SANSKRITI ALLOTTEE WELFARE ASSOCIATION (RETD.) AND ORS. VS GAURAV KATIYAR CA AT 873 of 2023
Facts:
1. Corporate Debtor- Earthcon Infracon Pvt. Ltd. was developing a residential project named ‘Sanskriti’ with another housing project named ‘CASA’. The Appellants represent Home Buyers of ‘Sanskriti’. In 2019, a Section 7 application was admitted by the Adjudicating Authority. Respondent No.1 was appointed to manage the operations of the Corporate Debtor as a going concern during the moratorium period, which included providing maintenance services and electricity to the Home Buyers, who received possession of their respective apartments between February, 2018 and January, 2020.
2. On the insolvency commencement date, the Home Buyers were paying maintenance fee @ Rs.1 per sq. ft. plus GST. However, there was admittedly an outstanding electricity bill payable to Noida Power Corporation Limited. The increase in maintenance charges as approved by CoC was informed by the RP to the Home Buyers on 28.01.2022. Subsequently, the Appellant- Home Buyers filed IA No.1146 of 2022 before the Adjudicating Authority. The Adjudicating Authority after hearing the IA 1146/2022 on 14.03.2022 passed interim orders on 14.03.2022 directing the respondents as well as other residents of the Sanskriti Project “to make payment of all pending dues towards the electricity charges as well as Company Appeal (AT) (Insolvency) No. 878 of 2023 Page 5 of 20 maintenance charges as decided by the CoC.” However, the RP/CoC was directed not to take any action for disconnection of electricity of the residents
3. Aggrieved with the impugned order dismissing IA No. 1146 of 2022 as infructuous and for allowing IA No. 3234 of 2023 granting liberty to the RP to take coercive steps with regard to payment of maintenance charges including electricity dues, the present appeal has been preferred.
Issue: Whether the appeal has preferred ?
Argument:
Apppellant:
1. Counsel submitted that original maintenance charge of Rs. 1 per sq. ft. was adequate, the RP had arbitrarily increased the maintenance charges by 100% without valid reasons explaining the hike. The Adjudicating Authority had passed a non-speaking, unreasoned impugned order without adjudicating on the validity of the decision of the RP/CoC to levy maintenance charges @ Rs.2 per sq. ft.
2. Counsel contended that neither the RP nor the CoC were empowered by IBC to determine the maintenance charges as under Section 11(4) of the Real Estate Regulation Act, 2016 (‘RERA’ in short) and Section 14(1) of Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 (‘UP Apartment Act’ in short), the RP was required to constitute an Association or Society of the Allottees to take decision on maintenance fees etc.
3. It was submitted that electricity dues form part of the CIRP costs and have to be paid as per Section 53 of the IBC only at the time of distribution of CIRP costs to all stakeholders. The RP by collecting the electricity dues was violating the provisions of IBC and its regulations lead for their unjust enrichment
Respondent:
1. Counsel submitted that Corporate Debtor had taken only one temporary electricity connection from NPCL for the residential project. The RP submitted that even after the Corporate Debtor was admitted into CIRP, the allottees continued to receive their electricity supply on the strength of the temporary single point connection.
2. It was submitted that as per Section 11(4)(d) of RERA Act, the Corporate Debtor is obligated to provide essential services on reasonable charges till the maintenance of the project is taken over by the association of allottees. In the present case, in the absence of any such association of allottees, the RP was responsible for providing maintenance service and electricity for which it had to collect the charges from the allottees who were the consumers.
Decision: NCLAT dismissed the appeal.
Rationale:
1. It held that irrespective of whether the association of allottees was constituted or not, this fact is not germane as it has no bearing on the undisputed fact that the Corporate Debtor was saddled with the liability of outstanding maintenance charges including electricity dues.
2. It held that the After having been present in the CoC meetings and exercised their voting rights on the determination of the maintenance fees and electricity dues, the allottees cannot question the authority of the CoC to have made these business decisions. It goes without saying that the commercial decision of the CoC is paramount and nonjusticiable and every dissatisfaction cannot partake the character of a legal grievance.
3. It held that AA did not commit any fault in directing that payment be made of all pending dues towards the electricity charges as well as maintenance charges as decided by the CoC and further clarifying that the RP is free to take coercive steps with regard to the non-payment, and maintenance charges which include the electricity charges of the common area.
Order:
