Tribunal junks insolvency plea by Wave group, imposes 1 crore penalty

The National Company Law Tribunal (NCLT) on Monday dismissed the Wave group’s corporate insolvency resolution process (CIRP) petition and directed that an inquiry be conducted by a central government agency into the allegations of fund diversion by the real estate firm.

“We have concluded that the application filed under section 10 of Indian Bankruptcy Code 2016 was an attempt on the part of the corporate debtor (Wave group) to play fraud on thousands of homebuyers, the Noida authority, and the government authorities. Further great prejudice must have caused if the CIRP was triggered. Therefore we are imposing ₹1 crore penalty on corporate debtor which shall be deposited in the Prime Minister’s relief fund in the next 15 days,” said the NCLT order delivered on June 6.

It further said, “We observed serious allegations against the corporate debtor with regard to siphoning off the money collected from homebuyers. Further, there is evidence produced by homebuyers that the corporate debtor was taking huge amount of cash from them. It is surprising to note that despite receiving the entire amount from homebuyers, the corporate debtor failed to give possession or refund money… In light of the above circumstances, we direct the central government to make necessary investigation into the affairs of corporate debtor.”

The Wave group’s Wave Mega City Centre Private Limited had filed for voluntary bankruptcy proceedings on March 26, 2021, leaving homebuyers who had paid for flats in the lurch.

Piyush Singh, advocate from PSP Legal, who represents the homebuyers, said this was the first time that a realty firm from Noida had approached the NCLT for voluntary insolvency proceedings. “The Wave group filed the petition as it wanted to evade recovery action by the Noida authority, which needs to realise 2,700 crore dues from the realtor. But the NCLT did not give the firm any relief and also imposed a 1 crore penalty on them.”

The Wave group had launched its residential and commercial projects in Noida’s sectors 25A and 32 in 2011-12 with an assurance of delivery from 2014 onwards. However, the group is yet to deliver these units — it has, so far, only delivered some shops in Sector 32. The group’s financial condition worsened in 2021 and the Noida authority in February 2021 cancelled the land allotment to the firm for failing to clear 2,700 crore land cost dues.

Later, on March 10, the authority took possession of 1,08,421.13 square metre land in Sector 32, allotted to Wave Mega City Centre Private Limited.

Sources said the firm may now approach the appellate tribunal or the Supreme Court for relief.

When contacted, Wave Mega City Centre spokesperson said, “The honourable tribunal has just pronounced the order. We will evaluate the order and will approach the appropriate court for the next course of action. Our priority remains to protect the homebuyers’ interest.”

Homebuyers have welcomed the order and said they will now be able to take on the realtor and get back their money. “We can now fight the developer who has cheated us for more than a decade. Had the NCLT accepted the firm’s plea, they would have escaped all responsibility,” said Anshuman Jain, a homebuyer.

The Noida authority, too, welcomed the order.“We placed all facts related to the case before the tribunal. The facts clearly state the realtor’s intention — they were not delivering flats to homebuyers despite collecting the entire cost of a flat from them,” said Kumar Sanjay, officer on special duty, Noida authority.