NCLAT sets aside CIRP plea as allottee was a speculative investor and corporate debtor agreed to repay principal amount

  • News|Blog|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 29 October, 2021

Corporate insolvency resolution process - Financial debt

Case Details: Ankit Goyat v. Sunita Agarwal - [2021] 131 taxmann.com 219 (NCLAT- New Delhi)

Judiciary and Counsel Details

    • Anant Bijay Singh, Judicial Member and Ms. Shreesha Merla, Technical Member
    • Chandra Shekhar YadavVinod Chaurasia and Ms. Gitanshi Arora, Advs. for the Respondent.

Facts of the Case

The Memorandum of Understanding (MoU) was executed between allottee-financial creditor and corporate debtor/real estate developer wherein it was agreed that after a payment of Rs. 25 lakhs by the allottee, one unit would be earmarked for allottee along with a return of 25 percent per annum at end of 24 months.

The financial creditor, on the other hand, issued a demand notice demanding principal with interest. Thereafter, a financial creditor filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016, and the same was admitted by NCLT by the impugned order.

The corporate debtor raised an issue that the allottee was a ‘speculative investor’ and triggered Code with malicious intentions. However, the assured rate of interest offered indicated that the allottee had invested, seeking interest in form of high assured returns.

NCLAT Held

Since allottee sought to benefit from a lucrative agreement as he was securing his money by way of that agreement which gave him lien over flat and unlike a normal builder-buyer agreement, where the home buyer does not have the option of exercising choice of taking or not taking possession of flat, in instant case buyer was to get his money plus 25 percent assured return even if he chose not to retain apartment.

Thus, homebuyers sought the benefit of a lucrative agreement and the Code prohibits and discourages recovery. Since corporate debtor was ready to return principal amount, order of admission under section 7 was to be set aside.

Case Review

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied