3C Company Director Held Over Default Of Rs 100 Crores
In a move that is indicative of the ill health of the real estate sector in the national capital region (NCR), the National Company Law Tribunal (NCLT) has 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 has joined the dubious league of NCR builders such as Amrapali, Jaypee and Unitech who are staring at insolvency.
On November 4, 2019, the Gautam Buddh Nagar administration also arrested absconding company director Surpreet Suri over a payment default of more than Rs 100 crores. Before the arrest, the district administration had sent three recovery certificates to the 3C Group.
NCLT Admits Lotus Zing Buyers’ Plea; Launches Insolvency Proceedings Against The 3C Company
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.