The banks are aware of the builder’s liability to make all the payments to the bank according to the signed agreement among the bank, builder, and buyer. Therefore, the banks cannot chase or harass the buyers for payment of due amounts under the SARFASI Act, 2002.
Since the real estate projects are the turkey projects and take multiple years to get it completed, a normal delay can be accepted. Any delay of more than 1 year from promised date of possession is regarded as ‘extra-ordinary delay’.
The Code was enacted in 2016 to consolidate and amend the laws governing corporate reorganization and insolvency resolution for corporations, partnerships, and individuals.
If the non-payment of a clear undisputed amount is being illegally and dishonestly avoided, whilst at the same time very large sums of money are being raised and spent by the same group or carrying on large real estate development projects.
The NCLAT ruling, on the other hand, may present some difficulties for banks that have extended bank guarantees. When the IBC imposes a moratorium period, recouping funds paid under bank guarantees from a corporate debtor may be difficult.
Claims that do not form part of the resolution plan will be extinguished on the date of the adjudicating authority’s acceptance of the resolution plan. This ruling has reaffirmed the IBC’s goal, which is for the Corporate Debtor to start over with a clean slate based on the resolution plan.
Supreme Court’s decision in Maharashtra Seamless Limited shows that the commercial wisdom of the CoC will be given top priority when deciding on the feasibility and viability of the resolution plan.
The NCLAT had to decide whether the NCLT/CoC may provide resolution applicants repeated chances to alter their individual resolution plans and whether the CoC was authorised to entertain fresh or revised resolution plans without exhausting available bids.
If the corporate debtor’s resolution plan was authorised and declared binding on the corporate debtor and its workers, members, creditors, guarantors, and other stakeholders under Section 31 of the Code, criminal proceedings under Section 138 will continue.
A dispute arose after the completion of the liquidation proceeding and whether the dispute relates to special legislation, such as the Copyright Act, where civil courts have been granted exclusive jurisdiction.