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2024 (12) TMI 1315
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....Mr. Samriddh Bindal and Mr. Vikash Kumar, Advocates for R - 2 to 4 For the Appellants : Mr. Arvind Nayar, Sr. Advocate with Mr. Lokesh Bhola, Mr. Akshay, Ms. Sanjana Manchanda, Advocates For the Respondents : Mr. Deep Bisht with Mr. N.K. Sharma, Advocates for R1/IRP Mr. Sahil Sethi, Mr. Samriddh Bindal and Mr. Vikash Kumar, Advocates for R - 2 to 4 For the Appellant : Mr. Vikas Nautyal , Advocate For the Respondents : Mr. Deep Bisht with Mr. N.K. Sharma, Advocates for R1 / IRP Mr. Sahil Sethi, Mr. Samriddh Bindal and Mr. Vikash Kumar, Advocates for R- 2 to 4 JUDGMENT ASHOK BHUSHAN, J. These three Appeal(s) by the Suspended Directors of three Corporate Debtors ("CDs") have been filed challenging the same order dated 19.07.2024 passed by National Company Law Tribunal, Court VI, New Delhi in admitting Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC") filed by the Financial Creditors in a class and rejecting IA Nos.293 and 2497 of 2024 filed by the Corporate Debtor - M/s Mist Direct Sales Pvt. Ltd. 2. Brief facts of the case necessary to be noticed for deciding the Appeal(s) are: (i) By Lea....
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....sed was threshold as required under the IBC of 100 allottees or 10% of the total number of allottees, is not fulfilled, hence, the Application under Section 7 deserves to be rejected. Further, objection was that the joint application against three CDs is not maintainable. There were various other objections raised by the three CDs, who were Respondent Nos.1, 2 and 3 in Section 7 Application. (v) The Adjudicating Authority heard the joint company petition and the objections raised by three CDs and by order dated 21.10.2022 held that company petition is maintainable and directed the matter to be listed for hearing on 10.11.2022. Aggrieved by the order dated 21.10.2022 passed by Adjudicating Authority in Section 7 Application, all the three CDs filed Appeal(s). The Company Appeal (AT) (Ins.) No.1506 of 2022 filed by Anand Infoedge Pvt. Ltd.; Company Appeal (AT) (Ins.) No.1478 of 2022 was filed by Mist Direct Sales Pvt. Ltd.; and Company Appeal (AT) (Ins.) No.127 of 2023 by Mist Avenue Pvt. Ltd. All the three Appeal(s) came to be heard by this Tribunal and by a detailed judgment dated 17.11.2023, all the Appeal(s) were dismissed, upholding order of Adjudicating Authority that ....
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.... (AT) (Ins.) No.96 of 2024 an Appeal was filed by Mist Direct Sales Pvt. Ltd. being Civil Appeal No.5018 of 2024 before the Hon'ble Supreme Court, which Appeal was dismissed as withdrawn on 29.01.2024. (ix) Another IA was filed being IA No.1808 of 2024 in Section 7 petition by M/s Dheeraj Sharma and Ors. praying for certain reliefs and raising objection to Section 7 petition, which Application was also dismissed in limine on 02.05.2024. (x) The order passed by Adjudicating Authority in Intervention Petitions on 27.02.2024 in P/12/2024 was also challenged by filing Appeal, i.e. Company Appeal (AT) (Ins.) No.899 of 2024 by Grand Developers Pvt. Ltd., which was dismissed by this Tribunal on 15.05.2024. (xi) The Adjudicating Authority proceeded to hear Section 7 Petition. Developer also filed a criminal complaint against the Financial Creditors in a class on 04.01.2024 alleging false, forged and fabricated affidavits filed before the Tribunal, on which complaint an FIR No.102/2024 was registered on 21.03.2024 under Section 420/467/471 and 34 of the Indian Penal Code. On 24.01.2024, Developer filed an IA No.293 of 2024 seeking direction from the Tribunal to en....
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....rious Intervention Applications have also been filed in these Appeal(s). We have also heard learned Counsel appearing for Intervenors in the above three Appeal(s). 4. Dr. U.K. Chaudhary, learned Senior Counsel appearing for the Mist Developer submits that among affidavits, which were filed along with Section 7 Application, some were forged and fabricated. An FIR No.102/2024 was also registered on a complaint filed by the Developer. A Status Report has also been filed in the FIR that 20 affidavits in the Application are forged affidavits. It is submitted that threshold of minimum 100 allottees or 10% has not been fulfilled in Section 7 Application, hence, it deserves to be rejected, there being total units of 1500. It is further submitted that Company Petition under Section 230 has also been filed by the Developer before the NCLT. It is submitted that objective of IBC is not to send a Company to CIRP, rather to resolve it. There are 1500 homebuyers and only 115 have initiated CIRP. It is submitted that Appellant was restrained by force majeure in carrying out the Project. It is submitted that Appellant has given three options for resolution by an affidavit, which need to be accep....
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.... 195(1)(b) alleging fraud and forgery was also dismissed. The Company Petition filed by the Developers in the year 2024 under Section 230 of the Companies Act, 2013 was another attempt to delay the disposal of Section 7 Application, which Application has been subsequently dismissed by the NCLT on 19.07.2024. The FIR No.102/2024 and Status Report are wholly irrelevant to decide Section 7 Application, where debt and default has to be looked into. The debt and default being fully proved, Section 7 Application ought to have been admitted, which could not be admitted on account of various dilatory tactics adopted by the Corporate Debtors. It is submitted that offer of the Corporate Debtors made in the end to pay the principal amount with some interest has been considered and rejected by the Financial Creditors in class. The principal amounts were paid in the year 2012 and refund of the principal amount with some meagre amount, which amount to interest @ 1-2% per annum was considered and rejected by Financial Creditors in a class, which is recorded in the order of the Adjudicating Authority. The Financial Creditors in a class do want the insolvency proceedings to commence, so that they m....
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....hat affidavits filed by six Financial Creditors have not been attested by him and that no entries were made by him in his register. A submission was also made by one of Financial Creditors Ajay Khajuria, who made a declaration that affidavit filed in his name before the Tribunal is forged and the same has not been signed by him and there is a visible difference in signatures. Reference to FIR No.102/2024 dated 21.03.2024 has also been made. The submission is that Investigation Officer ("IO") has filed a Status Report dated 01.05.2024 stating that 20 affidavits are forged and fabricated and further investigation is going on. Hence, in view of the said Status Report, 20 affidavits being forged and fabricated, it is only 95 Applicant/ allottees, who can be said to have filed the Application. Hence, threshold limit under Section 7 is not met and the Application was not liable to be admitted. 12. We have noticed above that in Section 7 Application objections were raised by the Corporate Debtors regarding non-fulfillment of threshold. The said objection was noticed in the order dated 21.10.2022 passed by the Adjudicating Authority. All the above objections were noticed and dealt by Ad....
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....quire into both the merits and maintainability. However, we also clarify that the issue of maintainability shall stand concluded by the impugned order dated 17 November 2023 insofar as the National Company Law Tribunal and NCLAT is concerned. 3 Since the application under Section 7 is pending for over two years, we request the NCLT to take up the application at the earliest possible date and to endeavour an expeditious disposal within two months. 4 Subject to the aforesaid, the Civil Appeals are dismissed. 5 Pending application, if any, stands disposed of." 13. We have also noticed above that several IAs were filed by the Corporate Debtors before the Adjudicating Authority being IA Nos.5400 of 2023, 4121 of 2023, 4122 of 2023 and 4312 of 2023, where Corporate Debtors had prayed for initiation of proceedings under Section 340 of CrPC read with Section 195(1)(b) and dismiss petition under Section 7 on the ground of playing fraud on the Tribunal. It is useful to notice the prayers made in one of the Application, which has been noted in paragraph 1 of the order dated 05.01.2024, which are as follows: "(a) Pass necessary orders and directions, ther....
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....ing Authority that the affidavits of most of the allottees were notarised in August or September 2021. whereas the Application u/s 7 IBC was filed much later in October 2021. Thus. there was no accompanying application under Section 7 of the Code at that point in time when the affidavits were notarised. Further, it has come to the knowledge of the respondent herein that another applicant named Ajay Khajuria (Applicant No.106 as per the memo of parties in the company petition) has provided a declaration that the affidavit filed before Adjudicating Authority in the present matter has not been signed by him and there is a visible difference in signatures. iii. That the Applicants/ Financial Creditors have initiated the proceeding before this Adjudicating Authority fraudulently and with malicious intent and the Adjudicating Authority has power within Section 65 of the Code to impose penalty upon such person. iv. That affidavit of one of the Applicants, i.e. Mr. Ajay Khajuria has been forged and declaration to that effect has been given by such Applicant. v. That the affidavits are false and not notarized." 15. The Adjudicating Authority considered all objections in....
