Shikha La! & Anr. Vs. Earthcon Universal Infratech Pvt. Ltd. - Thus, sine qua non for termination of the agreement between the parties was the refund of the amount as well as cancellation of the document executed between the parties which did not happen and before that the Appellants changed their mind and informed the Respondent that they do not want cancellation of their flat and refund of their money etc.

  NCLAT (2025.01.21) in Shikha La! & Anr.  Vs. Earthcon Universal Infratech Pvt. Ltd. [Comp. App. (AT) (Ins) No. 1027 of 2024 & LA. No. 3408 of 2024], held that; 

• Thus, sine qua non for termination of the agreement between the parties was the refund of the amount as well as cancellation of the document executed between the parties which did not happen and before that the Appellants changed their mind and informed the Respondent that they do not want cancellation of their flat and refund of their money etc.

Excerpts of the order;

This appeal is directed against the order dated 18.12 2023, passed by the National Company Law Tribunal, New Delhi, Court No. III (in short 'Tribunal') by which an application filed by the Appellants bearing I.A No. 2791 of 2021 with the prayer to direct the RP to include the name of the Appellants in the category of 'Flat Buyers', has been dismissed.

# 2. The Appellants who are the father and daughter had applied for allotment of an apartment on 16th floor, D-1602, 4 BHK, Size 2225 Sq. Ft. for total sale consideration of Rs. 52,59,900/-in the project 'Casa Royale' at plot no. GH-10, Sector 1, Greater Noida West, Greater Noida, UP- 201306, an undertaking by the Respondent/Corporate Debtor (CD) vide booking form dated 21.01.2019. A Builder Buyer's Agreement dated 09.01.2019 was executed between the parties and as per Article 4 of the said agreement, CD was to complete the construction work of the said apartment on or before 12 months with grace period of 3 months i.e. 09.04.2020 from the date of agreement. 

# 3. The Appellant deposited total amount of Rs. 26,22,9552- from 22 01.2019 to 22.03.2019 and since no construction was being done, therefore, the Appellant requested for cancellation of their allotment and refund of their money. In this regard, the appellant submitted a cancellation affidavit dated 03.08.2019 with original documents to AR of the CD. It was stated in the affidavit that the Appellant shall have no dues left after taking the refundable amount but neither the CD responded to their affidavit nor refunded the amount.

# 4. The Appellant also registered a case before the UPRERA on 05.09.2019. The argument in the said case was heard and order was reserved but vide order dated 28.02.2020, UPRERA adjourned the case and kept the application in abeyance because the CD was admitted into the CIRP.

# 5. An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (In short 'Code') was filed by the Financial Creditor, namely, M/s Nisus Finance 85 Investment LLP 85 Anr. against the CD which was admitted on 08.11.2020 and Jitendra Arora was appointed as Interim Resolution Professional (HIP) but subsequently Gaurav Katiyar was confirmed as the RP. 

# 6. It is also pertinent to mention that the resolution plan submitted by consortium of M/s D S Infraheights Pvt. Ltd. and M/s Anand Buildtech Pvt. Ltd. which was approved by the CoC in its 26th meeting held on 19.08.2023 by 70.18% voting share. The RP of the CD submitted an application bearing I.A No. 4466 of 2023 for approval of the resolution plan in terms of Section 30(6) r/w Section 31 of the Code on 22.08.2023 which is pending adjudication.

# 7. When the Appellant came to know about the CIRP of the CD, they submitted their claim in Form CA being financial creditor on 25.02.2020 which was accepted by the earlier RP vide email dated 03.03.2020.

# 8. The Appellant No. 1, vide letter dated 19.11.2020 and email dated 20.12.2020 addressed to RP, withdrew the cancellation and opted for the flat as no refund was made and none of the documents executed between the parties were cancelled or terminated.

