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Raheja Developers has appealed to the National Company Law Appellate Tribunal (NCLAT) to contest insolvency proceedings initiated by the NCLT over alleged non-delivery of units in its Shilas project in Gurugram. The NCLT's decision followed a petition from over 40 flat allottees, citing defaults totaling INR 112.90 crore. The NCLT has appointed an Interim Resolution Professional (IRP), suspended the company's board, and initiated a Corporate Insolvency Resolution Process (CIRP). Raheja's defense lawyers cited force majeure for delays, but the NCLT has rejected this claim, emphasizing the company's obligations.
Raheja Developers filed an appeal with the National Company Law Appellate Tribunal (NCLAT) to contest the initiation of insolvency proceedings against the company due to defaults related to the non-delivery of its Shilas project in Gurugram. This follows the Principal Bench of the National Company Law Tribunal (NCLT) admitting a petition from over 40 flat allottees of the Sector 109 project, directing the initiation of a Corporate Insolvency Resolution Process (CIRP). Advertisement
The NCLT has appointed an Interim Resolution Professional (IRP), suspended the company's board, and placed it under a moratorium against creditors as stipulated by the Insolvency and Bankruptcy Code. The IRP has been tasked with submitting a progress report on the CIRP by January 22, 2025.
Navin Raheja, Chairman and Managing Director of the suspended board, has now challenged this order before the NCLAT. His petition was presented to a three-member NCLAT bench led by Justice Rakesh Kumar Jain.
The issue at hand concerns the Raheja Shilas project in Sector 109, Gurugram, where flat buyers claim the company has defaulted on payments totaling INR 112.90 crore. The NCLT's order indicated that Raheja Developers has a "debt due and default" to the flat allottees, who have made their payments but have not received timely delivery of their units, thus referring the case to CIRP.
The NCLT noted that possession was due to be handed over between 2012 and 2014, with a grace period of six months, which was subsequently extended. The order highlighted that the debt has been acknowledged through various emails and continues to remain unpaid.
The petitioners informed the NCLT that they had paid over 95% of the total sale price and 100% of all demands made by Raheja Developers. However, they have yet to receive possession of their units, even within the extended timeline outlined in the Sale/Flat Buyers Agreement.
In its defense, Raheja Developers attributed the delay of over four years to force majeure, claiming it was beyond their control and covered in the agreement. The company also argued that the petitioners represent less than 10% of total buyers, making the petition unsustainable.
The NCLT rejected this defense, stating that the delay cannot be classified as force majeure due to ongoing litigation with a government department, which does not qualify as an unforeseeable circumstance. Statutory compliances, NOC, occupancy certificates, etc are part and parcel of such real estate projects. The tribunal emphasized that the challenges faced by the corporate debtor are typical issues that must be resolved and cannot absolve the company of its obligations.
Previously, insolvency proceedings were initiated against Raheja Developers in 2019 due to delays in the Raheja Sampada project. However, those proceedings were set aside in January 2020, as the delays were attributed to the lack of necessary clearances from authorities, which were beyond the company's control.
The ongoing legal battle highlights significant challenges in the real estate sector, particularly regarding timely project delivery and accountability. As Raheja Developers navigates the complexities of insolvency proceedings, the outcome will not only impact the company and its stakeholders but may also set a precedent for future cases in the industry. The situation underscores the critical need for clear communication and adherence to commitments in real estate projects, fostering trust between developers and buyers.
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