NCLT Chandigarh Rejects Samar Estates Homebuyers' Claim After They Admit Payment To Directors' Accounts

The Chandigarh Bench of the National Company Law Tribunal (NCLT) has dismissed an application filed by three homebuyers seeking recognition as financial creditors of Samar Estates Pvt. Ltd.

The tribunal held that the applicants failed to establish that the disputed Rs 60 lakh had been disbursed to the corporate debtor. It noted that the applicants themselves admitted the money had been paid into the personal accounts of the company's directors.

The bench of Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal observed,

“Disbursement into the account of the Corporate Debtor is an essential condition for a debt to fall under the definition of “Financial Debt” of the Code. The contention of the Respondent No.1 that as per the books of account, no amount is shown to be disbursed by the Applicants. The RP is duty bound to accept claims based on the books of accounts of the Corporate Debtor or on the basis of relevant proof by documents such as payment receipt, builder buyer agreement, allotment Letter, etc submitted by the claimant.”

Keshab Chand Gupta, Veneet Gupta and Abhinav Gupta claimed they had booked 18 fully furnished flats in Samar Estates' Ess Vee Apartments project in 2006. They claimed to have paid Rs 1.11 crore as advance consideration. According to them, Rs 51 lakh was later refunded, while Rs 60 lakh remained unpaid.

They contended that the unpaid amount constituted a financial debt. On that basis, they sought recognition as financial creditors during the corporate insolvency resolution process of Samar Estates Pvt. Ltd.

The homebuyers also contended that despite submitting their claims and supporting documents, the Resolution Professional did not admit their claims. Relying on Sections 18 and 25 of the Insolvency and Bankruptcy Code, they argued that the Resolution Professional was required to receive, collate and verify creditors' claims.

The Resolution Professional opposed the application. He contended that the applicants themselves had admitted that the disputed amount was transferred to the personal accounts of suspended directors Virender Bagai and Rajinder Bagai, and not to the corporate debtor's account. He also contended that the applicants failed to produce valid builder-buyer agreements, allotment letters or proof that the disputed amount had been paid to the corporate debtor. Referring to the CIRP Regulations, he argued that such documents were necessary to verify the claim.

The suspended directors disputed that stand. They maintained that the remaining amount had subsequently been transferred to the corporate debtor and adjusted towards the flat bookings.

After examining the material on record, the tribunal noted that the receipts produced by the applicants related to Rs 54 lakh. It observed that most of those receipts pertained to amounts that had already been refunded.

The tribunal further found that the applicants had not produced receipts, bank statements, ledger confirmations or any other contemporaneous record showing that the disputed Rs 60 lakh had been disbursed to the corporate debtor.

The tribunal also held that the corporate debtor, being a separate legal entity, could not be treated as having received money merely because payments were made into the accounts of its directors.

It further noted that the builder-buyer agreements subsequently placed on record, except the agreement executed by Abhinav Gupta, pertained to persons who were not applicants in the proceedings. Those documents, the tribunal held, did not advance the applicants' claim for recognition as financial creditors.

Holding that the applicants had failed to establish the existence of a financial debt owed by Samar Estates Pvt. Ltd., the tribunal dismissed the application.