NCLAT: Allottees would Get Treatment as per IBC Provisions but the same would have to be similar to all

NCLAT: Allottees would Get Treatment as per IBC Provisions but the same would have to be similar to all

The National Company Law Appellate Tribunal (NCLAT) denied the relief sought by an allottee against the Corporate Debtor requesting alternate premises for not delivering the flat as per the Builder Buyer Agreement because no preferential treatment could be provided since allottees would get treatment as per the Insolvency and Bankruptcy Code, 2016 (IBC) provisions but the same would have to be similar to all.

The Principal Bench of the National Company Law Appellate Tribunal at New Delhi, comprising Justice A.I.S. Cheema and Dr. Alok Srivastava heard the matter titled Ms. Indrani Brahmachari v. Mr. Chandra Prakash & Ors.

The factual background of the matter was that the Appellant – Allottee had booked a flat with the Corporate Debtor – M/s. Granite Gate Properties Pvt Ltd against whom the Corporate Insolvency Resolution Process (CIRP) was initiated. However, the apartment was not delivered even after four years and therefore, the Appellant was provided alternate premises in the same project on a rental basis through an agreement for a period of two years. This alternate premises was provided with the help of one of the Ex-directors of the Corporate Debtor who was arraigned as a respondent in this appeal. However, a suit for eviction was filed against the Appellant to vacate the alternate premises and the Appellant's interim application for protection against eviction was rejected.

The Appellant submitted that she could not be evicted from the alternate premises till the flat allotted to her was provided to her. The Appellant further submitted that the Corporate Debtor would also be liable as the Ex-Director of the Corporate Debtor made payments for the alternate premises provided to the Appellant. However, the Ex-Director claimed that he was not party to the agreement and did not have knowledge of the execution of the same and thus no relief could be sought against him.

In order to understand the matter, the Court went through the rent agreement for the alternate premises and found that the Ex-Director was not a signatory to the agreement.

The Court after considering the submissions of the parties, observed that the arrangement of accommodating in alternate premises was not part of the Builder Buyer Agreement or any subsequent agreement which would make the Corporate Debtor liable to maintain the Appellant in a rented/alternate premises. It was further noted that any direction to the Resolution Professional to continue to pay the rent for the alternate premises would result in giving preferential benefit to one of the allottees and there was no material shown which would prove that any other allottees of the Corporate Debtor in CIRP were being given any such preferential treatment for alternate premises.

The Court concluded that the relief sought by the Appellant – Allottee could not be granted as it would not be in consonance with the scheme of the Insolvency and Bankruptcy Code, 2016 (IBC). The Court disposed of this appeal by observing:

"Under the scheme of IBC, the allottee can be dealt with under the Resolution Plan or if the Corporate Debtor goes into Liquidation, the allottees would get treatment as per provisions but the same would have to be similar to all. Even if the veil is lifted, what appears is that one of the directors of the holding company gave some preferential benefit to the Appellant. However, when the CIRP has been initiated, the Corporate Debtor with whom no prior contractual arrangement is proved cannot be forced to continue with the same treatment."