Status as on- 17/05/2022
The National Company Law Appellate Tribunal [NCLAT] shattered the hopes of the homebuyers who had Decree(s)/Order(s) in their favor from the Real Estate Regulatory Authority [RERA], with its order as passed in the case of SUSHIL ANSAL VS. ASHOK TRIPATHI & ORS. The homebuyers with decree/order for refund accompanied by Recovery Certificates were left in lurch, after the amendment to Section 7 was introduced whereby it was made mandatory for the home buyers to approach the National Company Law Tribunal [NCLT] either 100 in number or 10% of the total allottees from a particular project.
But as a ray of new hope, the Hon’ble Supreme Court of India has come to the rescue of such home buyers. The Hon’ble Supreme Court of India by way of its recent judgement in the case of DENA BANK (NOW BANK OF BARODA) VS. C .SHIVAKUMAR REDDY & ANR., has paved way for the home buyers having RERA decree/orders/recovery certificates in their hands to take the builder into CIRP under the IBC [As amended up to date], 2017 [CODE].
The Hon’ble Supreme Court of India vide its detailed judgement has held that the order/decree/award obtained from any court of law/Tribunal for the payment of money, unsatisfied either in whole or in part, shall fall within the ambit of Financial Debt, thereby allowing the “decree holder” to initiate proceedings under Section 7 of the Code, as Financial Creditor. However, it has been made relatively clear that the order/decree/award shall be in consideration only to payment of money. For clarification purposes it stated that:
“………… As observed earlier in this judgement, on a conjoint reading of the provisions of the IBC quoted above, it is clear that a final judgement and/or decree of any Court or Tribunal or any Arbitral Award for payment of money, if not satisfied, would fall within the ambit of a financial debt, enabling the creditor to initiate proceedings under Section 7 of the IBC.”
The judgement per se, apart from giving right to the decree/award/order holders under the Code has also given them a fresh period of limitation. That is to say that, with the non-payment/default of the money as decided or held under the decree/award/order, a fresh period of limitation will start for such decree/order/award holders; in other words, the time period of three years of limitation for such a petition will start from the day when the default of the decree/order/award has occurred or the same has not been satisfied by the judgement debtor. The same can be construed from:
Moreover, a judgement and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgement and/or decree or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, under the judgement and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid”.
CONCLUSION:
Thus, in view of the above explained facts and circumstances it will be apt to conclude that the Home buyers who have an order/decree/award for refund passed either by RERA or any consumer court or any court of law, can approach the NCLT under Section 7 of the Code for its default/non-payment, giving a new cause of action for the limitation period from the date the default occurred.
Disclaimer- The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us.
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