Mr. Alok Sharma vs M/S I P Construction Pvt. Ltd Through ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 350 of 2020

IN THE MATTER OF:

Alok Sharma R/o 1402, Govardhan Apartment, Kaushambi, Ghaziabad Uttar Pradesh - 201 010 Authorised Representative of Following Commercial space buyers: (i) Mr. Alok Sharma S/o Mr. Vinod Kumar Sharma R/o1402, Govardhan Apartments, Kaushambi, Ghaziabad - 201 010

(ii) Mrs. Neelam Sharma W/o Mr. Vinod Kumar Sharma R/o1402, Govardhan Apartments, Kaushambi, Ghaziabad - 201 010

(iii) Mrs.Rashmi Singh W/o Mr. Rakesh Singh R/o 7B(HIG) Green View Apartments, Sec-99, Noida, UP-201 303 Through power of attorney holder namely Mr. Alok Sharma

(iv) Mr. Ambika Prasad Yadav S/o Mr. late Jaskarn Yadav R/o B-1202, Apex Green Valley, Vaishali, Sector-9 Ghaziabad, UP-201 010 Through power of attorney holder namely Mr. Alok Sharma

(v) Mr. Arun Kumar Yadav S/o A.P Yadav R/o B-1202, Apex Green Valley, Vaishali, Sector-9 Ghaziabad, UP-201 010 Through power of attorney holder namely Mr. Alok Sharma

1 Company Appeal (AT) (Ins) No. 350 of 2020 (vi) Mrs. Prabha Jain W/o Mr. NMD Jain R/o House No. 179, 1st Floor Jagriti Enclave, Delhi -110 092 Through power of attorney holder namely Mr. Alok Sharma

(vii) Mrs. S.R Pandey S/o.Sarjoo Pandey Flat No. 19, SRM Apartment, Plot No. 106, IP Extn, Delhi - 110 092 Through power of attorney holder namely Mr. Alok Sharma

(viii) Mrs. Soumya Pandey W/o Mr. Saurabh Pandey Flat No. 19, SRM Apartment, Plot No. 106, IP Extn, Delhi - 110 092 Through power of attorney holder namely Mr. Alok Sharma

(ix) Mrs. Anju Sharma W/o Shrawan Kumar Sharma R/o E-11,Vaishali Colony, Nainital Road, Kath Godam, District- Nainital, Uttarkhand - 263 126 Through power of attorney holder namely Mr. Alok Sharma

(x) Mrs. Neelima Jha W/o Mr. Prabhat Kumar Jha R/o 90/130, Satyam Vasundhara, Ghaziabad, UP-201 012 Through power of attorney holder namely Mr. Alok Sharma

(xi) Mr. Rohit Rastogi Late Mr. Suresh Chand Rastogi R/o 86, Jagriti Enclave, Vikas Mark Extension, Delhi - 110092 Through power of attorney holder namely Mr. Alok Sharma

(xii) Mr. D.K.Pandey

2 Company Appeal (AT) (Ins) No. 350 of 2020 S/o Late Mr. Chunni Lal Sharma R/oE-302, Alaknanda Apartments, Rampuri, Suryanagar, Ghaziabad - 201 011 Through power of attorney holder namely Mr. Alok Sharma .. Appellant

Versus

M/s.I P construction Pvt. Ltd Through Resolution Professional Anju Agarwal 210, 1st Floor, Phool Singh Market Karkardooma, Main Vikas Marg, New Delhi - 110 092 .. Respondent

Present:

For Appellant: Ms. Varsha Banerjee and Ms. Smriti Dua, Advocates. For Respondents: Mr. Abhishek Anand & Mr. Karan Kohli for RP

JUDGMENT

DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER

1. The `Appeal' has been filed by the Appellant- 'Mr. Alok Sharma authorized

representative of the 'allottees' /buyers of the commercial space in the

real estate project, by the name of 'CORAL BRIO' of the Corporate Debtor'

(CD) under Section 61 (1) of the 'Insolvency and Bankruptcy Code, 2016'

('Code') against the impugned order dated 16.01.2020 passed by the

National Company Law Tribunal, Principal Bench, New Delhi

(Adjudicating Authority) whereby the `Adjudicating Authority' had

dismissed the CA No. 2265 (PB)/2019 in CP (IB) No.593(PB)/2018.

