NCLAT Relief For Raheja In Insolvency Case

In a relief for Raheja Developers, the National Company Law Appellate Tribunal (NCLAT) has stopped insolvency proceedings, and has prevented the interim resolution professional from forming the committee of creditors and publication of advertisements for claims. The NCLAT has also allowed Raheja Developer to negotiate the matter with homebuyers to reach a settlement.

It was in August 2019, when the NCLAT directed the adjudicating authority to admit an insolvency plea against the builder. Consequently, the National Company Law Tribunal (NCLT) had initiated the process after admitting a plea by a homebuyer. The tribunal said 'a default has occurred' by Raheja Developers in giving possession of apartments, and rejected the contention of the developer that the delay was caused because of lack of infrastructure in the area to be provided by authorities.

The NCLT has also declared a moratorium, protecting the company from the lenders by prohibiting them to recover the amount for a certain period. It directed the developer to provide “all documents in their possession and furnish every information in their knowledge” within a period of one week.

In an earlier plea was filed by Ahluwalia Contracts, the NCLAT had ruled that if the dispute was not raised before the issuance of the demand notice, it cannot be a ground to reject an application under Section 9 of the Insolvency and Bankruptcy Code. The creditor had moved the NCLT, after the developer failed to pay up dues despite several demand notices.

However, Raheja Developers had claimed that the matter related to the work and payment was under dispute and that arbitration proceedings were already initiated. The developer also said that they had huge claims for delays and poor construction/services that outweighs the contractor's claims.

With inputs from Housing.com News