Mr. Vijendra Kumar Jain Vs. Income Tax Officer TDS-3. - In the present case, the attachment over the Bank account can not survive after commencement of moratorium w.e.f. 08.03.2019, as the claim of the Respondent is to be dealt in accordance with the claims filed before the Resolution Professional, and is ordered to be vacated with immediate effect.

NCLT Mumbai-1 (17.10.2023) in Mr. Vijendra Kumar Jain Vs. Income Tax Officer TDS-3. [I.A. 324 OF 2021 in C.P.(IB) No. 3448/MB/2018] held that;

• Upon the commencement of Corporate Insolvency Resolution Process, the security interest of each creditor are not enforceable individually, but are taking into consideration while determining the security classification amongst the class of creditors only.

• In the present case, the attachment over the Bank account can not survive after commencement of moratorium w.e.f. 08.03.2019, as the claim of the Respondent is to be dealt in accordance with the claims filed before the Resolution Professional, and is ordered to be vacated with immediate effect.

• Information Memorandum ought to have included the claim of those Homebuyers, who have not even filed their claims to correct liabilities of the Corporate Debtor for its appropriate resolution”,

• “However, we are of the view that the claim of those Homebuyers, who could not file their claims, but whose claims were reflected in the record of the Corporate Debtor, ought to have been included in the Information Memorandum and Resolution Applicant, ought to have been taken note of the said liabilities and should have appropriately dealt with them in the Resolution Plan. Nonconsideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution as is seen in the present case”.

Excerpts of the Order;    

# 1. This Application IA 324 of 2021 is filed by Sh. Vijendra Kumar Jain, the Resolution Professional appointed vide order dated 21 February 2020 to conduct Corporate Insolvency Resolution Process in the matter of M/s Transparent Energy Systems Private Limited (“Corporate Debtor”). The Applicant seeks following prayers –

• a. Direction to withdraw its notice dated 2nd January, 2019 issued U/s 226(3) of Income Tax Act, to HDFC Bank, Bhandarkar Road, Pune to defreeze the current A/C no. 50200005078579 with the HDFC Bank, Bhandarkar Road, Pune Branch immediately imposing debit freeze;

• b. Direction to allow the Applicant to operate the said account.

# 2. It is the case of the Applicant that the HDFC Bank, Bhandarkar Road Branch in Pune, being banker of the Corporate Debtor received notice under section 226(5) of Income Tax Act, 1961 dated 2nd January 2019. The bank account of the Corporate Debtor is freezed and is not able to use the funds in the said account even after the moratorium is in effect.

# 3. The Corporate Insolvency Resolution Process (the CIRP) in the case of Corporate Debtor commenced vide order dated 8th March, 2019 passed by this Tribunal in Company Petition No. CP(IB)/3448/MB/2018, pursuant to this, Mr. Ashish Vyas [IBBBI/IPA-001/IP/P-01520/2018-19/12267] was appointed as the Interim Resolution Professional (the IRP). Further, the Erstwhile Resolution Professional Mr. Nimit Kalsi was replaced vide order dated 21 February 2020, and the Applicant was appointed as the Resolution Professional (RP) of the corporate debtor (CD).

# 4. That the respondent is Income Tax Office TDS- 3 Pune having its office at Room no 119, 1 Floor, Ayakar Sadan, Bodhi Tower, 548/2B, Salisbury Park, Lane no 1. Behind Bank of Maharashtra, Pune 411003 working under Finance Ministry of Government of India. The respondent has issued notice U/S 226 (3) of the Income Tax Act, to the HDFC Bank, Bhandarkar Road Pune Branch for freezing of current bank account no. 50200005078579 of Transparent Energy System Pvt Ltd ie. Corporate Debtor.

