Uco Bank vs Debashish Nanda Resolution ...

[Arising out of Order dated 08.01.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench, Court - II), in IA- 4347/2023 in C.P.(IB)-1744 of 2019]

IN THE MATTER OF: UCO Bank ...Appellant Versus Debashish Nanda, Resolution Professional Bulland Buildtech Pvt. Ltd. ...Respondent

Present: For Appellant : Mr. Brijesh Kumar Tamber and Mr. Prateek Kushwaha, Advocates.

For Respondent : Mr. Sumant Batra, Mr. Sarthak Bhandari and Ms. Riya Kaur Arora, Advocates for R-1/RP.

WITH

Company Appeal (AT) (Insolvency) No. 1911 of 2024 & I.A. No. 7059 of 2024

[Arising out of Order dated 09.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench, Court - II), in I.A.- 1449/2022 in C.P.(IB)-1744 of 2019]

IN THE MATTER OF: UCO Bank ...Appellant Versus Debashish Nanda, Resolution Professional Bulland Buildtech Pvt. Ltd. ...Respondent

Present: For Appellant : Mr. Brijesh Kumar Tamber and Mr. Prateek Kushwaha, Advocates. For Respondent : Mr. Sumant Batra, Mr. Sarthak Bhandari and Ms. Riya Kaur Arora, Advocates for R-1/RP.

Ms. Noor Shergill, Advocate for SRA/R-2.

JUDGMENT

ASHOK BHUSHAN, J.

I.A. No. 7059/2024

In Comp. App. (AT) (Ins.) No. 1911/2024

1. This is an application praying for condonation of 13 days delay in filing

of the appeal.

2. Sufficient cause has been shown in the application for condonation of

delay.

Delay condoned.

Comp. App. (AT) (Ins.) Nos. 465 & 1911/2024

1. These two appeals have been filed by the appellant challenging the order

dated 08.01.2024 passed by the adjudicating authority (National Company

Law Tribunal, New Delhi Bench, Court - III) rejecting the I.A. No. 4347/2023

filed by the UCO Bank and order dated 09.07.2024 passed in I.A. No.

1449/2022 approving the resolution plan in the Corporate Insolvency

Resolution Process (CIRP) of the corporate debtor - M/s. Bulland Builtech Pvt.

Ltd.

2. Brief facts necessary to be noticed giving rise to these appeals are to the

following effect:

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 2 of 37 i. The corporate debtor M/s. Bulland Buildtech Pvt. Ltd. is a Real Estate

Company which has engaged in a residential project namely "Bulland

Elevates" situated in Greater Noida, Gautam Buddh Nagar, Uttar

Pradesh.

ii. In the above Real Estate Project, company allotted various flats to

several persons. Several unitholders entered into Tripartite Agreement

with UCO Bank and the company under which financial facility was

obtained by the borrower for purchase of the units.

iii. As per UCO Bank, 45 unitholders were sanctioned home loans on

different dates in the year 2013 onwards. On the instruction of

homebuyers, the amounts were paid to the corporate debtor.

iv. Canara Bank filed an application under Section 7 of the IBC against the

corporate debtor M/s. Bulland Buildtech Pvt. Ltd. on which CIRP

against the corporate debtor was initiated vide order dated 22.03.2021

passed by the adjudicating authority.

v. IRP through public announcement dated 26.03.2021 invited claim from

the creditor of the corporate debtor wherein the last date for submission

of the claim was 06.04.2021.

vi. UCO Bank also filed its claim in 'Form-C' dated 05.04.2021 for an

amount of Rs.18,82,07,927/-. The claim was filed on the basis of home

loans sanctioned to 45 unitholders. In the claim form, the UCO Bank

relied on the sanctioned letters as well as the Tripartite Agreement

entered with the unitholder.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 3 of 37 vii. The Interim Resolution Professional (IRP) by email dated 22.04.2021

declined to accept the claim of the applicant. The applicant sent various

emails and reminders to the IRP.

viii. Debashish Nanda, respondent was appointed as RP on 03.09.2021.

Applicant wrote to the RP and requested to provide the status of the

claim. UCO Bank thereafter filed I.A. No.4373/2023 praying for

direction to the RP to verify/consider/admit the claim of the applicant.

ix. Reply was filed by the RP to the said application. In the reply, the RP

has while objecting the claim of the applicant also pleaded that CoC

with 94.37% voting, held on 9th CoC Meeting dated 21.03.2022, has

approved the resolution plan. The RP also in the reply pleaded that

loan disbursed by the UCO Bank has been done without due diligence

and the allottees were not genuine homebuyers and in the record of the

corporate debtor the allotment to unitholders as claimed is not shown.

x. CRM data and homebuyer software does not support the claim. 25

allottees are speculative investor. Claim of only one allottee was found

and admitted i.e., unitholder for the unit Flat No. F-1703.

xi. The adjudicating authority heard the applicant, UCO Bank and the RP

and by order dated 08.01.2024 has rejected I.A. 4373/2023, aggrieved

by which order, Comp. Appeal (AT) (Ins.) No. 465/2024 has been filed.

xii. The RP after approval of the resolution plan filed an I.A. No. 1449/2022

praying for approval of the resolution plan and addendum to resolution

plan was also filed. The adjudicating authority considered the I.A. No.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 4 of 37 1449/2022 and by order dated 09.07.2024 has approved the resolution

plan submitted by Saviour Builders Pvt. Ltd., the R-2 in Comp. App.

(AT) (Ins.) No. 1911/2024. Aggrieved by the order approving the

resolution plan Comp. App. (AT) (Ins.) No. 1911/2024 has been filed.

3. We have heard Mr. Brijesh Kumar Tamber and Mr. Prateek Kushwaha

learned counsels appearing for the appellant. Learned counsel Mr. Sumant

Batra has appeared for the RP. We have also heard learned counsel appearing

for the Successful Resolution Applicant (SRA).

