Navigating Real Estate and Insolvency Laws: A Deep Dive into Mysore Petro Chemicals Ltd. vs. Mrs. Vandana Garg, RP of Raghuleela Builders Pvt. Ltd.
I. The Case in Context
The Applicant, having purchased an office unit in the Corporate Debtor’s project “ONE BKC” in Bandra, Mumbai, found themselves embroiled in a legal dispute due to the non-delivery of the unit. Despite paying the entire consideration amount of Rs. 12,93,60,000/-, the Corporate Debtor failed to hand over the possession of the unit by the agreed date of 30.09.2015.
II. Legal Proceedings and the Role of RERA
In response to the non-delivery, the Applicant filed a complaint before the Real Estate Regulatory Authority (RERA). However, RERA did not allow compensation to the Applicant in its Order dated 08.10.2020. This led the Applicant to appeal against the Order to the Maharashtra Real Estate Appellate Tribunal, Mumbai (MahaRERA).
III. The Appeal and the Corporate Insolvency Resolution Process (CIRP)
During the pendency of the appeal before MahaRERA, the Corporate Debtor was admitted to CIRP on 04.10.2021. Despite this, MahaRERA granted relief to the Appellant in its Order dated 30.06.2022, directing the Corporate Debtor to pay interest at the rate of State Bank of India’s highest Marginal Cost Lending Rate plus 2% on the amount paid by the Applicant from 01.10.2015 up to 30.11.2019.
IV. The Role of the Resolution Professional (RP)
Upon receipt of the Order, the Applicant informed the Resolution Professional (RP) and filed his claim in Form-B on 19.07.2022. The Applicant argued that the RP was duty-bound to disclose all legal proceedings pending against the Corporate Debtor under the Information Memorandum as per Regulation 36(2)(h) of IBBI (Insolvency of Corporate Persons) Regulations, 2016.
V. The Decision of the Adjudicating Authority
The Adjudicating Authority held that the claim of the Applicant could not be considered belated or barred by limitation, as the appeal was filed before MahaRERA prior to the initiation of CIRP proceedings. It emphasized the duty of the RP to be aware of and follow all pending proceedings against the Corporate Debtor.
VI. The Implications of the Judgment
The judgment has far-reaching implications for the insolvency resolution process in India, especially for real estate companies. It harmonizes the provisions of the Real Estate (Regulation and Development) Act, 2016, with the Insolvency and Bankruptcy Code, providing important guidelines for handling insolvency cases involving real estate entities.
In conclusion, the case of Mysore Petro Chemicals Ltd. vs. Mrs. Vandana Garg, RP of Raghuleela Builders Pvt. Ltd., serves as a significant precedent in the realm of insolvency laws. It underscores the need for a comprehensive understanding of both real estate and insolvency laws in handling such cases. The judgment also highlights the crucial role of the RP in the insolvency resolution process. The decision is a step forward in ensuring a more effective and efficient insolvency resolution process in India.