On May 2, the National Company Law Appellate Tribunal halted the National Company Law Tribunal’s (NCLT) judgement initiating insolvency proceedings against Logix City Developers Private Limited. Homebuyers of Logix Blossom Zest, a project in Noida, filed an appeal against the NCLT judgement. The NCLAT delayed the NCLT order after hearing the arguments. “Learned Counsel for the Appellant submits that the Operational Creditor’s application under Section 9 of the I&B Code, 2016 was both blocked by Section 10A of the Code and barred due to non-compliance with the Rs. 1 million threshold.” He also claims that an amount of Rs. 88,90,740/- was claimed in an email dated 04th March, 2020, and that an amount of Rs. 7,02,100/- and Rs. 4,36,600/- was claimed in two invoices dated 01st April, 2020 and 04th April, 2020, respectively, and that by combining these two invoices, the threshold is sought to be crossed,” the order said.
“It is submitted that the amount claimed, being for March 2020, was obviously impacted by Section 10 A of the Code, and those two invoices could not be combined together, resulting in the amount falling short of the threshold.” The NCLAT order noted that “submissions must be scrutinised.” It gave the respondents four weeks to file their reply affidavits. It said that any rejoinder could be submitted within two weeks following that. The date for the appeal has been set for July 6, 2022. The ruling given by Justice Ashok Bhushan, the chairperson, stated, “In the meanwhile, the Order dated March 22, 2022 challenged in this Appeal shall remain stayed.”
After March 25, 2020, if a party defaulted in clearing its obligation as a result of the COVID-19 pandemic, insolvency cannot be filed for that default under Section 10A. According to Sahil Sethi, Partner, Saikrishna & Associates, who represented the homebuyers in the case, the government instituted this to provide relief to companies. “We argued before the NCLAT that Colliers’ petition is barred by Sections 4 and 10A of the Insolvency and Bankruptcy Code, because the amount claimed by Colliers is less than Rs 1 crore and the payment to Colliers is due after the COVID-19 deadline.” As a result, Colliers’ application cannot be used to start the insolvency process. We are grateful that the NCLAT took notice of our representations and stayed the NCLT order,” he said.
Neither the developer nor Colliers had anything to say about it. NCLT began insolvency proceedings against Logix Blossom Zest in March, when operating creditor Colliers International (India) Property Services filed a petition. The business began working on the project in 2011. The project has 3,400 units split across 14 towers, nine of which are still under construction. Several homeowners have been unable to register their flats due to the developer’s outstanding dues with the Noida Authority.
The Comptroller and Auditor General stated in a study released in December last year that officials in Noida eroded and altered rules to benefit real estate developers, while ignoring the interests of homeowners who had spent their life savings. The anomalies had a financial impact on the authority, with builders owing Rs 18,633 crore against an allocation value of Rs 14,000 crore and no action taken against defaulters. Between 2005 and 2018, three real estate corporations named Wave, Three C, and Logix Group received about 80% of the total allotments of plots in the commercial sector. Despite these companies’ repeated violations in terms of outstanding dues totaling Rs 14,958.45 crore, the authority failed to take any action against them, the CAG had noted.
After Supertech, the Logix group is now in financial trouble, putting the destiny of roughly 2700 property owners in jeopardy. Logic Builder has been sued by Collier International (India) Property Services at the NCLT.
After real estate giant Supertech, another well-known building business in Noida, Logix, has filed for bankruptcy. In the Logix Blossom Zest housing project in Noida’s Sector 143, the fate of around 2700 home owners appears to be in jeopardy. The project, which began in 2011, has yet to be finished and given back to the buyers, who have been waiting for relief for the past 11 years. There are around 3400 units in the society, with nine towers totaling 14 in total. The claimed project’s construction work is yet to be completed. The Noida Authority owes Logix Builders around 500 crores.
Meanwhile, Logix Builder has been brought before the NCLT by Collier International (India) Property Services. The NCLT has assigned an Interim Resolution Professional (IRP) to the case, and buyers must file financial creditor information by April 5. The news comes amid rumours that real estate developer Supertech has filed for bankruptcy. The National Company Law Tribunal (NCLT) declared Supertech insolvent last week, a move that might affect more than 10,000 property buyers in the Delhi and NCR region. The bankruptcy court ordered the beginning of insolvency proceedings against real estate firm Supertech Ltd, one of the firms of the Union Bank of India, based on a petition filed by the Union Bank of India for non-payment of roughly Rs 432 crore in dues.
Several large real estate enterprises, notably Jaypee Infratech and Mumbai-based HDIL, are facing insolvency procedures. Thousands of homeowners have been affected by the Amrapali and Unitech groups’ failure to complete various projects, mainly in Delhi-NCR. Unitech’s management has been taken over by the government, while NBCC is working on Amrapali’s stalled projects under the supervision of the Supreme Court.