The National Company Law Tribunal (NCLT) has initiated insolvency proceedings against real estate firm MGF Developments, on a petition filed by a group of homebuyers.
The NCLT has also appointed an interim resolution professional for the company based in the National Capital Region.
“The company is yet to receive a copy of the order. We are still in the process of understanding the impact and exploring all available legal options. The project was delivered more than five years ago,” a company spokesperson said.
“The present application under Section 7 of the IBC Code, 2016 has been filed by The Vilas Condominium Association consisting of homebuyers having 327 units allotted in the name of members of the association…,” the NCLT order said.
According to the creditor, the default amount is under various heads and includes Rs 11.48 crore of interest-bearing maintenance security collected from the homebuyers and not refunded to the association of homebuyers as per law.
Also, the common area maintenance and common area electricity charges which the corporate debtor is supposed to pay for the period from the date of accrual of maintenance charges till the date of allotment to a home buyer, is not paid despite repeated request, according to the order.
The Supreme Court in the past had said that in a Section 7 application, the adjudicating authority only has to determine whether the financial creditors in a class who have filed the application jointly have a 10% mandate as per the first provision to Section 7 of the Insolvency and Bankruptcy Code.
MGF had formed a joint venture with Dubai-based Emaar Properties, which entered India in 2005 making the largest foreign direct investment in the realty sector till then under Emaar MGF Land.
In April 2016, Emaar decided to end the joint venture and two months later, Shravan Gupta, the then executive vice chairman and managing director of the joint venture, resigned. The demerger was approved in July 2018.
Currently, the erstwhile partners are at loggerheads after Emaar accused fraud in joint venture agreements and land deals and filed a petition with the NCLT in November 2019, seeking investigation into its allegations. It has sought bank guarantees of Rs 2,400 crore to secure its losses.
