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NATIONAL COMPANY LAW TRIBUNAL
Vinay Goel, J
Nova Castle Apartment Owner’s Association – Appellant
Versus
K. Parameswaran Nair Resolution Professional (Liquidator) – Respondent
IA(IBC)/257/KOB/2024|CP (IBC)/05/KOB/2021
| Table of Content |
|---|
| 1. homebuyers association seeks reliefs against illegal project loan. (Para 1 , 2 , 5) |
| 2. alleged fraudulent loan prejudiced homebuyers' prior rights. (Para 3 , 4 , 6 , 7 , 8 , 9 , 10) |
| 3. rp defends claim admission, valuation, and asset inclusion. (Para 11 , 12 , 13 , 14 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 4. cirp history: admission, liquidation stayed, plans pending. (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23) |
| 5. admitted homebuyer claims and pra participation. (Para 35 , 36 , 37 , 38) |
| 6. pra cannot challenge cirp framework post-submission. (Para 39 , 40 , 41 , 42 , 43) |
| 7. sale agreements do not exclude assets from cirp estate. (Para 44 , 45 , 46) |
| 8. coc commercial wisdom non-justiciable on valuation. (Para 47 , 48 , 49) |
| 9. application dismissed with nominal costs. (Para 50 , 51 , 52 , 53) |
O R D E R
1. The present Application has been filed by Nova Castle Apartment Owner’s Association, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, and Rules 11 and 32 of the NCLT Rules,2016, seeking the following reliefs:
1. To declare that the Project Loan sanctioned by Respondent No.3 is illegal and fraudulent as it had failed in its duty to ensure that the loan amount was used for the purpose of sanctioning the loan.
2. To declare that the dues of Respondent No.3 cannot be recovered from the assets of the Homebuyers as the same was not utilised in the construction of the project.
3. To direct Respondent No.3 to recover its dues from the other assets of Respondent No.2, which were created using the loan amount syphoned off, and from the other securities held by Respondent No.3.
4. To declare that the Applicants, having entered into the Agreements for Sale and Agreements for Construction, have created a prior charge over the assets of the Nova Castle Project.
5. To direct Respondent No.1 to recalculate the asset list of the project, by removing the security interest of Respondent No.3 over the 45 cents of the project land.
6. To declare that the apartments allotted to the homebuyers on payment of Sale consideration and by entering into an Agreement for Sale are 'Assets held in trust' on behalf of the Homebuyers and, as such, do not form part of the asset of the Corporate Debtor.
7. To direct Respondent No. 1 to exclude the asset held in trust from the Information Memorandum, and other documents and to obtain fresh valuation by excluding the asset held in trust.
8. To direct the Resolution Professional to reconsider the Resolution Plan submitted by the Applicants on the basis of restated valuation report.
The Brief facts of the case are as follows: -
2. The Applicant is an association of 37 homebuyers who are/were allottees of the "Nova Castle" project located at Muttada, Thiruvananthapuram, Kerala, developed by Samson & Sons Builders and Developers Private Limited ("Corporate Debtor"). The association is registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 (Reg. No. TVM/TC/1378/2016), with its registered office at TC-3/2430-1, KPRA 12, Marappalam, Pattom Palace P.O., Thiruvananthapuram – 695004, and is represented by its Secretary, Mr. Arul C Wilson.
3. The Applicant Association stated that they are aggrieved by the admission of Form-C claim of Respondent No. 3 during the CIRP by Respondent No. 1, as the loan was sanctioned by creating charge over the project and land without the notice or consent of the homebuyers who had paid almost the entire sale consideration, in violation of RBI Master Circulars and due diligence norms, resulting in diversion of funds by the promoters as revealed in the forensic audit, thereby gravely prejudicing the rights and interests of the homebuyers.
4. The Applicant further stated that they are also aggrieved by the actions of Respondent No. 1 in accepting an erroneous valuation methodology adopted by the registered valuers, resulting in an inflated and incorrect liquidation value, thereby frustrating the Applicants’ ability
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