2020 (10) TMI 231 - HC - Companies Law

Delhi High Court: Allotee Exclusion, Settlement Terms Disputes, Supreme Court Challenge, Independent NCLAT Review

Barun Mitra Versus AVP Buildtech Pvt Limitd & Ors.

The Delhi High Court addressed issues concerning an allotee's exclusion from insolvency proceedings, disputes over finalizing settlement terms, a ... Principles of Natural Justice - short grievance of the Petitioner, who is an allotee of a flat in the project of Respondent No. 1, is that his application, under rule 11 of the NCLAT Rules, has not been taken up by the NCLAT, and his claims have not been considered by the IRP - HELD THAT:- Irrespective of whether the Petitioner is an allottee or not, and whether the IRP issued notice to them or not, there can be no doubt that the Petitioner being an allottee would have to be heard by the NCLAT, before the settlement is finalised. For the said purpose, the Petitioner’s application, that has been filed before the NCLAT, ought to be heard at an early date, in order to ensure that before finalizing the terms of settlement and resolution plan, all allottees are heard and their grievances are properly addressed. Accordingly, in terms of the order dated 13th March, 2020, the IRP shall file the terms of settlement before the NCLAT. The NCLAT shall hear the Petitioner and any other financial creditors and allottees, who may wish to make submissions in respect of the future course of action to be adopted - Upon hearing all the interested parties and addressing the grievances in accordance with law, NCLAT shall pass orders in respect of the settlement, which may be placed before it by the IRP. Until then, the terms of settlement and the further course of action, shall not be implemented by the company or by the IRP. In view of the fact that there is urgency in this matter, it is directed that the applications filed by the Petitioner, and any other allottees or financial creditors, shall be listed before NCLAT, for hearing, on 12th October, 2020 - Petition disposed off. Issues:1. Allotee's grievance regarding being excluded from insolvency proceedings.2. Dispute over finalizing terms of settlement without hearing all allottees.3. Challenge to the order dated 13th September, 2020 before the Supreme Court.4. Allegations and grievances of the parties against each other.Issue 1: Allotee's Exclusion from Insolvency ProceedingsThe petitioner, an allotee/homebuyer in a project undergoing insolvency proceedings, raised concerns about not being included in the proceedings by the National Company Law Appellate Tribunal (NCLAT). Despite an order freezing claims, the Insolvency Resolution Professional (IRP) proceeded to finalize settlement terms without involving all allottees. The court acknowledged the urgency of the matter and directed the IRP to present the settlement terms before the NCLAT for a comprehensive hearing involving all interested parties, ensuring grievances are addressed in accordance with the law.Issue 2: Finalizing Terms of SettlementThe petitioner argued that the IRP proceeded to finalize settlement terms without hearing all allottees, with only a portion of them being initially notified. The IRP claimed that notice had been issued to all allottees, and a significant number had already voted on the terms of settlement. The court emphasized the importance of hearing all allottees before finalizing settlement terms. It directed the IRP to submit the terms before the NCLAT for a thorough review and ordered that no action be taken on the settlement until all parties are heard and grievances addressed.Issue 3: Challenge Before the Supreme CourtRespondent No. 3 and 4, also original allottees and financial creditors, had filed a civil appeal challenging the order dated 13th September, 2020, before the Supreme Court. The court noted this challenge and indicated that the matter was likely to be listed for hearing soon, without delving into the merits of the appeal. The parties were directed to present their arguments before the NCLAT, which would consider the allegations and grievances made by each party without being influenced by the current order.Issue 4: Allegations and GrievancesThe court highlighted that it had not examined the merits of the matter regarding the allegations between the parties. Both allottees and financial creditors, as well as the IRP, had made allegations against each other. The court directed the NCLAT to consider these allegations independently without being swayed by any observations in the current order. All pending applications were disposed of, with the directive to list the applications before the NCLAT for a hearing on 12th October, 2020, due to the urgency of the matter.This judgment by Justice Prathiba M. Singh of the Delhi High Court addressed the exclusion of an allotee from insolvency proceedings, the dispute over finalizing settlement terms, a challenge before the Supreme Court, and the allegations and grievances between the parties. The court emphasized the importance of hearing all interested parties, ensuring grievances are addressed, and directed the IRP to submit the settlement terms for review by the NCLAT. The court refrained from examining the merits of the case and directed the parties to present their arguments before the NCLAT, which would independently consider the allegations and grievances without being influenced by the current order.