Manoj Kumar vs Ample Infrastructure Pvt. Ltd. & Anr

Manoj Kumar ...Appellant

Vs

Ample Infrastructure Pvt. Ltd. & Anr. ....Respondents Present: For Appellant: Mr. Shambo Nandy, Mr. Arijit Mazumdar and Ms. Akanksha Kaushik, Advocates For Respondents: Mr. Raghavebdra Bajaj and Mr. Sanskar Agarwal, Advocates for Respondent No. 1.

Mr. Saurabh Jain and Mr. Smarth Arora, Mr. Pawan Bhushan, Mr. Tushar Bhushan, Mr. Jitendra Kumar Mr. Anjaneya Singh, Mr. D. Deshpande, Mr. Anil Sutor, Advocates for Intervenors.

Mr. Sameer Rastogi, Advocate for Respondent No. 1.

ORDER

13.11.2019 Heard learned Counsel for Appellant. Ample Infrastructure

Pvt. Ltd. filed an application under Section 7 of Insolvency and Bankruptcy Code,

2016 (in short "IBC") having no. IB-17/ND/2019 before the Adjudicating

Authority (National Company Law Tribunal) New Delhi, Bench - II against M/s

Intellicity Business Park Pvt. Ltd., Respondent- Corporate Debtor. It was

admitted by the Adjudicating Authority on 27.05.2019 and against the

admission of the application, present appeal has been filed by Director of the

Corporate Debtor.

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 1 of 7

2. The Appellant claims that there was a builder-buyer agreement executed

between the Financial Creditor and the Corporate Debtor and if the project was

incomplete or possession had not been handed over in time, the Financial

Creditor had options under builder-buyer agreement.

3. Learned Counsel refers to the agreement dated 03.10.2013 and clause-11

of the same which related to schedule for possession of the unit concerned.

Learned Counsel has stated that as per this clause, no doubt, the Corporate

Debtor was bound to deliver of possession by October, 2017 and if six months'

grace period was to be added, possession was to be given by April, 2018. Learned

Counsel stated that even if the possession had not been given as per this clause,

Clause 11(b) provides for payment of compensation as mentioned in the clause

which reads as under:

...

(b) Delay due to reasons beyond the control of the Builder:

If the possession of the Said Unit is delayed due to Force

Majeure conditions or fire, tempest, flood, violence of any or of

a mob, or other irresistible force or if, then the Builder shall be

entitled to extension of time for delivery of possession of the

Said Unit. The Builder during the continuance of the Force

Majeure reserves the right to alter or vary the terms and

conditions of this agreement or if the circumstance so warrant,

the Builder may also suspend the development for such period

as is considered expedient, the Buyer shall have no right to

raise any claim, compensation of any nature whatsoever for

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 2 of 7 or with regard to such suspension. The Buyer agrees and

understands that if the Force Majeure condition continues for

a long period, then the Building alone in its own judgment and

discretion may terminate this Agreement and in such case only

the liability of the Builder shall be to refund the amount

without any interest or compensation whatsoever. The Buyer

agrees that the Buyer shall have no right claim of any nature

whatsoever and the Builder shall be released and discharged

of all its obligations and liabilities under this agreement. In

case the builder is forced to abandon the said project due to

force majeure circumstances or for reasons beyond its control,

it shall refund the amount paid by the buyer alognwith simple

interest @ 6% p.a. from the happening of such eventuality."

...

4. It is further argued that as per the above clause, allottee was entitled to

compensation and if an allottee did not want to take benefit of this clause, the

allottee had option to cancel the contract for which there is clause-51 in the

agreement which reads as follows:

...

"51. Cancellation/Withdrawal

In the unfortunate event of cancellation/withdrawal of the

allotment, the amount paid by the Buyer shall be refunded

within six months after deducting amount equal to 15% of

basic sale price to partly compensate the Builder for midway

scrapping of contract and resultant delay in time schedule and

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 3 of 7 increase in construction cost of the project due to such

cancellation."

...

Submission of the learned Counsel is that the allottee had options to resort

to as per agreement and thus could not have filed application under Section 7 of

IBC. It is stated that there was no financial default and even in the copy of the

format, which has been filed with the rejoinder, Financial Creditor did not state

exact default. It is further stated that Clause -8 of the Agreement (page -40)

shows that time was essence. Clause -8 reads as follows:

...