# 9. The RP vide his email dated 05.01.2021 circulated the list of homebuyers as on 24.03.2021 in which the Appellant No. 1 was reflected as "flat cancelled/surrendered, claim collated on provisional basis" despite the fact that the Appellants opted for flat by withdrawing the cancelation vide email dated 20.12.2020 and hence, the list sent by the RP was. not found proper and the Appellant fell in the category of flat buyer. The appellant through their counsel, vide email dated 15.04.2021, requested to correct the list dated 24.03.2021 by including the name of the Appellant in the category of flat buyers but did not receive any response, therefore, the Appellant filed I.A No. 2791 of 2021 before the Tribunal.

# 10. The application was contested by the CD alleging that BBA was executed on 09.01.2019 and as per the said BBA, the CD was to offer the possession of the flat to the Appellants by April, 2019 but the Appellant submitted an affidavit of cancellation on August, 2019 and as per para 4 and 8 of the affidavit of cancellation, the CD before the insolvency commencement date repudiated the contract and decided to refund the money.

# 11. The Tribunal dismissed the application of the Appellants on the ground that they had willfully and voluntarily surrendered their unitand RP had rightly collated the claim under the refund category and  as such the Appellants were held entitled to refund the money as the only remedy left.

# 12. The Tribunal found that RP had not committed any illegality with respect to the Appellants classification under the e refund category and dismissed the application bearing I.A No. 2791 of 2021 on 18.12.2023.

# 13. Counsel for the Appellants has• argued that though the Appellants had submitted cancellation certificate but it was clearly mentioned that the Appellant shall have no right over the property in question after taking the refundable amount, so far neither the amount has been refunded nor the document executed between the parties for the allotment of the flat was cancelled or terminated. It is further submitted that the Appellant had also sent a letter dated 19.11.2020 brining to the notice of the Respondent its decision to keep the flat and return all the original booking documents because by that time Respondent had neither returned the amount received from the Appellants nor cancelled the documents executed between the parties, therefore, there is no binding contract between the parties. It is further submitted that against the same Respondent/CD one Mukesh Sharma filed an I.A No. 1822 of 2021 before the same Court on behalf of 31 home buyers in the same project. In this case, there was a tripartite agreement amongst buyers, seller and the Bank being the subvention scheme home buyers. In that case also there was a cancellation affidavit but no refund was made nor the agreement was cancelled, therefore, the Tribunal allowed the application with the following order:-

• "With regard to prayer (e) of the application, we direct the RP to consider the claim of the buyers who had submitted an affidavit for cancellation but to whom no refund was made, nor the tripartite agreement was  cancelled, in respect of such buyers, the unit cancellation shall be revoked and they shall rank pan i pasu in relation to all other homebuyers in class in relation to all their claim, rights and obligations etc."

# 14. It is further submitted that in another application filed by two applicants / joint allottees bearing I.A No. 2230 of 2021, namely, Savita Rani Bakshi and Sikha Bakshi. The allotment was cancelled on the basis of execution of settlement deed dated 05.07.2019 and it was agreed before the Mediator that the amount of the home buyers shall be returned. In the said case also, direction was issued to the RP to consider the claim of the said Applicants as home buyers/ allottees and in this regard, the following observations have been made:-

• "10. We have heard the Ld. Counsel for both the sides and perused the petition, reply along with documents as well as written submissions filed by them. On an analysis of the averments and pleadings it is seen that the Corporate Debtor /Respondent has admitted the claim of the. Applicants and in the settlement before the mediation, it has also agreed to refund an amount of Rs. 30.40 Lakhs. In the said settlement deed, it is not mentioned that the settlement deed will override the earlier agreement entered between the parties. Therefore, the contention raised by the Respondent that the earlier agreement stands cancelled / revoked automatically is not correct.

• 11. From perusal of the submissions made by Applicants it is seen that Corporate Debtor has been in default with regard to honoring the Mediation Agreement arrived at between the parties. It is clearly brought on record that the Applicants have re-served their right towards the flat in que-stion till such time the terms of agreement are complied with. The Applicants in this case have already paid more than 95o / o of the Base Sale Consideration for the Flat B-203 and so far, no third-party interest is stated to have been created With respect to the said flat. Therefore, we feel no prejudice is likely to be caused to anyone if prayers of the Applicants are allowed.

