TaxTMI 
TaxTMI 
2022 (7) TMI 1124
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.... Ashok Bhushan, J: 1. This Appeal has been filed challenging the Order dated 25th May, 2022 passed by National Company Law Tribunal, New Delhi, Bench-II by which Order, the Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "The Code") by the Operational Creditor has been admitted. The Appellant is an Association namely "Amrapali LA-Residentia Flat Buyers Welfare Association" which is registered under Society Registration Act, 1860. The association comprises of Flat Buyers of LA-Residentia Project developed by the Corporate Debtor. I.A. No. 1947/2022 was filed by the Appellant seeking leave to file this Appeal which Application was allowed vide Order dated 07th July, 2022 granting leave to the Appellant to file this Appeal. 2. Brief facts of the case necessary to be noted for deciding this Appeal are:- (i) Greater Noida Industrial Development Authority (GNIDA) executed a Lease Deed dated 03.02.2011 of plot bearing No. GH-06A, Sector-Tech, Zone-IV with the Corporate Debtor which is a special purpose company incorporated by consortium consisting of six Companies. The Project to be developed by the Corporate Debt....
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....e Supreme Court partially allowed the I.A. No. 12572 of 2022 and gave certain directions to be complied by the Corporate Debtor in a time bound manner. (vi) On 25th May, 2022, the Impugned Order was passed by the Adjudicating Authority admitting the Application under Section 9 of the Code. Mr. Naveen Kumar Jain was appointed as Interim Resolution Professional. (vii) Immediately after the admission of the Section 9 Application under the Code, Operational Creditor and the Corporate Debtor entered into Settlement on 04.06.2022. The entire amount of Rs. 28.07.764/- was paid to the Operational Creditor vide Bank Draft dated 04th June, 2022 No. 450844 drawn in Indian Bank, Anand Vihar, Branch. Operational Creditor submitted Form FA along with Memorandum of Settlement to the Interim Resolution Professional on 08th June, 2022. On 08th June, 2022, IRP informed about his total fee and expenses to be paid to enable to move Application. Total fee of Rs. 6 Lakhs and expenses of Rs. 5,89,657/-. 08th June, 2022 was also the date of submission of claim by the Creditors as per publication dated 27th May, 2022. (viii) On 09th June, 2022, IRP was requested to proceed to fil....
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....or IRP. Mr. Abhishek Anand, Advocate has appeared for Operational Creditor-Respondent No. 2. Mr. C.S. Gupta has appeared for Respondent Nos. 3 to 6. Mr. Janender Kumar Chumbak and Ms Asmita Duggal, Advocates have appeared for Financial Creditors-Applicants. 6. Learned Counsel for the Appellant in support of his Appeal submits that when both the Operational Creditor and Corporate Debtor has entered into Settlement and entire operational debt of Rs. 28,07,764/- was paid on 04th June, 2022, Form FA was submitted to the IRP on 08th June, 2022 and payment of entire fee and expenses of the IRP of Rs. 11,89,657/- having been paid on 10th June, 2022 through Demand Draft dated 10th June, 2022, IRP deliberately delayed in filing of the withdrawal Application to defeat the Settlement. Further in the Application which was filed by the Operational Creditor and the Suspended Directors of the Corporate Debtor on 10th June, 2022 before the Adjudicating Authority in which 17th June, 2022 date was fixed for hearing before the Adjudicating Authority, IRP deliberately did not appear whereas prior notice was served to him, to avoid passing of any order by the Adjudicating Authority. The Application ....
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....ween the parties on 04th June, 2022 itself. The act of constituting the CoC on 18th June, 2022 after filing the Application for withdrawal speaks of his motive. 7. Learned Counsel appearing for Suspended Directors-Respondent Nos. 3 to 6 has also supported the submissions of Learned Counsel for the Appellant and submitted that in the written synopsis filed by the Corporate Debtor it was mentioned that the Operational Creditor is carrying on business with the Corporate Debtor even after filing of the Application under Section 9 and payment of Rs. 40 Lakhs have been made to the Operational Creditor by the Corporate Debtor between the period 01.11.2021 to 31.12.2021. It is submitted that the entire amount due to the Operational Creditor was also paid through the Demand Draft on 04th June, 2022 which was communicated to the IRP and Form FA was also given on 08th June, 2022 and joint Application duly signed by the Operational Creditor was also filed on 10th June, 2022 before the Adjudicating Authority for withdrawal of the Insolvency Application. It is submitted that Corporate Debtor under the Orders of the Hon'ble Supreme Court is proceeding to complete the project and initiation of ....
