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The National Company Law Appellate Tribunal (NCLAT) has rejected Spaze Towers' former promoters' plea to restrict the Corporate Insolvency Resolution Process (CIRP) to the Spaze Arrow project alone. The NCLT's October 2024 ruling initiated insolvency for the entire company, citing defaults on flat deliveries. The NCLAT emphasized that limiting CIRP to one project would neglect creditor claims from other projects like Spaze Corporate Park. Launched in 2012, Spaze Arrow in Gurugram faced delays and licensing failures despite buyer payments. This ruling intensifies Spaze Towers' legal and financial woes, highlighting broader obligations to creditors and incomplete projects.
The National Company Law Appellate Tribunal (NCLAT) on 17th December rejected a plea by the former promoters of real estate developer Spaze Towers, seeking to confine the Corporate Insolvency Resolution Process (CIRP) to a single project, Spaze Arrow. The appellate tribunal upheld the decision of the National Company Law Tribunal (NCLT), which had initiated insolvency proceedings against the company on October 21, 2024, following a petition from flat owners. Advertisement
The former management of Spaze Towers had appealed against the NCLT's order, arguing that the CIRP should apply solely to the Spaze Arrow project. However, the NCLAT dismissed the appeal, emphasizing that limiting the CIRP to just one project would effectively disregard claims from creditors linked to other projects, including Spaze Corporate Park.
The Chief Minister directed pointed criticism at the central government, alleging that it has failed to fulfill its financial obligations. She claimed that the Centre has withheld dues meant for the state's poor for the past three years and emphasized that the state is demanding its rightful share, not charity.
The insolvency proceedings were initiated after the NCLT found Spaze Towers in default of its obligations to deliver flats in the Spaze Arrow project, located in Sector 78, Gurugram. The project had been launched with a timeline of 42 months for completion, but the company failed to meet the deadline. The tribunal also appointed an interim resolution professional to oversee the company, suspended its board, and placed it under a moratorium in accordance with the Insolvency and Bankruptcy Code.
The NCLT dismissed arguments from Spaze Towers that it had resolved dues with nine petitioner allottees, asserting that this did not exempt the company from its broader obligations as the petitioners remained financial creditors.
Launched in 2012, Spaze Arrow was envisioned as a high-end commercial complex featuring retail shops, showrooms, restaurants, offices, and serviced apartments. Between 2016 and 2019, buyers made payments under a construction-linked plan, but the company failed to deliver possession within the promised timeline. It also failed to obtain key licences required for the project.
This is not the first time Spaze Towers has faced insolvency proceedings. In October 2021, the Spaze Corporate Park project saw claims amounting to approximately INR 600 crore during a CIRP. While the company managed to settle the claims and halt the insolvency process, the Supreme Court later noted that the settlement had been achieved without full disclosure of all claims.
The latest developments deepen the legal and financial troubles for Spaze Towers, with unresolved claims and incomplete projects adding to the company's challenges.
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