8. Time is the essence

The Buyer agrees that time is of essence with respect of

payment of Total Sale Price and other charges, deposits and

amounts payable by the Buyer as per this agreement and/or

as demanded by the Builder from time to time and also to

perform/observe all other obligations of the Buyer under this

Agreement. The Builder is under no obligation to send any

reminders for the payments to be made by the Buyer as per

the schedule of payments and for the payments to be made as

per demand by the Builder or other obligations to be performed

by the Allottee. If payment is not received within the stipulated

period or in the event of breach of any of the terms and

conditions this agreement by the Buyer, the allotment will be

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 4 of 7 cancelled and amount received will be refunded without any

interest, after deduction of 15% the total cost of the unit."

...

5. It is the submission of the learned Counsel that when there was no

financial default, application under Section 7 of IBC should not have been

admitted. Learned Counsel for the Appellant prays for setting aside the

admission order.

6. Learned Counsel for the Appellant relied on the judgment in the matter of

"Pravinbhai Raninga Vs. The Kotal Resources and Anr." in Company Appeal

(AT)(Insolvency) No. 140 of 2018 dated 29th August, 2018 and referred to

paragraph-9. It is stated that it is open for the Corporate Debtor or its Directors

to point out that the debt is not payable by the Corporate Debtor in law and also

and/or in fact.

7. Learned Counsel for the Financial Creditor is heard. He has submitted

that admittedly possession was not delivered as per time schedule and there was

default and the impugned order itself shows that the Financial Creditor had paid

all the necessary instalments which is evident from paragraph-4 of the impugned

order. It is stated that the Financial Creditor has not defaulted in payments and

still if the Financial Creditor, because of delay, was to cancel the contract, the

Financial Creditor would be put to loss being made liable to the deduction of

15% of basic sale price for no fault of the Financial Creditor.

8. Learned Counsel for the Intervenors are present and it is stated that apart

from present application of the Financial Creditor, there were various other

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 5 of 7 allottees who had already filed applications under Section 7 which were pending

and as the present application got admitted, those allottees were required to file

their claims before Interim Resolution Professional/Resolution Professional,

which they have done. It is also pointed out that the revival plan pointed out by

the Appellant vide diary No. 15894 (page-14) shows the status of the project.

Learned Counsel referred to paragraph -2(b) (i) & (ii) which is as follows:

...

b. Proposal for Revised Project Plan

i. All allotments will be shifted to Ascot within 90 days

from the zero date.

ii. Spine A and Spine B are twin towers with identical

characteristics. Currently, Spine A is approximately 15%

constructed (Refer picture 1) and Spine B tower

construction is yet to be commenced. Under the revised

scheme, Spine A tower shall be constructed fully in

Phase 1 and Spine B tower shall be constructed in

Phase 2."

...

9. It is stated by the learned Counsel for the Respondents that there has been

construction of only 15% in one Tower and other has not even started, the project

was quite incomplete. There are 1881 allottees out of which 861 allottees have

filed the claims it is submitted.

10. Having heard learned Counsel for both the sides and having gone through

the material pointed out to us and going through the clauses from the agreement

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 6 of 7 referred to, we find that these fine print clauses are quite loaded in favour of the

Corporate Debtor/builder. We do not find substance in the argument that the

allottees were required to adopt options as available in the agreement as we find

that IBC has given option to the allottees to move before the Adjudicating

Authority for relief under IBC and they have been treated as Financial Creditors.

When timely possession as per the agreement has not been delivered, although

it should have been delivered somewhere in April, 2018, Financial Creditor is

entitled to claim that there is default. Merely because in the format, the Financial

Creditor did not mention the date of default, considering the admitted facts, the

default is apparent on record. There is no dispute that till today, possession has

not been handed over and even the affidavit filed by the Corporate Debtor,

referred to above, shows poor progress in the infrastructure which has been put

up.

For the above reasons, we do not find any merit in the appeal. Appeal filed

is rejected.

[Justice A.I.S. Cheema] Member (Judicial)

(Kanthi Narahari) Member(Technical)

(V P Singh) Member(Technical) Akc/Md

Company Appeal (AT)(Insolvency) No. 645 of 2019 Page 7 of 7