Insolvency proceedings initiated against ‘Vipul Limited’, NCLT rules in favor of resident welfare association
Recently the National Company Law Tribunal initiated Corporate Insolvency proceedings against Vipul Limited in a highly contested matter filed by Vipul Greens Resident Welfare Association (VGRWA) against Vipul Limited.
A Petition was filed before the National Company Law Tribunal (NCLT) by Lexstone Group and meticulously argued by Adv. Rajiv K. Virmani, Gaurav Jain, Karan Valecha and Anuj Malhotra on behalf of VGRWA for almost two years.
The NCLT Coram comprising Mr. Abni Ranjan Kumar Sinha (Judicial Member) and Mr. L.N. Gupta (Technical Member) after several rounds of arguments and hearings finally decided in favor of VGRWA, upholding the default of payment on part of VIPUL Limited and initiated insolvency proceedings against VIPUL Limited on 12.07.2021.
‘Vipul Greens Residents Welfare Association’ (VGRWA) is a resident welfare association of residents of Vipul Green Complex representing 300 Flat owners out of total 644 flats. It had preferred an application under Section-7 of Insolvency and Bankruptcy Code, 2016 on account of the failure on part of Vipul Limited to refund Maintenance Security Deposit with interest, as agreed between the two earlier, which it collected between 2007 to 2016 from flat owners of the Building under the guise of the maintenance agreement.
Backdrop of the case-
It was contended by VGRWA that the present issue arose when in 2004 the members of VGRWA entered into a Flat Buyer’s agreement with Vipul Limited for the purchase of flats at a building named ‘Vipul Greens Complex’. Under the purview of the agreement, Vipul Limited collected a total amount of Rs. 6,51,36,981/- as maintenance security deposits from the Flat owners between 2006 to 2016.The agreement also stated that Vipul Limited was also obliged to transfer the said deposit with interest to VGRWA at the time of handing over the maintenance.
It was also alleged by the petitioners that from 2013, as per the directions issued by DTCP Haryana, Vipul Greens was supposed to start handing over the flats to members of VGRWA, however, it did not. Though in 2018 Vipul Limited wrote to several agencies that it has handed over the maintenance to VGRWA with effect from 01.04.2018.
Vipul Limited was also accused of putting up arbitrary, irrational and illegal demands as preconditions for handing over the flats to the buyers.
It was alleged by the applicants that despite multiple requests, reminders and follow ups Vipul Limited did not pay the due amount in full to VGRWA as it was agreed between the two under the Flat Buyer’s agreement.
However, Vipul Limited (respondent) contended before the Tribunal that there was no due debt. The respondent said that the petition was filed by VGRWA only with the ulterior motive to extort money from it without any cause of action.
Respondent argued before the Tribunal that there was no valid agreement between the two parties and the amount claimed by the petitioner is not a Financial Debt under provisions of IBC, 2016. It was also contended by the respondent that VGRWA is not a legal rather a self-proclaimed resident welfare association as it represents less than half of the flats of Vipul Green Complex.
Relying upon the documents placed on record the Tribunal held that contentions raised by the respondent were not maintainable. VGRWA was held indeed an association under the purview of the Code.
Though acknowledging that a certain amount has already been paid by the respondents through various transactions and there remains a balance security deposit of Rs. 2,77,93,782/- with interest accrued thereon, the Bench Held the respondent liable for default in making the payments of the debt amount.
The application by VGRWA was accordingly admitted and insolvency proceedings were initiated.
Case Title- M/S Vipul Greens Residents Welfare Association (Financial creditor) v. Vipul Limited (Corporate Debtor)