Speculative Investor Is Not A Financial Creditor: NCLT Chandigarh

Background Facts

Nikhil Khanna and 87 other people (“Applicants”/ “Financial Creditors”/ “Allottees”) purchased a total of 80 (eighty) commercial office space in the Project of SPAZE TOWERS PRIVATE LIMITED (“Corporate Debtor”). Memorandum of Understandings (“MoUs”) were executed with respect to each office. The Corporate Debtor had guaranteed an investment return scheme to the Applicants against each office space. However, the Corporate Debtor committed default which led to the filing of the application by the Financial Creditors. A lease deed dated 30.09.2019 was executed between the Corporate Debtor and M/s OFCSPC Worldwide Private Limited (“Lessee”) without prior consultation with the Financial Creditors. The Corporate Debtor informed the Financial Creditors that the Lease Deed was terminated and invoked arbitration, but stopped paying assured investment returns since 30.09.2019. This suggested a bogus Lease Deed was created by the Corporate Debtor with a sham company to evade its MoU obligations. The Financial Creditors claimed an outstanding financial debt of Rs. 8,30,34,600/- and relied on 30.09.2019, as the “date of default”.

It was argued by the Financial Creditors that the remedies that are given to allottees are concurrent remedies and such allottees would be in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as IBC. It was also argued that they fall within the definition of an allottee, and the amount paid by the Financial Creditors to Corporate Debtor falls within the definition of “Financial Debt”.

It was argued by the Corporate Debtor that there was no requirement under the MoU for it to seek any approval of the Financial Creditors before leasing the Units of the Project. It was also contended that once the Lease Deed was executed, the Corporate Debtor was discharged of its obligation of making payments of assured returns to the Applicants as per MoU. Further, it was also argued that the Financial Creditors have invested only in the capacity of speculative investors and so cannot enjoy the status of Financial Creditors.

NCLT Verdict

It was observed by the tribunal that the Financial Creditors were to get assured/guaranteed returns upon the completion of project which also reflects that assured returns were not for a fixed/definite period of time, rather they were to continue till happening of certain event. It was stated that it indicates that there was no intention of the Financial Creditors to enjoy the possession over the units, rather they were interested in getting returns from their investment initially by way of assured returns.

It relied on Mrs. Nidhi Rekhan Vs M/s. Samyak Projects Private Limited where it was held that a Speculative Investor is not a Financial Creditor. It was observed that “the Applicants are only speculative investors interested in recovery of assured returns, and not genuine allotees buying the office space/ units for actual use, in our considered view, the applicants herein cannot be treated as “Financial Creditors” under Explanation (i) of Section 5(8)(f) of the IBC, and CIRP cannot be triggered by them.

It was held that the Applicants/Allottees are not financial creditors rather speculative investors seeking recovery of assured returns.

With the aforesaid observation, the application under Section 7 for initiating CIRP was rejected.

Case:Nikhil Khanna & Ors Vs Spaze Towers Pvt Limited

Case No. CP (IB) No. 70/Chd/Hry/2022 & IA No. 81/2024

Order Dated :11.06.2024

Counsels for the Financial Creditors :Mr. Sahej Mahajan, Advocate

Counsels for the Corporate Debtor: Mr. Sumesh Dhawan, Ms. Vatsala Kak & Mr. Shaurya Shyam, Advocates

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