Flats Sold After Completion Of Construction To Be Included In Computation Of Threshold Limit Under Section 7, IBC: NCLT New Delhi Reiterates

The National Company Law Tribunal, New Delhi Bench, comprising Shri P.S.N Prasad (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), while adjudicating an application under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) in Uttam Singhal & Ors vs M/s Anushree Home Developers Ltd.& Anr. has reiterated that the persons to who flats have already been sold after completing the construction would still be allottees and would be included for computation of threshold limit of section 7, IBC. Background Facts M/s Anushree Home Developers Private Limited and Swatantra Land and Finance Private Limited (“Corporate Debtors”) formed an Association of Person named M/s SLF Anushree Apartments (“Developer AOP”) for launching and advertising a Group Housing Colony (“the Project”) in Faridabad. The 13 Applicants (“Financial Creditors”) made an investment in 10 units of the project in 2015. A Builders’ Buyers Agreement (“BBA”) was signed between the Financial Creditors and the Developer AOP in October 2015 vide which the Developer AOP was supposed to offer the possession of the aforesaid units within 3 years of execution of the BBA. It was contended by the Financial Creditors that the construction of the Project was not completed till date and the default occurred on 26.10.2018 and 28.02.2020. It was further contended that the present Financial Creditors form 10% of the class of allottees in the concerned Project. The Group Housing Project had 3 sites for the whole project, however, the BBA was only applicable to Site 2 with 249 flat and the BBA excluded Site 1 and Site 3 from the Project. Out of 249 flats, only 99 had been allotted till the time of filing of the petition. Since the Financial Creditors are more than 10% of 99 i.e. 10 allottees, the threshold under Section 7, IBC is fulfilled. On the other hand, it was contended by the Corporate Debtor that the Group Housing Project, according to the details on the Haryana Real Estate Authority website, has 12 towers which had been booked. Out of these towers, the construction of 8 towers was complete and of 4 towers was ongoing. Thus as the time of filing of the petition, there were 653 allottees and a minimum of 64 allottees were required for maintainability of the petition. The contentions that the allottees of apartments of which the construction was complete were not to be included to formulation of the threshold limit under Section 7, IBC was not tenable. Findings of the Tribunal The Tribunal observed that the details of the Project provided on the Haryana Real Estate Authority provided that the project had 12 towers with 820 apartments out of which 653 had been allotted. The constructions of 8 towers had been completed and of 4 towers were remaining. Thus the minimum threshold needed for maintainability of the petition was 64 allottees. Further, the Tribunal reiterated that the persons to whom the flats had already been sold after completion of the construction would still be considered allottees and would be included in the threshold limit of Section 7, IBC. Reliance was placed on the Supreme Court judgment of Manish Kumar V. Union of India, 2021 (5) SCC wherein it was held that in cases of apartments, all persons to whom allotment had been made would be treated as allottees for calculating the threshold under Section 7, IBC. With the aforesaid observations, the Tribunal dismissed the petition. Case: Uttam Singhal & Ors vs M/s Anushree Home Developers Ltd. & Anr. Case No. ;IB-762/ND/2020 Counsels for the Applicants;Adv. Ashwarya Sinha and Adv. Alok K. Singh, Counsel for the Respondent ;Adv. Tarun Singla Click Here To Read/Download Order

Flats Sold After Completion Of Construction To Be Included In Computation Of Threshold Limit Under Section 7, IBC: NCLT New Delhi Reiterates

Udai Yashvir Singh

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