Investment agreements with assured returns classify creditors under IBC, necessitating compliance with Section 7 application thresholds.

JUDGMENT

[Per: Barun Mitra, Member (Technical)]

The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 (‘IBC’ in short) by the Appellant arises out of the Order dated 19.09.2023 (hereinafter referred to as ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, Principal Bench, New Delhi) in C.P.(IB)234(PB)/2019. By the Impugned Order, the Adjudicating Authority dismissed the Section 7 application filed by the Appellants for initiating Corporate Insolvency Resolution Process (‘CIRP’ in short) against M/s Orris Infrastructure Pvt Ltd – Corporate Debtor. Aggrieved by this impugned order, the present appeal has been preferred by the Appellants.

2. We have heard Shri Rajat Malhotra, Learned Advocate appearing on behalf of the Appellants and Shri P. Nagesh, Learned Sr. Advocate representing the Respondent.

3. The Learned Counsel for the Appellants while making his submissions submitted that the Corporate Debtor - Orris Infrastructures Pvt Ltd was developing a commercial building/complex known as Floreal Tower, Gurgaon. The Corporate Debtor had entered into an Agreement with the Appellants on 24.04.2010 (hereinafter referred to as ‘MOU’) for providing Monthly Assured Return (‘MAR’ in short). Clauses 2, 4, 5 and 6 of the MOU dated 24.04.2010 stipulated that MAR would continue to be paid by the Corporate Debtor for 36 months after the completion of the building or till the office space was leased out on completion, whichever is earlier, by the Corporate Debtor.

4. Further submission was made that the Corporate Debtor having not completed the project applied for renewal of License issued by the Town and Country Planning Department. The License had been renewed up to 13.11.2024 until final completion. Furthermore, it was submitted that though an Occupancy Certificate dated 16.08.2017 was placed before the Adjudicating Authority by the Corporate Debtor, the Occupancy Certificate cannot be viewed as Completion Certificate of the building. In any case, the liability for payment of MAR was up to 36 months from the date of Occupancy Certificate which was not complied to by the Corporate Debtor.

5. It was pointed out that the Appellant had paid the entire consideration amount of Rs.29.98 lakhs and thus had discharged their part of the obligation. It is also contended that neither the building is completed nor the office space leased out till date by the Corporate Debtor. However, the Corporate Debtor failed to make the payments as per MAR following which notices for default were issued on 09.01.2018 and 12.02.2018. Since payments were still not forthcoming, Section 7 application was filed before the Adjudicating Authority on 01.06.2018 but subsequently withdrawn following a Settlement Deed entered into by both parties on 09.07.2018. As the post-dated cheques issued in pursuance to the above Settlement Deed of 09.07.2018 were dishonoured, a fresh application was filed.

Again, the matter was amicably settled between the two parties following a Settlement Deed dated 06.03.2019. The Section 7 application was disposed of by the Adjudicating Authority on 07.03.2019 with the liberty to revive the petition in case of default. Due to further default, notice was issued on 10.12.1019 and the application was again revived. The Corporate Debtor thereafter handed over two bank drafts in the name of the Appellants with a view to settle all payments due and payable by them under the MOU dated 24.04.2010. It was submitted that these two bank drafts were not encashed by the Appellants since the amount contained in the