NCLT directs initiation of insolvency proceedings against Spaze Towers

New Delhi, Oct 24 (PTI) The National Company Law Tribunal (NCLT) has directed initiation of insolvency proceedings against realty firm Spaze Towers, admitting a plea filed by its flat owners.
     A two-member NCLT bench said the company has defaulted in completing the construction of flats in project 'Spaze Arrow' at Sector 78, Gurugram and giving the possession within the promised timeline of 42 months.
     The Delhi bench of NCLT also appointed an interim resolution professional to run the company, suspending the board and putting it under the protection of moratorium as per provisions of the Insolvency & Bankruptcy Code.
     The NCLT also rejected the submissions of Spaze Towers that it had settled the dues of nine petitioner allottees and hence they should not be treated as financial creditors.
     "It is clear that when a default takes place i.e., the debt becomes due and is not paid, the Insolvency Resolution Process shall begin against the corporate debtor. Therefore, on the basis of discussion...we are satisfied that the present application is complete in all respects," said NCLT.
     The financial creditor is entitled to move the application against the corporate debtor in view of outstanding financial debt in default, which is above the pecuniary threshold limit of Rs one crore.
     "As a sequel to the above discussion and in terms of Section 7 (5) (a) of the Code, the instant petition...stands admitted and CIRP of Spaze Towers Private Limited shall be initiated," it said.
     The NCLT order came over a plea jointly filed by 37 petitioners claiming a total default of Rs 23.37 crore towards the purchase of their respective units at project “Spaze Arrow”.
     The commercial project was launched in 2012, promising a high-end commercial complex, comprising retail shops, showrooms, restaurants, and a tower block with offices and serviced apartments.
     As per the agreement, during 2016-2019, buyers made payments as per the agreed construction-linked payment plan. The realty firm was to deliver the possession of the shops to the financial creditors within 42 months from the date of signing of the agreement.
     However, it failed to do so and was also not able to procure several necessary licences for the project.
     This is the second time Spaze Towers has faced insolvency.
     In October 2021, in another project, Spaze Corporate Park, an IRP had been appointed where claims of some Rs 600 crore were received. However, without disclosing all the claims to the Supreme Court, the company settled the claims and the CIRP process was set aside.

(This story has not been edited by THE WEEK and is auto-generated from PTI)