TaxTMI 
TaxTMI 
2025 (5) TMI 1839
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....ber ( Technical ) For the Appellant : Mr. Krishnendu Dutta, Sr. Advocate with Mr. Kumar Deepraj and Ms. Niharika Sharma, Advocates For the Respondents : Mr. Abhijeet Sinha, Sr. Advocate with Ms. Heena Kochar, Advocates Mr. Sunil Fernandes, Sr. Advocate with Ms. Honey Satpal, Ms. Diksha Dadu and Mr. Kanishk Khullar, Advocates for R-2 to R-12. Mr. Ashish Batra, Advocate for R-13 & R-14. JUDGMENT ( Hybrid Mode ) Per: Barun Mitra, Member (Technical) Three sets of appeals have been filed under Section 61 of Insolvency and Bankruptcy Code 2016 ('IBC' in short) out of which two appeals have been filed by the same Appellant, M/s Jayshree Agnihotri challenging two orders dated 16.10.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Indore Bench) in CP(IB)/26(MP)2024 and in I.A. No. 386 of 2024 in CP(IB)/26(MP)2024. The third appeal has been filed by Appellant-Shri Ashok Kumar Jain, suspended management of Corporate Debtor challenging the order dated 16.10.2024 passed by the Adjudicating Authority in CP(IB)/26(MP)2024. By the impugned order dated 16.10.2024 in CP(IB)/26(MP)2024, the Adjudicating Authority has admitted the Sect....
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..... * On completion of the Project, the entire shareholding of the Jain group partner was to be transferred to the Agnihotri group without consideration. After the aforesaid MoU, a Project namely, "Lush by Pushp Ratna" was registered. Out of 140 units, 77 units were sold. Various amounts were paid by the Allottees who filed Application under Section 7 (10 in number) who for convenience would be hereinafter referred to as "Home-buyers". * Allotment Letters were also issued by Corporate Debtor. As per the Allotment Letter, the units were to be constructed and handed over within 30 months. * Certain disputes arose between the two groups of shareholders, Agnihotri group and Jain group. Jain group claimed that MoU dated 14.09.2009 has been cancelled on 26.09.2011. * Agnihotri group claiming that it had never signed any Cancellation Agreement and their signature has been forged in the Cancellation Agreement 26.09.2011 they issued Notice for Arbitration, in pursuance of MoU dated 14.09.2009. * On 07.11.2009, Agnihotri group filed an Application under Section 9 of the Arbitration and Conciliation Act, 1996 for interim relief for restraining Jain group from issuing further shares wh....
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....A. No.386/2024 was filed by Jayshree Agnihotri of Agnihotri group claiming that Agnihotri group is 50% shareholder of the Corporate Debtor and that Section 7 Application has been filed by the Home-Buyers in collusion with suspended management of Corporate Debtor-Jain group. Jayshree Agnihotri of Agnihotri group offered in the IA No. 386 of 2024 to deposit the entire amount claimed in the Section 7 application and prayed that the C.P. (IB) No.26/MP/2024 be dismissed on discharge of the dues by deposit in the said Bank. * Adjudicating Authority heard the I.A.386/2024 and by impugned order dated 16.10.2024 rejected the Application. * Adjudicating Authority noticed the date of Allotment Letter of all the Home-Buyers and date of default based on the expiry of 30 months period and held that in view of the Order passed by the Hon'ble Supreme Court in Suo Motu Writ Petition, the Application filed by them on 22.05.2024 is well within time. * After returning finding of debt and default, Section 7 has been admitted and Mr. Hasti Mal Kacchara was appointed as Interim Resolution Professional (IRP). * Appellant-Jayshree Agnihotri had given a proposal on 19.11.2024 to the Committee of Cre....
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....ottees and their Section 7 application is within the period of limitation. It is further their case that the Adjudicating Authority took notice of the date of allotment letters given to the ten Home-buyers and the fact that the date of default was to arise on expiry of 30 months period from the date of such allotment letters. Thereafter relying on the orders of the Hon'ble Supreme Court in Suo Moto Writ Petition (Civil) No. 03 of 2020 giving benefit of exclusion of the period from 15.03.2020 to 14.03.2021, the Adjudicating Authority had correctly held the Section 7 application was filed within time. 7. When this matter was heard by this Tribunal earlier on 31.01.2025, it was noticed that the Balance Sheets which had been relied upon by the Adjudicating Authority were not on the record. It was also observed that the Section 7 application and other materials which had been brought before the Adjudicating Authority by the Home-buyers are required to be placed before this Tribunal for due consideration of the issue of limitation. Accordingly, the home-buyers/allottees were given an opportunity by this Tribunal to file their reply and bring on record the supporting documents to enable ....
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.... period from 15.03.2020 to 14.03.2021. 9. We now proceed to return our findings on the issue of limitation. Firstly, we come to the audited balance sheet of 31.03.2020. We notice that at Note 2.7 of the Balance sheet clearly depicts "Advances from customers for flat booking". This clearly substantiates that the allottees had been making advances to the Corporate Debtor which formed part of their Current Liabilities. This balance sheet of 2019-20 which has been placed on record at page 381 in the Reply affidavit of the Respondent-Home-buyers is as reproduced below: 2.7 OTHER CURRENT LIBILITIES Advances from Customers against Flat Bookings 38714432.00 38714432.00 Current Maturities on Loan (payable by 31-03-20) 4643841.59 Shriram City Union Finance Ltd. (payable by 31-3- 5002724.00 0.00 ICICI Bank Ltd (car Loan- New) (payable by 31-3- 233972.00 0.00 Car Loan (Ecosport)-ICICI (payable by 31-3- 101579.00 0.00 Interest Payable 42550.69 0.00 44095257.69 43358273.59 10. The above balance sheet of the Corporate Debtor thus clearly substantiates the fact that disbursals had been undisputedly made by the allottees even though their individual names were....
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....or. It was however contended by the Appellant that the above confirmation letter of 09.11.2021 was itself beyond the period of limitation. Such an argument is misconceived and lacks force since the confirmation letter is only an acknowledgment of the balance as reflected in the audited balance sheet for financial year 31.03.2020. When there is no dispute regarding the validity of the said audited balance sheet, there can be no challenge to the acknowledgment letter of 09.11.2021 on grounds of limitation. Interestingly, we also notice that following the submission of the audited finances and balance confirmations, the Appellant in their Reply Rejoinder at page 15 at para (xii) has chosen not to contest the issue of limitation though of course it has been dropped on the grounds that they had already made their offer for payment or completion to the Home- buyers. 13. When we see the above tabular chart as extracted in the impugned order which when read with the Note 2.7 of the balance sheet and the balance confirmation letter of 09.11.2021, we find that the Section 7 application does not attract the bar of limitation. Basis the acknowledgement letter of 09.11.2021, the period of limi....
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....bmitted that this step on the part of the Jain Group was violation of Clause 7 of the MoU of 14.09.2009 which clearly stipulated that there would be equal representation of both Agnihotri and Jain groups in the Board of Directors and this 50:50 ratio was to continue during the lifetime of the project. It was further added that this led to the institution of several civil and criminal proceedings initiated by the Agnihotri group against the Jain group including arbitration proceedings before the District Judge Commercial Court, Indore. The Agnihotri group had invoked the arbitration clause of MoU and filed a Section 9 application under the Arbitration and Conciliation Act challenging this fraud and forgery. In addition, the Agnihotri group filed a petition under Section 241-242 of the Companies Act which is also pending adjudication. 16. The Appellant- Jayshree Agnihotri has further contended that the Jain group on realising the likelihood of their not succeeding in the arbitration and other civil and criminal proceedings, they resorted to the modus operandi of hijacking the Corporate Debtor and grab the land by colluding and conniving with the Respondent-Homebuyers into filing the....
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....extension of the arbitration proceeding wrongly under Section 11 and allowed the defective application to subsist without timely corrective action. Even the Section 241-242 petition under the Companies Act was only a window dressing and a sham litigation with a view to prevent the home-buyers from succeeding in their Section 7 application. According to the home-buyers, on apprehending that the Section 7 petition which had been heard and reserved for orders may be allowed that IA No. 386 of 2024 was filed by the Appellant on 23.09.2024 collusively with the suspended management. 19. Making further submissions on behalf of the home-buyers, the Ld. Sr. Counsels representing them submitted that in the present case all the ingredients of Section 7 have been met. The debt has been admitted and a default has also been committed. The threshold requirements for "class of creditor" of 10% of allottees or 100 home-buyers whichever is less to initiate CIRP under Section 7 has also been met. Hence, the Section 7 application has been correctly admitted by the Adjudicating Authority. 20. Before we return our findings on the rival submissions made on behalf of Appellant-Jayshree Agnihotri and the....
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....t the settlement talks are going on, between the parties and seek adjournment. In view of the same, let the matter be listed in the second week of September, 2024. (SUBODH ABHYANKAR) JUDGE" 22. From the material placed on record before us, we also find that it has been admitted by the Appellant-Jayshree Agnihotri in their Reply Rejoinder to the reply of Respondent No.11 and 12 in CA No. 2112 of 2024 that there was settlement talk going on between the Agnihotri group and the Jain groups. The relevant paragraph 12 at page 9 is as reproduced below: "12. Although not relevant for present appeal, however, it is submitted that the statement that there is settlement talk was correct at that time, but unfortunately did not fructify. The settlement discussion is an attempt to resolve issues amicably and in expeditious manner, and its failure cannot be seen as doubtful conduct on the part of any party." 23. Both the above instances of admission of settlement talks clearly shows that there was inter se dispute between the Agnihotri group and Jain group and efforts were underway to settle the disputes among themselves. In such circumstances, it is clear that the two factions of the s....
