The National Company Law Appellate Tribunal (NCLAT) on Tuesday dismissed the plea filed by the former promoters of Spaze Towers to limit the Corporate Insolvency Resolution Process (CIRP) to only one project, Spaze Arrow. The real estate firm, which had been facing insolvency proceedings, had initially approached the National Company Law Tribunal (NCLT) in October 2024 following a petition from flat owners. The petition had led to the initiation of insolvency proceedings for Spaze Towers.
The NCLAT, in its decision, rejected the request to confine the insolvency process to the Spaze Arrow project, stating that it would be unjust to exclude claims related to other projects. The tribunal noted that various claims had been filed regarding Spaze Corporate Park, a project that was incomplete despite receiving an Occupancy Certificate and Completion Certificate. Confining the insolvency process to only one project, the tribunal emphasized, would be unfair to other claimants from different projects.
“We are not persuaded to pass an order confining the CIRP to only one project, i.e., Spaze Arrow,” the NCLAT stated, reinforcing its stance against limiting the scope of the insolvency process. The tribunal noted that Spaze Towers had failed to complete the construction of flats in Spaze Arrow as per the promised timeline, which had been set at 42 months. The company had also failed to deliver possession within the stipulated period, further justifying the insolvency process.
The NCLT, in its earlier order, had appointed an Interim Resolution Professional (IRP) to manage Spaze Towers’ operations and placed the company under a moratorium, protecting it from creditors. The NCLT had also rejected the argument by Spaze Towers that it had settled dues with the nine petitioner allottees and thus, these individuals should not be considered financial creditors. The Spaze Arrow project, launched in 2012, was intended to be a high-end commercial complex with retail shops, showrooms, restaurants, and a tower block containing offices and serviced apartments. However, despite the buyers adhering to the agreed construction-linked payment plan between 2016 and 2019, Spaze Towers failed to deliver the project on time. The company also faced delays in obtaining necessary licenses for the project. This is the second time Spaze Towers has faced insolvency. In October 2021, another project, Spaze Corporate Park, also went into insolvency, with claims amounting to approximately Rs 600 crore. However, the company managed to settle the claims without disclosing them to the Supreme Court, leading to the CIRP process being set aside. This recent decision has now once again put Spaze Towers under scrutiny, as it faces insolvency across multiple projects, further affecting its operations and stakeholders.
