Appellate Tribunal overturns order, remits case for fresh decision under Section 7

The Appellate Tribunal set aside the Adjudicating Authority's order due to defects in the application under Section 7 of the I & B Code, 2016. The case was remitted back for a fresh decision, emphasizing rectifying defects and ensuring a detailed discussion and reasoning. The Adjudicating Authority was directed to consider all aspects, provide hearing opportunities, and adhere to natural justice principles within twelve weeks.

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Issues Involved:
1. Completeness and defectiveness of the application under Section 7 of the I & B Code, 2016.
2. Consideration of the project as a single or multiple phases for threshold requirements.
3. Treatment of joint allottees as single or multiple allottees.

Issue No. (I): Completeness and Defectiveness of the Application

The Appellant argued that no authority letters were produced for several financial creditors, and the signatures on the authority letters appeared different from those on the Agreement for Sale and PAN Card. The Appellant also claimed that the financial creditors did not sign as required under Form 1 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016, making the petition defective. The Adjudicating Authority did not consider these objections on merit and concluded that the application was complete. The Appellate Tribunal noted that an incomplete or improperly authorized application might vitiate the proceedings. It emphasized the importance of rectifying defects and found that the Adjudicating Authority's order was unsustainable due to its lack of detailed discussion and reasoning.

Issue No. (II): Single Project vs. Different Phases

The Appellant contended that the Real Estate Project 'Prakruthi Solitaire' should be treated as a single project, not as separate phases, for calculating the threshold requirements under Section 7 of the I & B Code, 2016. The Appellate Tribunal did not delve into this issue due to the primary issue of defects in the application.

Issue No. (III): Treatment of Joint Allottees

The Appellant questioned whether joint allottees of an apartment should be treated as single or multiple allottees. The Appellate Tribunal did not address this issue in detail, as it focused on the primary issue of the application's completeness and defects.

Conclusion:

The Appellate Tribunal set aside the impugned order dated 20.10.2022, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench) due to the defects in the application and remitted the case back to the Adjudicating Authority for a de novo decision. The Adjudicating Authority was directed to consider all factual and legal aspects, provide adequate hearing opportunities to the parties, and adhere to the principles of natural justice, preferably within twelve weeks.

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