2021 (4) TMI 945 - Tri - Insolvency and Bankruptcy

Company Petition for Insolvency Dismissed: Financial Creditor Requirement Not Met

Shree Balaji Sarees Private Limited Versus Shristi Infrastructure Development Corporation Limited

The Tribunal dismissed the Company Petition seeking initiation of Corporate Insolvency Resolution Process under section 7 of the Insolvency and Bankruptcy ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor is an individual allottee - existence of debt and dispute or not - HELD THAT:- Without going through the merits of the matter, the present petition is not maintainable in the light of the judgment of the Hon'ble Supreme Court in MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER [2021 (1) TMI 802 - SUPREME COURT], in terms of which the Hon'ble Supreme Court has upheld the amendment made by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 with retrospective effect from 28/12/2019. In terms of the amendment, [Second proviso to sub-section (1) of section 7] an application u/s. 7(1) of Insolvency and Bankruptcy Code can be maintained only if an application for initiating corporate insolvency resolution process against the corporate debtor has been filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent of the total number of such allottees, whichever is less. Thus, Financial Creditor being an individual allottee, does not satisfy the requirements of the second proviso to section 7(1) of the Insolvency and Bankruptcy Code, 2016. Thus, the petition is not maintainable and, therefore, is dismissed. Issues:Corporate Insolvency Resolution Process under section 7 of the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. Factual Background: The Financial Creditor filed a Company Petition under section 7 of the IBC against the Corporate Debtor, seeking initiation of Corporate Insolvency Resolution Process. The Financial Creditor had booked a flat in the Corporate Debtor's project and made several payments as per the agreement.2. Payment Disputes: The Financial Creditor alleged poor quality of materials used in the flat and subsequent reallocation by the Corporate Debtor. The Financial Creditor demanded a refund of the amount paid along with interest due to delays and false promises by the Corporate Debtor. The Corporate Debtor disputed some claims and highlighted the terms of the agreement regarding refunds.3. Legal Proceedings: The case went through various stages of court proceedings, including affidavits, replies, and rejoinders. Due to a settlement failure, the matter was restored to its original stage for further hearings. The COVID-19 pandemic also caused delays in the legal process.4. Court Judgment: The Corporate Debtor argued that the petition was not maintainable as per the recent amendment to the IBC, requiring a certain number of allottees to jointly file for insolvency. The Financial Creditor, being an individual allottee, did not meet this requirement. The Tribunal dismissed the petition based on this ground, stating that the Financial Creditor did not satisfy the conditions under the amended law.5. Conclusion: The Tribunal ruled that the petition was not maintainable under the amended provisions of the IBC. The Financial Creditor's status as an individual allottee did not meet the required criteria for initiating insolvency proceedings. The petition was dismissed without prejudice to any other legal rights the petitioner might have. The order was to be issued as a certified copy upon formal application.