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....s in a class. As noted above, an Application for initiating criminal proceedings against Financial Creditors in a class was filed in Section 7 Application and was rejected, which order was unsuccessfully challenged in the Appeal before this Tribunal. The effect and consequence of the order, rejecting the Application to initiate criminal proceedings against the Financial Creditors in a class, cannot be bypassed by the Appellant(s) by filing First Information Report or complaints against Financial Creditors. Any Status Report submitted in such criminal proceedings can have no bearing on proceedings, which was taken by Financial Creditors in a class under Section 7. Reliance on Status Report submitted by Appellant(s) in a criminal proceeding can have no bearing while deciding Section 7 Application. The said Status Report is not an evidence on which it can be pronounced that threshold of 100 allottees was not complete in filing of Section 7 Application. We, thus, are of the view that submission raised by the Appellant(s) that threshold of 100 is not complete has no legs to stand and has to be rejected. 19. The Adjudicating Authority has returned a finding that there was debt and def....
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....oticing the aforesaid submission of the Appellant, the Appellant was permitted to deposit the aforesaid amount within 30 days, in pursuance of which order dated 25.07.2024, the aforesaid amount was deposited by the Appellant in Company Appeal (AT) (Ins.) No.1422 of 2024. 21. During hearing of the present Appeal also learned Counsel for the Respondents, i.e. Financial Creditors in a class specifically submitted that the Financial Creditors are not agreeable to accept the amount, which was offered to be deposited by the Appellant. The unit holders have been waiting for their units for last more than a decade and the amount, was paid in the year 2012 by the allottees, the Appellant cannot be absolved by permitting them to deposit the amount with meagre interest, which was received in the year 2012. The findings recorded by the Adjudicating Authority regarding debt and default and Application filed by the Corporate Debtors itself being IA Nos. 293 and 2497 of 2024 proves beyond doubt that debt and default is admitted on the part of the Corporate Debtor. In Section 7 Application, the Adjudicating Authority has rightly placed reliance on M. Suresh Kumar Reddy v. Canara Bank - (2023) 8....
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.... Court with regard to land dispute and Civil Suit No.662/2017 has also been initiated before the Ld. District Court, Gautam Budh Nagar, in which a written statement was filed by the Noida, where it was mentioned that aforementioned Khasras was not in the name of Noida. Learned Counsel for land owning Company has referred to series of litigations initiated with regard to issues pertaining to certain plots, which are in the midst of the Projects, with regard to which there are dispute between Noida and Greater Noida. Learned Counsel for the Financial Creditors in a class has submitted that with regard to construction of Project Phase-1, there was no issue pertaining to the land of Phase-1 Project, which could have very well be constructed. Civil Suit has been filed before the District Court Gautam Budh Nagar in the year 2017 and the Writ Petition No.1553/2019 has been filed before the Allahabad high Court in the year 2019. Other Writ Petitions filed by Sammiti were in the year 2019 and 2020. The Project was launched in the year 2012, in which year the amounts were collected from the allottees. Litigation which commenced in the year 2019 and 2020, cannot be a ground to absolve the Cor....
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....022 has examined the question. One of the questions, i.e. Question No.(i) was: "(i) Whether the joint application under Section 7 against 'Anand Infoedge Pvt. Ltd.', 'Mist Avenue' and 'Mist Direct' is maintainable? Three Respondents- Appellants herein being separate corporate entities." 25. This Tribunal considered the entire facts, including the lease granted in favour of Anand Infoedge Pvt. Ltd., Collaboration Agreement in favour of Mist Avenue and the second Collaboration Agreement dated 27.07.2017 executed in favour of Mist Direct Sales Pvt. Ltd. In paragraphs 15 and 16 of the judgment, following was observed: "15. When we take a holistic view of the matter, it is clear that all three Appellants had joined hands to develop the project. Present is a case of Real Estate Project and the project cannot be successfully developed by any one of the Appellants who were Respondents in Section 7 application. Under the Collaboration Agreement, 'Anand Infoedge Pvt. Ltd.' and developers have undertaken several responsibilities towards the allottees. The construction of Real Estate Project will not be achieved in event joint insolvency is not initiated against all the th....
