Shikha Lal And Anr vs Earthcon Universal Infratech Private ...

This appeal is directed against the order dated 18.12 2023,

passed by the National Company Law Tribunal, New Delhi, Court No.

III (in short 'Tribunal') by which an application filed by the Appellants

bearing I.A No. 2791 of 2021 with the prayer to direct the RP to

include the name of the Appellants in the category of 'Flat Buyers',

has been dismissed.

Comp. App. (AT) (Ins) No. 1027 of 2024 2

2. The Appellants who are the father and daughter had applied for

allotment of an apartment on 16th floor, D-1602, 4 BHK, Size 2225

Sq. Ft. for total sale consideration of Rs. 52,59,900/-in the project

'Casa Royale' at plot no. GH-10, Sector 1, Greater Noida West,

Greater Noida, UP- 201306, an undertaking by the

Respondent/Corporate Debtor (CD) vide booking form dated

21.01.2019. A Builder Buyer's Agreement dated 09.01.2019 was

executed between the parties and as per Article 4 of the said

agreement, CD was to complete the construction work of the said

apartment on or before 12 months with grace period of 3 months i.e.

09.04.2020 from the date of agreement.

The Appellant deposited total amount of Rs. 26,22,9552- from

22 01.2019 to 22.03.2019 and since no construction was being done,

therefore, the Appellant requested for cancellation of their allotment

and refund of their money. In this regard, the appellant submitted a

cancellation affidavit dated 03.08.2019 with original documents to

AR of the CD. It was stated in the affidavit that the Appellant shall

have no dues left after taking the refundable amount but neither the

CD responded to their affidavit nor refunded the amount.

Comp. App. (AT) (Ins No. 1027 of 2024 3

4. The Appellant also registered a case before the UPRERA on

05.09.2019. The argument in the said case was heard and order was

reserved but vide order dated 28.02.2020, UPRERA adjourned the

case and kept the application in abeyance because the CD was

admitted into the CIRP.

5. An application under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (In short 'Code') was filed by the Financial

Creditor, namely, M/s Nisus Finance 85 Investment LLP 85 Anr.

against the CD which was admitted on 08.11.2020 and Jitendra

Arora was appointed as Interim Resolution Professional (HIP) but

subsequently Gaurav Katiyar was confirmed as the RP.

6. It is also pertinent to mention that the resolution plan

submitted by consortium of M/s D S Infraheights Pvt. Ltd. and M/s

Anand Buildtech Pvt. Ltd. which was approved by the CoC in its

26th meeting held on 19.08.2023 by 70.18% voting share. The RP of

the CD submitted an application bearing I.A No. 4466 of 2023 for

approval of the resolution plan in terms of Section 30(6) r/w Section

31 of the Code on 22.08.2023 which is pending adjudication.

Comp. App. (AT) (Ins) No. 1027 of 2024 4

7. When the Appellant came to know about the CIRP of the CD,

they submitted their claim in Form CA being financial creditor on

25.02.2020 which was accepted by the earlier RP vide email dated

03.03.2020.

8. The Appellant No. 1, vide letter dated 19.11.2020 and email

dated 20.12.2020 addressed to RP, withdrew the cancellation and

opted for the flat as no refund was made and none of the documents

executed between the parties were cancelled or terminated.

9. The RP vide his email dated 05.01.2021 circulated the list of

homebuyers as on 24.03.2021 in which the Appellant No. 1 was

reflected as "flat cancelled/surrendered, claim collated on

provisional basis" despite the fact that the Appellants opted for flat

by withdrawing the cancelation vide email dated 20.12.2020 and

hence, the list sent by the RP was. not found proper and the

Appellant fell in the category of flat buyer. The appellant through

their counsel, vide email dated 15.04.2021, requested to corvect the

list dated 24.03.2021 by including the name of the Appellant in the

category of flat buyers but did not receive any response, therefore,

the Appellant filed I.A No. 2791 of 2021 before the Tribunal.

