on application of a Financial Creditor – Kotak Mahindra Bank Ltd. Vs. RP of Universal Buildwell Pvt. Ltd. – NCLAT New Delhi

NCLAT held that the insolvency was initiated against the Corporate Debtor and petition of the homebuyer was admitted against the Corporate Debtor. Thereafter, it was the appellant who has filed the application for confining the CIRP to one project only after filing its claim which application came to be rejected. But when the Adjudicating Authority has directed initiation of insolvency against the Corporate Debtor, on the application of the appellant, Adjudicating Authority could not have modified the initiation of CIRP by confining the CIRP to one project.

When CIRP was initiated against a Corporate Debtor as a whole, it cannot be modified only to one project on application of a Financial Creditor – Kotak Mahindra Bank Ltd. Vs. RP of Universal Buildwell Pvt. Ltd. – NCLAT New Delhi Read Post »

Moratorium u/s 14 of IBC does not impose any restriction on charging of any interest/Penal Interest during the CIRP period and it is not in the domain of the IBC, 2016 to decide any contractual interest liability – Mr. Arun Kumar Vs. Ms. Sripriya Kumar – NCLAT Chennai

In this important judgment, NCLAT held that:
(i) A simple and purposive reading of this Section 14 does not specify any ‘interest waiver’ during the period of moratorium.
(ii) The role of the RP under IBC, 2016 is only to collate the Claims and that he does not have any adjudicatory powers. The Claim of the Creditors does not stop on initiation of CIRP.
(iii) It is not in the domain of the IBC, 2016, even to decide any contractual interest liability. Section 14 does not impose any restriction on charging of any interest till the amount is paid. It is the commercial wisdom of the CoC with respect to the quantum of amounts to be paid to the Creditors within the Provisions of the Code.
(iv) There is no provision in the Code that enables the Corporate Debtor or a Guarantor to seek remission in the interest claims from the Financial Creditors solely on the basis that there is a Resolution Plan.
(v) Having not challenged the decision of the CoC in not qualifying him as a Prospective Resolution Applicant, the Promotor cannot now at the belated stage after the approval of the Plan by the Adjudicating Authority states that he is interested in offering a viable solution.
(vi)The Promotor being an MSME is given an opportunity under the Provisions of the Code to present a Plan. At the same time, the Code does not contemplate any kind of preference to be given to an MSME Promotor by the CoC while accepting a Resolution Plan.

Moratorium u/s 14 of IBC does not impose any restriction on charging of any interest/Penal Interest during the CIRP period and it is not in the domain of the IBC, 2016 to decide any contractual interest liability – Mr. Arun Kumar Vs. Ms. Sripriya Kumar – NCLAT Chennai Read Post »

In Project Wise Insolvency, Interim Resolution Professional/Resolution Professional cannot seek any unpaid Fees/Costs from the members of the Committee of Creditors of another project of the Corporate Debtor – Mr. Ashok Kriplani Vs. Ms.Ramanathan Bhuvaneshwari RP – NCLAT Chennai

NCLAT held that having regard to the fact that the Appellant herein was appointed as IRP/RP in C.P.(IB)No. 84/BB/2019, in another Project, viewed from any angle, the Appellant cannot seek any unpaid Fees/Costs from the members of the Committee of Creditors of another project of the Corporate Debtor. This Tribunal, is of the considered view that the Appellant has no locus standi to make his claim in C.P.(IB) No.83/BB/2021 and therefore this Tribunal does not find any substantial ground(s) to interfere with the well-considered order of the Adjudicating Authority in I.A. in C.P. (IB) No.83/BB/2021.

In Project Wise Insolvency, Interim Resolution Professional/Resolution Professional cannot seek any unpaid Fees/Costs from the members of the Committee of Creditors of another project of the Corporate Debtor – Mr. Ashok Kriplani Vs. Ms.Ramanathan Bhuvaneshwari RP – NCLAT Chennai Read Post »

Whether Redeemable Non-Convertible Debentures Subscription Agreement and the Debenture Trust Deed can be relied upon as valid legal documents, since they are insufficiently stamped as required under the Maharashtra Stamp Act, while considering the section 7 application under IBC – Mr. Praful Nanji Satra Vs. Vistra ITCL (India) Ltd. – NCLAT New Delhi

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Whether Redeemable Non-Convertible Debentures Subscription Agreement and the Debenture Trust Deed can be relied upon as valid legal documents, since they are insufficiently stamped as required under the Maharashtra Stamp Act, while considering the section 7 application under IBC – Mr. Praful Nanji Satra Vs. Vistra ITCL (India) Ltd. – NCLAT New Delhi Read Post »

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