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....above case in Section 7 Application, the Applicant has not made any payment to the Corporate Debtor Tripathi Hospital Pvt. Ltd., but the amount was paid to D.K. Chaturvedi and other individuals. The Adjudicating Authority rejected Section 7 Application on the ground that there was no financial debt. This Tribunal in the aforesaid judgment also came to the conclusion that there was no evidence of any direct transaction to have taken place between the Appellant and the Corporate Debtor and the insolvency resolution can be triggered where there is a financial debt owed to a person. It was held that Appellant was not able to prove that he is a Financial Creditors. This Tribunal affirmed the judgment of the Adjudicating Authority rejecting Section 7 Application. The above judgment does not in any manner help the Appellant in the facts of the present case. 27. Reliance has been placed on two more judgments of this Tribunal namely - Pravesh Magoo vs. Iroe Grace Realtech Pvt. Ltd. - Company Appeal (AT) (Ins.) No.1141 of 2019. The above was a case where Adjudicating Authority has rejected Section 7 Application filed by a Financial Creditor. The Adjudicating Authority has rejected Section....
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....P. 23. We find that there is every possibility that if the CIRP is permitted, the cost that the home-buyers will have to pay, would be much higher, inasmuch as the offer made by the resolution applicants could be after taking into consideration the price of escalation, etc. As against this, the Promoter has filed a specific undertaking specifying therein that the cost of the flat would not be escalated and that he would honour the BBA signed by the previous management. 24. In that view of the matter, we are inclined to allow the present appeal. Accordingly, we pass the following order: A. The appeal is allowed. The impugned order dated 22nd November, 2021 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi in I.A. No.1115 of 2020 in Company Appeal (AT) (Insolvency) No. 1507 of 2019 is quashed and set aside; B. The affidavit dated 27th December, 2021 filed by Shri Kashi Nath Shukla, the promoter of the respondent No.1 - Corporate Debtor is taken on record and treated to be an undertaking given to this Court; C. The appellant/promoter is permitted to complete the project as per the deliberations that took plac....
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.... Supreme Court in the matter of Energy Watchdog v. CERC, (2017) 14 SCC 80 has held that a party can rely on a force majeure clause only if it shows that reasonable steps have been taken to avoid the effect of the force majeure event. In this context it would be worthwhile to peruse the relevant portion of the order of UPRERA dated 07.12.2019 by which the registration of the project was cancelled. (This was filed vide Additional Affidavit dated 07.07.2022 by the Financial Creditors):- In proportion to the targeted completion date of the project, the progress of works of project is disappointing and at present work is stopped. The date of initiation of project has been given as 26.10.2012, this position of work in almost 7 years is very disappointing. The action of Promoter is a clear proof of misappropriation of hard earned money of allottees and violation of commitment of Promoter to complete the project within time and to provide them possession within the time limit decided in the contract executed with the allottees. Further the reasons for the cancellation given in the UP RERA order dated 07.12.2019 are as under: - After careful consideration....
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....delivering the said project and accordingly, the earlier arrangement with Mist Avenue is terminated and a new management has entered with effect from 2017. The letter also mentions that M/s. Mist Direct Sales has also taken charge of the inventories already sold by the earlier company including the documents and the money paid by the allottees. The said letter does not anywhere mention that the delay in completing the project is because of the force majeure reasons, although it is the submission of the Corporate Debtors that the disputes with farmers arose in the year 2016. Instead, the Corporate Debtors sought a vote of confidence from the allottees, asking them to trust in their ability to complete the project. 32. It is also notable that on the one hand CD No. 1 submitted that the Project cannot be completed due to reasons of 'force majeure', while on the other hand CD No. 3 has filed a petition u/s 230 of the Companies Act, 2013 seeking approval of a 'Scheme of Arrangement and Compromise' with the allottees to complete the project. 33. The Corporate Debtor No. 1, M/s Anand Infoedge, placed reliance on the judgment passed by the Hon'ble NCLAT in the matter of N....