NCLT Orders Liquidation Of 3C Company’s Lotus City Project
In further trouble for the already debt-ridden NCR-based 3C Company, the Delhi division bench of the National Company Law Tribunal (NCLT) ordered the liquidation of Lotus City project, on February 10, 2021. Located at Sector 22 of Yamuna Expressway, the project is promoted by 3C Homes, a subsidiary of the embattled group.
In 2011, the plot-based project that was sold to over 500 buyers. After the developer failed to launch the project, the buyers of Lotus City moved the NCLT in 2019. In September 2019, the Tribunal initiated insolvency proceedings against 3C Homes, subsequently awarding the task of project completion to Ace Infracity Developers.
On February 9, 2021, the division bench rejected the resolution plan suggested by Ace Infracity, over non-compliance of the Insolvency and Bankruptcy Code. Ace Infracity has said it will move a higher court against the NCLT’s order.
Another 3C Company Director Held Over Default Of Rs 100 Crores
December 5, 2020: A month after Surpreet Suri was arrested over the group's failure to clear pending dues worth around Rs 100 crore, the Gautam Buddh Nagar administration on December 4, 2019 arrested another director of the embattled 3C Company, Vidur Bhardwaj. Before the arrests, the district administration had sent three recovery certificates to the 3C Group. The company's third director Nirmal Singh is still on the run.
Earlier, the National Company Law Tribunal (NCLT) initiated insolvency proceedings against The 3C Company, after five homebuyers, who have invested in its Noida-based Lotus Zing project, filed a plea in the tribunal over project delays. With this, the cash-strapped developer joined the dubious league of NCR builders such as Amrapali, Jaypee and Unitech who are staring at insolvency.
The buyers, who now have the same rights as banks if a builder were to go insolvent, told the tribunal that despite making regular payments as mentioned in their builder-buyer agreements, they have been waiting for over five years for the delivery of their project. Located at Sector 168, Lotus Zing was launched in 2011 and the delivery was promised in 2014. The builder cited demonetization, land acquisition and orders from the National Green Tribunal that prohibited construction work as the reasons for the delay.
Setting aside the claims made by the builder, the NCLT said homebuyers cannot be expected to wait for housing projects for unreasonable timelines.
"Clauses that protect the builder against unforeseen circumstances hampering construction cannot be given a literal meaning. It does not mean the corporate debtor can defer possession till eternity and the financial creditor is expected to wait ... a reasonable construction of any such clause would be to grant the company another year for project completion ... that period ended in 2015 in this case," the NCLT observed while appointing Manish Kumar Gupta as the interim resolution professional (IRP) in the case.
While directing the company to provide the IRP with every detail and document related to the project within a week, the tribunal also prohibited projects lenders from launching any moves to recover dues.
Confusion prevails among buyers
While the company promised a “SurpriZING!” living at 17.5-acre Lotus Zing located along the Noida Expressway, buyers have been running from pillar to post as confusion prevails with regard to the future course of action.
"I have been in regular contact with at least 15 buyer groups who are consulting multiple lawyers to gauge where all this is going. Our various attempts to get clarity form the officials of the Real Estate Regulatory Authority (RERA) have also yielded results next to nothing. We do not know what to expect,” says Delhi-based Thomas John, who expects a home in Lotus Zing tower 12 upon completion.
“On site, there is no construction … the developer keeps saying the delay is pertaining to reasons beyond their control,” John, a banker by profession who has been regularly paying the EMI along with his monthly rent, says, adding, “We expect some clarity to prevail in a meeting with the RERA officials scheduled in September.”
It may be recalled that there are several other project delays that have led to buyers approaching the insolvency tribunal in the past. In January 2019, for instance, over 3,500 homebuyers who have invested in the company’s Lotus projects, Lotus Panache and Lotus Boulevard, moved the NCLT to start insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code (IBC). Buyers in Greenopolis and Woodview project in Gurugram have also been protesting against the builder demanding possession.