# In the matter of R.S. Stones Private Limited Company Petition No. (IB)-1788 (PB)-2018

> NCLT judgment dated 2019-08-02. Citation: TCN-2019-NCLT-02132. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 2 Aug 2019
- **Citation:** TCN-2019-NCLT-02132
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rs-stones-private-limited-company-petition-no-ib-1788-pb-2018-cad2f403

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by three financial creditors (Mrs. Sarika Somvanshi, Mrs. Rekha Chauhan, and Mr. Dhani Ram) against M/s R. S. Stones Private Limited, the corporate debtor. The financial creditors sought initiation of the Corporate Insolvency Resolution Process (CIRP) due to the corporate debtor's failure to provide possession of flats they had booked and paid for under the 'Fort View Residency' project. The creditors had entered into agreements to sell with the corporate debtor in 2015 and made payments, partly from their savings and partly through loan facilities. The corporate debtor failed to complete construction within the agreed timeframe, leading to the application for CIRP.

## Facts

Mrs. Sarika Somvanshi, Mrs. Rekha Chauhan, and Mr. Dhani Ram, the applicants, are financial creditors who jointly filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s R. S. Stones Private Limited, the corporate debtor. The applicants had entered into agreements to sell with the corporate debtor for purchasing flats in the 'Fort View Residency' project. Each applicant made payments towards the purchase of their respective flats, partly from their own savings and partly through loan facilities. The agreements stipulated a construction period of 24 months with a 6-month grace period, which expired on 21.02.2018. The corporate debtor failed to provide possession of the flats within the agreed timeframe. The applicants claimed that

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## Issues and analysis

### Issue 1: Whether the applicant home buyers qualify as 'financial creditors' under Section 5(8)(f) of the …

**Ratio:** The ratio is based on the interpretation of Section 5(7) and 5(8) of the IBC, along with

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**Reasoning:** The court reasoned that the amendment to Section 5(8) of the IBC and the Supreme Court's

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**Interpretation:** The interpretation of Section 5(8)(f) of the IBC, particularly the explanation

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**Application:** In this case, the applicants are home buyers who had paid amounts to the

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## Parties

- **Judges:** CHIEF JUSTICE…; S. K. MOH…
- **Appellants:** Sarika Som…
- **Respondents:** M/s R. S. Stones…

## Timeline

- **2015-07-07 — Agreement t…**: Dhani Ram entered into an Agreement to Sell…
- **2015-08-07 — Agreement t…**: Rekha Chauhan entered into an Agreement to…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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