4. Learned counsel for the appellant challenging the order passed by the

adjudicating authority dated 08.01.2024 rejecting the application filed by the

UCO Bank for accepting its claim submits that adjudicating authority

committed error in rejecting the claim of the appellant. It is submitted under

Tripartite Agreement with the unitholder, UCO Bank and the corporate debtor

home loan was sanctioned to the borrower which was paid to the corporate

debtor under the instruction of borrower. Under the Tripartite Agreement it

was the responsibility of both the borrower and the corporate debtor to comply

with the terms and conditions of the Tripartite Agreement. The Bank also got

its charge registered with Central Registry of Securitisation Asset

Reconstruction and Security Interest of India with respect to some of the units

against which the home loans were sanctioned. Charge of the Bank has bas

been registered against the units. It is submitted that as per the clause of the

Tripartite Agreement in event borrower fails to repay the dues, the Bank shall

have absolute right to the said stage to transfer alienate and deal with the

same and realise their outstanding dues and borrower has no right to create Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 5 of 37 any obstruction and objection thereto. The borrower has undertaken to

deposit the registered title deeds of the units before the Bank to create a

mortgage by deposit of title. It is submitted that the security interest was

created in favour of the UCO Bank in the units for which home loan was

sanctioned by the UCO Bank. Banks claim which was filed on the basis of

sanction of loan to 45 unitholders after entering into Tripartite Agreement was

liable to be accepted by the RP. Adjudicating authority committed error in

rejecting the I.A. filed by the appellant for acceptance of claim. Learned

counsel for the appellant further submits that the Bank has filed application

before the Debt Recovery Tribunal (DRT) against unitholders and the company

in which proceeding, decree has been passed by the DRT on different date in

the year 2019-2020 in favour of the Bank against the borrowers and the M/s.

Bulland Buildtech Pvt. Ltd. It is submitted that appellant having disbursed

the amount to the company, it is the financial creditor of the corporate debtor

within meaning of Section 5(8) of the IBC and adjudicating authority

committed error in rejecting the application. Learned counsel for the

appellant further submits that as per the terms of contractual arrangement

entered between the parties wherein the corporate debtor was obligated to

indemnify the Appellant Bank. The transaction is a financial debt within the

meaning of Section 5, sub-section (8)(i). The corporate debtor having taken

liability to indemnify the Bank, the transaction is a financial debt.

5. In support of Comp. App. (AT) (Ins.) No. 1911/2024, appellant submits

that plan has been approved without taking into consideration the claim of

the appellant which was erroneously rejected on 08.01.2024. The resolution

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 6 of 37 plan which has been approved by the adjudicating authority without

considering the claim of the appellant as financial creditor, approval of the

resolution plan deserves to be set aside.

6. Learned counsel Mr. Sumant Batra appearing for the RP refuting the

submission of the appellant submits that appellant is not the financial

creditor of the corporate debtor. Appellant has sanctioned home loan to the

allottees and the amount was disbursed to the allottees only and it is the

allottees who were the financial creditor, the disbursal cannot be said to be in

favour of the corporate debtor. On the basis of Tripartite Agreement, appellant

cannot claim to be financial creditor of the corporate debtor. Corporate debtor

has neither applied nor availed any financial assistance from the UCO Bank.

It is the allottees who were sanctioned the credit within the meaning of Section

5(8)(f) of the Code since the amounts have been raised by the corporate debtor

from the individual allottees and not from the UCO Bank. The amount was

sanctioned by the Bank to the allottees and on the instructions to the allottees

was paid to the corporate debtor. It is submitted that out of the units claimed

by the appellant, 20 units have been allotted to other allottees who had made

payment to the corporate debtor and filed their claims whose claim have been

admitted. Claim of certain individuals to whom the appellant claim to have

sanctioned the loan had filed the claims in 'Form-CA' which was rejected by

the IRP since their name could not reflect in the record of the corporate debtor.

Claim of 6 individuals were rejected and 24 others even did not file any claim.

Those individuals filed an application before the adjudicating authority

claiming to be the homebuyer which claim to be rejected by the adjudicating

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 7 of 37 authority. Out of 44 units claimed by the appellant, 13 units were not allotted

to any allottees and said units are reflected as vacant inventory as per the

record of the corporate debtor. It is submitted that with regard to several

transactions made by the promoters of the corporate debtor, avoidance

application has been filed by the RP under Section 66 of the Code by I.A.

No.1286/2022 with respect to certain persons whose names are included in

the list of unitholders. The claim of only Parmit Jaiswal has been accepted

as a genuine allottee who has been allotted Flat No. 1703, F Block, who had

filed its claim before the RP. The decrees passed by the DRT which have been

filed along with the appeal were not the basis of claim filed by the UCO Bank

nor they were relied in the application which was filed by the UCO Bank before

the adjudicating authority seeking a direction to admit a claim. Decrees

which have been filed along with the appeal were prior to the initiation of

CIRP, however, they were not basis of the claim of the UCO Bank hence are

not relevant for considering the appeal. It is submitted that financial facility

was extended to the borrowers/allottees and not to the corporate debtor, no

claim can be made by the appellant from the corporate debtor. It was

borrower who were liable to refund the amount. Mr. Batra further submits

that in the avoidance application which has been filed by the RP for avoiding

certain transactions entered by the promoters with respect to some of the

allottees out of 44 loan accounts, in event any proceeds are received, the same

can be given to the Bank subject to approval of the SRA.

7. Learned counsel for the SRA also supported the impugned order and

submits that resolution plan was submitted on the basis of admitted claims

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 8 of 37 and the claim of the appellant was never admitted. Learned counsel for the

SRA submits that the loan was not taken by the corporate debtor hence

corporate debtor was not liable to make any refund and bank cannot claim

itself a financial creditor of the corporate debtor. Learned counsel for the SRA

submits that insofar as proceeds of Section 66 application for avoidance of

transaction, if any amount is received the SRA has no objection to the said

amount being paid to the UCO Bank towards its outstanding dues.

8. We have considered the submissions of the counsel for the parties and

perused the records.

9. Both the parties have relied on various judgments of this Tribunal and

the Hon'ble Supreme Court which we shall refer to while considering the

submissions.

10. The issue which has arisen for consideration in the appeal is as to

whether the claim submitted by the appellant in 'Form-C' for an amount of

Rs.18,82,07,927/- was a financial debt owed by the corporate debtor and as

to whether the RP was obliged to accept the claim as financial creditor. As

noted above, the claim was filed by the appellant within time by its letter dated

05.04.2021 which claim was not accepted by the RP leading to the filing of

the application I.A.4347/2023 by the appellant before the adjudicating

authority which came to be rejected on 08.01.2024. We need to first notice

the 'Form-C' which was filed by the UCO Bank dated 05.04.2021 for raising

its claim. Copy of 'Form-C' has been brought on record as Annexure A-4 to

the appeal. Appellant claiming to be a financial creditor has filed the claim.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 9 of 37 Relevant particulars of 'Form-C' which are particulars of 'Form-C' regarding

the claim are as follows:

"FORM C SUBMISSION OF CLAIM BY FINANCIAL CREDITORS (Under Regulation 8 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016) Date 05/04/2021 From: UCO Bank, Asst Management Branch, Ground Floor, 5, Parliament Street New Delhi-110001 To The Interim Resolution Professional/Resolution Professional, Shri Mahesh Taneja Value plus Insolvency Resolution Professionals Pvt Ltd. 1-B, 1/17, Lalita Park, Laxmi Nagar East Delhi-110092 Email: irpbullandbuiltech@gmail.com Subject: Submission of claim and proof of claim. Madam/Sir, UCO Bank, hereby submits this claim in respect of the corporate insolvency resolution process of M/s Bulland Buildtech Pvt. Ltd. The details for the same are set out below:

Relevant Particulars

1. Name of the financial UCO BANK creditor

2. Identification number UCO BANK (2128) of the financial creditor (If an incorporated body, provide identification number Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024

10 of 37 and proof of incorporation. If a partnership or individual provide identification records of all the partners or the individual)

3. Address and email Assets Management address of the Branch. UCO Bank financial creditor for Building Ground Floor, correspondence 5, Parliament Street, New-Delhi - 110001.

Email; NEWAMB@ UCOBANK.CO.IN

4. Total amount of claim RS. 188207927/- (RS.

EIGHTEEN Crores eight (including any two lakhs seven interest as at the THOUSAND NINE insolvency HUNDRED AND commencement date) TWENTY SEVEN ONLY.)

5. Details of documents Sanction letters.

by reference to which Tripartite Agreement the debt can be and statement of substantiated account of 44 home loan accounts.

6. Details of how and Our bank has when debt incurred sanctioned and disbursed the home loan to the borrowers/Allotees of M/s Bulland Buiidtech Pvt. Ltd under Tripartite Agreement.

7. Details of any mutual NIL credit, mutual debts, or other mutual dealings between the corporate debtor and the creditor which

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 11 of 37 may be set-off against the claim

8. Details of any FLATS ALLOTED TO security held, the THE DIFFERENT value of the security, BUYERS/BORROWERS and the date it was AS PER TRIPARTITE given AGREEMENT

9. Details of the bank IFSC code:

account to which the UCBA0002128 amount of the claim A/C or any part thereof No.01200210002186 can be transferred pursuant to a UCO BANK, AMB, NEW resolution plan DELHI

10. List of documents 1) SANCTION LETTERS attached to this claim 2) TRIPARTITE in order to prove the existence and non- payment of claim due to the financial creditor

Relevant Particulars

AGREEMENT 3. STATEMENT OF ACCOUNTS

(Signature of financial creditor or person authorised to act on his behalf) (Please enclose the authority if it is being submitted on behalf of the financial creditor)

Name in BLOCK LETTERS: MAHESH KUMAR

Position with or in relation to creditor: ASSISTANT GENERAL MANAGER

Address of person signing: UCO BANK, ASSET MANAGEMENT BRANCH, 5, PARLIAMENT STREET, NEW DELHI-110001

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 12 of 37 PAN number, passport, AADHAR Card or the identity card issued by the Election Commission of India.

DECLARATION I, Mahesh Kumar, Assistant General Manager currently residing at UCO Bank, 5, Parliament Street, New Delhi do hereby declare and state as follows: -

1. UCO Bank, the corporate debtor was, at the insolvency commencement date, being the 5th day of April 2021, actually indebted to me for a sum of Rs. Rs.

188207927/- (RS. EIGHTEEN CRORES EIGHT TWO LAKHS SEVEN THOUSAND NINE HUNDRED AND TWENTY SEVEN ONLY.) In respect of my claim of the said sum or any part thereof, I have relied on the documents specified below: SANCTION LETTERS, TRIPARTITE AGREEMENT and STATEMENT OF ACCOUNTS.

2. The said documents are true, valid and genuine to the best of my knowledge, information and belief and no material facts have been concealed therefrom.

3. In respect of the said sum or any part thereof, neither I, nor any person, by my order, to my knowledge or belief, for my use, had or received any manner of satisfaction or security whatsoever, save and except the following:

[Please state details of any mutual credit, mutual debts, or other mutual dealings between the corporate debtor and the creditor which may be set-off against the claim].

4. I am / I am not a related party of the corporate debtor, as defined under section 5 (24) of the Code.

5. I am eligible to join committee of creditors by virtue of proviso to section 21 (2) of the Code even though I am a related party of the corporate debtor.

Date: 05.04.2021 Place: New Delhi (Signature of Claimant) VERIFICATION

1. Mahesh Kumar, the claimant hereinabove, do hereby verify that the contents of this proof of claim are true and correct to my knowledge and belief and no material fact has been concealed therefrom. Verified at New Delhi on this 5th day of April 2021 Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 13 of 37 (Signature of claimant) [Note: In the case of company or limited liability partnership, the declaration and verification shall be made by the director/manager/secretary/designated partner and in the case of other entities, an officer authorised for the purpose by the entity.]"

11. The above details indicate that basis of the claim is sanction letters and

Tripartite Agreement of accounts of 44 home loan accounts. There is no

dispute that sanction letter was issued by the Bank in favour of the

unitholder. The sanction letters and Tripartite Agreement and statement of

accounts are the documents which have been relied in the 'Form-C' for

proving financial debt. Section 3(6) defines the claim in following manner:

"3. Definitions.-

In this Code, unless the context otherwise requires,-- (6) "claim" means--

(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;

(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;"

12. Section 3(11) defines debt in following manner:

"3. Definitions.-

In this Code, unless the context otherwise requires,-- (11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;"

13. Section 5(8) defines financial debt. Sections 5(8)(f) & 5(8)(i) which is

relevant for the present case is as follows:

"5. Definitions.-

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024

14 of 37 In this Part, unless the context otherwise requires,-- (8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes--

(f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;

Explanation. -For the purposes of this sub-clause,-

(i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and

(ii) the expressions, "allottee" and "real estate project" shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);

(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;"

14. For a creditor to be a financial creditor a financial debt is owed and is

required to be owed. The definition of claim, we have noted above which is

the right of payment whether or not such right is reduced to judgment, fixed

disputed, undisputed, legal, equitable, secured or unsecured. The basis of

claim is Tripartite Agreement and the clauses therein. We need to look into

the one of the Tripartite Agreements which is part of the appeal filed as

Annexure A-5 to the appeal dated 10.09.2013 entered between Mrs. Praveen

Gupta borrower mortgager/first party as one part, UCO Bank as second part

and M/s. Bulland Buildtech Pvt. Ltd. as third part. The statement in

Tripartite Agreement clearly mentions that Bank has sanctioned the credit

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 15 of 37 facility to the borrower for buying the property as stated in Schedule II, which

statement is as follows:

"...Whereas the borrower herein, on their requests and subject to compliances of requirements of SECOND PARTY herein, have been sanctioned the credit facility, as stated in Schedule I, herein below, (for short, "the said credit limit") for the purpose of buying the property as stated in Schedule II appended below, (for short, "the said space") agreeing to be purchased by the first party herein from owner/builder, as the case may be, in the project, as the terms and conditions as have been applicable thereto, inclusive but not limited to the personal guarantee of Guarantors herein and security, lien and equitable mortgage of the said space..."

