Aquacity Homebuyers and MP-RERA Get Landmark Order against Aakriti Group and DB Corp
On 9 December 2023, the national company law appellate tribunal (NCLAT) delivered a landmark order in favour of Aquacity Consumer and Social Welfare Society (ACSWS), which represents a group of home buyers, and the Madhya Pradesh Real Estate Regualtory Authority (MP-RERA). The homebuyers will hopefully get a refund of their investment with interest from the Aakriti group, even if they have had to give up on the homes they had invested in.
This long and harrowing battle of almost 13 years may not have ended as yet, because there is still an option for the powerful corporates involved to approach the Supreme Court to delay justice. But it holds important lessons for thousands of homebuyers involved in similar murky battles against builders across India, over a significant chunk of their life savings. A positive aspect of their long road to victory was that MP-RERA, for the first time, fought alongside the homebuyers and added weight to their stand that the bankruptcy law was wrongly invoked.
Members of the Aquacity consumer forum purchased residential apartments in the 2011-2017 period from AG8 Ventures Ltd., which is part of a large business group with interests in realty, hospitality, sugar, and healthcare. Its realty projects, spread across India, are under the brand name 'Aakriti'. It has a large presence in Madhya Pradesh (MP) with 11 projects registered with the MP-RERA. When the builder was unable to deliver apartments, the home buyers association moved the National Consumer Disputes Resolution Commission (NCDRC) and obtained a favourable order in 2020-21.
They established that Aakriti had diverted money meant for the project. The apex consumer forum ordered the builder, AG8 Ventures, to refund their money from the date of possession with 9% interest. However, the order was flawed. After all, the money ought to have been refunded with interest from the investment date. So, they approached the Supreme Court (SC) for a modification of the order and obtained a verdict in their favour in October 2022.
In August 2021 MP-RERA had also passed an order against the builder after it was established that it failed to maintain the money collected from home buyers in a separate designated account as required by RERA and had instead diverted the money to other projects. MP-RERA ordered a detailed investigation into the finances of the builder and appointed Milind Waikar as financial adviser, who was to keep the regulator informed of findings and developments. Subsequently, based on the findings, the registration of Aakriti Aquacity and Aakriti Business Arcade was cancelled in 2022 and an agency was to be appointed to complete the project.
The builder meanwhile used every legal forum to challenge the orders and entered into a collusive deal with DB Corp (Dainik Bhaskar group, one of the largest newspapers in MP), a listed company, to stymie action. In January 2022, DB Corp invoked proceedings under Section 9 of the bankruptcy law claiming that it was an ‘operational creditor’ and had to be paid Rs10.77 crore including interest under barter agreements with the builder.
It transpires that AG8 Ventures had entered into ‘barter’ agreements with DB Corp Ltd for nearly 10 years between 2010 and 2019 for massive advertising deals. Such deals allow realty companies to buy expensive and prominent advertising space in leading newspapers. It has been common for the past 15 years. Under such agreements, the realty companies make a small cash payment for the advertisements and allot housing units to the media houses for the rest of it. Under nine agreements with DB Corp or Dainik Bhaskar group Aakriti had already handed over 22 residential units to DB Corp and the battle was about 19 more that remained undelivered.
For readers who think that the full-page advertisement campaigns suggest the financial strength of builders, for just one particular advertising commitment of Rs25.50 lakh, Aakriti builders paid a paltry Rs2 lakh in cash while the rest would be paid by allocating residential units. There were nine such agreements adding up to Rs 14. 36 crore and the cash component was a mere Rs2.64 crore.
It is important to note that when the bankruptcy law is invoked it leads to a moratorium on all claims, and hence, orders of consumer courts and even RERA cannot be executed against the builder. MP RERA argued before NCLAT that DB Corp was not an operational creditor and could not invoke the insolvency law as it had done it in collusion with the builder. 
As an aside, India's bankruptcy law has still to settle the respective rights and actions of the Consumer Forums and sectoral regulators such as RERA or the Securities and Exchange Board of India (SEBI). A variety of conflicting judgements have been invoked by creditors to back their case (Read Pg 139+, Moneylife Foundation article/pdf/RERA-MASTERFILE-2020-25186758031232.pdf )
During the bankruptcy proceedings, Aakriti said it had already paid the cash component under the barter deal. As for DB Corp’s demand, the builder said that it could only pay the principal amount of Rs5.25 crore but not the interest. During the hearings, NCALT noted that the basis on which DB Corp already had converted its right to be allocated 19 apartments into a very specific sum of money was not clear.
As the battle progressed, further dubious details were revealed. MP-RERA told NCLAT that DB Corp’s claim itself was a ‘collusive’ action aimed at wriggling out of its obligations arising out of the realty regulator's various orders. It was argued that the barter agreements to pay for lavish advertisements, were themselves disapproved by the realty regulator, and it was debatable whether the media house could position itself as ‘operational creditors’ with a claim superior to that of  home buyers.
Aakriti homebuyers, were able to obtain certified copies of documents submitted before the National Company Law Tribunal (NCLT) Indore and analyse them to establish that even the invoices submitted by D B Corp in support of its claims were forged and fabricated for the case. The NCLAT order notes that although the goods and services tax (GST) came into force in 2017, invoices for 2010 had columns for GST printed in them. It says that DB Corp’s action in invoking Sec.9 of the bankruptcy law was ‘a clear abuse of the process of law’ and elaborates why this was so. First, most of DB Corp's claims were time-barred – all but one out of 210 invoices filed by them was outside the three-year window of filing such a claim.
Pertinently, DB Corp had already represented itself as an ‘allottee’ of apartments under its barter agreement and was now positioning itself as an ‘operational creditor’. Although the fabrication was sloppy and brazen, the adjudicating authority (AA) was happy to allow it without close scrutiny, or as the NCLAT order notes, the AA ‘failed to notice these facts’.
DB Corp unsuccessfully attempted to question the locus standi of both, MP-RERA as well as the home buyers forum. The NCLAT order of 9 December upheld their stand. It says: ‘We thus are satisfied that the entire initiation of proceedings under Section 9 by the Operational Creditor is contrary to the scheme of IBC and no payment of money was due (to DB Corp)’ and that the AA committed an error in admitting the company to insolvency proceedings.
This broad narration has little room to explain the many dishonest dealings that were exposed and settled under proceedings at multiple forums. For instance, the NCLAT order has only a mild criticism about the AA and makes no mention of the shady actions of the resolution professional (RP) against whom a penalty was imposed by the Delhi high court and contempt proceedings continue. RERA has also imposed a penalty of Rs 3 crore on the RP and another Rs 3 crore on AG8 Ventures for various violations. Both parties have contested the penalties before the MP high court.
So the battle continues, but there is a glimmer of a victory for homebuyers in sight!
7 months ago
There are nearly 1500+ Home buyers who are suffering in AG8 projects.

Though the order has been received but road from here is still not very clear. Also , the culpability of AG8 in misguided the Home Buyers and cheating them of their hard earned money certainly needs to be fixed. People have lost/losing loads of many cases ..entire life savings....
We definitely need more stricter laws and time bound stringent action against ilk of AG8 , Super tech and such like big Real estate giants who Duper the innocent Home buyers...
7 months ago
Gali Gali main shor hey - Hemant Soni, AG8 and DB Corp chor hey. In sab ke saath Abhishek Jain(Fake Neta) bhi chor. Abhishek Jain got money under the table from AG8(20 Lakhs plus plot plus got his home completed) and became observer to mislead the home buyers and was trying to help AG8 for bankruptcy.
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