The National Company Law Tribunal (NCLT) has given its sanction to initiate insolvency proceedings against realty firm Parsvnath Developers' subsidiary that is developing a housing project in the national capital.
Three homebuyers in this project have filed an insolvency petition with the NCLT against the subsidiary firm - Parsvnath Landmark Developers - for inordinate delay in the development of this project and non-refund of their payment.
The tribunal appointed Yash Jeet Basrar as an interim resolution professional (RP) to run the corporate insolvency resolution process of Parsvnath Landmark Developers.
A two-member bench of the NCLT, headed by President Justice M M Kumar, has directed that all the personnel connected with the Parsvnath Landmark Developers, erstwhile directors, promoters or any other person associated with the management must cooperate with the RP in managing the affairs of the company.
The tribunal has also directed that "in case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else the interim resolution professional/resolution professional would be at liberty to make appropriate application" before it for passing an appropriate order.
The NCLT has directed the Registrar of Companies to update "the status of 'corporate debtor' and specific mention regarding admission of this petition must be notified" on its portal.
The tribunal direction came over a petition filed by Alka Agarwal and two others, who had booked flat at La Tropicana project of Parsvnath Landmark Developers at Khyber Pass in Delhi for a consideration of Rs 10.93 cr.
According to the flat buyer agreement executed between the parties on October 1, 2009, Parsvnath Landmark Developers was to hand over the possession within 36 months from the date of commencement of construction with grace period of six months.
However, even after the expiry of more than nine years, construction of the said flat has not been commenced so far. The buyer has several communications with the company either to hand over the flat or return the money with interest as per the agreement.
The counsel for Parsvnath Landmark Developers did not participate in the hearing.
However, in a written submission filed by its authorised representative, it said that the application was not maintainable and delay was on account of various clearances and the matter of issue of ownership of the said land is still pending before the Delhi High Court.
It further said that in the flat buyer agreement, it was agreed that the construction of the flat would likely to be completed within 36 month of commencement of construction on receipt of sanction of building plans and all other requisite approvals for construction. It also conceded that the buyers are not financial creditors.
Rejecting the company's submission, NCLT said, "The amount has been raised from the petitioners/allottees under a real estate project. In such a situation not only the debt has a commercial effect of borrowings and come within the scope of 'financial debt', but also the petitioners are covered by the definition of expression 'financial creditor'.
NCLT said, "It is confirmed that applicants-financial creditors had disbursed the money to the respondent corporate debtor as consideration for purchase of a residential flat. Though a considerable long period has lapsed, even the principal amount disbursed has not been repaid by the respondent corporate debtor".
As per the provision of clause 11 of the flat buyer's agreement, it has committed a default, the tribunal added.
"It is accordingly held that respondent corporate debtor has committed default in repayment of the outstanding financial debt which exceeds the statutory limit of Rs 1 lakh. Thus, the application warrant admission as it is complete in all respect. Accordingly, in terms of Section 7 (5) (a) of the Code, the present application is admitted," said NCLT.
Many NCR-based developers, including Jaypee Infratech, Amrapali and an arm of The 3C Company, are facing bankruptcy proceedings as per the direction of the NCLT.