Case Note & Summary
The judgment arises from three appeals filed by commercial space allottees against orders of the National Company Law Tribunal (NCLT), Principal Bench, New Delhi, in the Corporate Insolvency Resolution Process (CIRP) of M/s IP Constructions Pvt. Ltd. The appellants, Praveen Arya and others, and Nupur Garg, were allotted commercial spaces in a project developed by the corporate debtor. They challenged the NCLT's orders dated 30.10.2023 and 05.10.2023, which dismissed their applications seeking inclusion of their claims in the resolution plan. The core legal issue was whether commercial space allottees qualify as 'financial creditors' under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 (IBC). The appellants argued that they had invested money for the purpose of receiving commercial space, which constitutes a financial debt. The respondents, including the Resolution Professional (RP) and the Successful Resolution Applicant (SRA), contended that commercial space allottees are not financial creditors and that their claims were not required to be included. The National Company Law Appellate Tribunal (NCLAT) analyzed the definition of 'financial debt' under Section 5(8)(f), which includes any amount raised under a transaction for the time value of money. The Tribunal noted that the allottees had paid consideration for the allotment of commercial space, and the corporate debtor was obligated to deliver the space, which involves a time value of money. Relying on precedents, the NCLAT held that commercial space allottees are financial creditors. Consequently, the Tribunal allowed the appeals, set aside the impugned orders, and directed the RP and SRA to include the claims of the allottees in the resolution plan. The judgment emphasizes that the IBC aims to protect the interests of all creditors, including allottees of commercial spaces.
Headnote
A) Insolvency and Bankruptcy Code - Financial Creditor - Commercial Space Allottee - Section 5(8)(f) IBC, 2016 - The issue was whether commercial space allottees are financial creditors under Section 5(8)(f) of the IBC. The Tribunal held that commercial space allottees are financial creditors as they have invested money for the purpose of receiving commercial space, which amounts to a financial debt. The resolution plan must include their claims. (Paras 1-10) B) Insolvency and Bankruptcy Code - Resolution Plan - Inclusion of Claims - Section 30, 31 IBC, 2016 - The Tribunal held that the resolution plan must consider the claims of allottees of commercial spaces, as they are financial creditors. The Adjudicating Authority's order excluding such claims was set aside. (Paras 11-20)
Issue of Consideration
Whether commercial space allottees are financial creditors under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016, and whether their claims must be included in the resolution plan.
Final Decision
Appeals allowed. Impugned orders set aside. Resolution Professional and Successful Resolution Applicant directed to include claims of the allottees in the resolution plan.
Law Points
- Commercial space allottees are financial creditors under Section 5(8)(f) of IBC
- 2016
- Resolution plan must include claims of allottees
- CIRP cannot exclude claims of commercial space buyers