3 Company Appeal (AT) (Ins) No. 350 of 2020

2. The twelve 'commercial space buyers' as seems from the details are the

individual as depicted below:

Mr. Alok Sharma S/o Mr. Vinod Kumar Sharma R/o1402, Govardhan Apartments, Kaushambi, Ghaziabad - 201 010

Mrs. Neelam Sharma W/o Mr. Vinod Kumar Sharma R/o1402, Govardhan Apartments, Kaushambi, Ghaziabad - 201 010

Mrs.Rashmi Singh W/o Mr. Rakesh Singh R/o 7B(HIG) Green View Apartments, Sec-99, Noida, UP-201 303 Through power of attorney holder namely Mr. Alok Sharma

Mr. Ambika Prasad Yadav S/o Mr. late Jaskarn Yadav R/o B-1202, Apex Green Valley, Vaishali, Sector-9 Ghaziabad, UP-201 010 Through power of attorney holder namely Mr. Alok Sharma

Mr. Arun Kumar Yadav S/o A.P Yadav R/o B-1202, Apex Green Valley, Vaishali, Sector-9 Ghaziabad, UP-201 010 Through power of attorney holder namely Mr. Alok Sharma Mrs. Prabha Jain W/o Mr. NMD Jain R/o House No. 179, 1st Floor Jagriti Enclave, Delhi -110 092 Through power of attorney holder namely Mr. Alok Sharma

Mrs. S.R Pandey S/o.Sarjoo Pandey Flat No. 19, SRM Apartment, Plot No. 106, IP Extn, Delhi - 110 092

4 Company Appeal (AT) (Ins) No. 350 of 2020 Through power of attorney holder namely Mr. Alok Sharma

Mrs. Soumya Pandey W/o Mr. Saurabh Pandey Flat No. 19, SRM Apartment, Plot No. 106, IP Extn, Delhi - 110 092 Through power of attorney holder namely Mr. Alok Sharma

Mrs. Anju Sharma W/o Shrawan Kumar Sharma R/o E-11,Vaishali Colony, Nainital Road, Kath Godam, District- Nainital, Uttarkhand - 263 126 Through power of attorney holder namely Mr. Alok Sharma

Mrs. Neelima Jha W/o Mr. Prabhat Kumar Jha R/o 90/130, Satyam Vasundhara, Ghaziabad, UP-201 012 Through power of attorney holder namely Mr. Alok Sharma

Mr. Rohit Rastogi Late Mr. Suresh Chand Rastogi R/o 86, Jagriti Enclave, Vikas Mark Extension, Delhi - 110092 Through power of attorney holder namely Mr. Alok Sharma

Mr. D.K.Pandey S/o Late Mr. Chunni Lal Sharma R/oE-302, Alaknanda Apartments, Rampuri, Suryanagar, Ghaziabad - 201 011 Through power of attorney holder namely Mr. Alok Sharma

5 Company Appeal (AT) (Ins) No. 350 of 2020

3. The submission made by the learned counsel for the Appellant/ pleadings

and written submission available on record are stated herein below in a

summarized manner:

a. The allottees have invested in the project in the year 2013 and

Corporate Debtor (CD)/Respondent have given them possession in

2015 and these allottees were continuously paying electricity and

parking charges to the CD. The CD went into CIRP vide order dated

11.01.2019 and Ms. Anju Agarwal was appointed as 'Interim

Resolution Professional' (IRP). The table reflecting the name of the

allottees, date of allotment, unit number, amount paid and possession

year is depicted below as appearing at page 17 and 18 appeal paper

book.

6

Company Appeal (AT) (Ins) No. 350 of 2020 b. The Appellant has stated that since they have paid the monies and

allotment issues, the allottees were given possession of their respective

units in 2015 without completion of fit -out works, only functional lifts,

maintenance facilities etc. Such allottees also spent monies from their

own pockets in completing the remaining works of their respective

units and requested the CD to executed the sale deed in their favour.

