NOIDA: The National Company Law Appellate Tribunal (NCLAT) last week temporarily halted the corporate insolvency resolution process (CIRP) against ATS Group‘s luxury project Knightsbridge in Sector 124 and gave three weeks to a financial creditor and the developer to file their responses on their appeals.
NCLAT, hearing the case on May 9, instructed that no additional steps should be taken in the insolvency process till the appeals are resolved. But it allowed construction to go on under the supervision of retired judge Sunil Gaur, who was last month asked to monitor the IRP‘s management of construction work.
For construction, the tribunal permitted funds from the developer’s Rera account to be utilised though the insolvency resolution professional (IRP) and other signatories will disburse them. Financial creditors are also expected to facilitate release of funds.
“The corporate debtor (ATS Heights Pvt Ltd) being a real estate company, we are of the view that the interests of homebuyers are to be protected… We issue notice in both the appeals and grant three weeks’ time to file a reply to the respondents. Rejoinder, if any, be filed within two weeks thereafter,” the tribunal’s order said.
In April, NCLT allowed initiating the insolvency procedure against ATS Heights after a financial services provider ASK Trusteeship Services alleged that the developer did not pay debts owed to another creditor Piramal Capital & Housing Finance and its assignee JM Financial Asset Reconstruction Company. ASK also said the developer had defaulted on debenture returns worth Rs 285 crore to it. Agreeing to a debenture contract is like giving a loan, but one without collateral.
The tribunal’s ruling was challenged in two appeals filed by JM Financial Asset Reconstruction Company and director of ATS Heights.
During the latest hearing, the counsel representing ATS and Piramal argued that ASK did not have any authority to admit a debt on Piramal’s behalf. They said the developer and the creditor were in talks for settlement of debt. The ATS counsel said the project has sufficient unsold inventory and capital from flats already sold. ASK said the insolvency process was justified as the developer had also defaulted on debenture returns to it. Both appeals have been listed for final disposal on July 12.
