The National Company Law Appellate Tribunal in the case Ashoka Hi-Tech Builders Pvt. Ltd. v Sanjay Kundra & Anr, wherein the Principal Bench, comprising of Chairperson, Justice Ashok Bhushan and the Technical Member, Mr. Barun Mitra observed while adjudicating an appeal filed and has held that a landowner in a development agreement is not being a financial creditor within the meaning of Section 5(8) of IBC and the same cannot be included in the Committee of Creditors.
Facts of the Case: The Landowner/ Appellant, Ashoka Hi-Tech Builders Pvt. Ltd being the owner of an agricultural land admeasuring 11.40 acres on which a development project was proposed to be constructed by the Corporate Debtor. Therefore, the Development Agreement dated 01.04.2009 was executed between the Landowner and the Corporate Debtor and in the agreement it is stated stated that the Corporate Debtor would carry on construction, and out of total saleable construction 32% will be of the Landowner and remaining 68% shall be owned by the Corporate Debtor.
The Adjudicating Authority removed the Landowner from the CoC vide
order dated 03.11.2022, wherein the bench observed that since no amount
was disbursed for the time value of money, the Landowner cannot be regarded
as a Financial Creditor. The bench placed reliance on the NCLAT judgment
in Namdeo Ramchandra Patil and Ors. v Vishal Ghisulal Jain.
However, when the Corporate Debtor was being executed into the Corporate Insolvency Resolution Process. A claim has been filed by the Landowner before the Resolution Professional in the capacity of a financial creditor and the same was admitted. Thus, the landowner was being inducted in the Committee of Creditors.
An application was filed by the Home-Buyers before the Adjudicating Authority wherein seeking removal of the landowner from the CoC since he is not a financial creditor. The Adjudicating Authority removed the Landowner from the CoC vide order dated 03.11.2022, wherein the bench obs e r ve d t h at s i n c e n o amount was disbursed for the time value of money, the Landowner cannot be regarded as a Financial Creditor. The bench placed reliance on the NCLAT judgment in Namdeo Ramchandra Patil and Ors. v Vishal Ghisulal Jain.
The bench in its order held that while taking into consideration the provision of Section 5(8)(f) Explanation (i) and (ii), it is clear that pre-condition for a debt being a Financial Debt is disbursement against the time value of money and when any amount is being raised from an allotment under real estate such transaction is also being covered under Section 5(8)(f). Therefore, the pre-condition for application of Explanation (i) of Section 5(8)(f) is raising of an amount from allottee and the present being not a case where an amount has been raised from the Appellants – the Landowners and the submissions made by the Appellant that they are allottees within the meaning of Section 2(d) of RERA Act does not make their transaction as a Financial Debt within the meaning of Section 5(8)(f). Verdict Of NCLAT: It has been observed by the bench that the judgement in the case Namdeo Ramchandra Patil & Ors, the said issue is fully covered and Adjudicating Authority had rightly held that the Landowner is not a financial creditor.
It has been clearly stated by the Development Agreement that the Landowner was a collaborator in the development agreement and not a financial creditor. Thus, there being no disbursement for time value of money by the Landowner within meaning of Section 5(8) of the IBC. Accordingly, the bench dismissed the appeal.