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....djudicating Authority while passing the impugned order. 13. Before the Hon'ble Supreme Court, applications were filed by the Appellant as well as the Corporate Debtor, in paragraph 26 Hon'ble Supreme Court issued following directions: "26. It is therefore directed:- a) The Company shall be entitled to continue with the construction and development of the instant project; b) 632 flats which were subject matter of Orders dated 23.07.2019 and 14.10.2019 shall be allowed to be sold by the Company to the interested persons or parties at a fair price or value, provided :- i) all the concerned transactions including the execution of appropriate documents or deeds are counter-signed by the Court Receiver or his nominee; ii) The price or value at which said flats are to be sold is certified by the Court Receiver to be fair and appropriate. iii) all the amounts received by way of such transactions of sale are credited to a separate account completely under the control of the Receiver and/or his nominee; iv) the cost of construction with respect to those 632 flats, upon due certification by the Chartered Accountants of the Comp....
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.... shall be credited to a separate account maintained under the directions of learned Court Receiver as stated in said order dated 29.06.2021. g. Outflow from the account shall also be in accordance with the directions already issued and under the express directions of learned Court Receiver. We have passed these directions to ensure that the project gets completed and as stated earlier, we shall not be taken to have either dealt with the contentions of various flat-buyers or reflected on the merits or demerits of their contentions." 15. We are satisfied that the fact that between the period 01.11.2021 to 31.12.2021 payment of Rs. 40 Lakhs have been made by the Corporate Debtor to the Operational Creditor and Operational Creditor is continuing with the business relation, ought to have been taken into consideration by the Adjudicating Authority which fact clearly indicated that the Corporate Debtor is not insolvent. 16. In any view of the matter, the Adjudicating Authority ought to have referred to directions of the Hon'ble Supreme Court as noted above which directions permitted continuance of the project to secure the interest of the home-buyers and to ensure ....
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....le Tribunal may deem fit and proper in the fact and circumstances of the case." 18. The said application also came to be listed before the Adjudicating Authority on 17th June, 2022 but IRP did not appear before the Adjudicating Authority and hence no Order could be passed on such date. Learned Counsel for the IRP submits that he already filed an Application on 15th June, 2022 on the basis of Settlement which he received from the Corporate Debtor. Learned Counsel for the Appellant submitted that Application which was filed by the IRP on 15th June, 2022 was defective application and defects were removed by the IRP on 29th June, 2022 after he communicated that he has constituted the CoC. 19. At the time of enactment of Insolvency and Bankruptcy Code, 2016, there was no provision akin to Section 12A it was only after the observations were made by the Hon'ble Supreme Court of India in the matter of "Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India" (2019) 4 SCC 17 that Insolvency Application can be permitted to be withdrawn, Section 12A was inserted in the Code. In the CIRP Regulations, Regulation 30A was also added with effect from 25th July, 2019. Regulation 30-A is as follows:....
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....fessional or resolution professional, as the case may be, within three days of such approval, in the bank account of the corporate debtor, failing which the bank guarantee received under sub-regulation (2) shall be invoked, without prejudice to any other action permissible against the applicant under the Code." 20. The Application which was filed by the Suspended Directors and the Operational Creditor under Rule 11 NCLT Rules, 2016 as well as the Application filed by IRP on 15th June, 2022 were referable to Regulation 30A(1)(a). According to the IRP's case, he constituted the CoC on 18th June, 2022 by which date both the Applications were filed before the Adjudicating Authority, and the said Applications could have been allowed by the Adjudicating Authority before constitution of CoC. Regulation 30-A(3) states that Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days. IRP received the Form FA as a Settlement between the parties on 08th June, 2022 and also received his entire fee and expenses on 10th June, 2022 he d....