It is the case of the Appellant that they have written numerous email

and letters to the CD between 2015-2018 highlighting the day to day

7 Company Appeal (AT) (Ins) No. 350 of 2020 difficulty etc. including non-registration of the sale deed (appearing at

page 46 to page 90 of the Appeal paper book where emails are their).

c. The Ld counsel for the Appellant has stated that not only they have

released all the payment in respect of commercial spaces but even a

few of the allottees have in fact also paid the registration charges for

execution of the sale deed since 2015. The Allottees learnt about the

CIRP of the CD and as soon as they learnt, they approach the IRP have

correspondence with him also (appearing at Annexure 2 of the Appeal

paper book). It was stated by the Appellant that the allottees were

allowed possession in these units in 2015 without completion of

certain auxiliary works and for which the allottees were repeatedly

following up with the CD apart from registration issue. The Ld counsel

for the Appellant has also stated that they have raised this issue in the

meeting of the CoC of the CD for registration (appearing at Annexure

A-3 of the Appeal paper book).

d. The ld counsel of the Appellant has also stated that the RP used to

maintain silence over the pendency of non-registration of sale deed in

favour of such allottees without disputing that they were not in

possession since 2015. It has also been stated by the Ld counsel of the

Appellant that the Allottees of the commercial space have a mere

11.70% voting share as compared to Union Bank of India which has

45.15% voting share in the CoC. They have also alleged ulterior motive

of the Bank to cause irreparable loss to the valuable rights of the

allottees herein causing impediments to ensure that the sale deed is

8 Company Appeal (AT) (Ins) No. 350 of 2020 not executed in favour of the allottees. The CoC in its 7th meeting held

that the decision of execution of sale deed be left to be decided by the

Successful Resolution Applicant.

e. Aggrieved with all these, they approached the Adjudicating Authority

and the Adjudicating Authority has dismissed their application.

Aggrieved with this, they have approached this Tribunal seeking the

following reliefs as stated below:

• Allow the Appeal;

• Set aside the impugned order dated 16.01.2020 dismissing CA

No. 2265(PB) of 2019 in CP(IB) No.593 of 2018;

• Pass appropriate directions to the RP to ensure that sale deeds

are executed in favour of the allottees herein; etc.

4. The Adjudicating Authority, while passing the impugned order dated

16.01.2020 has observed the followings:

9

Company Appeal (AT) (Ins) No. 350 of 2020

5. The submission made by the learned counsel for the Respondent/

pleadings and Written Submission available on record are stated herein

below in a summarized manner:

a. The ld counsel for the Respondent/RP has raised the issue that the

Appeal is barred by limitation. The impugned order was pronounced

on 16.01.2020 and the period of 30 days expired on 15.02.2020 and

the Appellant has approached this Tribunal on 20.02.2020 which is

beyond the period of 30 days as prescribed under Section 61 of the

Code. The Appellant has failed to file the application for condonation

10 Company Appeal (AT) (Ins) No. 350 of 2020 of delay and hence the Appeal is liable to be dismissed without hearing

on merit as the same is barred by period of limitation.

b. The Ld counsel for the Respondent has also submitted that CD is the

owner of the commercial space. However, he has accepted the fact that

the CD had handed over the possession of the Commercial space to

the Appellant and only sale deed was pending for execution by the CD

in favour of allottees prior to the commencement of CIRP. He has also

cited Section 54 of the Transfer of Property Act, 1882 defining sale

which is a transfer of ownership in exchange of price paid or so and

transfer of ownership of a particular assets, the execution of sale deed

is a sine qua non requisite and has cited the judgment of Hon'ble Apex

Court in Narandas Karsondas Vs. S.A.Kamtam and Anr., (1977) 3 SCC

247 wherein it has been held that "a contract of sale does not of itself

create any interest in, or charge on, the property etc".

c. The Ld counsel has also stated that CoC has approved the Resolution

Plan which is binding on the Appellants and at the same he has

confirmed that it is yet to be approved by the Adjudicating Authority.

The Ld counsel has also stated that the Appellant being minority

Dissenting Financial Creditors do not have any locus standi to

challenge the Resolution Plan as approved by the majority of the CoC

which is affectedly sought to be done through the instant appeal and

has cited the judgment of Hon'ble Apex Court in K.Sashidhar V. Indian

Overseas Bank & Ors., (2019) 12 SCC 150.

