NCLT Initiates Insolvency Plea Against Raheja Developers
A building under construction in India. (Source: Bloomberg)

NCLT Initiates Insolvency Plea Against Raheja Developers


The National Company Law Tribunal has initiated insolvency proceedings against National Capital Region-based real estate firm Raheja Developers after admitting a plea filed by one of its flat buyers.

A two-member Principal bench, headed by President Justice MM Kumar, has appointed an interim resolution professional to take over the management of the company.

The tribunal said “a default has occurred” by Raheja Developers in giving possession of apartments, and rejected the contention of the realty firm that the delay was caused because of lack of infrastructure in the area to be provided by the state government authorities.

The NCLT declared a moratorium, protecting the company from the lenders by prohibiting them to recover the amount for a certain period. It directed the earlier-management to provide "all documents in their possession and furnish every information in their knowledge" within a period of one week.

The NCLT’s direction came over a petition filed by a flat buyer of Raheja Developers. Flat buyers are now treated as financial creditor of the company after recent amendments in the Insolvency & Bankruptcy Code.

The petitioner had booked an apartment in the residential project - Raheja Sampada developed by the corporate debtor (Raheja Developers).

Raheja Developers had issued a joint allotment letter on Aug. 3, 2012 and executed a flat buyer's agreement. As per the agreement, possession was to be delivered within a period of 36 months, which was not fullfiled.

The buyers had made a payment of Rs 86.62 lakh to the company on various dates and sought a refund along with 18 percent interest rate, claiming default after possession was not handed over within the stipulated time frame.

The NCLT observed that 36 month-period came to an end on Aug. 3, 2015 and construction was not complete.

Raheja Developers had contended that there was no default from its part as the handing of possession was subject to provisioning of the infrastructure by the government in the area and it has received the occupation certificate in 2016.

According to the realty firm, till date water and sewer pipelines has not been provided.

"The vague arguments made by the corporate debtor-respondent hardly need to be noticed. The other objections are also lame excuses to deny the claim of the financial creditor," the NCLT said.

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