New Delhi, Dec 7 (PTI) The National Company Law Tribunal (NCLT) has permitted the withdrawal of the insolvency proceedings initiated against MGF Developments after the realty firm settled the dues with its financial creditors – homebuyers of a project.
On November 30, the NCLT had directed to initiate Corporate Insolvency Resolution Process (CIRP) after terming the dues as default in payment and had suspended the board of the realty firm by appointing an interim resolution professional to take over the affairs.
After this, MGF Developments returned the Interest-Bearing Maintenance Security (IBMS) collected by it along with interest to the residents’ association of ‘The Vilas Condominium’, a project at Sector 25 of Gurugram, within a week of passing the order and approached the tribunal seeking withdrawal of CIRP.
A two-member NCLT bench allowed MGF Developments’ plea to withdraw CIRP against it.
“Consequently, the corporate debtor (MGF) is now free from the rigours of CIRP and the management of the corporate debtor is restored to its original position,” said NCLT bench.
The NCLT has directed the Interim Resolution Professional of MGF Developments to handover back all the documents and assets taken during the process.
The association has confirmed to the tribunal that it has received the dues of Rs 8.33 crore on account of Interest-Bearing Maintenance Security (IBMS) collected by the company and interest of Rs 2.71 crore. Besides, it has also received a litigation cost of Rs 66 lakh.
“Counsel for the corporate debtor (MGF) as well as the counsel of financial creditor (Association) has confirmed all cheques has been encashed by the financial creditors and submitted that in view of that nothing is payable towards IBMS claimed by the financial creditors,” NCLT observed.
The Interim Resolution Professional appointed by the NCLT also confirmed receiving his full and final settlement.
“Having gone through all the above documents and hearing the submissions, we are satisfied that it is a fit case for grant of relief… Accordingly, the said prayer to allow and withdraw the Corporate Insolvency Resolution Process of MGF Development, as initiated by this authority on November 30 is allowed,” said NCLT.
Under Section 12A of the Insolvency & Bankruptcy Code (IBC), NCLT can permit withdrawal of ongoing insolvency proceedings against a company over an application with the consent of creditors, even after admission of cases against them.
However, it has to be done before the formation of the Committee of Creditors.
The Vilas Condominium Association, consisting of homebuyers having 327 units, had alleged the amount of IBMS collected from them has not been refunded to them.
On November 30, while passing an order against the realty firm, NCLT had pointed that MGF Developments has used the IBMS funds collected from house owners to pay maintenance bills, other charges.
As per the clauses, IBMS charges cannot be utilised for any other purposes other than what has been mentioned in the said clause, the tribunal observed.
“The corporate debtor (MGF Developments) has itself admitted that the amount has been utilised for the purpose of construction of a club, restaurant, swimming pool and 62-seater mini theatre,” NCLT had said adding that it was a breach of the agreement. PTI KRH MR MR