# 5. The applicant states and submits that the corporate debtor has its current bank account no. 50200005078579 with HDFC Bank at its branch-Bhandarkar Road, Pune. The respondent had issued notice no PNOTO/TDS-03/ Recovery/2018-19 dated 2nd January, 2019 for freeing the above-mentioned account with the bank. According to the notice, a sum of Rs. 7,26,424/- with interest is stated to be due from the corporate debtor. It was further directed to restrict the corporate debtor from operating the said account by initiating "No Debit" until further instructions. However, no restriction on credit/deposit were imposed. A copy of the said notice dated 2nd January, 2019 is placed in the Application.

# 6. The applicant sent a reply to the notice dated 2nd January, 2019 to the respondent through email dated 22nd July, 2020. In the said reply the Applicant explained that the consequent upon commencement of moratorium in the case of Corporate Debtor from 08.03.2019, the notice attaching the assets of the Corporate Debtor requires to be withdrawn, as no adverse action against the Company can be initiated till conclusion of the CIRP or liquidation, as the case may be. The Applicant further requested the Respondent to defreeze the account and withdraw the instructions issued to the Bank and allow the Applicant to operate the said account to carry out the affairs of the corporate debtor as a going concern.

# 7. The Applicant further submits that, thereafter on 30th September, 2020 and 29th October, 2020 he sent emails along with copy of "Form B" requiring the Respondent to submit the claim. Despite this, there was no response from the side of the respondent.

# 8. The applicant states that, for the first time on 1st January, 2021 the respondent put forth that due to change in incumbency since October, 2020 there was delay in responding to the letters of the applicant. Respondent further sought sometime to adhere the applicant's communications. Further informed that they are going to submit their claim in "Form C" along with relevant documents in due course. The applicant further states and submits that he replied the above mentioned email on the very same day i.e. 1st January. 2021 and also informed the respondent that, there was delay on their side in making the Claim and that the Applicant had already submitted the Resolution Plan to the Hon'ble Bench for its approval. The respondent however did not mention about the request of the Applicant to defreeze the account.

# 9. We heard the Counsel and perused the material on available on record.

9.1. Upon the commencement of Corporate Insolvency Resolution Process, the security interest of each creditor are not enforceable individually, but are taking into consideration while determining the security classification amongst the class of creditors only. In the present case, the attachment over the Bank account can not survive after commencement of

moratorium w.e.f. 08.03.2019, as the claim of the Respondent is to be dealt in accordance with the claims filed before the Resolution Professional, and is ordered to be vacated with immediate effect.

9.2. It is undisputed that the Resolution Professional was aware of the debt due to the Respondent on the commencement of the CIRP itself. Accordingly, as held by Hon’ble NCLAT in case of Puneet Kaur vs. K V Developers Private Limited. {Company Appeal (AT) (Insolvency) No. 390 of 2022} held that 

• “extinguishment of claim of the Appellant(s) shall happen only after approval of the Plan by the Adjudicating Authority. The argument of the Respondents that since CoC has approved the Resolution Plan, the claim of the Appellant(s) have been extinguished, cannot be accepted as there is no extinguishment of claim of the Appellant(s) on approval of Plan by the CoC”. 

The Hon’ble NCLAT concluded that

• “Information Memorandum ought to have included the claim of those Homebuyers, who have not even filed their claims to correct liabilities of the Corporate Debtor for its appropriate resolution”, and finally held that “However, we are of the view that the claim of those Homebuyers, who could not file their claims, but whose claims were reflected in the record of the Corporate Debtor, ought to have been included in the Information Memorandum and Resolution Applicant, ought to have been taken note of the said liabilities and should have appropriately dealt with them in the Resolution Plan. Nonconsideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution as is seen in the present case”.

9.3. In view of the ratio laid down in the case of Puneet Kaur(Supra), we hold that the claim of the Respondent as per the notice u/s 226(3) of the Income Tax Act, 1961 ought to have been included in the list of creditors, and the Resolution Professional is directed to act accordingly.

9.4. With the aforesaid directions, we allow the present application directing the Respondent to vacate the attachment and allow the Applicant to operate the Bank Account of the Corporate Debtor; and also directing the Applicant to include the debt of the Respondent as per Notice u/s 226(3) in the list of Creditors, if no separate claim has been filed by them.