Comp. App. (AT) (Ins) No. 1027 of 2024 5

10. The application was contested by the CD alleging that BBA was

executed on 09.01.2019 and as per the said BBA, the CD was to offer

the possession of the flat to the Appellants by April, 2019 but the

Appellant submitted an affidavit of cancellation on August, 2019

and as per para 4 and 8 of the affidavit of cancellation, the CD

before the insolvency commencement date repudiated the contract

and decided to refund the money.

11. The Tribunal dismissed the application of the Appellants on the

ground that they had willfully and voluntarily surrendered their unit

and RP had rightly collated the claim under the refund category and

as such the Appellants were held entitled to refund the money as

the only remedy left.

12. The Tribunal found that RP had not committed any illegality

with respect to the Appellants classification under the e refund

category and dismissed the application bearing I.A No. 2791 of 2021

on 18.12.2023.

13. Counsel for the Appellants has• argued that though the

Appellants had submitted cancellation certificate but it was clearly

mentioned that the Appellant shall have no right over the property

Comp. App. (AT) (Ins) No. 1027 of 2024 in question after taking the refundable amount, so far neither the

amount has been refunded nor the document executed between

the parties for the allotment of the flat was cancelled or terminated.

It is further submitted that the Appellant had also sent a letter dated

19.11.2020 brining to the notice of the Respondent its decision to

keep the flat and return all the original booking documents because

by that time Respondent had neither returned the amount received

from the Appellants nor cancelled the documents executed between

the parties, therefore, there is no binding contract between the

parties. It is further submitted that against the same Respondent/CD

one Mukesh Sharma filed an I.A No. 1822 of 2021 before the same

Court on behalf of 31 home buyers in the same project. In this case,

there was a tripartite agreement amongst buyers, seller and the Bank

being the subvention scheme home buyers. In that case also there

was a cancellation affidavit but no refund was made nor the

agreement was cancelled, therefore, the Tribunal allowed the

application with the following order:-

"With regard to prayer (e) of the application, we direct the RP to consider the claim of the buyers who had submitted an affidavit for cancellation but to whom no refund was made, nor the tripartite agreement was

Comp. App. (AT) (Ins) No. 1027 of 2024 cancelled, in respect of such buyers, the unit cancellation shall be revoked and they shall rank pani pasu in relation to all other homebuyers in class in relation to all their claim, rights and obligations etc."

14. It is further submitted that in another application filed by two

applicants / joint allottees bearing I.A No. 2230 of 2021, namely,

Savita Rani Bakshi and Sikha Bakshi. The allotment was cancelled

on the basis of execution of settlement deed dated 05.07.2019

and it was agreed before the Mediator that the amount of the home

buyers shall be returned. In the said case also, direction was issued

to the RP to consider the claim of the said Applicants as home

buyers/ allottees and in this regard, the following observations have

been made:-

"10. We have heard the Ld. Counsel for both the sides and perused the petition, reply along with documents as well as written submissions filed by them. On an analysis of the averments and pleadings it is seen that the Corporate Debtor /Respondent has admitted the claim of the. Applicants and in the settlement before the mediation, it has also agreed to refund an amount of Rs. 30.40 Lakhs. In the said settlement deed, it is not mentioned that the settlement deed will override the earlier agreement entered between the parties. Therefore, the contention raised by the Respondent that the earlier agreement stands cancelled / revoked automatically is not correct.

Comp. App. (AT) (Ins) No. 1027 of 2024 8

11. From perusal of the submissions made by Applicants it is seen that Corporate Debtor has been in default with regard to honoring the Mediation Agreement arrived at between the parties. It is clearly brought on record that the Applicants have re-served their right towards the flat in que-stion till such time the terms of agreement are complied with. The Applicants in this case have already paid more than 95o / o of the Base Sale Consideration for the Flat B-203 and so far, no third-party interest is stated to have been created With respect to the said flat. Therefore, we feel no prejudice is likely to be caused to anyone if prayers of the Applicants are allowed.

12. Further the Counsel for the Applicants have already stated on bar that Applicants shall pay all such legitimate payments qua the said flat as may be demanded from the class/category of Homebuyers to whom any flat has been allotted but the possession has not been delivered as part of the re-solution plan as may he approved 1;>y this Authority. We are also convinced that in the given facts and circumstances of the case the Corporate Debtor cannot be permitted to undue benefit of its own wrongs.

