New Delhi: New Delhi-based consulting firm SGM Webtech Pvt. Ltd has filed a petition in the National Company Law Tribunal (NCLT) seeking to initiate insolvency proceedings against Boulevard Projects Pvt. Ltd, a special purpose vehicle (SPV) owned by directors of The 3C Company, a Noida-based real estate developer.

In 2010, SGM Webtech had booked an office space in a luxury commercial and residential project called Delhi One, launched by the developer. The project, originally expected to delivered in 2016, is far from completion.

With no improvement even after the intervention of the Uttar Pradesh Real Estate Regulatory Authority (UPRERA), SGM Webtech approached NCLT Delhi on 2 August to initiate insolvency proceedings. Mint has reviewed a copy of the petition.

Delhi One is situated next to the DND Flyway in Sector 16 B, Noida, Uttar Pradesh—a mixed use project that includes residential, commercial, retail and hospitality spaces. The developer tied up with Canadian hospitality chain Four Seasons Hotels and Resorts to manage its private luxury homes—180 apartments and 300 hotel rooms within the project. Allotment letters were issued in April 2011 but despite substantial payments by investors, no agreement was executed with allottees until 2013.

SGM Webtech has so far paid more than 4 crore for the office space, according to the petition, prompting the firm to file an online complaint against the developer with UPRERA on 4 December 2017. The matter was listed thrice before UPRERA, but the builder failed to appear for any of the hearings. In an order dated 21 April 2018, UPRERA ordered the builder to return the payment made by the SGM Webtech with 18% interest along with a penalty at the rate of 25 per sq. ft per month.

As per the order, SGM Webtech has served a refund demand letter of about 12 crore (including investment, penalty and interest), which has not been honoured.

“A few other home buyers and investors who have booked apartments and office space in the project have also filed complaints before UPRERA seeking refund. Most of these allottees are also in the process of approaching NCLT," said Rajat Malhotra, partner, Laware Associates, a Delhi-based law firm and lead counsel for SGM Webtech.

“These allottees have together invested close to 100 crore in the project, and going by the one order passed by UPRERA, they shall together be entitled to be paid 300-350 crore by the company," added Malhotra.

The other reason why SGM Webtech and Malhotra approached NCLT to initiate insolvency petition is because they have doubts about the company’s financial position to execute the project. “As per the company books of accounts it had liabilities in excess of 1,100 crore, of which 550 crore were owed to banks and financial institutions," said Malhotra in the petition. The developer earlier failed to honour an order passed by UPRERA, in which the authority asked the developer to refund the money invested by SGM Webtech along with compensation and interest. Taking cognizance of the fact and based on the application, NCLT issued a notice to the developer on 8 August.

According to Malhotra, “Agreements with allottees were executed in January 2013 with a promise to complete the project within 36 months plus an additional grace period of six months. The builder failed to deliver the units and the project within time. Allottees were, therefore, entitled to delay compensation at the rate of 25 per sq. ft as per the agreement. Further, there was a term for refund of the money with interest in case of such non completion."