# 10. Accordingly, IA 324 of 2021 is allowed.

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Vishal Chelani & Ors. Vs. Debashis Nanda - In view of the foregoing reasons, the impugned order is hereby set aside; the appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority.

Supreme Court (06.10.2023) in Vishal Chelani & Ors. Vs. Debashis Nanda [Neutral Citation - 2023 INSC 913] held that;

• The Resolution Professional’s view appears to be that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA – no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable.

• As held in Natwar Agarwal (HUF) (Supra) by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party - in the present case of allottees as financial creditors.

• Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to “hyper- classification” and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanced.

• In view of the foregoing reasons, the impugned order is hereby set aside; the appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority.

Excerpts of the Order;    

# 1. The appellants challenge a decision of the National Company Law Appellate Tribunal, New Delhi1 (hereinafter referred to as “NCLAT”) which ruled that as beneficiary of a decree by the Uttar Pradesh Real Estate Regulatory Authority (hereinafter referred to as “UPRERA”), the order of the Resolution Professional (R.P.) proposing that they be treated differently from other home buyers allottees, does not call for interference.

# 2. The brief facts are that the appellants are home buyers, who had opted for allotment in a real estate project of the respondent company (hereinafter referred to as “Bulland Buildtech Pvt. Ltd.” or “the respondent”. Aggrieved by the delay in the completion of the project, the appellants approached the UPRERA which by its orders upheld this entitlement to refund amounts deposited by the, together with interest. In the meantime, proceedings under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) were initiated. In the course of proceedings after due consultations by the Committee of Creditors, a resolution plan was presented to the adjudicating authority. In that plan, a distinction was made between home buyers, who had opted or elected for other remedies such as i.e. applying before the RERA and having secured orders in their favor, and those who did not do so. Home buyers who did not approach authorities under RER Act were given the benefit of 50% better terms than that given to those who approached RERA or who were decree holders. The appellants felt aggrieved; their applications were rejected by the adjudicating authority. Their appeals too were unsuccessful. Consequently, they have approached this Court.

# 3. Mr. Abhimanyu Bhandari learned counsel argued that having regard to the definition of financial debt [Section 5(8)(f)] which was amended in 2018 after which home buyer allottees in real estate projects also fell within the broad description of financial creditors, a distinction cannot be made between one set of such home buyer allottees and another. He relies upon a decision of the NCLT, Mumbai Bench-IV, [Mr. Natwar Agrawal (HUF) vs. Ms. Ssakash Developers & Builders Pvt. Ltd.] in CP(IB) No.21/MB-IV/2023 dated 02.08.2023, which inter alia held as follows: 

• “3.2. Accordingly, this bench is of the considered view that decree would be categorized as either financial or operational debt depending on the nature of the underlying claim which stands  crystallized through the arbitral or court the nature of the debt due under decree would depend on the nature of transaction from which the decretal debt has arisen. In the present case the applicant had obtained a decree from RERA in capacity of allottee in a Real Estate Project and allottee in Real Estate Project is covered under the definition of Financial Debt contained in under Explanation to Section 5(8)(f) of the Code. Accordingly, the applicant, being holder of a decree in capacity of allottee is a Financial Creditor.

• 3.3. At this juncture, this bench considers appropriate whether an allottee holding a decree from RERA would fall under the class of Home Buyers within the category of Financial Creditor or it would cease to be an allottee under the class of Home Buyers, but shall remain a Financial Creditor, to determine whether the threshold limit prescribed under section proviso to section 7(1) of the Code or under section 4 of code would apply. This bench finds that second proviso to section 7(1) prescribes the threshold limit specifically in relation to Home Buyers Class so as to discourage multiple applications being filed by the allottees in a Real Estate Project. This bench feels that an allottee in Real Estate Project, who subsequently becomes a Decree Holder under RERA Act, continues to be a creditor in the class of Home Buyers and shall continue to be governed by the threshold limit prescribed under second proviso to section 7(1) of the Code.”

