The National Company Law Appellate Tribunal (NCLAT) has permitted a reverse corporate insolvency resolution process (CIRP) for the group housing project, The Belvedere, in Noida. The project faced delays, leading buyers to form the Belvedere Welfare Association and seek resolution for the delayed possession. The NCLAT's decision allows negotiations between the homebuyers, the developer, and a finance creditor to complete the project. Strict conditions have been imposed on the developer to protect the interests of homebuyers, including completing Phase I by January 2025 and depositing funds into a RERA-approved escrow account.
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The National Company Law Appellate Tribunal (NCLAT) has taken an unprecedented step in allowing a reverse corporate insolvency resolution process (CIRP) for the group housing project, The Belvedere, located in Sector 79, Noida. The project, launched by Sequel Buildcon Pvt Ltd, an Ajnara subsidiary, promised 660 flats, out of which 318 remain unsold. The buyers were originally assured of possession within three years, but due to inconsistent construction progress, a group of buyers formed the Belvedere Welfare Association in 2019 and sought resolution for the delayed possession.
The NCLT accepted the buyers' petition in June, leading to the appointment of an interim resolution professional (IRP). The builder, in a desperate attempt to salvage the situation, approached the NCLAT on July 3, urging for the insolvency proceedings to be reversed. Subsequently, the NCLAT temporarily stayed the formation of the committee of creditors (CoC) on July 7, paving the way for negotiations between the homebuyers, the developer, and Eka Life Services, a finance creditor.
After much deliberation, an agreement on the terms and conditions of the construction was signed on July 12, bringing hope for the completion of the project. However, the NCLAT imposed strict conditions to protect the interests of the homebuyers and stakeholders involved. According to these conditions, Phase I of the project must be completed by January 2025, with the subsequent phase, including the common areas, scheduled for completion by January 2026.
One of the critical aspects of the NCLAT's decision is the requirement for Sequel Buildcon to arrange for an interim finance amount of Rs 75 crore through Eka Life Services, or alternatively, from its own sources within six to nine months. This condition aims to ensure that adequate funds are available for the project's smooth progress, preventing any further delays.
Moreover, the developer is mandated to deposit Rs 20 crore into the RERA-approved escrow account within 30 days of the NCLAT order. This move adds an extra layer of financial security for the homebuyers, instilling confidence that their investments are protected during the construction phase.
The NCLAT's vigilant supervision over the construction progress, as stipulated in the agreement, aims to hold Sequel Buildcon accountable for adhering to the agreed terms and conditions. By submitting status reports every eight weeks, the IRP will be able to keep track of the progress and intervene promptly if any discrepancies arise, ensuring that the project stays on track.
In conclusion, the NCLAT's decision to allow a reverse CIRP for The Belvedere housing project in Sector 79 offers hope for the long-overdue completion of the development. The strict conditions imposed on the developer, coupled with vigilant oversight by the IRP, aim to protect the interests of the homebuyers and ensure timely project completion. If successful, this resolution could serve as a reference point for settling disputes in other real estate projects, ultimately benefiting all stakeholders involved.
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