NCLT Bengaluru Direct Mantri Developers to settle the Matters

Introduction

In the recent development, while hearing the petition on 07/02/2020, filed by financial creditors, NCLT Bengaluru Bench has asked the management of the M/s Mantri Developers Pvt. Ltd to settle the cases pending before NCLT, March 2020. This development came by NCLT under newly Insolvency and Bankruptcy Laws (referred to as IBC Laws).

The matter was being argued by Mr. Harshvardhan B Sharma, from legal firm M/s Centrik Legalistic LLP, on behalf of the financial creditors (previously home-buyer). The default arose out of the Karnataka RERA order 14/05/2019 where the company was ordered by RERA to refund the total amount with interest. However, the company has failed to repay the whole amount as per the RERA order. During the last hearing on 23/01/2020, the Hon’ble Bench came hard on the company and asked the MD of the company to appear in the next hearing and submit the plan to settle the matters, failing which there may be serious consequences in the affairs of the company. On 07/02/2020, the CFO the company appeared and offered to settle the matters. 

The petition has been filed by financial creditors who were home-buyers. Later upon default in timely delivery, Karnataka RERA passed the refund order as per Section-18. However, the builder has not honored the RERA orders and did not refund the amt. Aggrieved by such behavior, the petition u/s 7 of IBC Laws were filed before Bengaluru NCLT. 

Mantri Developers is a known name in the Real Estate Sector with various real estate projects located in South India. The Company is based out of Bengaluru. However, various creditors including homebuyers have moved against Mantri Developers for initiation of Corporate Insolvency Resolution Process (CIRP) owing to the default on the part of the Corporate Debtor. 

Let's understand the IBC Laws:

What are IBC Laws?

IBC (Insolvency & Bankruptcy Code, 2016) was implemented, from December 2016 with the objectives to consolidate the laws related to reorganization and insolvency resolution, in a time-bound manner. One of the prime objects of IBC Laws is to identify the stressed assets and find the resolution plan in a quick and time-bound manner. 

IBC through NCLT (National Company Law Tribunal) has helped to recover more than Rs. 1 Lac Crs of bad-debts within 3 years of its implementation. A lot of big cases like JP builder, Amrapali, Reliance Telecom, Essar Steel has been resolved in a very efficient manner.

Who can approach to NCLT under IBC Laws?

Under IBC laws, there may be 3 circumstances to approach NCLT which are as under:

• Financial creditors can file a petition to NCLT upon default - Any financial creditor upon default of money more than Rs. 1 Lac may file petition u/s 7 of IBC Laws before the jurisdictional NCLT, in the prescribed form with the consent of Insolvency professional.
• Operational Creditors can file petition to NCLT upon default- Any operation creditor (creditors arose out of operations of goods & services, employees or others) upon default of money more than Rs. 1 Lac may file petition u/s 9 of IBC Laws (after serving demand notice u/s 8 of IBC Laws), before the jurisdictional NCLT, in the prescribed form.
• Corporate debtors can file voluntarily - Any corporate debtor upon default of money more than Rs. 1 Lac may file petition u/s 10 of IBC Laws before the jurisdictional NCLT, in the prescribed form with the consent of Insolvency professional.

As per recent changes, the decree-holder can prove as financial creditor and can approach to NCLT upon default. 

Disclaimer - the above article is based on the personal interpretation of daily orders and related laws, which may differ from person to person. The author is not intended to defame any brand or persons. The readers are expected to take expert opinion before placing reliance. For any clarification, please reach to an expert at [email protected] or call at 8383011629.