# 4. Mr. Gunjesh Ranjan appearing for the resolution professional resisted the appeal and contented that the appellants cannot be permitted to secure two benefits. Having approached the UPRERA, they fell into a different sub-class of home buyers, who were entitled to specified amounts and, therefore, were unsecured creditors, as compared with allottees who had not invoked RERA remedies. It is submitted that such home buyers relinquished their rights under Section 18 of the RERA Act.

# 5. Section 5 (7) & (8) defines “financial creditors” and “financial debt” in the following terms: “financial creditor” means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to;”

• (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 de-materialised 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; 

• (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 subclause,--

• (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 sub-clauses (a) to (h) of this clause;”

• The amendment of 2018 introduced an explanation below. Sub-section 8(f) to Section 5 which reads as follows:

• “(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 subclause,- (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);

# 6. It is thus evident that with the introduction of the explanation home buyers and allottees of real estate projects were included in the class of “financial creditors” - because financial debt is owed to them. On a plain reading of Section 5 (8)(f) no distinction is per se made out between different classes of financial creditors for the purposes of drawing a resolution plan. Consequently, the reasoning of the Mumbai Bench of NCLT “Mr. Natwar Agrawal(HUF)” is correct in the opinion of this Court.

# 7. So far as the argument of the resolution professional is concerned, Section 18 of the RERA, Act reads as follows: 

• “18. Return of amount and compensation – 

• (1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,-

• (a) In accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or 

• (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

• Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, intererst for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

• (2) The promoter shall compensate the allottees in case of any loss cause to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this sub-section shall be not barred by limitation provided under any law for the time being in force.

• (3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.”

# 8. The Resolution Professional’s view appears to be that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA – no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. As held in Natwar Agarwal (HUF) (Supra) by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party - in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to “hyper- classification” and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanced.

# 9. In view of the foregoing reasons, the impugned order is hereby set aside; the appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority.

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Vishal Chelani & Ors. Vs. Debashis Nanda - In view of the foregoing reasons, the impugned order is hereby set aside; the appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority.

 NCLAT (28.02.2023) In Vishal Chelani & Ors. Vs. Debashis Nanda RP Bulland Buildtech Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 991 of 2022] held that;

•  it has been held that once the Recovery Certificate has been issued, the party in possession of the Recovery Certificate is to be considered as a Financial Creditor.

Hon’ble Supreme Court (06.10.2023) in Vishal Chelani & Ors. Vs. Debashis Nanda [Neutral Citation - 2023 INSC 913] held that;

• # 8. The Resolution Professional’s view appears to be that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA – no others. In such circumstances, to treat a particular segment of that classdifferently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. As held in Natwar Agarwal (HUF) (Supra) by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb thestatus of the concerned party - in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC containsa non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to “hyper- classification” and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanced.

• # 9. In view of the foregoing reasons, the impugned order is hereby set aside; the appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority.

Excerpts of the Order;    

28.02.2023 The brief facts of the case are that the ‘Canara Bank (Erstwhile Syndicate Bank)’ filed an application under Section 7 of the I & B Code, 2016 (in short ‘Code’) against M/s Bulland Buildtech Pvt. Ltd. (Corporate Debtor) before the ‘Adjudicating Authority’ (National Company Law Tribunal, New Delhi Bench – II) which was registered as Company Petition (IB) No. 1744/ND/2019. This application was filed for the resolution of an amount of Rs. 32.88 crores. The Application was admitted on 22.03.2021, CIRP proceedings were initiated and moratorium was imposed.

# 2. After initiation of CIRP, public announcement was made by the RP on 26.03.2021 for inviting claims pursuant to which all the five Appellants herein who are stated to be the Home Buyers filed their respective claim application in Form CA, prescribed under Regulation 8A of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016, (in short ‘Regulations’). However, for the sake of convenience and as an example we are referring the facts in the matter pertaining to Vishal Chelani and Bhavana Chelani otherwise the case of all the five Appellants are similar. Vishal Chelanai and Bhavana Chelani filed an application in Form C to the IRP on 21.03.2021.

