Raheja Developers In Big Trouble! NCLT Takes Big Step Against Millionaire Builders

A significant judicial development has come in the form of an order from the National Company Law Tribunal (NCLT), declaring the initiation of the insolvency process against Raheja Developers Ltd. The NCLT order came following a petition filed by flat allottees of the Gurgaon-based Shilas project. The NCLT ruling cited "debt due and default", giving the basis for a declaration that the realty firm had defaulted in accepting payments from over 40 flat buyers.

It has arisen over delay in the handing over of units at the Raheja Shilas project located in Sector 109, Gurugram. More than 40 flat buyers claim that Raheja Developers defaulted on Rs 112.90 crore, as they had paid 95% of the total sale price and had made all demand payments as per the agreement. The possession of flats was never handed over within time despite multiple extensions.

The bench of NCLT, presided by President Justice Ramalingam Sudhakar and member AK Srivastava, admitted the petition for Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016. The defense from the developers about "force majeure" owing to external delays was rejected by the NCLT. The tribunal emphasized that delays were not due to circumstances beyond one's control but due to things like pending statutory compliances, NOC, and occupancy certificates, which are critical for projects of such nature.

Raheja Developers defended itself by stating that the delay was out of their hands, citing government-related issues. However, the NCLT rejected this and stated that such obstacles were not beyond the control of the developers and thereby not valid grounds for delay. The tribunal also appointed Manindra K Tiwari as an Interim Resolution Professional (IRP) to manage the CIRP process.

The ruling follows a similar insolvency case in 2019 against Raheja Developers for delays in the Raheja Sampada project, although that case was later set aside. The new order underlines the importance of timely delivery in real estate contracts and has become a cautionary tale for developers in the sector.

With insolvency proceedings now on, the issues that stand unresolved for Raheja Developers would be dealt with, and debt cleared to flat buyers or further legal and financial dominoes will tumble.

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