13. In view of the above, we hereby allow the present petition in its totality and direct the Resolution Professional to consider the claim of Applicants at par with "Home buyers/ Allottees: other approved units sold and possession not yet given" and consequently extend same/identical benefits to the Applicants as are available to all other allottees/homebuyers. It is made clear that the Applicants shall remain liable to pay all balance • dues in terms of Builder Buyer Agreement and the Resolution Plan as may be approved by this Authority. Accordingly, IA is disposed of."

Comp. App. (AT) (Ins) No. 1027 of 2024 9

15. On the other hand, Counsel for Respondent has submitted that

the claim of the Appellant cannot to be collated as homebuyer

instead of financial creditor - in class - refund category because they

have willfully and voluntarily surrendered their unit which is

acknowledged by way of an affidavit of cancellation filed by the

Appellants. It is submitted that as per of Section 5(8)(f) and

explanation, to become to homebuyer there should be a valid

subsisting builder buyer agreement or allotment but the Appellants

before the commencement of CIRP had surrendered their allotment

to the CD therefore the RP had collated the claim of Appellant as

financial creditor in class under refund category. It is further

submitted that the cancellation has been asked for by the Appellants,

therefore, the Appellant cannot approbate and reprobate at this stage

for the allotment of the flat and to be included in the list as a home

buyer.

16. As regards, the orders passed in I.A No. 1822 of 2021 is

concerned, it is submitted that the said order was passed in the

context of subvention buyers whereas there is nothing on record to

show that that the Appellants are under the category of subvention

Comp. App (AT) (Ins) No. 1027 of 2024 10

buyers. It is further submitted that the decision in I.A No. 2230 of

2021 is not applicable because in that case it was concluded by the

Tribunal that settlement cannot resulted into novation and older BBA

stands on the date of commencement of CIRP whereas in the present

case the Appellants have acknowledged the cancellation by their

affidavit.

17. We have heard Counsel for the parties and perused the record

with their able assistance.

18. It has been categorically averred in the affidavit of cancellation

by the Appellants that "after taking refundable amount from the

• Company, I shall have no dues left with the Company in any manner

whatsoever. It was also averred that "I agree to surrender all

relevant original documents given by the company to me at the time

of booking and later on, i.e .allotment letter, receipt etc. regarding

the said unit". The Appellant made clear to the Respondent that

they shall not have any right over the allotment of flat after taking

refundable amount from the company which was a point from

which the relationship between both the parties had come to an

end but before the amount could have been returned by the

Comp. App. (AT) (Ins) No. 1027 of 2024 11

Respondent, the Appellant served a letter dated 19.11.2020 in

which it was clearly mentioned that the appellants have not received

payment from the Respondent, therefore, the Appellants changed

their approach to keep their flat and return of their original booking

documents. Thus, sine qua non for termination of the agreement

between the parties was the refund of the amount as well as

cancellation of the document executed between the parties which

did not happen and before that the Appellants changed their mind

and informed the Respondent that they do not want cancellation of

their flat and refund of their money etc. In this regard, it is also

relevant to refer to the order passed by the Tribunal in I.A No.

1822 of 2021 by which thefl application filed by similarly situated

persons has been allowed on the ground that after the cancellation

no refund was made and nor tripartite agreement was cancelled.

Even if that was a case where the home buyers have taken loan from

the Bank by executing a tripartite agreement and that is why called

subvention home buyers but it does not make any difference in so

far as the case of the Appellant is concerned because the moot issue

is about the refund of the money and cancellation of documents

Comp. App. (AT) (Ins) No. 1027 of 2024 12

which would have brought an end to the relationship between the parties as

the buyer and the seller.

19. In view of the aforesaid facts and circumstances, we find force in the

submission made by the Appellants and hence, the present appeal is hereby

allowed, the impugned order is set aside and direction is issued to RP to

include the name of the Appellants in the category of flat buyers. No costs.

Pending IAs, if any, are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical) New Delhi 21st January, 2025 Sheetal

Comp. App. (AT) (Ins) No. 1027 of 2024