Homebuyers look to NCLT to revive stalled HDIL projects
MUMBAI: Dr Haresh Manglani, an orthopaedic who runs a hospital in Mulund, booked a flat in HDIL’s Whispering Towers project in Mulund West, so that his ageing parents could enjoy a good life in a gated community
MUMBAI: Dr Haresh Manglani, an orthopaedic who runs a hospital in Mulund, booked a flat in HDIL’s Whispering Towers project in Mulund West, so that his ageing parents could enjoy a good life in a gated community. They were promised possession in 2016, but the project construction was delayed and finally stalled indefinitely in 2015. His father passed away in 2019 without seeing the new flat.
Malad-based 72-year-old Chandrakishore Kolindewala sold his ancestral land to book an airy flat on the 19th floor in HDIL’s Majestic Towers, in Nahur, and was promised possession in 2013. Like Whispering Towers, this project was also delayed and finally construction stopped.
Since then, Dr Manglani, Kolindewala and 850 other EMI and taxpaying homebuyers from the two projects have resiliently fought time-consuming and expensive legal battle for their dream homes and justice at multiple fora.
Earlier this month, when the resolution professional Abhay Manudhane informed the stock exchanges that resolution plans (RP) for six of the 10 verticals, including these highrise projects, were approved, their hopes of finally entering their dream homes soon were rekindled.
A formal approval by the National Company Law Tribunal (NCLT) for these plans is required to complete the successful resolution of these stalled projects. Once done, this will be the first such successful resolution of a large number of stalled projects in Mumbai through the Insolvency and Bankruptcy Code and NCLT-based resolution process.
“Our fingers are crossed. It’s never over till it’s over. We hope that NCLT gives the approval soon and developers start completing the buildings,” said Dr Manglani, who heads the Whispering Towers Flat Owners Welfare Association. He even began studying for a degree in law during his long fight for justice.
When it became clear that HDIL will not resume construction any time soon, the buyers from the projects came together and one group approached the consumer courts, and another filed complaints with Maharashtra Real Estate Regulatory Authority (MahaRERA) hoping for a faster grievance resolution. Majestic Towers buyers had filed 87 cases in consumer courts and over 60 in MahaRERA.
Kolindewala, who heads the Majestic Towers Flat Owners Association, and his group of 53 buyers had initiated the process to remove HDIL and appoint a new developer under Section 7 and 8 of RERA. MahaRERA even scheduled the final orders around August 2019, and the insolvency petition moved by Bank of India, one of its multiple lenders, to recover ₹522 crore of dues was admitted by the NCLT on August 20.
In September, 2019, then MahaRERA chairman Gautam Chatterjee cited NCLT proceedings and directed homebuyers to approach it after the corporate insolvency resolution process (CIRP) is over. This was a frustrating moment for the homebuyers who had to recoup, and start a fresh battle under another 2016 law -- Insolvency and Bankruptcy Code (IBC) -- to intervene in the NCLT process. HDIL had challenged the NCLT decision to admit BOI’s petition in NCLT’s Appellate Tribunal.
“We had no choice, but to go to NCLAT, move the Supreme Court which sent us back to NCLT. Fortunately, on August 9, 2019, SC, in a landmark judgment upheld an IBC amendment and gave homebuyers the status as financial creditors on par with lenders. So, now we had a role in the Committee of Creditors (CoC),” said Kolindewala.
Dr Manglani said NCLAT’s landmark order of January 4, 2022, has now set a legal precedent and opened the doors for future homebuyers dragged into the NCLT resolution process to opt for project-wise resolution.
Majestic Towers Asociation went to NCLAT to extend the CIRP beyond 330 days and it became the case law.
“Apart from paying EMIs and the mental agony, the legal battle has cost us more than ₹35 lakh. The human cost is greater. Many senior citizens who had hoped to move into new homes passed away. Covid-19 pandemic triggered job losses. Some couldn’t afford to continue living on rent in Mumbai and moved to other cities,” said Kolindewala, who virtually handed over his travel business to his son Vikas, as he was busy spearheading the legal fight.
“Why can there not be one forum which can give swifter justice to taxpaying homebuyers. Why do we have to run from one forum or another? How can we afford such time-consuming and expensive legal processes? I would like to appeal to the Prime Minister and the Maharashtra Chief Minister to take a serious note of our experience and provide a solution,” he said.
About 27 different financial creditors in the insolvency process and addressing the concerns of each in relation to the corporate debtor also took time. A claim of ₹14,391 crore made by Budhpur Buildcon Private Limited (BBPL), with alleged links to Adani Group, in August 2021, nearly two years after the moratorium commenced, had to be verified by the RP and was eventually rejected. BBPL went in appeal and the NCLAT eventually rejected it in September 2022.
Interestingly, the final results of the e-voting by the CoC declared on November 4 showed that the Bank of India, whose actions had triggered the insolvency case in the first place, abstained from voting completely for any of the 10 verticals.
“The IBC law mandates 180 days for a resolution which can be extended by 90 days and extended maximum upto 330 days. The process slowed down due to Covid-19 pandemic in 2020 and first half of 2021. We have been waiting for 12 years. My father could never see the new flat. I hope that at least my 82-year-old mother is able to see the new house,” said Dr Manglani.
2009-2010: HDIL opens bookings for Majestic Towers and Whispering Towers, promising a number of amenities.
2015: The construction at the respective sites stalled.
2017-2018: Buyers from Majestic and Whispering Towers approach consumer courts, MahaRERA.
December 2018: MahaRERA asks HDIL to submit the list of homebuyers and resume construction by April 30, 2019, or face deregistration under Section 7.
June 2019: Bank of India moves NCLT to recover ₹522 crore from HDIL.
August 20, 2019: NCLT admits Bank of India’s insolvency petition, appoints resolution professional to spearhead the corporate insolvency resolution process (CIRP).
August 29, 2019: Public announcement of HDIL insolvency. HDIL files appeal before NCLAT.
September 2019: Multiple complaints in consumer courts and MahaRERA disposed of as IBC provisions supercede their proceedings.
September 30, 2019: Economic Offences Wing (EOW) lodges FIR against Rakesh and Sarang Wadhwan of HDIL in PMC Bank scam case.
October 3, 2019: EOW arrests Wadhwans in ₹4566 crore PMC Bank scam case. EOW are also booked in an FIR filed by Majestic Towers.
November, 2019: Whispering and Majestic Towers associations intervene in NCLAT proceedings.
March, 2020: Covid lockdown begins, slowing down proceedings.
July 13, 2020: NCLAT upholds NCLT order, rejects HDIL appeal.
September 8, 2021: The Committee of Creditors approves project-wise resolution proposal put up strongly by homebuyers. 25 applicants show interest.
September 29, 2021: NCLT rejects plea by RP to extend the CIRP, throwing homebuyers into jeopardy. Homebuyers challenge it in NCLAT.
January 4, 2022: Landmark judgement by NCLAT, allowing 90-day extension for project-wise resolution.
September 16, 2022: IBBI amends IBC provisions to allow project-wise resolution if no resolution plan is received for corporator debtor as a whole.
November 4, 2022: Results of e-voting by 27 financial creditors announced stakeholders.
November 11, 2022: RP informs stock exchanges that resolution plans for six verticals have been approved, and four verticals including rest of the company will go into liquidation.