25 August 2019: The NCLT has initiated insolvency proceedings against NCR-based real estate firm Today Homes Noida Ltd on a petition filed by a group of homebuyers.
A two-member NCLT bench, headed by President Justice M M Kumar, has appointed an interim resolution professional (IRP) to take over the management of the company.
There are many companies in Delhi-NCR which are facing insolvency proceedings, including Jaypee Infratech, because of default to home buyers and bankers.
The tribunal rejected the submission of the real estate firm that it has got four-year extension from UP Real Estate Regulation Authority (RERA) to complete the project, saying that Insolvency and Bankruptcy Code (IBC) overrides provisions under the realty law.
Today Homes Noida Ltd had contended that UP-RERA has extended its timeline till June, 2021 to complete the Ridge Residency housing project in sector 135, Noida.
Observing that there is “overwhelming evidence to prove default” against the company, the tribunal directed the erstwhile promoters, directors and employees of Today Homes Noida to “provide every assistance and cooperation” to IRP in managing the affairs of the company.
The National Company Law Tribunal (NCLT) also granted it protection from the lenders by prohibiting them to recover the amount for a certain period.
The tribunal order came over a batch of petitions filed by home buyers of the real estate firms, who are now a financial creditor of the company following amendments in the IBC.
The petitioners had entered into home buying agreement with the firm on March 29, 2012 and had paid almost 90 per cent of their amount for flat in the Ridge Residency Housing Project, sector 135, Noida.
As per the agreements, buyers had to pay the regular payment and the builder was supposed to deliver the possession within 30 months with a grace period of 120 days, failing which a compensation of Rs 5 per square feet per month was to be paid depending on the flat size.
According to the agreement, flats were to be delivered latest by 2016 but neither the possession of premises was delivered nor money was refunded.
The petitioners had claimed Rs 4.18 crore along with 24 per cent interest and submitted that more than 60 months has passed but possession was not granted.
Consenting to their plea, NCLT observed: “The said period has lapsed and the Corporate Debtor having failed to deliver the possession of the said flats, there is a clear default committed by the Corporate Debtor (Today Homes Noida), which is the correct position taken by the financial creditors(buyers)…”
The tribunal also observed that as per the agreement, the flats were supposed to be delivered in FY 2016-17 only and the application was filed by home buyers in July 2018.
The NCLT did not agree with the submissions of Today Homes Noida that they have been given time till 2021 to complete the project by the real estate regulator RERA.
“We find that argument is completely fallacious, in as much as the same it would not absolve liability to honour the commitment made to the applicants, herein the builders buyer agreement for the purpose of the code (IBC),” said the bench.
“Mere because the builder has been provided a different timeline for completion of the project”, it would not “cut any ice because IBC overrides RERA”, the order further said.