TaxTMI 
TaxTMI 
2025 (5) TMI 1839
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....chnical ) And [ Arun Baroka ] Member ( 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....
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.... and if project is prolonged, the Jain group shall be subject to onward revision by 12.6%. * 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 ....
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....5 of 2024 has been filed by Ashok Kumar Jain of the Jain group in his capacity as suspended management of the Corporate Debtor. * In the C.P. (IB) No.26/2024, an I.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 ....
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....t Section 7 petition was not maintainable on grounds of limitation lacks merit. The home-buyers have submitted audited balance sheets, accounts balance confirmations to establish that the home-buyers were genuine allottees 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 thi....
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.... default as arising on expiry of 30 months period from the date of allotment letters. After taking notice of the same, the Adjudicating Authority held the Section 7 application to have been filed within time after relying on the order 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. 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 Ba....
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....ount confirmation for your reference. We kindly request that you refrain from pursuing any legal action, as we remain committed to delivering your flat as promised. Ashok Jain" 12. When the balance confirmation letters are conjointly read with the Balance sheet, it validates that the Corporate Debtor had clearly received disbursals from the 10 home-buyers and the disbursals have been treated as current liabilities of the Corporate Debtor. 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 thoug....
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....letion of the project, the Jain group was to transfer their entire shareholding to Agnihotri family. However, the Jain group manipulated a takeover of the Corporate Debtor by substituting the directors of the Agnihotri group with their nominees by forging a deed of cancellation of the MoU. This cancellation deed, it was contended by the Appellant-Jayshree Agnihotri, has already been prima-facie held to be a sham by Hon'ble High Court of Madhya Pradesh. It was submitted 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 A....
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.... Conciliation Act but kept deliberately in the limbo which shows a tacit understanding between the Agnihotri group and Jain group with their end interest being to settle their mutual disputes to consolidate and protect their own turf wherein the interest of home-buyers was not factorised even remotely. Submission was pressed that the Agnihotri group was non-serious about pursuing the arbitration proceedings is evident from the fact that they had filed application for 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 th....
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....i group and the Jain groups. One such instance of admission is recorded in the orders of the Hon'ble Madhya Pradesh High Court in AC No. 02 of 2024 which is extracted below: "IN THE HIGH COURT OF MADHYA PRADESH AT INDORE AC No. 2 of 2024 (RAJEEV AGNIHOTRI Vs. ASHOK JAIN AND OTHERS) Dated: 22-07-2024 Shri Manoj Munshi, learned counsel for the applicant. Shri Shantanu Sharma, learned counsel for the respondents. Learned counsel appearing for the parties submit that 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 statemen....
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.... Section 7 petition filed by them. We notice that reliance has been placed by the Appellant-Jayshree Agnihotri on the MoU of 14.09.2009 to explain the basis of the inter se dispute between the two parties. We find that this argument is misplaced and lacks relevance since the home- buyers were not privy to the said MoU. Nor does the MoU have any relevance on the obligations of the Corporate Debtor towards the home-buyers. When the home-buyers were never a part of the MoU or its purported cancellation, it is unfair and unconscionable on the part of the 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 Sectio....
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....d from bookings from customers in the balance sheet do not indicate their individual names, it is also pertinent to note that the Corporate Debtor has not denied receiving of advance towards the real estate project from these 10 home-buyers. The objection which has been raised by the Appellant- suspended management of Corporate Debtor is that some of home-buyers had defaulted in making payments. We do not find this to be a genuine defence. Since construction was stalled since 2014-15, the Appellants were not expected to make further payments. Neither has 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. Ho....
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.... is not final and if CoC rejects a just settlement arbitrarily, the Appellate Tribunal can always set aside such a decision. Reliance has also been placed on the judgment of the Hon'ble Supreme Court in Anand Murti Vs Soni Infratech Pvt. Ltd. (2023) 3 SCC 743 to support the contention that when the Corporate Debtor is willing to refund the amount or construct the flats, the settlement plan cannot be opposed. Reliance was also placed on similar ratio contained in the judgment of this Tribunal in Jagmohan Daga Vs Bimal Kanti Chowdhary in CA(AT)(Ins.) No. 848 of 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 ....
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....was asserted that CIRP process must be allowed to continue and Corporate Debtor if it so wishes can always come forward and participate as prospective resolution applicant. Reliance has also been placed on the judgment of Pioneer Urban Land Vs UoI (2019) 8 SCC 416 Pioneer Urban Land & Infrastructure vs Union of India (2019) 8 SCC 416. The extract of the relevant para is as hereunder: "30.... If, however, the allottee wants that the corporate debtor's management itself be removed and replaced, so that the corporate debtor can be rehabilitated, he may prefer a 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 t....
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....ould take over and complete the project. The facts of the case in Anand Murti judgment supra is also distinct as in that case only 7 out of 452 home-buyers had opposed the settlement plan. Moreover, in that case there was no inter se dispute between the shareholders of the Corporate Debtor. We therefore hold that the Anand Murti judgment supra cannot come to the rescue of the Appellant. The judgment of this Tribunal in the Jagmohan Daga case was passed in the facts that the dispute was between two family members and therefore contextually different from the present factual matrix and 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 ....