Real estate company's appeal dismissed after 143 allottees successfully file Section 7 insolvency application

NCLAT Principal Bench dismissed an appeal challenging the rejection of objections to a Section 7 insolvency application filed by 143 real estate project allottees. The appellant company contested the application's maintainability, claiming the 100-allottee threshold wasn't met and alleging false documents. NCLAT upheld the adjudicating authority's decision, finding no fraudulent or malicious intent by the allottees who were legitimately protecting their rights. The court rejected requests for criminal proceedings under Section 340 CrPC and penalties under Section 65 IBC, determining the appellant's objections were malafide attempts to delay proceedings rather than genuine legal concerns.

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Issues Involved:
1. Maintainability of Section 7 Application.
2. Allegations of forged affidavits.
3. Request for proceedings under Section 340 CrPC.
4. Imposition of penalty under Section 65 of the Insolvency and Bankruptcy Code, 2016.

Summary:

1. Maintainability of Section 7 Application:
The Appellant contested the maintainability of the Section 7 Application filed by 143 homebuyers, arguing that the threshold limit of 100 allottees was not met. The Adjudicating Authority rejected this objection, and the decision was upheld by the Appellate Tribunal and the Hon'ble Supreme Court. The Tribunal confirmed that the application fulfilled the threshold limit prescribed under Section 7 of the Insolvency and Bankruptcy Code (IBC).

2. Allegations of Forged Affidavits:
The Appellant alleged that six affidavits filed by the Applicants were forged, as the individuals were residents of Australia and the affidavits were purportedly sworn in Gautam Buddh Nagar, UP. The Respondents countered that these affidavits authorized them to prosecute the application and fresh affidavits were filed by the six Applicants reiterating their authorization. The Tribunal found no merit in the Appellant's claims and observed that the allegations were an attempt to delay the proceedings.

3. Request for Proceedings under Section 340 CrPC:
The Appellant sought proceedings under Section 340 CrPC against the Financial Creditors for allegedly filing false documents. The Tribunal, relying on the Supreme Court judgment in Amarsang Nathaji v. Hardik Harshadbhai Patel, concluded that it was not expedient in the interests of justice to initiate an inquiry into the alleged false evidence. The Tribunal noted that the fresh affidavits filed by the six Applicants negated the need for any investigation under Section 340 CrPC.

4. Imposition of Penalty under Section 65 of the IBC:
The Appellant requested the imposition of a penalty under Section 65 of the IBC, alleging fraudulent or malicious initiation of proceedings by the Financial Creditors. The Tribunal found no grounds to hold that the initiation of Section 7 proceedings by the allottees was fraudulent or malicious and thus rejected the request for a penalty.

Conclusion:
The Tribunal dismissed the appeal, finding no error in the Adjudicating Authority's decision. It observed that the Appellant's actions were a dilatory tactic to delay the adjudication of the Section 7 Application, which had already been pending for over two years. The appeal was dismissed with no order as to costs.

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