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Insolvency case | Appellate tribunal stays NCLT order against Logix Blossom Zest

The appeal against the NCLT order was filed by homebuyers.

The appeal against the NCLT order was filed by homebuyers of Logix Blossom Zest, a project located in Noida.

The appeal against the NCLT order was filed by homebuyers of Logix Blossom Zest, a project located in Noida.

The National Company Law Appellate Tribunal on May 2 stayed the order of the National Company Law Tribunal (NCLT) by which insolvency proceedings had been initiated against Logix City Developers Private Limited.

The appeal against the NCLT order was filed by homebuyers of Logix Blossom Zest, a project located in Noida.

After hearing the arguments, NCLAT stayed the NCLT order.

“Learned Counsel for the Appellant submits that Application under Section 9 of the I&B Code, 2016 filed by the Operational Creditor was both barred by Section 10A of the Code as well as barred due to non-compliance of threshold of Rs. 1 crore. He further submits that initially by email dated 04th March, 2020 an Amount of Rs. 88,90,740/- was claimed and thereafter two Invoices 01st April, 2020 and 04th April, 2020 an amount of Rs. 7,02,100/- and 4,36,600/- was claimed and by clubbing these two invoices, the threshold is sought to be crossed,” the order said.

“It is submitted that the amount claimed being of March, 2020, it was clearly hit by Section 10 A of the Code and those two invoices could not be added hence it falls short of the threshold. Submissions needs scrutiny,” the NCLAT order stated.

It directed the respondents to file their reply affidavits within four weeks. Rejoinder, if any, may be filed within two weeks, thereafter, it said.


The appeal has been listed for July 6, 2022.

“In the meantime, the Order dated 22nd March, 2022 impugned in this Appeal shall remain stayed,” said the order issued by Justice Ashok Bhushan, the chairperson.

Under Section 10A, if a party defaulted in clearing its debt following the COVID-19 pandemic, after March 25, 2020, insolvency cannot be initiated for such default. The government introduced this to give relief to businesses, explained Sahil Sethi, Partner, Saikrishna & Associates, who had represented the homebuyers in the case

“We submitted before the honourable NCLAT that the petition filed by Colliers is barred by both Section 4 and Section 10A of the Insolvency and Bankruptcy Code, as the amount claimed by Colliers is less than Rs 1 crore and the payment to Colliers became due after the COVID-19 pandemic. Therefore, the insolvency process cannot be initiated on Colliers’ application. Pleased that the honourable NCLAT took note of our submissions and stayed the order of NCLT,” he said.

There was no comment either from the developer or Colliers.

In March, NCLT initiated insolvency proceedings against Logix Blossom Zest allowing a plea by operational creditor Colliers International (India) Property Services. The project was launched by the company in 2011. The project consists of 3,400 units spread across 14 towers of which nine are incomplete. Several homebuyers had not been able to get their units registered because of the pending dues of the developer with Noida Authority.

In its report released in December last year, the Comptroller and Auditor General found that authorities in Noida diluted and tweaked rules to suit real estate developers, even as the interest of homebuyers who had invested their life savings was ignored. The irregularities took a toll on the authority's finances as well—dues from builders have touched Rs 18,633 crore against an allotment value of Rs 14,000 crore, and no action was taken against the defaulters.

Nearly 80 percent of the total allotments of plots in the commercial category between 2005 and 2018 were secured by three real estate firms named Wave, Three C and Logix Group. Despite repeated violations by these companies in terms of outstanding dues that accumulated to Rs 14,958.45 crore, the authority failed to take any action against them, the CAG had noted.

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Moneycontrol News
first published: May 2, 2022 06:25 pm
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