15. The statement made by the owner and builder is that land still subsists

by virtue of registered title deed read with requisite provision in their favour

which are free from all encumbrances demands, mortgagers, liabilities, gifts,

lien etc. The Agreement contained various statements on some of which

reliance is placed by the appellant. Appellant has relied on clause 9 of the

Tripartite Agreement which contemplate eventuality when first party fails to

repay the dues. Clause 9 is as follows:

"9. That the first party undertake that in case they fail to repay the dues under «& on account of said credit limits as per the agreed terms and conditions, then the second party shall have absolute right to get the said space transferred, alienated, sold and/or dealt with the same in any manner to realise their entire outstanding dues, and the first party shall not have any right to create any obstruction and objection thereto."

16. The above clause contains a stipulation that when borrower fails to

repay the Bank shall have absolute right to get the said space transferred

alienated sold and fist party shall not have any right to create any obstruction

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 16 of 37 and objection thereto. The said clause is obligation of first party i.e., a

borrower. To the similar effect is Clause 12 which is as follows:

"12. That in case of the failure of the said first party, to liquidate the entire outstanding amount of the second party, under the said credit limits, the second party shall be entitled to get sold and auctioned the said space in the manner as deem fit, with/without recourse to the court of law and the sale proceeds thereof, shall be appropriated towards the outstanding dues and the first party shall not make any objection, &challenge to such action of the second party."

17. The first party has appointed the second party their irrevocably and

unconditionally true and lawful attorney. Clause 19 of the Agreement is as

follows:

"19. That the first party do hereby appoint the second party herein their irrevocably and unconditionally true and lawful attorney and empower the said attorney to take all actions and do all deeds, at whatsoever, for the compliance oftens of the present agreement and give discharge for and on their behalf and in their name. All or any of act of their said attorney shall be deemed as if done by us and shall be binding on us."

18. Learned counsel for the appellant has also relied on Clause 41 of the

Agreement which is as follows:

"41. That the owner and the builder herein jointly and/or severally agree/s and accept/s the present terms and conditions of this agreement and binds itself from the said terms and conditions and the same are not repeated herein separately only for avoidance of the repetition and desirous of being brief and short. The owner and builder are further agreed that all the terms and conditions hereof shall be applicable upon them, so far as the same pertains to the rights to the bank over the said space, in the capacity of owner and builder, as may be applicable which are applicable against the first party herein."

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 17 of 37 to contend that builder has also jointly and severally agreed and

accepted the terms and conditions of the Agreement and bind itself from the

said terms. When we look into the Tripartite Agreement relied by the

appellant under none of the clauses of Tripartite Agreement the corporate

debtor has undertaken to make the payment to the Bank of financial facilities

which was extended to the borrower in event of failure of the borrower to pay

the outstanding. The Agreement of course permits that Bank to sell, alienate

and transfer the unit. The first question to be considered as to whether the

transaction i.e., Tripartite Agreement makes the Bank financial creditor of the

corporate debtor. We have noticed the definition of claim above which clearly

provides that claim means a right to payment, right to remedy for breach of

contract. Claim of the appellant is on basis of Tripartite Agreement the claim

shall arise only when the Tripartite Agreement gives any right to payment to

the Bank from the corporate debtor. The home loan has been sanctioned by

the Bank to the borrower and under the Tripartite Agreement it is the liability

of the borrower to repay the amount and on failure of the borrower in making

to payment the Bank is entitled to alienate transfer of this case for which

facility was extended. None of the clauses in the Tripartite Agreement cast

any obligation of the corporate debtor to make repayment of the loan to the

Bank. It is relevant to notice that present is not a kind of Agreement to enter

with respect to subvention scheme. The corporate debtor never undertook to

pay any invoice as in normal subvention scheme. The entire liability to pay

the home loan was on the borrower and corporate debtor has never

undertaken to repay the loan. We fail to see that how the appellant can claim

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 18 of 37 right to payment from the corporate debtor on the basis of Tripartite

Agreement when loan is sanctioned to borrower disbursal of the loan is also

to the borrower although on the instruction of borrower it is made to the

corporate debtor. We also need to consider the submission of the appellant

on the strength of Section 5, sub-section (8)(i) of the IBC. Section 5, sub-

section (8) (i) is as follows:

"5(8)(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause;"

19. Learned Counsel for the appellant to bring the transaction within the

meaning of Section 5, sub-section (8)(i) contends that the clauses of Tripartite

Agreement specially Clause-41 contains an indemnity by the builder to

indemnify the Bank. The copy of Tripartite Agreement has been brought on

record by the appellant as Annexure A-5. We have noted relevant clauses of

the Tripartite Agreement in preceding paragraphs of this judgment. Clause-

12 provides that in case of failure of the borrower to liquidate the entire

outstanding amount to the Bank, the Bank shall be entitled to get sold and

auctioned the said space in the manner as deem fit and Borrower shall not

make any objection, & challenge to such action of the Bank. Thus, the

condition to liquidate the outstanding amount and consequences are provided

in Clause-12. The clauses as provided in Tripartite Agreement do not

contemplate liability to be taken over by the Builder or Builder to make any

repayment to the Bank. Learned Counsel for the Appellant placed reliance on

Clause-41 of the Tripartite Agreement. Clause 41 of the Tripartite Agreement

as extracted above, cannot be read as any indemnity given by the Builder in

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 19 of 37 favour of the Bank. Section 124 of the Contract Act defines 'contract of

indemnity'. Section 124 of the Contract Act is as follows:

"124. "Contract of indemnity" defined.--A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".

