Pnb Housing Finance Ltd vs J.S.S. Buildcon Pvt. Ltd

Present: For Appellant : Mr. Prashant Tripathi, Advocate

ORDER

23.01.2020 The 'PNB Housing Finance Limited' disbursed loan to the

number of allottees and pursuant to 'Tripartite Agreement' executed on different

dates between 'PNB Housing Finance Limited' (Financial Creditor), 'individual

allottees' and 'JSS Buildcon Pvt. Ltd.' (Corporate Debtor). On behalf of the

allottees, the amount was disbursed in the account of the 'Corporate Debtor'

(Promoter/Developer) of infrastructure. 14 allottees who borrowed loan from the

'PNB Housing Finance Limited', as detailed below, defaulted in making the

payment :

Borrowers Date of Loan Amount Loan (disbursed to Agreement Corporate Debtor) Vansh Sachdeva 25.02.2015 52,86,640/- Ishwar Singh 19.09.2014 37,79,522/- Alpana Deva 27.01.2015 65,97,425/- Aman Duggal 30.12.2014 53,29,797/- Jagtar Singh 29.12.2014 47,48,944/- Atul Jagatnarayan 28.09.2014 44,75,080 Mishra Raju Srivastav 14.10.2014 37,98,800/- Puneet Khanna 20.01.2015 37,89,370/- Aakash Sachdeva 08.04.2015 49,74,149/- Rajesh Kumar 01.10.2015 42,31,200/- Arvind Kumar 11.06.2015 27,00,000/- 2

Shikha Singhal 17.03.2015 65,15,599/- Amit Kumar 28.07.2015 43,23,896/- Nisha Rathneesh 11.05.2015 44,86,593/- TOTAL 6,50,37,015/-

2. The 'PNB Housing Finance Limited' (Financial Creditor) having noticed

moved an application under Section 7 of the 'Insolvency and Bankruptcy Code,

2016 ('I&B Code', for short) against the builder - 'JSS Buildcon Pvt. Ltd.

(Corporate Debtor) on the ground that it has defaulted in making the payment.

3. The 'Corporate Debtor' on appearance before the Adjudicating Authority

(National Company Law Tribunal), New Delhi Bench specifically stated that it do

not owe any financial debt to 'PNB Housing Finance Limited' (Appellant) as

alleged and the transactions do not fall within the meaning of Section 5(8) of the

'I&B Code'. There has been no default on the part of the 'Corporate Debtor' and,

therefore, the petition under Section 7 of the 'I&B Code' is misplaced and liable

to be dismissed. The Adjudicating Authority found merit in arguments advanced

by the 'Corporate Debtor' and observed as follows:

"6. We find merit in the arguments

advanced by the ld. counsel for the Corporate

Debtor. It is common knowledge that housing

finance companies offer loans to people seeking

financial assistance for the purpose of booking

units in a particular project, and have a tie up

with the developers for procuring business from 3

such borrowers. The loan applications in this

case were made individually by the borrowers.

The accounts were opened by the borrowers with

the Financial Creditor and money disbursed in

the said account by the financial creditor to the

borrowers was disbursed automatically to the

Corporate Debtor as per Standing instructions.

The Tripartite agreement is only by way of

security that the Respondent would withhold the

allotment in the event of default by the borrower

and realization of any excess amount would be

given to the Financial Creditor. The financial

Creditor had only sought security by creating

mortgage of the residential units for the loans

availed by the allottees, and the Corporate

Debtor gave due permission for the same to

enable the borrower procure financial

assistance."

4. We have heard the learned counsel for the Appellant and being satisfied

that while we condone the delay of one day in preferring the appeal, we hold that

'PNB Housing Finance Limited' who has mortgaged the flats cannot be treated

as 'Financial Creditor' of 'J.S.S. Buildcon Private Limited' for the facts and

reasons discussed below.

