Claims For Interest Based On RERA Order Do Not Translate Into Financial Debt Under IBC, Rules NCLT Delhi
Pranav B Prem
The National Company Law Tribunal, New Delhi Bench, comprising of Shri Manni Sankariah Shanmuga Sundaram (Member Judicial) and Dr. Sanjeev Ranjan (Member Technical), has dismissed an application filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, by Mr. Yogesh Kumar Gupta and another against Mr. Devendra Umrao, Resolution Professional (RP) of M/s Opulent Infradevelopers Pvt Ltd. The Tribunal held that claims arising out of a RERA recovery certificate for delayed possession charges do not constitute a financial debt under Section 5(8)(f) of the IBC.
Background
The Corporate Insolvency Resolution Process (CIRP) of M/s Opulent Infradevelopers Pvt. Ltd. was initiated on 12th July 2022. A resolution plan submitted by Amtex Infrastructure received 100% approval from the Committee of Creditors (CoC) on 8th July 2023, though final approval by the Tribunal is pending.
The Applicants, who are allottees of a residential unit (Unit No. 014, Marriott Tower, Urbtech 168’s Xaviers project, Noida), had entered into an allotment agreement dated 1st June 2013. They had substantially paid under a construction-linked plan. However, in 2018, the Corporate Debtor raised inflated demands, which were challenged before the Uttar Pradesh Real Estate Regulatory Authority (UP RERA). By order dated 7th August 2019, UP RERA quashed the disputed demands and directed the issuance of a fresh demand letter, delivery of possession, registration of the conveyance deed, and adjustment of future demands against delayed possession charges payable to the Applicants.
Subsequently, the Applicants took possession of their unit on 1st November 2021, albeit on an “as-is-where-is” basis, without an occupancy certificate and without receiving delayed possession charges.
Unaware of the initiation of CIRP, the Applicants later filed a contempt petition before UP RERA, resulting in a recovery certificate being issued. However, due to the moratorium under Section 14 of the IBC, enforcement of the recovery certificate was barred.
The Applicants learned of the CIRP in September 2023, after the disconnection of electricity supply to their unit, and thereafter submitted their claim through Form CA. However, the Resolution Professional rejected the claim citing delay.
Applicant's Contention
The Applicants argued that they were genuine allottees whose claims should be accepted despite the delay, relying on the NCLAT’s decision in Puneet Kaur v. K.V. Developers Pvt Ltd [Company Appeal (AT) (Ins.) No. 390 of 2022], which held that the extinguishment of homebuyer claims occurs only after the approval of the resolution plan.
They submitted that no lawful demands could be enforced against them without issuance of an occupancy certificate and that any amounts should be adjusted against delayed possession charges awarded under the RERA order. They also challenged the demands raised by the RP, stating that maintenance and electricity dues cannot be claimed without complying with the RERA directions. It was contended that the Applicants had consistently made efforts to assert their rights, but the CIRP proceedings were not within their knowledge until a much later stage.
RP’s Response
The Resolution Professional submitted that the Applicants had been in possession of their unit since November 2021 and were enjoying peaceful possession, which negated the existence of a financial debt under the IBC.
It was contended that the primary grievance of the Applicants related to the execution of a sale deed and interest for delayed possession, which did not constitute a financial debt under Section 5(8)(f) of the IBC. The RP emphasized that the Applicants, by virtue of the RERA order, became decree-holders under Section 3(10) of the IBC, and not financial creditors or creditors in a class.
The RP also relied on the judgment of the NCLAT in Pooja Mehra v. Nilesh Sharma, where the Appellate Tribunal had held: “The Appellant was sleeping over his rights. A person who sleeps over his rights ought not be given any indulgence.”
Accordingly, the RP argued that the claim was barred by delay and should not disturb the CIRP’s timelines. Further, it was submitted that the electricity connection was disconnected due to non-payment of maintenance dues necessary for keeping the project operational as a going concern.
Tribunal’s Observations
The Tribunal examined the submissions and observed that the Applicants had taken possession of the allotted unit as early as November 2021 and continued to enjoy peaceful possession thereafter.
The Tribunal recorded: “It is an admitted position that the Applicants have been in possession of their respective units since the year 2021 and have continued to enjoy peaceful possession thereof.”
Regarding the Applicants' claim based on the RERA order, the Tribunal noted: “The Applicants have further relied upon an order dated 07.08.2019 passed by the Hon’ble UP RERA, claiming an amount of Rs. 11,72,535/- towards interest for delayed possession. While it is true that the said order confers upon them the status of decree-holders as per Section 3(10) of the IBC, the debt arising therefrom is not a financial debt within the meaning of Section 5(8)(f).”
The Tribunal further emphasized that the initiation or continuation of proceedings to execute the RERA recovery certificate was barred by the moratorium under Section 14 of the IBC.
With regard to the disconnection of electricity, the Tribunal observed that such services were essential for the maintenance of the project as a going concern, and the Applicants were required to comply with maintenance obligations like other allottees. Referring to Pooja Mehra v. Nilesh Sharma, the Tribunal highlighted that allowing belated claims would defeat the objectives of the CIRP timelines under the IBC.
Verdict
The NCLT ultimately found no merit in the Applicants’ claims and dismissed the application. It held that since the Applicants had already taken possession, their grievances related to the execution of the sale deed and delayed interest charges did not amount to a financial debt under Section 5(8)(f) of the IBC.
Appearance
For Applicant: Adv. Vaibhav Mahajan, Adv. Harshita Aggarwal, Adv. Aditi Kumar
For RP: Adv. Gaurav Mitra, Adv. Abhishek Parmar
Cause Title: M/s Genesis Comtrade Private Limited V. M/s Opulent Infradevelopers Pvt. Ltd
Case No: IA 1796(ND)/2024 in CP No.: IB 304(ND)/2022
Coram: Shri Manni Sankariah Shanmuga Sundaram [Hon'ble Member (Judicial)], Dr. Sanjeev Ranjan [Hon'ble Member (Technical)]
[Read/Download order]
