Marvel Landmarks Pvt Ltd. Vs Jay Nihalani (NCLAT Delhi)
Conclusion: Since Corporate Debtor took undue advantage of the absence of the allottees and misrepresented the correct facts causing miscarriage of justice, Adjudicating Authority did not commit any mistake in holding that the order was passed only on the submissions of the Corporate Debtor without getting into the merits of the matter. Since, the order was not on merits and was passed without hearing the present Respondents, the Adjudicating Authority was justified in recalling the order and restored the Company Petition.
Held: Corporate Debtor-Appellant had entered into Agreements to Sale with the Respondents- Homebuyers/Financial Creditors for purchase of residential units in the Marvel Isola J Building Since the residential units could not be constructed and possession could not be handed over on time, the Respondents had filed a Section 7 petition for initiation of Corporate Insolvency Resolution Proceedings. Corporate Debtor raised questions on the maintainability of the Section 7 petition, inter alia, including the ground that the Respondents had failed to meet the requirements laid down by the 2nd proviso to Section 7(1) of the IBC which had come into effect with an amendment in the IBC during 2020 which prescribed minimum threshold of 100 allottees or 10% of the total allottees in a Section 7 petition. Since the Respondents did not appear before the Adjudicating Authority again on 04.06.2024, the Adjudicating Authority disposed of the Company Petition No. 4320 of 2019 and the two IAs on the ground that the present Respondents therein did not comply with the amended law setting up requisite percentage/number of allottees to make them eligible to continue with the Company Petition. Subsequently, the present Respondents filed an application IA No.4881 of 2024 under Rule-11 of the NCLT Rules, 2016 seeking recall of the order. The matter was heard by the Adjudicating Authority on which date the impugned order was passed recalling the order and restoring the Company Petition and the two IAs. Aggrieved by this order, the Appellant- Corporate Debtor had come up in appeal. Appellant argued that the powers of the Adjudicating Authority in the context of recall under Rule 11 of NCLT Rules was limited and did not extend to review of its own order or judgement. It was held that the Corporate Debtor had misled the Adjudicating Authority on 06.2024 into believing that there were 288 unit- holders in Marvel Isola J Building Project, while the correct position was that in this Building Project where the Respondents were to get their units, there were only 44 units. It was pointed out that the MAHARERA Certificate also clearly showed that there were 44 flats in this building project. Hence, with 12 Applicants in CP No. 4320 of 2019, the 10% threshold criteria stood fulfilled making the Company Petition maintainable. On the other hand, taking advantage of the absence of the Respondents-Allottees during the hearing, Appellants succeeded in misleading the Adjudicating Authority into believing that the project consisted of 282 residential flats and the Company Petition having been filed by only 12 allottees, the 10% threshold was not fulfilled. This was a clear case whereby the Corporate Debtor had suppressed material information from the Adjudicating Authority which led to the erroneous finding on the part of the Adjudicating Authority that the Company Petition was not maintainable. Corporate Debtor took undue advantage of the absence of the allottees and misrepresented the correct facts causing miscarriage of justice. In the above circumstances, the Adjudicating Authority did not commit any mistake in holding that the order dated 04.06.2024 was passed only on the submissions of the Corporate Debtor without getting into the merits of the matter. Since, the order was not on merits and was passed without hearing the present Respondents, the Adjudicating Authority recalled the order of 04.06.2024 and restored the Company Petition.
