In a major real estate development, the National Company Law Tribunal (NCLT) has admitted a plea filed by over 40 flat buyers of Raheja Developers’ Shilas project in Sector 109, Gurugram. The Principal Bench has ordered for initiation of a Corporate Insolvency Resolution Process (CIRP) against the company for delay in delivering the promised flats.
NCLT’s Directive: A Blow to Raheja Developers
The flat buyers who have collectively claimed a default of ₹112.90 crore alleged that Raheja Developers failed to deliver the flats despite receiving more than 95% of the total amount in most of the cases. The possession of these flats was promised between 2012 and 2014 with an additional 6 months’ time. However, the delivery date was extended multiple times and the allottees had to take legal action.
In its 29-page order, the NCLT has found the company in default of its obligations and has said, “There is default on the part of the corporate debtor in not paying the debt (delivery of the units) against the amount raised from them under the real estate project when the debt has become due and payable.”
The tribunal has appointed an Interim Resolution Professional (IRP) to oversee the CIRP process, suspended the board of Raheja Developers and imposed a moratorium on the company to protect it from creditors during this period. The IRP has to submit the progress report by January 22, 2025.
Raheja Developers Challenges the NCLT Order
After the NCLT order, Navin Raheja, Chairman and Managing Director of the suspended board approached the National Company Law Appellate Tribunal (NCLAT). The appeal was heard before a three-member bench headed by Justice Rakesh Kumar Jain on Thursday.
The company contended that the delays were due to force majeure events including external factors like disputes with government departments and other statutory challenges. But NCLT rejected this defence saying that obtaining statutory clearances and compliance certificates is a part and parcel of any real estate project and does not qualify as force majeure.
The tribunal said, “The obstacles stated by the corporate debtor…are not force majeure or beyond the control of CD or unforeseeable.”
Raheja Developers has faced insolvency earlier
This is not the first time Raheja Developers has been in insolvency proceedings. It had faced a similar situation in 2019 with its Sampada project in Gurugram. But those proceedings were set aside in 2020 when the company argued that the delays were due to clearance issues beyond its control.
But NCLT has not accepted the company’s defence in this case. The tribunal has pointed out that Raheja Developers had itself admitted the delays in various communications with the buyers.
Implications for Buyers and the Real Estate Sector
NCLT’s move to initiate insolvency proceedings shows the growing accountability in the real estate sector especially for delayed projects. For the flat buyers affected, CIRP is a solution to their long pending issues but the outcome will depend on the restructuring plan approved by creditors and IRP’s findings.
For Raheja Developers this is a turning point as they will have to challenge the NCLT order. The case highlights the importance of timely project delivery and sticking to contractual obligations in an industry where trust is the key.
Conclusion
Now that insolvency proceedings have begun, we will see how Raheja Developers handles this legal and financial battle. The outcome will impact all stakeholders involved and will set a benchmark for other real estate cases.
This is a wake-up call for developers to be transparent, accountable and compliant so that projects are delivered as promised and trust and credibility are maintained in the market.