The court ruled that claims for specific performance and damages relating to a project stalled due to insolvency are classified as debts under IBC; thus, their pursuit is barred during insolvency proceedings.

ORDER :

1. The above mentioned Interim Application is taken out by the plaintiff, an Association registered under the Societies Registration Act, 1860, for appointment of Court Receiver, High Court Bombay, as Receiver of the Project, to take its possession and custody, and enable the members of the Association and the representatives of the Project Management Consultant/Architect appointed by it, to carry out an inspection of the project for preparation of detailed report, as a step towards its completion. A direction is also sought to confirm the appointment of the Project Management Consultant/Architect, so that the timelines as well as the amount to be incurred in completion of the project can be assessed, since the flat purchasers, the members of the Association are desirous of funding the project for its completion, with the assistance of the Court Receiver.

2. The Interim Application is filed in the backdrop of the fact that the Plaintiff Association is formed with the presence of 224 flat purchasers out of the total 309 flat purchasers in a project referred to as ‘RNA Exotica’ (herein referred to as ‘the project’).

The defendant no.1, Skyline Construction Company is a proprietary concern of Mrs. Saranga Agarwal, and a part of ‘RNA’ Group. The defendant no.1 had launched the residential project ‘RNA Exotica’ in the year 2020 at Goregaon (West) Mumbai, projecting it to be equipped with excellent amenities, modern facilities, grand elevation, high speed elevator, swimming pool, gymnasium etc. The project comprise of four towers with basement and ground stilt, 10 levels of podium, 1 level of E- Deck and 36 floors of 2/3 BHK flats. It was projected that the project shall be completed around December, 2013.

The members of the Plaintiffs, based upon the projections and advertisements, purchased the flats in the project upon its launch in the year 2007 upto the year 2010 and standard agreement for sale came to be executed with defendant no.1. Neither in the allotment letters, nor in the agreement for sale the date of delivery of possession was mentioned and despite substantial payments as and when demanded by the defendant no.1, the project did not reach culmination and the construction work of the project which was undertaken in the year 2010, was interrupted from time to time and it is a specific case of the Plaintiff that it was virtually abandoned since November, 2017.

All the like minded buyers of the flats in the project, joined hands and formed an association with an object of collectively agitating their rights and grievances and they also registered themselves under the Societies Registration Act, 1860.

It is a case of the plaintiff that as on date only a bare shell structure of 33 floors is constructed and it is pleaded that the members of the association belong to middle class, who have obtained loan from banks and other financial institutions and continue to repay it and four of the members have passed away, awaiting possession of the new premises and according to the plaintiff, an approximate sum of Rs. 237 Crores is made over to defendant no.1.

The defendant no.1 entered into agreements for sale and issued allotment letters to the members between 2010-2019 and there are 60 unsold units according to the original plan, which have now become 77 as few duplexes are to be constructed as single units.

It is the specific case of the plaintiff, that the project was assured to be completed and the flats were to be ready for possession