Wave seeks Insolvency - way forward for aggrieved homebuyers - Part 1
A critical analysis and Legal Options discussed - keep watching this space for more.
(The author is an aggrieved homebuyer in the stalled project of Wave Megacity Centre Pvt. Ltd., besides being an Advocate practising in New Delhi. The author is also in possession of the Petition filed by WMCC before the NCLT, New Delhi and therefore the views, opinions, comments expressed and posted here are all based upon first hand information available with the author.)
Vide an application u/s 10 of the Insolvency and Bankruptcy Code, 2016 Wave Megacity Centre Pvt. Ltd. filed on 26Mar2021 before the Vide an application u/s 10 of the Insolvency and Bankruptcy Code, 2016 Wave Megacity Centre Pvt. Ltd. filed on 26Mar2021 before the NCLT, New Delhi, sought for initiation of Corporate Insolvency Resolution Process (CIRP).
After having examined in detail through the entire case record it can be safely said that it is a case which, on the face of it, can be best defined as an act of depravity and deceit besides reckless and unprincipled opportunism being dangerously played out in the open by a builder who has usurped and actually siphoned off huge amounts of money accepted from thousands of homebuyers and never developed the project as promised.
The petition for Insolvency as filed is fraudulent and guided with malicious intent as allottees of the various residential and commercial properties in the project should have got refund of their money or possession of the units since not developed by the developer since over last ten years and as of now after having accepted huge amounts of money from them and unilaterally deciding all of a sudden to leave thousands of allottees and subscribers in the middle of nowhere, in a way throwing them under the bus.
The petition u/s 10 of the IBC has been filed fraudulently and with malicious intent for the purposes other than for resolution of Insolvency or liquidation as defined in Section 65 of the IBC and following are some of the intentional lapses on the part of the Company apparent on the face of record that go on to substantiate the aforesaid allegations:
It is not the case of the Developer that the aggrieved allottees/subscribers committed default in making payments or failed to comply with any of the other terms of the allottees arrangement(s) / agreement(s);
The developer omitted to state as to why did it fail to develop the project for a period of over 10 years after admittedly having received above 1400 Crore Rupees from thousands of subscribers (the exact figure pertaining to the number of subscribers, has not been correctly reported; there are apparent and definite instances of missing details). No reasons citing delay and non-delivery for over ten years have been explained at all.
There has been a misreporting about the land parcels and towers for which the OC issued by the NOIDA Authority. The correct information and confirmation has been obtained through RTI by the author herein.
There is an FIR registered by the EOW, Delhi Police New Delhi u/Ss 406, 420 and 120B on 13.4.2021 on the Complaint filed in Sep 2020 by a group of aggrieved homebuyers and there are a large number of judgments passed against the Developer pending satisfaction and the application u/s 10 IBC is an attempt to escape those Judgments and jeopardise the interests of the aggrieved homebuyers besides trying to evade / delay criminal prosecution, which may not be an option available for the Builder ultimately even otherwise, since the petition as such has not been admitted and is going to be seriously opposed in the Tribunal on behalf of the victims/aggrieved homebuyers.
The Developer accepted payments in cash from a sizeable number of homebuyers/subscribers and issued plain paper receipts while inducing them to accept and agree to a reduced price of the properties to save on Stamp duty at a later stage and now there is no discussion about the cash payments received by the developer in the petition filed before the NCLT indicating to the intention of the developer to usurp the said cash element without any trace. Considering the aforesaid, there is a need for the National Company Law Tribunal to direct Forensic Audit against the developer before the application u/s 10 could be taken up as such and decided on merits.
The most mischievous and fraudulent action on the part the Company is an attempt at transposition of the founding director of the Company Manpreet Singh Chadha (DIN 00032276) since 7.6.2011 (the day the Company was incorporated), as a Financial Creditor to whom the Company allegedly owes over ₹530 crores, after fraudulently and with malicious intent removing himself as a Director on 11Jan2021 just before the filing of the application for Insolvency. The author is in possession of necessary information obtained from Ministry of Corporate Affairs and responsible for this revelation. This is the severest and most audacious and visible demonstration of the fraudulent and malicious intent at seeking insolvency, which must be taken note of by the NCLT. Furthermore, this is a fact which has been conveniently concealed by the developer from the NCLT and warrants immediate and urgent attention as this does reflect to the malicious intent of the Corporate Debtor / Developer.
That another reason for transposing the said Manpreet Singh Chadha (DIN 00032276) as Financial Creditor is to afford him an opportunity to DOMINATE the Committee of Creditors (if at all the CIRP is allowed to be initiated by the NCLT) by way of the increasing the proportionate value of his vote vis-a-vis other Financial Creditors including the thousands of aggrieved homebuyers left in lurch at the instance of the said Manpreet Singh Chadha (DIN 00032276). This is something, which may not be permitted by the Code. How can this fact be overlooked that the Company in its application for Insolvency before the NCLT failed to plead, explain or even narrate about Manpreet Singh Chadha (DIN 00032276), a founding director, resigning less than 45 days before filing for insolvency after having managed the Company since its inception in 2011 and remaining at the helm of affairs and dropping out just prior to the Company applying for Insolvency before the NCLT and becoming a Financial Creditor claiming ₹530 crores in the process.
Not only Manpreet Singh Chadha but also Charanjeet Singh who was on the board of the Company as director and functioning as Managing Director of the Company Wave Megacity Centre Pvt. Ltd. resigned on 17.2.2021. That the date of resignation and exit of Charanjeet Singh is also crucial to indicate the malafide and fraudulent intention of all those responsible for the day to day affairs of the company for about ten years dropping out just before the Company files for Insolvency reflecting to the malicious intent to be taken cognisance u/s 65 of the IBC.
That the developer / Corporate Debtor has tried to put the entire blame on the NOIDA Authority without coming clean on its own lapses while trying to rid itself of the sins committed in the last over ten years by way of an inefficient, inoperative and fraudulent management of the affairs of the Company, failing to perform after assuring dream houses and commercial properties to thousands of subscribers, while not denying the fact that the dues of the Authority were after all not avoidable at all unless that the developer had been attempting another mischief to evade such liability.
That the Developer has gone on record to state in terms of the pleadings in the petition u/s 10 of the IBC for Insolvency that the first time NOIDA Authority made the demand of its dues was in February 2020. That it is also a matter of record that the project was launched in 2011 and was to have been developed and delivered in 2016. That being the case, there was enough time and opportunity available with the petitioner to meet the liability if they had honestly and without fraudulent intentions worked on the development of the project. That it is a matter of fact that the project as such was never taken off the ground and not even 10% is completed after a period of 10 years, while none of the homebuyers/subscribers is in default and some of them have been made to pay up to about 95% of the cost of the units booked by them.
Further it is the case of the Company in the petition u/s 10 of the IBC that it had assumed the dues to the NOIDA authority to the tune of over ₹1222 crore but the Company has not stated as to what actions were being taken in the last 10 years towards repayment of the dues of NOIDA since they had been able to collect thousands of crores of rupees from over 2300 homebuyers who fell into their trap and made bookings on their assurance of timely delivery and possession.
The author, who is a victim himself and a practising Advocate, has already filed application for himself and on behalf of several aggrieved homebuyers to oppose the petition for insolvency before the NCLT, New Delhi and it is a matter of record even in the knowledge of the developer.
The further steps possible in continuation of the above shall be discussed in the next column to be released soon. Keep watching. The author is already pursuing appropriate legal remedies against the Company with many other similarly situated persons.
For any clarifications, please contact the author:
Advocate, New Delhi
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