• 12. Further the Counsel for the Applicants have already stated on bar that Applicants shall pay all such legitimate payments qua the said flat as may be demanded from the class/category of Homebuyers to whom any flat has been allotted but the possession has not been delivered as part of the resolution plan as may he approved 1;>y this Authority. We are also convinced that in the given facts and circumstances of the case the Corporate Debtor cannot be permitted to undue benefit of its own wrongs.

• 13. In view of the above, we hereby allow the present petition in its totality and direct the Resolution Professional to consider the claim of Applicants at par with "Home buyers/ Allottees: other approved units sold and possession not yet given" and consequently extend same/identical benefits to the Applicants as are available to all other allottees/homebuyers. It is made clear that the Applicants shall remain liable to pay all balance • dues in terms of Builder Buyer Agreement and the Resolution Plan as may be approved by this Authority. Accordingly, IA is disposed of."

# 15. On the other hand, Counsel for Respondent has submitted that the claim of the Appellant cannot to be collated as homebuyer instead of financial creditor - in class - refund category because they have willfully and voluntarily surrendered their unit which is acknowledged by way of an affidavit of cancellation filed by the Appellants. It is submitted that as per of Section 5(8)(f) and explanation, to become to homebuyer there should be a valid subsisting builder buyer agreement or allotment but the Appellants before the commencement of CIRP had surrendered their allotment to the CD therefore the RP had collated the claim of Appellant as financial creditor in class under refund category. It is further submitted that the cancellation has been asked for by the Appellants, therefore, the Appellant cannot approbate and reprobate at this stage for the allotment of the flat and to be included in the list as a home buyer.

# 16. As regards, the orders passed in I.A No. 1822 of 2021 is concerned, it is submitted that the said order was passed in the context of subvention buyers whereas there is nothing on record to show that the Appellants are under the category of subvention buyers. It is further submitted that the decision in I.A No. 2230 of 2021 is not applicable because in that case it was concluded by the Tribunal that settlement cannot resulted into novation and older BBA stands on the date of commencement of CIRP whereas in the present case the Appellants have acknowledged the cancellation by their affidavit.

# 17. We have heard Counsel for the parties and perused the record with their able assistance.

# 18. It has been categorically averred in the affidavit of cancellation by the Appellants that "after taking refundable amount from the • Company, I shall have no dues left with the Company in any manner whatsoever. It was also averred that "I agree to surrender all relevant original documents given by the company to me at the time of booking and later on, i.e .allotment letter, receipt etc. regarding the said unit". The Appellant made clear to the Respondent that they shall not have any right over the allotment of flat after taking refundable amount from the company which was a point from which the relationship between both the parties had come to an end but before the amount could have been returned by the Respondent, the Appellant served a letter dated 19.11.2020 in which it was clearly mentioned that the appellants have not received payment from the Respondent, therefore, the Appellants changed their approach to keep their flat and return of their original booking documents. Thus, sine qua non for termination of the agreement between the parties was the refund of the amount as well as cancellation of the document executed between the parties which did not happen and before that the Appellants changed their mind and informed the Respondent that they do not want cancellation of their flat and refund of their money etc. In this regard, it is also relevant to refer to the order passed by the Tribunal in I.A No. 1822 of 2021 by which the application filed by similarly situated persons has been allowed on the ground that after the cancellation no refund was made and nor tripartite agreement was cancelled. Even if that was a case where the home buyers have taken loan from the Bank by executing a tripartite agreement and that is why called subvention home buyers but it does not make any difference in so far as the case of the Appellant is concerned because the moot issue is about the refund of the money and cancellation of documents which would have brought an end to the relationship between the parties as the buyer and the seller.

# 19. In view of the aforesaid facts and circumstances, we find force in the submission made by the Appellants and hence, the present appeal is hereby allowed, the impugned order is set aside and direction is issued to RP to include the name of the Appellants in the category of flat buyers. No costs. Pending IAs, if any, are closed.

-----------------------------------------