Decree Of Civil Court Will Not Alter The Basic Nature Of Transaction: NCLT Delhi

Background Facts

M/s Jones Lang Lasalle Building Operations Pvt. Ltd. ("Operational Creditor") had filed a petition under Section 9 of the Insolvency and Bankruptcy Act, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against M/s Celebration City Projects Pvt. Ltd. ("Corporate Debtor"). The Corporate Debtor was admitted into CIRP.

The Applicant is a real estate allottee of the Corporate Debtor. The Resolution Professional had rejected the Applicant's claim upon the premise that the latter had ceased to be a real estate allottee on account of Arbitral Award dated 25.10.2018 passed in her favour. In the Award the Corporate Debtor was directed to deliver the possession of the Unit to the Applicant and to pay penalty for the delayed period and interest.

There was a clause in the Award that the Applicant would be entitled to enforce the allotment of Unit within 60 days or in default it could secure the same by way of a money decree. Therefore, the Applicant made a claim before the Resolution Professional stating that it is a real estate allottee and its claim should be treated in that class. The Resolution professional rejected the claim and directed the Applicant to file the same as a financial creditor as award was in the form of a decree.

Thereafter, the Applicant filed an application before the Adjudicating Authority seeking recognition of her status as a Financial Creditor of the Corporate Debtor in class of allottees.

Contentions Of The Applicant

The Applicant argued that the nature of the original document shows that she is a real estate allottee. The issue of decree should not stand in the way of Resolution Professional admitting the claim of real estate allottee in a class. Reliance was placed on the NCLAT judgment in Mukul Agarwal v Royale Resinex Pvt. Ltd., C.A. (AT) (Ins) No. 777 of 2020, wherein it was held that the decree of a civil court will not alter the basic nature of a transaction.

Decision Of NCLT

The Bench also relied on the NCLAT judgment in Mukul Agarwal v Royale Resinex Pvt. Ltd., C.A. (AT) (Ins) No. 777 of 2020 and observed that NCLAT has held that the decree of a civil court will not alter the basic nature of a transaction. The transaction prima facie has to be considered for the purpose of adjudicating the claim. The decree of Court is a measure of debt and that would be the manner in which it should be heard. Based on the said position of law, the Bench held that the Applicant should be treated as the real estate allottee/creditor in class and be dealt with accordingly.

The application was allowed and disposed off.

Case Title: M/s Jones Lang Lasalle Building Operations Pvt. Ltd. v M/s Celebration City Projects Pvt. Ltd.

Case No.: IB-652(PB)/ 2019

Counsel for Applicant: Mr. Abhishek Anand, Mr. Viplav Acharya, Dr. Farrukh Khan, Ms. Ridhima Goyal, Sr. Adv. Vivek Kohli, Ms. Yeshi Rinchhen, Ms. Nikita Maheshwari, Anjali Prabhakar, Mr. Karan Kohli, Mr. Namit Suri and Mr. Arjun Kaushal.

Counsel for Respondent: Sr. Adv. P. Nagesh, Mr. Akshay Sharma, Mr. Shivam Wadhwa, Sr. Adv. Sanjeev Kumar Dubey, Mr. Abhishek Chaudhary, Mr. Sanchit Aggarwal, Ms. Niharika Dubey.

Counsel for RP: Mr. Pankaj Agarwal, Mr. Shashwat Srivastava.

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