NCLT Allows Withdrawal Of Insolvency Proceedings Against MGF Developments

The National Company Law Tribunal (NCLT) has allowed the withdrawal of insolvency proceedings against MGF Developments, following a settlement agreed between the company and homebuyers.

Piyush Singh of PSP Legal who argued the matter on behalf of the homebuyers said, “The matter was settled on December 6. The builder has paid the entire IBMS amount with interest.”

The National Company Law Tribunal (NCLT) had ordered on November 30, 2021 that insolvency proceedings against MGF Developments be initiated and appointed Gaurav Katiyar as an interim resolution professional after suspending the board of the real estate company.

A two-member Delhi-based bench of NCLT had allowed a plea filed by the residents association of The Vilas Condominium, a project in Gurgaon for breach of clauses of the agreement between them terming it as default.

The application under Section 7 of the IBC Code, 2016 was filed by The Vilas Condominium Association consisting of homebuyers having 327 units who had alleged that the amount of Interest-Bearing Maintenance Security (IBMS) collected from them has not been refunded to them.

They had also alleged that the common area maintenance and common area electricity charges, which MGF Developments was supposed to pay for the period from the date of accrual of maintenance charges till the date of allotment to a home buyer, had not been paid to them.

The association had alleged that an amount of Rs 11.48 crore along with interest amounting to Rs 10.34 crore are due towards IBMS charges. The builder has also allegedly failed to pay common area electricity charges to the tune of Rs 1.82 crore.