NCLAT Sets Aside Rejection of Homebuyer’s Claim Based on Cash Payment Dispute, Upholds Evidentiary Value of Settlement and Allotment Documents

The NCLAT set aside the rejection of the homebuyer’s claim based on a cash payment dispute and upheld the evidentiary value of the settlement agreement and allotment documents submitted by the claimant.

The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Indevar Pandey (Technical Member), while adjudicating a company appeal along with a connected interlocutory application, held that where a corporate debtor has expressly acknowledged its liability through a Builder Buyer Agreement, Article of Agreement, and a subsequent settlement agreement, the Resolution Professional cannot arbitrarily reject or reduce the admitted claim merely on the ground that part of the payment is not reflected in the books of accounts. The Tribunal observed that disregarding undisputed documentary evidence in such circumstances amounts to a patent error necessitating judicial interference.

The National Company Law Appellate Tribunal (NCLAT) allowed the appeal filed against the order dated 21.11.2023 passed by the NCLT, New Delhi Bench, whereby the appellant’s application (I.A. No. 4809 of 2022) seeking full admission of her claim under the Insolvency and Bankruptcy Code, 2016 was dismissed. The appellant had initially invested in a studio apartment in 2016, which was later converted into a commercial shop unit (Shop No. 445A) in the same project developed by Indirapuram Habitat Centre Pvt. Ltd. Following the failure of the developer to hand over possession or honour the promised assured returns, a settlement agreement dated 05.03.2019 was entered into, pursuant to which the appellant withdrew her Section 7 application, with liberty to revive in case of default.

After CIRP was initiated against the Corporate Debtor (CD) by another financial creditor, the appellant submitted her claim of ₹59,21,650 to the IRP, who initially admitted the claim provisionally. However, the subsequently appointed RP unilaterally reclassified the appellant as a “collateral holder” rather than a “homebuyer/allottee” and significantly reduced the admitted claim amount in stages, ultimately acknowledging only ₹26,64,923. The appellant challenged this reclassification and reduction of her claim before the NCLT, which upheld the RP’s decision primarily on the ground that the cash component of ₹29,74,900 was not reflected in the CD’s books of accounts and cast doubt on the veracity of the receipt.

NCLAT found this reasoning flawed and held that both the NCLT and RP had failed to consider crucial, undisputed documents such as the Builder Buyer Agreement, the Article of Agreement dated 02.01.2018, the settlement agreement dated 05.03.2019, and the post-dated cheques issued by the CD. It noted that these documents, which collectively evidenced the full consideration amount of ₹54,62,000, were part of the official record and had been acknowledged by the CD in writing. The Tribunal emphasised that the CD had induced the appellant into settlement during the pendency of the first Section 7 application to avoid the initiation of CIRP, thereby admitting liability and acknowledging the debt.

Accordingly, the NCLAT held that the RP erred in not admitting the entire claim and misclassified the appellant's status, which had legal consequences on her voting share and participation in the CoC. It found the impugned NCLT order patently erroneous, set it aside, and allowed the appeal.

Mr. Rishi Sood and Mr. Prafull Singh Chandel, Advocates, Represented the Appellant.

Mr. Sumesh Dhawan, Mr. Praful Jindal and Mr. Shaurya Shyam, Advocates, appeared for the RP. Mr. N.K. Sharma, RP, presented in person.

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