Supreme Court Allows Withdrawal of CIRP, Directs Completion of Housing Project

The Supreme Court allowed the withdrawal of Corporate Insolvency Resolution Process (CIRP) proceedings, quashed lower court orders, and directed the appellant to complete the housing project within one year. Emphasizing the protection of home buyers' interests and legislative intent, the court disposed of the proceedings based on the settlement. The appellant was instructed to pay costs to the Interim Resolution Professional (IRP) within two weeks.

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Issues Involved:
1. Impleadment of parties.
2. Admission of Section 7 application under the Insolvency and Bankruptcy Code (IBC).
3. Constitution of the Committee of Creditors (COC) and appointment of Interim Resolution Professional (IRP).
4. Settlement between the appellant and the home buyers.
5. Withdrawal of Corporate Insolvency Resolution Process (CIRP) proceedings.
6. Application of Article 142 of the Constitution of India.
7. Payment of costs incurred by IRP.

Issue-wise Detailed Analysis:

1. Impleadment of Parties:
The court allowed Interlocutory Application No. 105732/2021 for impleadment, ordering the parties to be impleaded as respondents in the appeal.

2. Admission of Section 7 Application under the IBC:
The National Company Law Tribunal (NCLT) admitted the Section 7 application filed by home buyers due to the corporate debtor's failure to complete a housing project. The NCLT's order was upheld by the National Company Law Appellate Tribunal (NCLAT), leading to the initiation of CIRP against the corporate debtor. The appellant challenged this order.

3. Constitution of the Committee of Creditors (COC) and Appointment of IRP:
Following the NCLT's order, an IRP was appointed, and a COC was constituted. The IRP issued a public announcement and convened the first meeting of the COC. The Supreme Court stayed the CIRP proceedings, subject to the appellant depositing a specified amount.

4. Settlement between the Appellant and the Home Buyers:
The appellant and a majority of the home buyers reached a settlement, agreeing that the corporate debtor would complete the housing project within one year and hand over possession to the home buyers. The original applicants agreed to withdraw the CIRP proceedings in light of the settlement.

5. Withdrawal of CIRP Proceedings:
The Supreme Court considered the withdrawal of CIRP proceedings under Section 12A of the IBC, which allows withdrawal with the approval of 90% of the COC. Given the settlement and the majority of home buyers' agreement, the court permitted the withdrawal of the CIRP proceedings to serve the larger interest of the home buyers.

6. Application of Article 142 of the Constitution of India:
The court exercised its powers under Article 142 to permit the withdrawal of CIRP proceedings, considering the unique facts and circumstances, including the settlement and the home buyers' interests. The court noted that continuing CIRP would have adverse consequences for home buyers and emphasized the legislative intent to protect their interests.

7. Payment of Costs Incurred by IRP:
The court directed the appellant to pay Rs. 6,00,000 to the IRP for expenses incurred and litigation costs. This amount was to be paid within two weeks.

Conclusion:
The Supreme Court allowed the withdrawal of CIRP proceedings, quashed the NCLT and NCLAT orders, and directed the appellant to complete the housing project within one year. The court emphasized the protection of home buyers' interests and the legislative intent behind the IBC amendments. The proceedings were disposed of in terms of the settlement, with directions for the appellant to pay costs to the IRP.

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