2021 (4) TMI 893 - Tri - Insolvency and Bankruptcy

Petition for Corporate Insolvency Resolution Dismissed

The petition under the Insolvency and Bankruptcy Code was dismissed by the Tribunal as it was deemed not maintainable due to ongoing related proceedings ... Maintainability of petition - estoppel from invoking provisions of Code again when they have already invoked provisions of Code by filing Company Petition earlier against Pro forma Respondent - HELD THAT:- By reading of the provisions of Section 60(5) of IBC Code, it is clear that the above provision enables parties to file Misc. Application(s) or proceedings by or against Corporate Debtor or Corporate Persons. It does not entitle a party to file a fresh Company Petition to initiate Group Insolvency as sought for in the instant Petition. Moreover, the Association has already moved against main Corporate Debtor by inter alia contending that it is the responsibility of Holding Company to get constructed promised houses as per Agreements through its alleged Subsidiary namely M/s. Ithaca Estates India Pvt. Ltd. While initiating CIRP, one of the criteria is solvency of CD apart from debt and default in question. It is settled position of law that the provisions of the Code cannot be invoked for recovery of outstanding amount, and it cannot be misused to drop curtain on healthy organisation. The Project Skylark Ithaca is being developed by Ithaca Estates Private Limited (IEPL). Even in CIRP initiated in respect of Skylark Mansions Pvt. Ltd., the Resolution Plan proposed by Resolution Applicant is subject to contribution of ₹ 1250/- per sq. ft. only from each customer in order to complete Skylark Ithaca Project. Therefore, it shows, the Corporate Debtor is in a position to complete the project in question - Corporate Debtor, prima facie appears to be solvent Company, which cannot be subjected to insolvency proceedings and it should be given one more opportunity to fulfill its obligations to various Home Buyers, who have substantially contributed to get their flats. The Petitioner has failed to make out even prima facie case so as to initiate CIRP as prayed for - Petition dismissed. Issues Involved:1. Maintainability of the Petition under the provisions of the Insolvency and Bankruptcy Code (IBC).2. Whether the Petitioner approached the Adjudicating Authority (AA) with clean hands.3. Estoppel against the Petitioner from invoking the provisions of the IBC again after previously filing a similar petition against the Proforma Respondent.Detailed Analysis:Issue 1: Maintainability of the Petition under the provisions of the IBCThe Tribunal examined whether the petition filed under Sections 7 and 60(5) of the IBC was maintainable. It was noted that Section 60(5) allows for applications or proceedings by or against the corporate debtor or corporate person, but it does not entitle a party to file a fresh company petition to initiate group insolvency. The Tribunal emphasized that the Association had already moved against the main Corporate Debtor (Skylark Mansions Pvt. Ltd.) in an earlier petition (C.P. (IB) No. 389/BB/2019), which was under appeal. Given that the issues raised in the current petition were already under adjudication in the pending appeal, the Tribunal concluded that the instant petition was not maintainable.Issue 2: Whether the Petitioner approached the AA with clean handsThe Tribunal observed that the Petitioner had previously filed a petition against Skylark Mansions Pvt. Ltd., claiming a default of over Rs. 220 Crores, which was admitted by the AA. The current petition, filed by the same Association but claiming a default of over Rs. 432 Crores, sought to initiate group CIRP against both the Corporate Debtor and Skylark Mansions Pvt. Ltd. The Tribunal noted that the issues raised in the current petition were already known to the Petitioner during the earlier proceedings. The Tribunal found that the Petitioner had failed to furnish the total registered number of members and was resorting to filing applications by abusing the provisions of the Code. Therefore, the Tribunal concluded that the Petitioner had not approached the AA with clean hands.Issue 3: Estoppel against the Petitioner from invoking the provisions of the IBC againThe Tribunal held that the Petitioner was estopped from filing the present petition after having taken all pleas in the earlier petition and not impleading the Corporate Debtor in that petition. The Tribunal emphasized that the matter was sub judice, and appeals were pending before the Hon’ble NCLAT. The Tribunal also noted that initiating CIRP against the holding company (Skylark Mansions Pvt. Ltd.) would not automatically apply to its subsidiary (Ithaca Estates Pvt. Ltd.) unless the subsidiary had also become insolvent.ConclusionThe Tribunal concluded that the Petitioner had failed to make out a prima facie case for initiating CIRP as prayed for. The Tribunal emphasized that the Corporate Debtor appeared to be a solvent company and should be given an opportunity to fulfill its obligations to the home buyers. Consequently, the petition was dismissed.OrderThe petition (C.P. (IB) No. 201/BB/2020) was dismissed with no order as to costs.