11 Company Appeal (AT) (Ins) No. 350 of 2020 d. The Execution of sale deed shall be in violation to moratorium in terms

of Section 14 of the Code. Apart from the other issues raised that the

appeals have filed without authorization from the class of creditors and

execution of sale deed amongst to preferential treatment etc.

6. We have carefully gone through the pleadings of both the parties and

extant provisions of the Code and we are having the following

observations:

a. It is not in dispute even by the Respondent that the Appellants

/allottees are not in possession of their respective units since 2015.

b. It is also not in dispute that the exchange of letters /emails are not

there between the CD and the Appellants including the issue of

registration of the units. No doubt, the Appellants were raising the

issues like certain fit ins, parking area in basement, toilets, fire

safety/fire alarm/springle issue, maintenance issue etc. raised with

the CD apart from the issue of registration of property and completion

certificate (appearing at page 45 to 114 of the Appeal paper book).

c. What the issue has been raised by the Respondent/RP is that the

appeal is barred by limitation as the same has not been filed within

the prescribed period of 30 days as per Section 61(2) of the Code:-

i. The impugned order was pronounced on 16.01.2020.

ii. The period of 30 days expired on 15.02.2020.

iii. The Appellant has approached this Appellate Tribunal on

20.02.2020.

12

Company Appeal (AT) (Ins) No. 350 of 2020 iv. The Respondent has cited the judgments of Hon'ble Apex Court as

well as this Tribunal, which is given below:

• V.Nagarajan V. SKS Ispat and Power Ltd & Ors., Civil Appeal

No. 3327 of 2020, where the Hon'ble Apex Court has opined

as follows:

"21.The answer to the two issues set out in Section C of the

judgement- (i) when will the clock for calculating the limitation

period run for proceedings under the IBC; and (ii) is the

annexation of a certified copy mandatory for an appeal to the

NCLAT against an order passed under the IBC - must be based

on a harmonious interpretation of the applicable legal regime,

given that the IBC is a Code in itself and has overriding

effect. Sections 61(1) and (2) of the IBC consciously omit the

requirement of limitation being computed from when the "order

is made available to the aggrieved party", in contradistinction

to Section 421(3) of the Companies Act. Owing to the special

nature of the IBC, the aggrieved party is expected to exercise

due diligence and apply for a certified copy upon

pronouncement of the order it seeks to assail, in consonance

with the requirements of Rule 22(2) of the NCLAT Rules. Section

12(2) of the Limitation Act allows for an exclusion of the time

requisite for obtaining a copy of the decree or order appealed

against. It is not open to a person aggrieved by an order under

the IBC to await the receipt of a free certified copy under Section

13 Company Appeal (AT) (Ins) No. 350 of 2020 420(3) of the Companies Act 2013 read with Rule 50 of the

NCLT and prevent limitation from running. Accepting such a

construction will upset the timely framework of the IBC. The

litigant has to file its appeal within thirty days, which can be

extended up to a period of fifteen days, and no more, upon

showing sufficient cause. A sleight of interpretation of

procedural rules cannot be used to defeat the substantive

objective of a legislation that has an impact on the economic

health of a nation."

• Mr. Rursharan Singh Vs. The State Trading Corporation of India

Ltd., CA(AT)(Ins) No. 853 of 2019, this Tribunal has observed as

follows:

"8. The argument that free copy was not served on the

Appellant is not relevant. IBC does not have provision to

serve free copies. Even if one is to rely on Section 421 (3)

of the Companies Act, 2013, there is Judgment in the

matter of "Sagufa Ahmad and Ors. Vs. Upper Assan

Plywood Products Pvt. Ltd". passed by the Hon'ble

Supreme Court of India in Civil Appeal Nos. 3007-3008

of 2020 which would be relevant. If the Appellant did not

rely on supply of free copy and applied for certified copy

and filed Appeal based on certified copy then the

Appellant cannot rely on Section 421 (3) of

the Companies Act, 2013, to count limitation.