# 3. Since the IRP was changed by virtue of an order passed by the Tribunal on 03.09.2021 and Debashis Nanda was appointed as RP, the Applicant (Vishal Chelanai and Bhavana Chelani) again filed their claim as a creditor in a class in the prescribed form CA in terms of Regulation 8A on 04.10.2021.

# 4. The said application did not find favour with the RP and he informed the said Appellant through an e-mail dated 27.10.2021 that :-

• Request to file you claim as FC in Form C

• Bulland Buildtech ip.bullland@gmail.com
  27.10.2021 2.43 PM
  To: royharendra@outlook.com royharendra@outlook.com

….

• Dear Sir,

• This is for your kind information that as you had filed your complaint in RERA, UP, vide complaint no. NCR144/11/0927/2019 and vide its order dated 15th September, 2020, the Hon’ble RERA Bench has ordered for refund till 30.11.2020 but the Corporate Debtor did not comply with the same.

• Pursuant to the non-compliance, you had filed for execution of the order dated 15.09.2020 and the Hon’ble RERA Bench had ordered for refund by issuing RC amounting to Rs. 52,23,536.82 dated 27.01.2021.

• Based on the above, please note that we are not in a position to admit your claim as a homebuyer. Kindly resubmit your claim as a Financial Creditor in duly filled and signed Form C.

• A copy of the Form C is attached herewith for your reference.

• Debashis Nanda

•  RP in the matter of Bulland Buildtech Pvt. LTd.
  IBBI Reg No., No. IBBI/IPA-003/IP-N00040/2017-18/10316

• Address: CS-14, Ansal Plaza, Vaisahali, Ghaziabad, 201010

# 5. After receipt of the aforesaid e-mail, the said Appellant filed the claim in Form C dated 27.10.2021 prescribed under Regulation 8 of the Regulations. Counsel for the Appellant has submitted that the RP did not reject their claim set up in Form C in writing but orally they were told that they would be treated as Unsecured Financial Creditor.

# 6. The Appellant again filed their claim in Form CA to the RP on 27.10.2021 and thereafter filed an application bearing I.A. No. 1387 of 2022 in CP (IB) No. 1744/ND/2019 before the Tribunal with a prayer that the RP may be directed to admit the claim of the applicant in Form CA and to treat them as Homebuyers under a class and the ‘Committee of Creditors’, may direct the RP to call upon the RA to amend the prospective Resolution Plan after classifying the Applicant as Homebuyers in the class and issue an order of Status quo till the finalisation of the Resolution Plan and convening of the meeting of the ‘Committee of Creditors’.

# 7. The said application was contested by the RP before the Tribunal in which the Tribunal has taken the following view:-

• “We are unable to accept the contention of the applicants that they may be permitted to file a claim in Form-CA and direction be given to the RP to consider the claim in Form-CA. In our considered view, once the Ld. UPRERA has passed a decree directing the Corporate Debtor to refund the amount and in pursuant of that, all the applicants had submitted their claim in Form C, which were duly considered by the respondent/ R.P, and only on the ground that the entire claims of the applicants are not admitted and applicants are treated as a Financial Creditor on the basis of that decree and not as a Creditors of Class, we are unable to accept the submission of the applicants to direct the Resolution Professional to admit their claim in Form – CA.”

# 8. Aggrieved from the order of the Tribunal dated 08.06.2022 all the five Applicants have preferred this appeal.

# 9. Counsel for the Appellant has vehemently argued that the Tribunal has committed a patent error in holding them as Financial Creditor on the ground that the Appellants had already obtained a decree from the UPRERA regarding refund of their amount.