20. As per the definition of 'contract of indemnity', there has to be a promise

by one party to save the other from loss caused to him by the conduct of the

promisor himself, or by the conduct of any other person. None of the clauses

of Tripartite Agreement contain any contract of indemnity and Clause-41 on

which reliance is placed, only contains agreement of builder that it accepts

the present terms and conditions of the Tripartite Agreement and binds itself

for the said terms and conditions. Thus, Clause-41 is reiteration of earlier

terms and conditions of the Agreement. Applicability of Clause-41 arises only

when there is any terms and conditions in the Agreement, which requires

Builder to discharge the liability of Borrower for repayment to the Bank. There

being no such terms and conditions in the Tripartite Agreement that on failure

of Borrower to repay the loan to the Bank, the Builder is obliged to discharge

the liability, Clause-41 in no manner helps the Appellant in the facts of the

present case.

21. The adjudicating authority in the impugned order has relied on the

judgment of this Tribunal in 'Axis Bank' Vs. 'Value Infracon India Pvt. Ltd.

& Anr.' reported in [2021 SCC OnLine NCLAT 426]. In the above case also

Axis Bank had filed the application before the adjudicating authority seeking

a direction to declare the applicant Bank as secured financial creditor with a

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 20 of 37 claim amount as claimed in 'Form-C'. The Bank in the above case has

sanctioned loan to 42 homebuyers. The Bank had obtained a decree against

42 allottees from the DRT. The claim submitted by the Axis Bank was not

accepted hence application was filed which came to be rejected by

adjudicating authority. This Tribunal referring to the judgment of the Hon'ble

Supreme Court in 'Pioneer Urban Land & Infrastructure Ltd. & Anr.' Vs.

'Union of India & Ors.' made following observations in paragraphs 8 & 9:

"8. It is not disputed that M/s. Axis Bank has sanctioned loans to 44 home buyers/allottees who have purchased units/flats, in the project floated by the "corporate debtor". Home buyers were included as "financial creditors" vide amendment dated June 6, 2018. Section 5(8) of the Code reads as follows:

"5. Definitions.--In this Part, unless the context otherwise requires,--..

(8) 'financial debt' means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes--

(a) money borrowed against the payment of interest ;

(b) any amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent ;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument ;

(d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed ;

(e) receivables sold or discounted other than any receivables sold on non-recourse basis ;

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 21 of 37

(f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing ;

Explanation.--For the purposes of this sub- clause,--

(i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing ; and

(ii) the expressions, 'allottee' and 'real estate project' shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016) ;

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account ;

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution ;

(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in subclauses (a) to (h) of this clause"

(emphasis supplied)

9. The hon'ble Supreme Court in paragraphs 18 and 19 in Pioneer Urban Land and Infrastructure Ltd. v. Union of India (2019) 217 Comp Cas 1 (SC) ; (2019) 8 SCC 416 has observed as follows (page 38 of 217 Comp Cas):

"It can be seen that the Insolvency Law Committee found, as a matter of fact, that delay in completion of flats/apartments has become a common phenomenon, and that amounts raised from home buyers contributes significantly to the financing of the construction of such flats/apartments. This being the case, it was important, therefore, to clarify that home buyers are treated as financial creditors so that they can trigger the Code under Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024

22 of 37 section 7 and have their rightful place on the committee of creditors when it comes to making important decisions as to the future of the building construction company, which is the execution of the real estate project in which such home buyers are ultimately to be housed. Shri Shardul Shroff, whose dissent was provided to us in the form of an e-mail, after finding that self-financed home buyers may be financial creditors, but a home buyer who is a borrower is not, then went on to state:

'8. If the home buyers have taken loans from banks, then it is such lenders who should be on the table on the CoC as special status creditors.

9. Our report ought to be altered to the extent that home buyers financiers should be treated as unsecured financial creditors and they should be representatives of the home buyers. There should be no direct right given to home buyers to be on the CoC.' Even the dissent of Shri Shroff recognises that in the case of home buyers, who have taken loans from banks, such banks ought to be on the committee of creditors. If such banks ought to be on the committee of creditors as representatives of the home buyers, and they are to vote only in accordance with the home buyer's instructions, why should the home buyer himself then not be on the committee of creditors, and why should it make any difference as to whether he has borrowed money from banks in order to pay instalments under the agreement for sale or whether he does it from his own finances ? These matters have not been addressed by the dissenting view which in principle, as we have seen, supports home buyers who have taken loans as against home buyers who have used their own finances. Perhaps the real reason for Shri Shroff's dissent is the fact that unsecured, as opposed to secured, financial creditors are being put on the committee of creditors. If there is otherwise good reason as to why this particular group of unsecured creditors, like deposit holders, should be part of the committee of creditors, it is difficult to appreciate how such a group can be excluded."

(emphasis supplied)"

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024

23 of 37

22. One of the clauses in Tripartite Agreement has been extracted in

paragraph 14 of the judgment, which is as follows:

"14. The relevant clause of the tripartite agreement entered into between the home buyers, the developer and the appellant/M/s. Axis Bank is reproduced as hereunder: "It is agreed by and between the parties to this agreement that in case if the borrower fails to honour the commitment, the developer/ builder shall inform the bank and the bank shall have the right to pay the sale consideration and get it registered either in Bank's name or its nominee. Likewise in the event the borrower defaults in payment of instalments then, in such an event also, the bank shall have the right to inform about such default on the part of the borrower to the builder and shall accordingly have the right to write to the builder cancellation of agreement executed between the builder and the borrower, where after the bank shall have the right to pay the sale consideration and get the subject property registered either in the bank's name or in the name of the bank's nominee."

23. This Tribunal noticed the fact that Bank has rendered financial

assistance for the purpose of booking units in the project of corporate debtor

and Agreements were made individually by the borrowers. This Tribunal in

the above facts have held that financial institution which has advanced loan

to homebuyers cannot be considered as financial creditors and included in

the Committee of Creditors (CoC). Liability to pay home loan is on the

individual homebuyers. In paragraph 15 to 17, following was held:

"15. It can be seen from the material on record that Axis Bank had rendered financial assistance for the purpose of booking units in the project floated by the "corporate debtor" and had a tie-up with the "corporate debtor" for procuring business from the home allottees. The home loan agreements in these cases were made individually by the borrowers. As per standing instructions, the money in the account of the home allottees was disbursed automatically to the "corporate debtor". Tripartite agreement is only by way of security

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024

24 of 37 that the developer would withhold the allotment in the event of default by the allottee. The bank had sought security by creating mortgage of the residential units for the loans availed by the home buyers and the "corporate debtor" had given permission for the same to enable the home buyer to procure financial assistance.