4

Appellant has filed one of the sample 'Loan Agreements' with the 'Borrower'

(Allottee). In the said Agreement, clause 2.9 relates to 'Repayment' and clause

2.10 relates to 'Delay in payment' and reads as follows :-

"2.9 Repayment 5

5. The Agreement shows that for delayed payment, the Appellant - 'PNB

Housing Finance Limited'has agreed to levy additional interest on the borrower

(allottee) and any default by the borrower in making payment for EMI or PEMI

or any other payments having treated as an 'event of default' under Article 7.1

of the Agreement. Therefore, in each case, there will be a separate default and a

'corporate insolvency resolution process' cannot initiated against them.

6. Learned counsel for the Appellant have also relied on one ofthe 'Tripartite

Agreement' dated 15th December, 2014 reached between one of the allottee

(Borrower), 'PNB Housing Finance Limited' and by the builder, relevant of which

reads as follows:

6

"1. That on application for grant of housing

loan of the Borrowers and on receipt of intimation

from the Builder that the property has been

allotted to the Borrowers, PNBHFL has

sanctioned the housing loan for purchase of

Property of Rs.68,00,000/- (Rupees Sixty Eight

Lakh Only) to the Borrowers according to its

rules, but the actual payment in instalments will

be made by PNBHFL directly to the Builder as per

the norms of PNBHFL. Any amount towards

purchase price in excess of the "Housing Loan for

purchase of Property" sanctioned by PNBHFL will

be paid by the Borrowers directly to the Builder

as per sale agreement between the Builder and

the Borrowers and original money receipts will be

submitted to PNBHFL.

xxx xxx xxx

7. Further, the Builder, in the event of default of

repayment of loan by the Borrowers, shall on

written intimation/ instructions of PNBHFL

cancel the allotment of the Property of the

Borrowers and refund, the entire amount

advanced/ funded by PNBHFL directly to

PNBHFL and the Builder shall have right to

recover/ forfeit the earnest money. 7

xxx xxx xxx

13. The Builder will not transfer the said Property

to any other member or other person without

obtaining the previous written consent/ NOC

from PNBHFL.

14. In the event of default by the buyer/s or

Mortgagor/s or Borrowers, if PNBHFL exercise its

right enforces the security by sale, the Builder

would accept the purchaser/s of the Property as

a buyer, on such purchaser's complying with the

necessary formalities which are required to

become a buyer of the Builder.

xxx xxx xxx

16. The Borrowers and the Builder assume full

responsibility for and unconditionally agree to

indemnify, defend and hold harmless PNBHFL

from and against any and all claims, actions,

liabilities, losses, damages, costs and expenses

(including but not limited to attorneys fees)

arising from failure of Borrowers and Builder to

perform any of their respective obligations under

this and/or any other Agreement with PNBHFL

and/ or from the negligence or misconduct of the

Borrowers and the Builder."

8

7. The aforesaid agreement shows that the agreement relates to individual

allottee (Borrower) and in the event of default of repayment of loan by the

Borrower, on written intimation and instructions of 'PNB Housing Finance

Limited' the builder will cancel the allotment of the flats and thereafter the

amount is payable to the Punjab National Bank. However, nothing is brought

on the record by the Appellant to show that any cancellation of the allotment

was made and notice was issued to the individual allottees by the 'PNB Housing

Finance Limited'.

8. In terms of clause 13 of the said 'Tripartite Agreement', the builder cannot

transfer the property to any other member or other persons without obtaining

the written consent/NOC from 'PNB Housing Finance Limited'. Further clause

14 shows that default by the buyers or mortgagor of borrowers, the 'PNB

Housing Finance Limited' has right to exercise to enforce security by sale and in

such case, the builder will accept the purchaser as a buyer and comply with the

necessary formalities as 'PNB Housing Finance Limited' has right to sell the

property as a mortgager. Therefore, 'PNB Housing Finance Limited', who claimed

to be mortgager of the premises of the allottees cannot move the application

under Section 7 of the 'I&B Code' on the basis of the Tripartite Agreement, which

is not maintainable.

We find no merit in this appeal. The appeal is dismissed. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[ Shreesha Merla ] Member (Technical) /ns/RR