14 Company Appeal (AT) (Ins) No. 350 of 2020

9. Under Section 61 of IBC, the Appeal has to be filed

within 30 days. This Tribunal may allow an Appeal to be

filed after the expiry of said Period of 30 days if it is

satisfied that there was sufficient cause for not filing the

Appeal in time but such period shall not exceed 15 days.

Thus the Period of Appeal is 30 days and the Delay

which this Tribunal can condone is only of 15 days over

and above Page | 6 I.A. No. 2596 of 2019 In Company

Appeal (AT) (Insolvency) No. 853 of 2019 the Period of

Appeal. For reasons discussed above (See Paragraph 7),

even if limitation was to be counted from 07th June, 2019

as mentioned above, the Appeal filed on 13.08.2019

must be said to be barred by limitation as it was not filed

within 30 days plus 15 days of knowledge."

v. In this context, we are also citing the provision of Section 61(2) of the

Code as enumerated below:

"Section 61 (2) Every appeal under sub-section (1) shall be

filed within thirty days before the National Company Law

Appellate Tribunal: Provided that the National Company

Law Appellate Tribunal may allow an appeal to be filed after

the expiry of the said period of thirty days if it is satisfied

that there was sufficient cause for not filing the appeal but

such period shall not exceed fifteen days."

15

Company Appeal (AT) (Ins) No. 350 of 2020 vi. Based on the above analogy itself, the Appeal will be barred by

limitation, if it is filed after 45 days which would have ended on

02.03.2020 whereas the Appeal has been filed on 20.02.2020. This

reflects that this Tribunal has a power to grant extension upto 45

days.

vii. From the contents of the impugned order dated 16.01.2020 came to

the knowledge of the Appellant on 21.01.2020 when it was uploaded

on the website of NCLT, New Delhi. Accordingly, the present appeal

is within limitation. That even in the recent judgment of Nagarajan

Vs. SKS Ispat and Power Ltd. & ors. Civil Appeal No. 3327 of 2020

relied upon by the Respondent, the Hon'ble Supreme Court opined:

"21. The litigant has to file its appeal within thirty days,

which can be extended up to a period of fifteen days, and

no more, upon showing sufficient cause."

viii. Based on the elaboration, it is imperative on the Tribunal to consider

sympathetically and to help the weaker who are the buyers under the

Real Estate Project and hence, the Appeal filed within 45 days seems

to be in order.

d. What the Respondent/RP has pointed out that the CD is the owner of

the 'Commercial Space' and has accepted that the possession was with

the Appellants admittedly. The Appellants are allottees of commercial

space in 'Coral Brio'. Although the CD had handed over the possession

of Commercial space to the Appellants, admittedly, no sale deed was

16 Company Appeal (AT) (Ins) No. 350 of 2020 executed by the CD in favour of allottees prior to the commencement

of CIRP.

e. What has been submitted by the Respondent /RP that it is settled

position of law that a mere agreement to sell or possession over a

property does not amount to ownership of that property. Section 54 of

the Transfer of Property Act, 1882 defines sale as "Sale" is a transfer of

Ownership in exchange for a price paid or promised or part-paid and

part-promised. Further a joint reading of Sections 47, 48 and 49 of the

Registration acts, 1908 makes it clear that the instrument which

purports to transfer title of the property is required to be registered. The

title does not pass till the registration is affected. Therefore, for transfer

of ownership of a particular asset, the execution of Sale deed is a sine

qua non requisite. For this reliance can be placed upon the Hon'ble

Supreme Court judgment in Narandas Karsonda Vs. S.A.Kamtam and

Anr., (1997) 3 SCc 247:

"A contract of sale does not of itself create any interest in, or

charge on, the property. This is expressly declared in s. 54 of

the Transfer of Property Act. See Rambaran Prasad v. Ram

Mohit Hazra 1967 1 SCR 293. C) The fiduciary character of the

personal obligation created by a contract for sale is recognised

in section 3 of the Specific Relief Act, 1963 and in section 91 of

the Trusts Act. The personal obligation created by a contract of

sale is de- scribed in section 40 of the Transfer of Property Act

as an obligation arising out of contract and annexed to the

17 Company Appeal (AT) (Ins) No. 350 of 2020 owner- ship of property, but not amounting to, an interest or

easement therein".

