Section 7 insolvency threshold remains intact despite forgery claims, force majeure pleas, and proposed settlement.
A section 7 insolvency application by an allottee class is examined in light of threshold objections based on alleged forged supporting affidavits, force majeure, land-title disputes, absence of privity of contract, and the liability of a project participant. The text states that collateral criminal allegations do not unsettle prior maintainability findings, incomplete project performance and collection from allottees do not by themselves establish force majeure, and pending land disputes do not defeat the insolvency claim. It further notes that a proposed settlement or compromise will not displace the statutory insolvency process unless accepted in accordance with the code. The admission order is described as sustained.
Issues: (i) whether the section 7 application filed by the allottee-class satisfied the statutory threshold despite allegations that certain supporting affidavits were forged and fabricated; (ii) whether the corporate debtors could resist admission on the grounds of force majeure, land-title dispute, absence of privity of contract, and alleged non-liability of one project participant; and (iii) whether the proposed settlement and compromise arrangement warranted interference with the order admitting insolvency.
Issue (i): whether the section 7 application filed by the allottee-class satisfied the statutory threshold despite allegations that certain supporting affidavits were forged and fabricated.
Analysis: The threshold objection had already been raised and decided against the corporate debtors in earlier proceedings. The later reliance on a police status report and allegations of forged affidavits did not displace the earlier findings on maintainability, because the criminal proceedings were collateral and could not control the insolvency record. The adjudicatory findings on threshold had attained finality for the tribunal below, and the materials relied upon by the appellants were insufficient to reopen that issue.
Conclusion: The threshold objection failed and the section 7 application was held to be maintainable.
Issue (ii): whether the corporate debtors could resist admission on the grounds of force majeure, land-title dispute, absence of privity of contract, and alleged non-liability of one project participant.
Analysis: The project had remained incomplete for a long period after collections from allottees, and the reasons advanced for delay were treated as a consequence of the corporate debtors' own conduct rather than a legally sufficient force majeure event. The pending land-related litigation did not absolve the obligation to complete the project or defeat the insolvency claim. The collective project structure and the interwoven roles of the entities involved supported the conclusion that the land-owning company could not escape insolvency-related consequences by relying on absence of direct privity. The plea that one collaborator had been absolved by cancellation of the earlier arrangement was also rejected in the broader project context.
Conclusion: The objections based on force majeure, land-title dispute, and privity of contract were rejected.
Issue (iii): whether the proposed settlement and compromise arrangement warranted interference with the order admitting insolvency.
Analysis: The appellants' settlement proposals and the compromise arrangement were considered, but the financial creditors in class did not the proposal. In the circumstances, the tribunal declined to substitute a negotiated completion model for the statutory insolvency process, and held that the resolution professional would proceed in accordance with the code and regulations.
Conclusion: No interference was warranted on the basis of the proposed settlement.
Final Conclusion: The impugned admission order was sustained and the appeals were rejected, leaving the insolvency resolution process to proceed in accordance with law.
Ratio Decidendi: Once default is established and the statutory threshold for a section 7 application is satisfied, admission follows unless a legally sustainable ground is shown to defeat the claim; collateral criminal allegations, disputed settlement offers, and project-delay excuses do not by themselves displace that consequence.
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