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The National Company Law Tribunal (NCLT) recently made a significant observation while dismissing a plea filed by two unit buyers of a commercial complex. The plea sought to initiate insolvency proceedings against Orris Infrastructure, citing an alleged default of Rs 3.60 lakh. The NCLT's Principal Bench, during the hearing, emphasized that the Insolvency & Bankruptcy Code (IBC) should not be used as a mere "tool for recovery."
The case revolved around the purchase of office space and retail units in a commercial building complex known as Floreal Tower, located in Sector 83, Gurgaon, Haryana. According to the NCLT, the purchasers had already received full and final payment from Orris Infrastructure in accordance with their agreement. In fact, the amount received exceeded the default amount claimed in the insolvency petition. The counsel for the applicants even acknowledged the receipt of a demand draft from the realty firm.
The NCLT bench, comprising President Ramlingam Sudhakar and Avinash Srivastava, made it clear that the applicants held demand drafts exceeding the defaulted amount, and using the IBC for recovery in this case was inappropriate. They emphasized that the IBC should not be misused for settling disputes that have already been resolved through settlements between the parties.
The agreement between the parties was entered into on April 24, 2010, and it was related to the purchase of office and retail spaces from Orris Infrastructure. The agreement stipulated that the realty firm would provide monthly assured returns to the buyers for the first 36 months after the completion of the building or until the office spaces were leased, whichever came earlier.
The construction of the Floreal Tower Project was completed in December 2013, and the occupation certificate was received on August 16, 2017. Therefore, the 3-year period for paying assured returns, as per the occupation certificate, ended on August 16, 2020.
The NCLT also noted that settlement deeds had been entered into between the parties on two previous occasions to resolve default issues related to assured returns. This further emphasized that the matter had already been addressed through mutual agreements.
The realty firm, Orris Infrastructure, had issued demand drafts totalling Rs 6.15 lakh and Rs 1.87 lakh to the two petitioners as part of the full and final payment of the assured returns for the allotted units.
In summary, the NCLT's decision in this case underscores the principle that the Insolvency & Bankruptcy Code (IBC) should not be utilized as a means of recovery when disputes have already been resolved through settlements between the parties involved. It also highlights the importance of adhering to contractual agreements and the obligation to honour financial commitments.
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