16. From the aforenoted clause in the tripartite agreement entered into between the home buyer, the Axis Bank and the "corporate debtor", it is evident that in case of any default by the borrower, the bank would have the right to write to the builder for cancellation of agreement executed between the developer and the borrower, whereafter the bank shall have the right to pay the sale consideration and get the subject property registered. There is no material on record to evidence that any such cancellation has taken place. The home loan agreement read with the demand letters and the allotment letter clearly specify that when there is a "default" on behalf of the home allottee a penalty interest would have to be paid by the allottee to the bank. Therefore, the "default" aspect is to be seen vis- a-vis the home allottee and the appellant-bank only. It is contended by the respondent that though the allotment letter shows that the payments were construction linked, the bank released the entire amount prior to completion of construction.

17. Be that as it may, we are of the considered view that this subject matter cannot be viewed from such a narrow compass. It is definitely not the scope and objective of the Code to include banks/financial institutions which have advanced loans to home buyers to be considered as "financial creditors" and included in the CoC, specifically in the light of the fact the liability to repay the home loan is on the individual home buyers. This would defeat the very spirit and objective of the Code aiming at resolution and maximisation of the assets of the "corporate debtor". Presence of a mere tripartite agreement does not change the character of the amount borrowed by the home buyer vis-a-vis the bank and vis-a-vis the "corporate debtor". Viewed from any angle, the appellant cannot be included as a "secured financial creditor" in this case and hence we find no reasons to interfere with the well-reasoned order of the Adjudicating Authority."

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 25 of 37

24. Learned counsel for the appellant has placed much reliance on the

judgment of this Tribunal in [Comp. App. (AT) (Ins.) No.390/2023], in

'Canara Bank' Vs. 'Vivek Kumar, RP of M/s. AVJ Developers (India) Ltd.'

decided on 09.01.2025. Learned Counsel for the appellant submits that

Canara Bank has also entered into Tripartite Agreement with homebuyer and

the corporate debtor, which claim was not accepted. There was decree also

obtained by the Canara Bank from the DRT. This Tribunal in the above case

after noticing the relevant clauses of Tripartite Agreement held that the

clauses in the Tripartite Agreement obliged the builder to refund the amount

to the Bank hence the claim was required to be admitted. In the above

judgment, in paragraph 53, this Tribunal has noticed the relevant clauses.

Paragraph 53 of the judgment is as follows:

"53. Now it will be desirable to look into and examine the relevant clauses of the tripartite agreement entered into amongst the Appellant Bank, the Homebuyers and Borrower/ Corporate Debtor. The relevant portion of the tripartite agreement is reproduced as under :-

"उत्तर प्रदे श UTTAR PRADESH CA 138831

Tripartite Agreement (To be executed by the Borrower, Canara Bank and Land owning Builder/PA holder of the land owner having rights to construct and sell Flats) WHEREAS under an Agreement for Sale dated ......entered into between the Builder and the Borrower, the Builder has agreed to sell Schedule B property to the Borrower and in furtherance thereof, the Borrower has already paid to the builder Rs.15,85,000/- (Rupees Fifteen Lac Eighty Five Thousand Only) by way of advance money and the receipt of which is acknowledged by the Builder.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 26 of 37 WHEREAS the Borrower has approached the Bank to grant him loan of Rs 11,00,000/- (Rupees Eleven lac Only) for purchase of Schedule B property and the Bank has vide its sanction letter dated.... Agreed to sanction the loan of Rs 11,00,000/- (Rupees Eleven lac Only) to the Borrower (hereinafter called "Loan".

Whereas Borrower and builder represent that after completion of construction of flat, Builder shall execute Sale Deed for Schedule B property in favour of Borrower in terms of this agreement. Pending execution of Sale Deed, the Bor- rower and the Builder have requested the Bank to disburse the said loan to the Borrower. Bank has agreed to disburse the said loan on the following terms and conditions among others:

2. The Borrower has already paid a sum of Rs.15,85,000/- (Rupees Fifteen Lac Eighty Five Thousand Only) to the builder on........ as advance money for the purchase of Schedule B property.

The Borrower hereby authorizes the Bank to disburse the above said loan amount directly to the Builder in terms of the above said Agreement for Sale or as requested by the Borrower. The sum of Rs.11,00,000/- (Rupees Eleven Lac Only) advanced by the Bank to the Borrower and remitted by the Bank directly to the builder shall be deemed as disbursed by the Bank directly to the Borrower.

3. That the Bank has and shall have the first and paramount lien over the money disbursed by the Bank as loan to the Borrower, The charge in favour of the Bank shall be first and paramount over the charge which the Builder may have over the said flat/loan amount.

4. That the Builder agrees that they have no objection to the Borrower(s) mortgaging Schedule B Property as security for the above said Loan.

5. That the Builder shall note in its records, the charge and lien of the Bank over the Schedule B property. The Builder shall not transfer the Schedule B property to any person without the prior written consent of the Bank

11. That on receipt of the entire loan amount, the Builder shall execute a proper Conveyance Deed/ Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 27 of 37 Sale Deed/Lease Deed in favour of the Borrower. The Builder undertakes to deliver the same along with original Registration fee receipt directly to the Bank and not to the Borrower(s). Before the execution of the Sale Deed /Conveyance Deed/ Lease Deed, the Builder shall inform the Bank about the same and date of registration shall be fixed with written consent of Bank. On receipt of the entire loan amount, the Builder shall deliver possession of Schedule B property to the Borrower.

13. The Borrower/s, hereby undertakes to create equitable mortgage in favour of Bank after obtaining the original sale deed of Schedule B Property as per guidelines of the Bank.

16. In the event of default of repayment of the loan and/or the Borrower(s) committing any other default which make the Borrower liable for the re payment of the entire amount outstanding in the said loan as per the terms of the loan agreement executed between the Borrower's and the Bank, or if the Borrower withdraws from his agreement or Builder cancels the booking of the Borrower, or in the event of failure of the Builder to complete the project, or in the event of death of the Borrower, or in any event where the title to the schedule flat/dwelling unit is not/not being passed on to the Borrower or in any other eventualities of the nature by which the loan advanced by the Bank is not utilised for the purpose for which it was so advanced or breach of any of the terms and conditions contained in this agreement, the entire amount advanced by the Bank on account of the Borrower shall be refunded by the Builder to the Bank. If the entire amount refunded by the Builder is insufficient to close the loan account, Borrower shall make immediate arrangements for payment of such deficit amount as may be required to close the loan account. If the Builder fails to repay the amount as stated under this clause, the Borrower shall repay the entire loan amount with interest, expenses, penal interest, etc. in terms of the loan agreement executed by the Borrower/s.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 28 of 37

17. The Builder hereby agrees that the Builder shall not refund the Borrower or any other person any advance/contribution given by the Borrower unless the Builder has taken written consent from the Bank to that effect.

