2021 Supreme(Bom) 29

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. KATHAWALLA, VINAY JOSHI, JJ.
Marvel Sigma Homes Pvt. Ltd. - Appellant
Versus
State of Maharashtra and Ors. - Respondents
Interim Application (ST) No.2044 of 2021 In Writ Petition (L) No.3221, 2657 OF 2020
Decided on : 09-03-2021

Point of Law: Debt Recovery - Insolvency and Bankruptcy - Insolvency resolution process is not a money suit for recovery nor a suit for execution for any decree or award as distinct from Section 35 of the Arbitration Act, which related to execution of an award- question of availing any effective remedy, in case of default of debt for an ‘Operational Creditor, as held by the learned Adjudicatory Authority, is not based on any sound principle of law.

Headnote:

Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine Payable, Forms of Complaints and Appeal, etc.), Rules, 2016 - Rules 3, 4 - Companies Act, 1956 - Real Estate (Regulation and Development) Act, 2016 - Sections 2, 12, 14, 18, 40, 57, 7 and 19 - Maintainability of Writ Petition - Recovery of Amount - Petitioner is an “allottee” as defined under Section 2(d) of the Real Estate (Regulation and Development) Act, 2016 -Petitioner had filed Complaint under Sections 12, 14, 18 and 19 of the RERA Act against Respondent No.4. - Main grievance in Complaint before RERA was that under Articles of Agreement Petitioner paid the entire consideration to Respondent No.4 towards purchase of a unit or apartment in its project Marvel Ribera. - It was further stated that there was a gross delay in handing over possession. - Therefore, Petitioner filed the Complaint seeking return of amount paid and interest including compensation under aforesaid provisions of RERA. - By an order Adjudicating Officer allowed the said Complaint and directed Respondent No.4 along with interest at the rate of 10.05% p.a. to Petitioner. As the Respondent No.4 failed to pay this amount, Petitioner initiated execution proceedings against Respondent No.4, which RERA was pleased to allow and issued a Recovery Certificate against Respondent No.4 for recovering the decreetal amount as arrears of land revenue. - Thereafter, RERA directed the Collector to execute the said Recovery Certificate. - By its letter Collector directed the Tahsildar to execute the Recovery Certificate. - According to the Petitioner, despite the aforesaid direction Collector and Tahsildar both failed to comply with the said direction and failed in performing their statutory obligations, resulting in the Petitioner filing this Writ Petition, seeking a writ of mandamus against the Collector and Tahsildar to perform their statutory duties to recover the amounts under the Recovery Certificate as arrears of land revenue. - Whether the said Order of the Adjudicating Officer directing return of the amount paid with interest is a direction to pay ‘compensation’ or a monetary claim of ‘compensation’ as understood by Section 40(1) of the Act

Findings of Court:

Application by the Petitioner before the NCLT under Section 7 of the IBC is not a recovery proceeding. - The nature of the proceeding is in rem and it seeks the initiation of a corporate insolvency resolution process against Respondent No.4 on the basis that there is a default in paying a financial debt due to a financial creditor. - It is clear to us that recourse to Section 7 of the IBC is by no means a substitute to recovery proceedings seeking monetary reliefs under provisions of the RERA Act. - This distinction between proceedings seeking winding up of a company under the Companies Act, 1956 - and recovery proceedings, is settled law and noted in various judgments. - It is also relevant to consider the NCLAT’s view in this regard in the case of Annapurna Infrastructure Pvt. Ltd. and Anr. (Supra). - NCLAT was dealingwith an issue whether pendency of proceedings for execution of an award or judgment and decree, bar a creditor to prefer any petition under the IBC scope of Section 40(2) of the Act, on the other hand, pertains to orders or directions against any person to do an act or refrain from doing an act under the provisions of the RERA Act. - When read in the light of Section 40(1) and the other provisions of the Act, it is apparent that Section 40(2) of the Act deals with orders or directions that are not in the nature of monetary reliefs or for recovery of amounts that are specifically provided for in Section 40(1) of the Act. - There are various other orders that the Authority under Section 20 of the Act can make, such as for example delivery of possession of units or in respect of conveyance of the land to the Society or Association formed. Section 40(2) of the Act would apply in situations such as these. - If the expression ‘order’ and ‘direction’ under Section 40(2) is to be understood as every order and direction including those contemplated in Section 40(1) of the Act, then Section 40(2) of the Act would render Section 40(1) of the Act redundant or otiose. - It is a well settled rule of interpretation that if two provisions can be read so as to give meaning and effect to both of them, then that interpretation should be preferred to one that renders a particular provision otiose or ineffective - As regards Rule 3 and Rule 4 of the RERA Rules, their application will follow the interpretation of the Sections of the Act, which have been considered above. There is no dispute that if the recovery is covered by Section 40(1) of the Act, Rule 3 will apply; and if the order or direction is covered by Section 40(2) of the Act, the execution of such order or direction will be governed by Rule 4 of the Act. - Court is of the view that the Recovery Certificate resulting from the Order of the Adjudicating Officer has rightly been issued under Section 40(1) of the Act read with Rule 3 of the RERA Rules. - It is important to note that Section 40(1) of the Act, which court have analysed above, also encompasses directions to the promoter/developer to pay penalty, interest and compensation that may be issued by the Appellate Authority. - Even if one considers these directions in respect of monetary claims as ‘orders’, it is not as if all orders by the Appellate Tribunal are only covered by Section 57 of the Act. - Section 57 of the Act would have to be harmoniously interpreted with Section 40(1) of the Act. - Accordingly, the directions that may be issued by the Appellate Authority under Section 40(1) of the Act or in cases where the Appellate Authority confirms in appeal a direction issued by the Adjudicating Officer or by RERA under Section 40(1) of the Act, would be recoverable as arrears of land revenue under Section 40(1) read with Rule 3 of the RERA Rules and not under Section 57 of the Act. - In any event, the Recovery Certificate and the first communication by which it was sent to the Collector/Respondent No.2 has been produced before us in the Affidavit in Reply filed by Respondent Nos.2 and 3. - Since the filing of that Affidavit that document has been before the Court. Respondent No.4 has had the benefit of considering it. we find no merit in any of the objections to the maintainability of Writ Petition (L) raised in the Interim Application or in any of the grounds of challenge raised in Writ Petition

Result: Writ Petition Dismissed