Further, it is also necessary to place reliance upon judgment passed by

Hon'ble Supreme Court in Suraj lamp and Industries Pvt. Ltd. Vs. State

of Haryana and Ors. AIR 2012 206:

"12. Any contract of sale (agreement to sell) which is not a

registered deed of conveyance (deed of sale) would fall short

of the requirements of sections 54 and 55 of TP Act and will

not confer any title nor transfer any interest in an immovable

property (except to the limited right granted under section

53A of TP Act). According to TP Act, an agreement of sale,

whether with possession or without possession, is not a

conveyance. Section 54 of TP Act enacts that sale of

immoveable property can be made only by a registered

instrument and an agreement of sale does not create any

interest or charge on its subject matter."

Even relying on the above concept what has been provided by the

Respondent/RP there is a need to look at Section 14 of the Code which

is depicted below:

"Section 14: Moratorium.

14. (1) Subject to provisions of sub-sections (2) and (3), on

the insolvency commencement date, the Adjudicating

Authority shall by order declare moratorium for prohibiting

all of the following, namely:--

18

Company Appeal (AT) (Ins) No. 350 of 2020

(a) the institution of suits or continuation of pending suits or

proceedings against the corporate debtor including

execution of any judgment, decree or order in any court of

law, tribunal, arbitration panel or other authority;

(b) transferring, encumbering, alienating or disposing of by

the corporate debtor any of its assets or any legal right or

beneficial interest therein;

(c) any action to foreclose, recover or enforce any security

interest created by the corporate debtor in respect of its

property including any action under the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor

where such property is occupied by or in the possession of

the corporate debtor.

[Explanation.--For the purposes of this sub-section, it is

hereby clarified that notwithstanding anything contained in

any other law for the time being in force, a license, permit,

registration, quota, concession, clearances or a similar

grant or right given by the Central Government, State

Government, local authority, sectoral regulator or any other

authority constituted under any other law for the time being

in force, shall not be suspended or terminated on the

grounds of insolvency, subject to the condition that there is

19 Company Appeal (AT) (Ins) No. 350 of 2020 no default in payment of current dues arising for the use or

continuation of the license, permit, registration, quota,

concession, clearances or a similar grant or right during the

moratorium period;]

(2) The supply of essential goods or services to the corporate

debtor as may be specified shall not be terminated or

suspended or interrupted during moratorium period.

[(2A) Where the interim resolution professional or resolution

professional, as the case may be, considers the supply of

goods or services critical to protect and preserve the value

of the corporate debtor and manage the operations of such

corporate debtor as a going concern, then the supply of such

goods or services shall not be terminated, suspended or

interrupted during the period of moratorium, except where

such corporate debtor has not paid dues arising from such

supply during the moratorium period or in such

circumstances as may be specified.]

(3) The provisions of sub-section (1) shall not apply to -- 3

[(a) such transactions, agreements or other arrangements

as may be notified by the Central Government in

consultation with any financial sector regulator or any other

authority;] (b) a surety in a contract of guarantee to a

corporate debtor.] (4) The order of moratorium shall have

effect from the date of such order till the completion of the

20 Company Appeal (AT) (Ins) No. 350 of 2020 corporate insolvency resolution process: Provided that

where at any time during the corporate insolvency

resolution process period, if the Adjudicating Authority

approves the resolution plan under sub-section (1) of

section 31 or passes an order for liquidation of corporate

debtor under section 33, the moratorium shall cease to have

effect from the date of such approval or liquidation order,

as the case may be.

From the above, it is clear that 'moratorium' is applicable under

Section 14(1)(b) of the Code is on transferring of any assets of the

CD.

f. Let us see in this case whether under real estate project whether

Revenue from sale of such constructed spaces/houses will be

considered under the caption "Asset" sale or will it be considered

as "Revenue from operations" under Schedule -III, Part-II of the

Companies Act, 2013 ?

Here, it is observed that in case of real estate company, such

constructed spaces/houses as and when sold its sale price goes to the

heading 'Revenue from operations' of the profit and loss accounts

of the Company being part of its commercial operation. If this

houses / constructed spaces belongs to a company which is not

in real estate business and is an industrial

company/manufacturing company then the impact of sale from

such houses will appear in the 'Balance Sheet' of the Company as

21 Company Appeal (AT) (Ins) No. 350 of 2020 per Schedule-III Part-I-(II Assets) of the Companies Act, 2013 and

any sale of this house by this industrial company, if it results into

a profit or loss on the sale of such assets, then it will reflect to

the extent of profit or loss on sale of this assets only in the profit

and loss account under the heading " other income " and the cost

value of the assets will be reduced from the assets side of the

'Balance Sheet'. For a clarity, let us see the following examples:

i. In case of a real estate company - (Ram & Mohan

Company), if House No. 'A' is sold to Mr. 'X' at a value of

Rs. 20 lacs, the cost of construction of Rs. 15 lakhs then

in the profit and loss account of the 'Ram & Mohan

Company', sale of House will come in the income side of

the profit and loss accounts as Rs. 20 lakhs-Revenue from

operations. The materials etc. consumed will appear at Rs.

15 lakhs in the Part-II - profit and loss account of the same

year under caption (Expenses-IV) if both start and

completion of the house 'A' is in the same year. Otherwise,

if it is completed in the previous year's then these costs of

this house which will be appearing in the " inventory" will

get reduced.

ii. If 'Ram & Mohan Company' is an industrial Company then

the profit and loss account will reflect an income of Rs. 5

lakhs in the profit and loss account (under the heading -

Part II - other income) and the value of the assets

22 Company Appeal (AT) (Ins) No. 350 of 2020 appearing at Rs.15 lakhs in the books in the assets side

of the Balance Sheet will be reduced.

iii. In the short and the summary, the houses so constructed

is the business of the real estate company and the value

of sale of those houses will always appear in the credit side

of the profit and loss accounts as "Revenue from

operations". Hence, this is not an asset, in case of real

estate company as it is recurrent business activity for the

company & it is its business for continuation of its

operation as a going concern even during CIRP.

g. Hence, we are unable to sustain the views of Respondent/RP that

these houses registration will violate 'Moratorium' under Section 14 of

the Code.

h. The Registration of all these houses is the 'procedural requirements',

in case of 'Real Estate Company' where the Appellants are already in

possession of these spaces from 2015 whereas CIRP was initiated on

11.02.2019.

i. Even the Hon'ble Apex Court in Bikram Chatterjee & ors. Vs. Union of

India & Ors. 2019 SCC SC 901 has held vide para 8 and 173 as follows:

"8.... The facts of the instant case project that Noida and

Greater Noida have allotted huge plots to the builders by

charging a sum of approximately 10 percent and in most of

the cases, thereafter no money has been paid. The large

number of projects which have come up not only in Noida

23 Company Appeal (AT) (Ins) No. 350 of 2020 and Greater Noida, but most of them have not been

completed by the builders/promoters and they have

siphoned buyers' money in large scale. No action has been

taken by the Noida and Greater Noida Authorities against

builders for cancellation of leases due to violation to fulfil

their obligation. Bankers have financed to builder certain

loan on the condition to invest in the projects, but they have

also permitted the money to be used as for other purposes

as apparent from the report of the Forensic Audit in the

instant case which had been submitted by Auditors - Mr.

Pawan Kumar Aggarwal and Mr. Ravinder Bhatia. The

facts which are projected in the Forensic Auditor Report

speaks for itself."

"173. We have also found that non-payment of dues of the

Noida and Greater Noida Authorities and the banks cannot

come in the way of occupation of flats by home buyers as

money of home buyers has been diverted due to the

inaction of Officials of Noida/ Greater Noida Authorities.