# 10. He has argued that the status of the Appellant would remain the same as Homebuyers within a class and should not change even if there is a decree passed in their favour by the UPRERA. In support of his submissions, he has relied upon a decision of the Hon’ble Supreme Court rendered in Civil Appeal No. 689 of 2021 in the case of Kotak Mahindra Bank Limited vs. A. Balakrishnan & Anr. decided on 30.05.2022. Para 51 of the said decision read as under :-

• “51. Applying these principles to clause (8) of Section 5 of the IBC, it could clearly be seen that the words “means a debt along with interest, if any, which is disbursed against the consideration for the time value of money” are followed by the words “and includes”. Thereafter various categories (a) to (i) have been mentioned. It is clear that by employing the words “and includes”, the Legislature has only given instances, which could be included in the term “financial debt”. However, the list is not exhaustive but inclusive. The legislative intent could not have been to exclude a liability in respect of a “claim” arising out of a Recovery Certificate from the definition of the term “financial debt”, when such a liability in respect of a “claim” simpliciter would be included in the definition of the term “financial debt”

# 11. On the other hand, Counsel appearing on behalf of the RP has submitted that there is no error in the ‘impugned order’ which may require any interference by this Tribunal. It is submitted that as per scheme of the Act and the ‘Regulations’ the Appellant after obtaining a decree from the UPRERA regarding refund of their amount, invested for the purpose of purchase of the flat, shall fall within the definition of a Financial Creditor and not in a class of creditor for the purpose of putting up their claim as such before the RP.

# 12. It is further submitted that the Hon’ble Supreme Court in the same decision in the case of Kotak Mahindra (Supra) has decided that in case the Recovery Certificate is issued, the holder of the Recovery Certificate would be a Financial Creditor. He has referred to the Para 84 of the said decision which is reproduced as under :-

• “84. To conclude, we hold that a liability in respect of a claim arising out of a Recovery Certificate would be a “financial debt” within the meaning of clause (8) of Section 5 of the IBC. Consequently, the holder of the Recovery Certificate would be a financial creditor within the meaning of clause (7) of Section 5 of the IBC. As such, the holder of such certificate would be entitled to initiate CIRP, if initiated within a period of three years from the date of issuance of the Recovery Certificate.”

# 13. We have heard Counsel for the Parties and perused the record with their able assistance.

# 14. There is no dispute that the Appellant had applied for Unit (Flat) in the project called Bulland Elevates floated by the Corporate Debtor.

# 15. There is also no dispute that the Appellant being the Home Buyers filed a complaint before the Uttar Pradesh Real Estate Regulatory Authority, Gautam Buddha Nagar (in short UPRERA). The said application filed at the instance of the Appellants was allowed by the UPRERA on 04.10.2019. The complaint No. NCR/144/04/0045/2019 was filed by Vishal Chelani against Bulland Buildtech Pvt. Ltd. under Section 31 of the UP Real Estates (Regulation & Development Act, 216). Pursuant to the order dated 04.10.2019 passed by the UPRERA, a Recovery Certificate was also issued on 21.09.2020 under Section 40 of the Act, 2016 qua the refund of the amount with interest, invested by the Appellant for the purchase of the Flat. It has also come on record that execution was also filed on the basis of the Recovery Certificate.

# 16. During the course of hearing, Counsel for the Appellant categorically submitted that the Appellants are no more interested in the refund of money but are interested only in the allotment of the Flat which has been three times priced in the Resolution Plan and are now beyond their reach.

# 17. The question would thus arise as to whether after obtaining the decree for Recovery of amount infused at the instance of the Appellant for which Recovery Certificate has been issued, the Appellant would stand in the category of the class of creditor or is a Financial Creditor for the purpose of filing an application claiming it in Form C instead of Form CA.

# 18. In this regard, we are guided by the decision of the Hon’ble Supreme Court in the case of Kotak Mahindra (Supra) in which in Para 84, while concluding the discussion in the entire judgment, it has been held that once the Recovery Certificate has been issued, the party in possession of the Recovery Certificate is to be considered as a Financial Creditor.

# 19. The submission made by the Counsel for the Appellant in regard to the observations made in Para 51 of the aforesaid decision would not be of any help to him because ultimately conclusion has been drawn in Para 84 of the aforesaid judgment.

# 20. No other point has been raised.

# 21. In view of the aforesaid discussion, we do not find any merit in the present appeal and the same is hereby dismissed. No cost.

 

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