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A petition was filed by Sunteck Realty Ltd. under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking for initiation of Corporate Insolvency Resolution Processes against a corporate debtor for default of a sum of Rs.3.12 crore before the National Company Law Tribunal (NCLT).
It was submitted by the petitioners that according to a term sheet executed between the parties, the petitioner had advanced a sum of Rs 2.51 crores towards the redevelopment of the respondent, Goodwill Theaters Private Ltd.’s property. It was agreed through the term sheet that a Development Management Agreement (DMA) is to be executed within 60 days and a failure to do so would lead to the termination of the term sheet and the respondent in such a circumstance will be held liable for repayment of the advanced amount including interest of 24% to the petitioner. The court noted that the petitioner upon the DMA not being executed and a Deed of Cancellation of the Term Sheet being drafted claimed for repayment of the advance amount with the interest payable. However, despite reminder letters and notices issued by the petitioners, there had been no reply from the respondent’s side. Hence, the petitioners had filed a plea in the NCLT demanding repayment of Rs. 3.12 crore.
The respondent of the case contended that the plea filed by the petitioner under the provisions of IBC is not maintainable, claiming that the petitioners cannot be treated as operational creditors since no goods or services were provided by them.
NCLT noted both the parties’ submissions and stated that the petitioners in the present case are to be treated as a contractor of the project due to their service of collecting payment from the respondent who here is a corporate debtor. Reading down Section 5(20) and 5(21) of IBC and recognizing that in a situation where the DMA has executed the fee collectible on the agreement by the petitioner would be considered as operational debt, hence, the court stated that the amount due to the petitioner despite non-execution of the DMA must be treated as operational debt and petitioner be treated as an operational creditor.
Hence, the court admitted the plea of the petitioner and have initiated the Corporate Insolvency Resolution Process by appointing an Insolvency Resolution Professional and have declared a mortarium under Section 14 of the IBC.
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