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Nclt orders insolvency proceedings against Mgf Developments

On November 30, the National Company Law Court (NCLT) ordered insolvency proceedings against MGF Developments and appointed an interim resolution professional after suspending the board of directors of the real estate company.

A bench of two members of the Delhi-based NCLT passed the ordinance, allowing a plea filed by the residents’ association of “The Vilas Condominium”, a project located in Sector 25 of Gurugram, for violating the terms of the agreement between them, calling it a default.

The Vilas Condominium Association, made up of buyers of 327 units, alleged that the amount of the Interest-Bearing Maintenance Guarantee (IBMS) collected from them had not been refunded to them. They also alleged that the maintenance costs of the common areas and the electricity of the common areas, which MGF Developments was supposed to pay for the period from the date of the accumulation of the maintenance costs until the date of award. to a home buyer, were not paid to them.

According to the Home Buyers Association, MGF Developments had collected IBMS at Rs.50 per square foot from the super zone, which was like a corpus security deposit instead of maintenance services and was not refunded afterwards. the handing over of maintenance work. An amount of Rs 11.48 crore as well as interest amounting to Rs 10.34 crore is due for IBMS fees. He also failed to pay the electricity charges in the common areas of Rs 1.82 crore, the association alleged.

However, the real estate company denied the allegation and said Rs 8.33 crore had been refunded. He further stated in accordance with IBMS clause 11.2 (a) that this fund can be used for the upgrade of the DG assemblies, the electrical substation and other fixed assets / equipment. . It was used for the construction of a club house with a specialty restaurant, swimming pool and 62-seat mini-theater for the beneficiaries of the complex.

However, the NCLT pointed out that just reading the aforementioned clause shows that provision for IBMS has been made to pay maintenance bills, other charges. In accordance with the clauses, the IBMS fees cannot be used for purposes other than those mentioned in the said clause, the court observed.

“The debtor company (MGF Developments) itself admitted that the proceeds were used for the construction of a club, restaurant, swimming pool and 62-seat mini-theater,” said the NCLT adding that this was a violation of the agreement. . The NCLT said the association has met all the requirements of Article 7 of the IBC, for the opening of insolvency proceedings against the real estate company.

“We are therefore satisfied that the applicant / financial creditor has established an admission case under Section 7 IBC and a clear case of default has been established. Therefore, the process of resolving corporate insolvency debtors is initiated from the date of this order and the captioned claim filed by the financial creditor is allowed, “the NCLT clarified. The insolvency court declared a moratorium until the completion of the insolvency proceedings and ordered to prohibit the transfer, charge, alienation or disposal of assets by the real estate company.

The petition on behalf of the association was filed by PSP Legal and argued by Piyush Singh.


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