NCLT Dismisses Heritage Max Condominium Association's Insolvency Plea Against Dreamhome Infrastructure

Tribunal rules application non-compliant with threshold requirements under Insolvency and Bankruptcy Code, 2016.

In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Bench, has dismissed an application filed by the Heritage Max Condominium Association seeking to initiate a Corporate Insolvency Resolution Process (CIRP) against Dreamhome Infrastructure Pvt. Ltd. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, for the alleged non-payment of INR 16.23 crore, which included a principal amount and accrued interest related to the Interest Free Maintenance Security (IFMS) corpus.

The association, representing homeowners from the Heritage Max housing colony in Gurugram, claimed that Dreamhome Infrastructure Pvt. Ltd. had siphoned off the IFMS corpus without lawful justification. The corpus was intended for the maintenance of services and common utilities but was allegedly not transferred to the association as required.

However, the Tribunal, comprising Member (Judicial) Shri Manni Sankariah Shanmuga Sundaram and Member (Technical) Shri Atul Chaturvedi, found that the application did not comply with the minimum threshold requirement mandated by Section 4 of the Insolvency and Bankruptcy Code. The ruling emphasized that the statutory scheme of the Code requires strict adherence to threshold criteria for initiating insolvency proceedings.

The Tribunal pointed out that the application was filed by a collective body, the Residents' Welfare Association, rather than individual allottees, who in their personal capacity did not meet the threshold requirement. Consequently, the application was deemed unsustainable.

The Tribunal's decision was informed by the precedent set in the case of Mr. Suresh Narayan Singh v. Tayo Rolls Limited, where it was held that individual claims must meet the threshold amount to be maintainable. As the individual claims in this case did not meet the requisite threshold, the application was dismissed without costs.

The Tribunal also granted liberty to the association to pursue remedies under other legal frameworks, suggesting that the parties could approach civil courts or other appropriate forums for relief.

This decision highlights the importance of adhering to procedural requirements under the Insolvency and Bankruptcy Code and serves as a cautionary tale for collective bodies seeking to initiate insolvency proceedings on behalf of individual members.

Bottom Line:

Insolvency and Bankruptcy Code, 2016 - Section 9 application by a Residents' Welfare Association on behalf of homebuyers dismissed for non-compliance with the minimum threshold requirement under Section 4 of the Code.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 4, 8, 9

Heritage Max Condominium Association v. Dreamhome Infrastructure Pvt. Ltd. (Developer), (NCLT)(New Delhi Bench) : Law Finder Doc Id # 2820994