The NCLT has also appointed a Interim Resolution Professional.
“Since, the financial creditor satisfies all the requirement of section 7 of IBC, 2016. We are therefore, satisfied that the applicant/financial creditor has made out a case under Section 7 IBC for admission and a clear case of default has been established. Hence, the Corporate Insolvency Resolution Process of corporate debtor is initiated from the date of this order and the captioned application filed by financial creditor is admitted,” NCLT said in its order on Tuesday.
MGF did not respond to the email query till press time.
MGF had formed a joint venture with Emaar Properties, which entered India in 2005 with the largest FDI in the realty sector under Emaar MGF Land.
In April 2016, Emaar decided to end the MGF joint venture and two months later, Shravan Gupta, the then executive vice chairman and managing director of the joint venture, resigned.
The demerger was finally approved in July 2018.
Currently, the erstwhile partners are at loggerheads after the Dubai-based realty developer accused fraud in joint venture agreements and land deals and filed a petition with NCLT in November 2019 seeking investigation into this. It has sought compensation of Rs 2,400-crore bank guarantee to secure its losses.
“The present application under Section 7 of the IBC Code, 2016 has been filed by The Vilas Condominium Association consisting of homebuyers having 327 units allotted in the name of members of the association, the Financial Creditor seeking to initiate CIRP against MGF Developments Limited, the Corporate Debtor,” the order says.
According to the financial creditor, the default amount are under various heads and include Rs 11.48 crore of Interest-Bearing Maintenance Security (IBMS) collected from the home buyers and not refunded to the association of homebuyers as per law.
Also, the common area maintenance and common area electricity charges which the corporate debtor is supposed to pay for the period from the date of accrual of maintenance charges till the date of allotment to a home buyer, is not paid despite repeated request, according to the order
The Supreme Court in the past had said that in a Section 7 application, the adjudicating authority only has to determine whether the financial creditors in a class have filed the application jointly having 10% mandate as per the first provision to Section 7 of the code.
Whether the default has occurred as per the agreement executed between the parties, which in the present case is the BBA executed.
“As far as first condition is concerned, the association members hold 327 Units; therefore, first condition is satisfied,” the order said.
“The financial creditor is directed to send the copy of this order to the IRP with immediate effect, so that he could take charge of the corporate debtor’s assets etc., and make compliance with this order as per the provisions of IBC, 2016. The financial creditor is directed to communicate this order to the IRP and the corporate debtor with immediate effect,” NCLT said in the order.