Wave Mega City Center (WMCC) Private Limited, the company that has been developing commercial-cum-residential projects in Noida, has filed an application in The National Company Law Tribunal (NCLT).
“Wave Megacity Centre Pvt. Ltd. i.e., the Corporate Debtor, has filed the present application, under Section 10 of the Insolvency and Bankruptcy Code, 2016 (“Code”) for seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor under the provisions of the Code,” the application filed before NCLT on March 25 said.
Moneycontrol has a copy of the application.
It should be noted that WMCC is a special purpose vehicle for the project and it does not have any investment in any other group company.
Earlier this month, Noida Authority had seized a 1.08 lakh sq m land belonging to the Wave Mega City Centre Private Limited located in the heart of Noida in Sector 32. Officials had said the action came after the company allegedly failed to pay dues for the land in question, forcing the authority to take possession after cancelling the allotment on February 11, 2021. Two towers had also been sealed.
Asked to comment on the issue, Rajiv Gupta, managing director at Wave Infratech said, “We cannot comment as the matter is sub-judice. We are working for the best interest of the buyers.”
Noida Authority’s decision to seal the residential-cum-commercial project in Sectors 32 and 25 is being seen as an attempt to settle a commercial dispute through “arbitrary’ means, the company said.
In February this year, Noida Authority had sent a demand for over 2,500 crore to WMCC which had to be paid within seven days. This demand included Rs 1,800 crore toward land price and balance for lease rent and interest, it said.
“On 11.02.2021, the Noida Authority vide its letter informed the Corporate Debtor that out of the total area of 1,64,821.13 sq. mtrs. allotted to the Corporate Debtor, allotment of an area of 1,08,421.13 sq. mtrs. has been cancelled due to non-payment of land dues and the Noida Authority would take possession of the same.
"Thereafter, on 11.03.2021 the Noida Authority has taken physical possession of land parcels including land parcels 3E (Commercial Space on which a building of 42 levels has already been constructed out of 46 levels) and 2D (Residential units – 6 levels constructed) on which the Corporate Debtor has made constructions and has also sold the units to various allottees," the application said.
“The Corporate Debtor in its response sent on 25.02.2021 to the said letter informed the Noida Authority that it has already applied for restoration of the land parcel ad measuring 50,148 sq. mtrs. (on which it had already carried out construction and created third party interest in such buildings) based on the adjustment of the interest and other amounts already paid, while the Corporate Debtor was willing to further surrender the land parcel ad measuring 58,273.13 sq. mtrs. had been left vacant.
The Corporate Debtor also requested for recalculation of the dues after surrendering 4,54,131.62 sq. mtrs. and further informed that third party rights have been created on 1,08,421.13 sq. mtrs. land and had therefore requested that possession of the land may not be taken,” the application filed by the company before the NCLT said.
However, the Noida Authority on 11.03.2021 has taken over physical possession of 1,08,421.13 sq. mtrs of the land on which the Corporate Debtor has made constructions and sold the units to third parties on portions thereof. Additionally, the Noida Authority is refusing to execute sub-lease deeds for even the completed units (residential and commercial) in the fully paid-up land parcel admeasuring 56,400 sq. mtrs. on the grounds of non-payment of outstanding dues, the application said.
“Thus, while the Corporate Debtor has issued possession letters to allottees for 167 commercial units and 78 residential units, it has not been able to handover physical possession, due to the refusal of the Noida Authority to execute and register the tripartite agreements for the handing over of the physical possession to the allottees. Therefore, the Corporate Debtor is unable to generate revenue from the sale/transfer of such units and is also in default of its obligations to the allottees of the residential and commercial units resulting in the Corporate Debtor not having the adequate cash-flow to meet its obligations to the customers and financial lenders,” the application filed before the NCLT said.
Additionally, on account of the Noida Authority taking possession of the land admeasuring 1,08,421.13 sq. mtrs. and which includes possession of land parcel 2D, mortgaged in favour of the financial creditor namely YBL (Yes Bank Limited) as part of the security cover for the Term Loan Facility availed by the Corporate Debtor, the application said.
“The said financial creditor has sought further information and clarification from the Corporate Debtor on 12.03.2021, in relation to the action taken by the Noida Authority and the status of the Projects and has further requested immediate resolution of the issues by 20.03.2021 failing which it would take necessary action against the Corporate Debtor,” the application said.
The application filed before NCLT said that the “Corporate Debtor is carrying forward losses of Rs 875,62,05,514 (Rupees Eight Hundred Seventy Five Crores Sixty Two Lakhs Five Thousand Five Hundred and Fourteen) as of 31.03.2020. Additionally, there is a provisional loss of Rs 232,53,43,396 (Rupees Two Hundred Thirty Two Crores Fifty Three Lakhs Forty Three Thousand Three Hundred Ninety Six) for FY 20-21.”
The application also said that the company had received an amount of Rs 1,398 crore (net of refunds) from applicants/allottees of the residential and commercial units in the project.
“As on 15.03.2021, there are approximately 210 presently pending cases before various judicial authorities including the RERA Authority, Courts, Consumer Fora filed by customers/flat buyers of the Corporate Debtor and refund claims against the Corporate Debtor amounting to approximately Rs 253.93 Crores (Rupees Two Hundred and Fifty Three Crores and Ninety Three Lakhs only). Such cases are likely to increase due to the failure of the Noida Authority to execute the tripartite agreements/ sub-lease deeds with the Corporate Debtor and the allottees (of residential and commercial units),” the application said.
The Noida Authority had on March 11, 2011 allotted 618,952 sqm to the realty firm in Sector 25A and 32 in Noida for a mega mixed-land (commercial and residential) use project. Wave Mega City Center Private Limited acquired 6.18 lakh sq. meters of land on a leasehold basis in 2011, spread between Sector 25 and 32 in Noida for around Rs 6,622 crore at the rate of Rs 1.07 lakh per sq. meter.
As per the original scheme, the repayment schedule was spread over 16 half-yearly installments after a moratorium of two years. Each installment included principal and scheduled interest.
However, amid slowdown in the real estate sector, the firm could not develop the land and returned about 454,131 sqm to the authority under the Project Settlement Policy of December 2016.
Under the PSP, the developers were allowed to retain land equivalent to 85% of the money deposited with authority and authority was entitled to forfeit the balance of 15%. This amount did not consider payment made toward stamp duty, penal interest, restoring charges, and other statutory charges.
Accordingly, WMCC was entitled to land equivalent to Rs 1,227 crore (after deducting Rs 226 crore, which is 15% of 1443 crore). Therefore, at the allotment rate of Rs 1.07 lakh sq. meter, WMCC was entitled to 1.14 lakh sq. meters, as per the PSP, the company said.
The authority, accepting the proposal in principal, allocated only 56,400 sq meters to WMCC as newly allotted land. It stated that the allotment was done against the principal amount of Rs 709 crore after adjusting 15%. They treated this parcel of land as fully paid up, which was not sealed, the company said.
Wave Mega City Center (WMCC) had invested over Rs 3,800 crore in the project which includes investment of Rs 2,213 crore by its promoters and their associates. Besides this, a sum of Rs 200 crore has been raised as bank loan, and buyers have paid the balance amount of around Rs 1,400 crore. Of this, more than Rs 2,000 crore is paid to various government agencies that include around Rs 1,600 crore to the Noida Authority, the company said.