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....he Appellant-Jayshree Agnihotri to entangle the home-buyers in their inter se dispute with the Jain group by raising allegations that they had acted one-sidedly and in collusion with Jain group. From the facts on record, it is also clear that during this interregnum period when their purported inter se disputes were subsisting, the completion of the housing project faced hurdles thereby prejudicially affecting the interests of the home-buyers. In such circumstances, delay in completion of the project was sufficient ground for the home-buyers to have lost confidence in both Agnihotri group and Jain group triggering the filing of the Section 7 petition by them. It is immaterial as to who controls the Corporate Debtor or whether there is inter se dispute between shareholders of the Corporate Debtor. The rights of the home buyers cannot be sacrificed on account of inter se dispute between the shareholders. We are of the considered view that the home-buyers have every right to safeguard their interest and were justified in taking steps permissible under the statutory construct of the IBC to seek redressal of their grievance by seeking initiation of the CIRP of the Corporate Debtor. Rais....
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....as any proof been submitted to show that the Corporate Debtor had issued demand letters to the home- buyers for the balance payments. Moreover, the very fact that both the Appellant-Jayshree Agnihotri and suspended management of Corporate Debtor have submitted settlement proposals to discharge the debt obligations tantamount to admission of debt and default. 27. We find that there is sufficient evidence to show that the Corporate Debtor had received funds from the home-buyers under the real estate project. It is also an admitted fact that the home-buyers have been awaiting delivery of their constructed units since over a decade. However, the Corporate Debtor failed to complete the construction of the said project within the given window period of 30 months. By defaulting in giving timely possession of the flats to the home-buyers, the Corporate Debtor has failed to liquidate or discharge their debt liability qua the home-buyers. There is a clear existence of debt and default in excess of Rs 1 Cr. Since the financial debt subsists, this constituted sufficient ground for home-buyers to file the Section 7 application. The Adjudicating Authority has therefore not committed any error i....
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....f 2022. It is further the case of the Appellant-Jayshree Agnihotri that the denial of the CoC to accept the settlement of claims is an offshoot of proxy litigation initiated at the behest of the Jain group which was indirectly controlling the entire CoC. Hence, it was asserted that this is a fit case to be covered by Section 65 of IBC. 30. The Ld. Counsel for the suspended management of the Corporate Debtor also submitted that the home-buyers could repose their trust in them and allow them to complete the construction in case they were unwilling to take refund. 31. On the settlement offer given by the suspended management of the Corporate Debtor, the Appellant-Jayshree Agnihotri dubbed that offer to be a smokescreen by the Jain group to cover up their collusion with Homebuyers. Submission was pressed that the collusion of the Jain group with the home- buyers gotten exposed, the suspended management of the Corporate Debtor, as a cover-up, filed Appeal No. 2235 of 2024 seeking rejection of the CIRP proceedings and orally proposing to settle the dues of the home-buyers. It was also contended that no credible grounds have been given as to why no such offer was made previously by susp....
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.... Section 7 application under the Code.... 41...... Thus, given the bona fides of the allottee who moves an application under Section 7 of the Code, it is only such allottee who has completely lost faith in the management of the real estate developer who would come before NCLT under the Code hoping that some other developer takes over and completes the project, while always taking the risk that if no one were to come forward, corporate death must ensue and the allottee must then stand in line to receive whatever is given to him in winding up. Given the reasons of the Insolvency Committee Report, which show that experience of the real estate sector in this country has not been encouraging, in that huge amounts are advanced by ordinary people to finance housing projects which end up in massive delays on the part of the developer or even worse i.e. failure of the project itself and given the state of facts which was existing at the time of the legislation, as adverted to by the Insolvency Committee Report, it is clear that any alleged discrimination has to meet the tests laid down in Ram Krishna Dalmia (Ram Krishna Dalmia v. S.R. Tendolkar, 1959 SCR 279: AIR 1958 SC 538], V.C. Shukla....
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.... thus does not help the Appellant. 35. Given this backdrop, it is clear that the home-buyers as members of the CoC had exercised their collective wisdom in not agreeing to the settlement offer of the Agnihotri group which as per their perception was only a guise to retain control over the land of the Corporate Debtor after evicting the home- buyers by repaying their principal with simple interest at a time when they have purportedly been paying compounded interest to the bank authorities in respect of their loan facility. We also notice that the RP in his report has submitted that work in only 3 out of 9 towers has commenced in which not more than 30% to 40% work has been completed since inception and that presently the progress has come to a grinding halt. Both factions of the shareholders have clearly acted in total disregard of the rights of the home- buyers and delayed the project inordinately long. In such circumstances, it is quite logical for the home-buyers to be justifiably wary of being caught further in the cross-fire of the rival group of shareholders who were busy furthering their own interests to wrest control over the real estate project land. The ratio laid down in....