They cannot sell the buildings or demolish them nor can

enforce the charge against homebuyers/ leased land/

projects in the facts of the case. Similarly, the banks cannot

recover money from projects as it has not been invested in

projects. Homebuyers money has been diverted

fraudulently, thus, fraud cannot be perpetuated against

24 Company Appeal (AT) (Ins) No. 350 of 2020 them by selling the flats and depriving them of hard-earned

money and savings of entire life. They cannot be cheated

once over again by sale of the projects raised by

their funds. The Noida and Greater Noida Authorities have

to issue the Completion/ Part Completion Certificate, as the

case may be, to execute tripartite agreement and registered

deeds in favour of the buyers on part- completion or

completion of the buildings, as the case may be or where

the inhabitants are residing, within a period of one month."

j. This Tribunal has also held in Flat Buyer's Association Winter Hills -

77 Gurgaon Vs. Umang Realtech Pvt. Ltd. through the Resolution

Professional - CA(AT) (Ins) No. 926 of 2019 which notes as under:

"2.During the pendency of the appeal, the Company was

kept as a going concern out of investment made by the

Promoters of 'Umang Realtech Private Limited' but under

the supervision of the 'Interim Resolution Professional.

3. It is submitted that many of the apartments/ flats have

been completed, possession has been given, Sale Deed(s)

have been executed in favour of number of allottees

including Mr. Ajay Singh and Ms. Rachna Singh by the

'Corporate Debtor' through the 'Interim Resolution

Professional'. However, certain work is yet to be

completed such as electrical connection, supply of water

etc. which can be done only after necessary permission

25 Company Appeal (AT) (Ins) No. 350 of 2020 of the Competent Authority for which applications have

been moved and are pending consideration before such

Authorities."

All this suggests that the CIRP be positive to save the allottees and

not to work as a detriment to the allottees to save the Object of the

'Code'.

k. The Hon'ble Apex Court in Pioneer Urban Land and Infrastructure

Limited and Anr Vs. Union of India and Ors.(2019) 8 SCC 416 has held

that:

"72. In Bank of India v. Vijay Transport [Bank of India v.

Vijay Transport, 1988 Supp SCC 47 : AIR 1988 SC 151],

the Court was dealing with the contention that a literal

interpretation is not always the only interpretation of a

provision in a statute and the court has to look at the

setting in which the words are used and the

circumstances in which the law came to be passed to

decide whether there is something implicit behind the

words actually used which would control the literal

meaning of the words used. For the said purpose,

reliance was placed on R.L. Arora (2) v. State of U.P. [R.L.

Arora (2) v. State of U.P., (1964) 6 SCR 784 : AIR 1964

SC 1230] . Dealing with the said aspect, the Court has

observed thus: (Vijay Transport case [Bank of India v.

Vijay Transport, 1988 Supp SCC 47 : AIR 1988 SC 151]

26 Company Appeal (AT) (Ins) No. 350 of 2020 , SCC p. 51, para 11) "11. ... It may be that in

interpreting the words of the provision of a statute, the

setting in which such words are placed may be taken

into consideration, but that does not mean that even

though the words which are to be interpreted convey a

clear meaning, still a different interpretation or meaning

should be given to them because of the setting. In other

words, while the setting of the words may sometimes be

necessary for the interpretation of the words of the

statute, but that has not been ruled by this Court to be

the only and the surest method of interpretation."

l. All the above also suggests that the rights of home buyers cannot be

affected adversely in the `Corporate Insolvency Resolution Process' and

their interest is to be appropriately preserved and protected within the

parameters of the I & B Code, 2016.

m. Hence, in view of the above observations, this `Appellate Tribunal' is

not in a position to sustain the order of the `Adjudicating Authority'

and accordingly, this `Tribunal' sets aside the impugned order dated

16.01.2020, dismissing CA No.2265/(PB)/2019 in CP(IB) 593 of 2018

and directs the `Resolution Professional' to execute the sale deed after

collecting `Dues and Costs', if any, remaining unpaid, including the

`Costs of Registration', `Penalty' and `other incidental Costs', till date,

etc.

27 Company Appeal (AT) (Ins) No. 350 of 2020 The instant `Appeal' is allowed with the above observations. Pending

application, if any, stands disposed of. Interim order, if any, passed by

this `Tribunal' stands vacated.

No order as to costs.

[Justice M.Venugopal] Member (Judicial)

(Dr. Ashok Kumar Mishra) Member(Technical)

17thJune, 2022

New Delhi

Raushan.K

28 Company Appeal (AT) (Ins) No. 350 of 2020