18. In the event of any default by the Borrower and the Builder not paying the dues of the bank, the Bank shall have right to identify third party in the place of Borrower and Builder shall accept the purchaser identified by the Bank and execute necessary Conveyance deed/Sale deed in favour of the said third party /purchaser. The Borrower is bound to accept the said Conveyance deed / Sale deed executed by the Builder at the request of the Bank. The decision of the Bank as to whether Borrower has committed default or not shall be final and binding on the Borrower Builder.

(Emphasis Supplied)"

25. The judgment of this Tribunal in 'Axis Bank' (supra) was also noticed,

and the above case was distinguished on the ground that in case of 'Value

Infracon India Pvt. Ltd. & Anr.' (supra) there was no responsibility of the

corporate debtor for any payment to the Banker, which has been observed in

paragraph 63 of the judgment, which is as follows:

"63. Hence it become correct important to understand the background and the ratio of the said judgement i.e., Value Infracon India Private Limited (Supra). We already noted the relevant portion of the said judgment in the preceding paragraphs. It is clear that in the said case the loans were given by the banks to the individual homebuyers and it was responsibility of the homebuyers alone to repay the loan to the bankers/ Financial Creditors and there was no responsibility of the Corporate Debtor/ Borrower for any payment to banker in case of any default by borrower or Corporate Debtor."

26. In the Canara Bank, this Tribunal noticed Clause 16(c) of the Tripartite

Agreement and noticing the clause that entire advance by the Bank shall be

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 29 of 37 refunded by the builder held that the case of the 'Canara Bank' is clearly

distinguishable from the 'Value Infracon India Pvt. Ltd. & Anr.' (supra).

In paragraph 66 to 68, following was held:

"66. In contrast to this the cause 16 of tripartite agreement of the present case before us reads as under :

"16. In the event of default of repayment of the loan and/or the Borrower(s) committing any other default which make the Borrower liable for the re payment of the entire amount outstanding in the said loan as per the terms of the loan agreement executed between the Borrower's and the Bank, or if the Borrower withdraws from his agreement or Builder cancels the booking of the Borrower, or in the event of failure of the Builder to complete the project, or in the event of death of the Borrower, or in any event where the title to the schedule flat/dwelling unit is not/not being passed on to the Borrower or in any other eventualities of the nature by which the loan advanced by the Bank is not utilised for the purpose for which it was so advanced or breach of any of the terms and conditions contained in this agreement, the entire amount advanced by the Bank on account of the Borrower shall be refunded by the Builder to the Bank. If the entire amount refunded by the Builder is insufficient to close the loan account, Borrower shall make immediate arrangements for payment of such deficit amount as may be required to close the loan account. If the Builder fails to repay the amount as stated under this clause, the Borrower shall repay the entire loan amount with interest, expenses, penal interest, etc. in terms of the loan agreement executed by the Borrower/s."

(Emphasis Supplied)

67. This Clause is quite different from the typical clauses of the Tripartite agreement and different from the equivalent clause of the Value Infracon India Private Limited (Supra) noted, quoted and discussed in the preceding paragraphs.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 30 of 37

68. The clause of tripartite agreement in the present appeal is very categorical that in case of default of payment of loan or borrower committing any default or any event of failure of builder or in event where the title of dwelling unit is not passed on to the borrower/ homebuyers or due to breach of any terms and conditions contained in the tripartite agreement "the entire advance by the bank on account of borrower shall be refunded by the builder to the bank". The clause 16 also provide that in case the builder fails to pay the amount as stated in this clause, the borrower shall pay the entire loan amount with interest, including panel interest etc., in terms of loan agreement."

27. After noticing the relevant provisions of the Code, it was held that in

the facts of the present case, there was a financial debt advanced by the

appellant to the corporate debtor. Following was held in paragraph 70 and

71:

"70. In Clause 16 of the tripartite agreement in the present appeal and it is only on the failure of the builder to repay to the Appellant/Bank, the borrower/ homebuyer is required to repay the entire outstanding balances to the Appellant/ Bank. We note that this is quite distinctive term which has been signed by the Appellant Bank as lender, the borrower (homebuyers) and the builder (Corporate Debtor) making direct relationship and set of obligations and rights between the Appellant/ Bank and the Corporate Debtor/ Builder. In fact, the primary responsibility in the present case is of the Corporate Debtor/ Builder and secondary responsibility is of borrower/ Homebuyers.

71. We have already taken into consideration the definition of financial debt in our earlier discussion. The main requirement is that there must be debt along with interest, if any, which is disbursed against time value and money and there should be disbursement of money from creditors to debtors in terms of Section 5(8) of the Code. In context of Section 5(8) of the Code, promise by the debtor to pay money to the creditor may also tantamount to transaction as defined under Section 3(33) of the Code and same may attract the provisions of the Section 5(8) of the Code. We have

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 31 of 37 already noted that the clause 16 of the tripartite agreement in the present appeal amongst the parties indicates that the entire amount advanced by the bank on account of the borrower shall be refunded by the Corporate Debtor/ Builder to the Appellant/ bank thus in terms of Section 5(8) r/w Section 3(33) of the Code, the same may become a financial debt advanced by the Appellant bank to the Corporate Debtor"

28. This Tribunal set aside the order and remanded the matter. The case

of this Tribunal in 'Canara Bank' (supra) was thus based on specific clauses

of Tripartite Agreement especially Clauses 13 and 16 as noted above. In the

facts of the present case, Tripartite Agreement between the parties does not

contain any clause under which the corporate debtor has undertaken the

liability to refund the amount to the Bank. Thus, judgment of this Tribunal

in 'Canara Bank' (supra) in no manner helps the appellant.

29. The judgment of this Tribunal in [Comp. App. (AT) (Ins.)

No.172/2019] in 'Indiabulls Housing Finance Limited' Vs. 'Rudra

Buildwell Projects Private Limited', also fully supports the submission of

the appellant. In the above case, also India Bull Finance Ltd. has also entered

into Tripartite Agreement with the homebuyer, corporate debtor and financial

creditor and advanced the amount which facts have been noted in paragraphs

3 and 4. This Tribunal after considering the definition of financial debt under

Section 5(8) held that financial creditor has disbursed the amount in

consideration of time value of money in favour of the borrower hence

application filed against builder was held not maintanable. In paragraph 6

following was held:

"6. Admittedly the appellant, IHFL, has disbursed the amount for consideration of time value of money in

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 32 of 37 favour of borrower, Mr. Davender Singh and not to the builder. Therefore, the Adjudicating Authority has rightly held that Rudra Buildwell Projects Pvt Ltd is not the corporate debtor of the appellant and the application under Section 7 of I&B Code is not maintainable."

