NCLT Starts Insolvency Proceedings Against Today Homes Noida
The National Company Law Tribunal has initiated insolvency proceedings against 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 MM Kumar, has appointed an interim resolution professional to take over the management of the company.
There are many real estate companies in the National Capital Region facing insolvency proceedings, including Jaypee Infratech Ltd., because of default to homebuyers and banks.
It rejected a submission of Today Homes Noida that it has received four-year extension from U.P. Real Estate Regulation Authority to complete the project, saying that Insolvency and Bankruptcy Code overrides provisions under the realty law.
Today Homes Noida Ltd. 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 real estate firm, NCLT 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 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 homebuyers, 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 Mar. 29, 2012, and had paid almost 90 percent of their amount for flats in Ridge Residency Housing Project.
According to 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 claimed Rs 4.18 crore alongwith 24 percent interest and submitted that more than 60 months has passed but possession was not granted.
"The said period has lapsed and the corporate pebtor having failed to deliver 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 NCLT said.
The tribunal also observed that according to the agreement, the flats were supposed to be delivered in 2016-17 only and the application was filed by homebuyers 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 under 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.