NCLT Starts Insolvency Proceedings Against Parsvnath Subsidiary

With the National Company Law Tribunal (NCLT) initiating insolvency proceedings against Parsvnath Landmark Developers (PLD) , another real estate biggie of the national capital region has joined the league of builders, who are clearly on the end of their tether due to wrongdoings, majorly caused by siphoning off homebuyers’ money. Jaypee, Amrapali and The 3C Company are some other realtors against which insolvency proceedings are underway currently.

The NCLT has admitted a petition by three homebuyers of PLD’s La Tropicana project in Delhi’s Khyber Pass who signed purchase agreements with the developers in 2009. While the developer promised to deliver the project within 36 months, the construction work has yet to start. The buyers’ several attempts to get a refund have elicited no response from the developer. Admitting their plea, the insolvency tribunal has started action against the builder for inordinate delay in the project and for non-refund of buyers’ money.

While appointing Yash Jeet Basrar as an interim resolution professional to oversee the proceedings, the Delhi Bench of the NCLT has directed company bosses, past and present, to cooperate.

In its defence, the realtor has pleaded that the delay was caused due to delay in approval while stating that buyers cannot initiate insolvency proceedings considering they were not financial creditors.

Trashing both those claims, the NCLT said: “The amount has been raised from the petitioners/allottees under a real estate project. In such a situation not only the debt has a commercial effect of borrowings and come within the scope of ‘financial debt’, but also the petitioners are covered by the definition of expression ‘financial creditor’.” The NCLT has also directed the Registrar of Companies to update on its website Parsvnath's status of 'corporate debtor'.

PLD’s parent company Parsvnath Developers is already being probed by the securities and Exchange Board of India (Sebi) for being in a list of 331 suspected shell companies.

Apart from building residential projects across 16 locations and township projects in 13 locations in the NCR, Parsvnath Developers is also involved in developed retail and office spaces and information technology parks. Most of the company projects are in the Noida and Greater Noida region. Apart from La Tropicana, Parsvnath is developing its Paramount project in the national capital.