30. Learned counsel for the respondent in his reply to the application filed

before the adjudicating authority as well as in reply before in this appeal has

given details of 20 units which are out of 44 loan accounts claimed by the

appellant who have been allotted to other homebuyers and the name of the

allottees as claimed by the appellant is not reflected in the records of the

corporate debtor. With regard to several transaction with respect to which

loan sanctioned was claimed by the appellant avoidance application has been

filed by the RP before the adjudicating authority which are pending

consideration. It is further pleaded by the RP that there are 13 units which

are claimed by the Bank to have been allotted to its borrower, whereas, the

said units are shown as unsold inventory and not allotted to any homebuyer.

It is submitted by the RP that the borrowers which are claimed by the Bank

are all speculative investors and are not genuine homebuyers. We need not

dwell any further on above submission of RP since the transaction with

builder by the bank is not a financial debt.

31. Learned counsel for the appellant has relied on registration of charge

before the Central Registry of Securitisation Asset Reconstruction and

Security Interest of India and it is submitted that charge was not necessary

to be registered under Section 77 of the Companies Act, 2013 and security

interest in favour of Bank was created. Learned counsel for the appellant has

also placed reliance on the judgment of this Tribunal in [Comp. App. (AT) Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 33 of 37 (Ins.) No.210/2024], in 'Bizloan Private Limited' Vs. Amit

Chandrashekhar Poddar [Liquidator For Autocop (India) Private Limited],

where this Tribunal has held that in the said case financial creditor was held

to be secured financial creditor based on the registered charge with CERSAI

in accordance with the Insolvency and Bankruptcy Board of India (Liquidation

Process) Regulations, 2016. In the above case facility of discounting was

extended to the corporate debtor. In the above case, liquidation order was

passed. In the liquidation proceeding, claim was filed before the liquidator as

secured financial creditor, which was rejected. In the above context, this

Tribunal relying on Regulation 21(c) of Insolvency and Bankruptcy Board of

India (Liquidation Process) Regulations, 2016 held that the registration of

charge which CERSAI to be accepted as financial creditor. In paragraph 52

and 53, following was held:

"52. In the present appeal before us, the Appellant has indeed entered charge over the assets of the Corporate Debtor with CERSAI, however, the same is not registered with the RoC under Section 77(3) of the Companies, 2013.

53. Thus, we hold that the Appellant should have been treated as secured Financial Creditor based on the registered charge with CERSAI in accordance with Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016."

32. The above judgment arose out of liquidation proceeding and reliance is

placed on Regulation 21(c), where such charge is required to be considered.

The question of accepting the appellant as secured financial creditor on the

basis of charge registered with Central Registry of Securitisation and

Reconstruction and Security Interest of India arises only when the appellant

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 34 of 37 is accepted as financial creditor of the corporate debtor. We having already

noticed the relevant clauses of Tripartite Agreement and having taken the view

that none of the clauses contain any obligation of the Builder to repay the

loan taken by the borrower to the Bank and there is no financial debt owned

by the corporate debtor to the appellant, the question of accepting the

appellant as secured financial creditor, does not arise.

33. More so, we have to find true nature of transaction on basis of which

the financial creditor claimed thee financial debt. The Hon'ble Supreme Court

in 'Global Credit Capital Ltd. & Anr.' Vs. 'Sach Marketing Pvt. Ltd. &

Anr.' reported in [2024 SCC OnLine SC 649] has held that for finding out

whether a debt is financial debt or not that true nature of transaction has to

be found out. In the present case, the basic question for consideration is as

to whether the transaction under which appellant had sanctioned home loan

to the borrower and entered into Tripartite Agreement whether appellant can

be held to be financial creditor of corporate debtor. We have looked into the

various clauses of Tripartite Agreement entered into the borrower bank and

corporate debtor, there is no liability of the corporate debtor to repay the

amount which was sanctioned and disbursed to the homebuyer by the Bank.

Coming to the decrees obtained by Bank from the DRT against the borrower

and the corporate debtor, it is clear that decrees were obtained by the Bank,

even prior to commencement of the CIRP and in the claim form, 'Form-C'

appellant has not based its claim on basis of decree and the claim of financial

debt was based only on the sanctioned letter and Tripartite Agreement. Bank

having not filed 'Form-C' on the basis of DRT decree, which was very much

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 35 of 37 inexistence at the time of commencement of the CIRP, which was passed prior

to commencement of CIRP the decree is not relevant for consideration in this

appeal. Thus, it is not open for the Bank to claim acceptance of its claim on

the basis of the said decrees with regard to which the claim was never raised

before the adjudicating authority, either in 'Form-C' or in the application

which was filed for accepting the claim. The facts of the present case are fully

covered by judgment of this Tribunal in 'Axis Bank' (supra). On basis of

loan sanctioned by the Bank to the homebuyer and there being no clause in

the Tripartite Agreement making builder liable to make repayment, the claim

submitted by Bank in 'Form-C' is not covered in the definition of claim under

Section 3(6), as noted above and adjudicating authority did not commit any

error in rejecting the application filed by the appellant.

34. We thus do not find any merit in Comp. App. (AT) (Ins.) No.465/2024.

The Comp. App. (AT) (Ins.) No.1911/2024 has been filed challenging the order

of the adjudicating authority approving the resolution plan. We having

upheld the order dated 08.01.2024 passed by the adjudicating authority

rejecting the application of the appellant, we do not find any infirmity in the

order approving the resolution plan based on the claims which were admitted

by the RP which form part of the resolution plan. Appellant has also not made

out any ground to establish that the plan approved by the CoC and

adjudicating authority in any manner is non-compliant of Section 30(2) of the

IBC. We thus do not find any error in the order of the adjudicating authority

dated 09.07.2024, approving the resolution plan.

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 36 of 37

35. In view of above forgoing discussions and conclusions, we do not find

any ground to interfere with the impugned order dated 08.01.2024 and

09.07.2024 passed by the adjudicating authority. Both the appeals are

dismissed.

[Justice Ashok Bhushan] Chairperson

[Arun Baroka] Member (Technical) NEW DELHI

29th October, 2025

himanshu

Comp. App. (AT) (Ins.) No. 465 & 1911 of 2024 37 of 37