Case Law Details
Parikshit Madanmohan Sharma Vs M.S. Gopikrishnan & Ors. (NCLAT Delhi)
Introduction: In a significant development, the National Company Law Appellate Tribunal (NCLAT) in Delhi has directed the National Company Law Tribunal (NCLT), Mumbai Bench, to reassess compliance with Section 7(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), specifically concerning the threshold of the number of allottees required for the initiation of the Corporate Insolvency Resolution Process (CIRP). The case, titled Parikshit Madanmohan Sharma Vs. M.S. Gopikrishnan & Ors., sheds light on the procedural nuances of admitting applications under the IBC.
Detailed Analysis: The appeal challenges the NCLT Mumbai’s decision dated 08.02.2023, which admitted a CIRP application against K.D. Lite Developers Private Limited filed by some home buyers. The appellants contended that the application did not meet the threshold requirement as per Section 7(1) of the IBC, which mandates a minimum percentage of home buyers to file such an application. According to the appellants, the total number of home buyers was 209, setting the threshold at 21, but the application was filed by fewer home buyers than required.
The NCLAT found that the NCLT’s order lacked a detailed discussion or findings on several crucial issues raised by the appellants, including the threshold limit and whether the application was within the limitation period. Additionally, there was a contention regarding the actual number of allottees, with the appellants claiming 209 and the respondents asserting 124. This discrepancy called for a factual determination, which was absent in the NCLT’s order.
Conclusion: Considering the lack of a comprehensive analysis on the part of the NCLT and the dispute over the factual details such as the number of allottees, the NCLAT has set aside the impugned order and remanded the matter back to the NCLT for a thorough re-examination. The NCLAT emphasized the need for a speaking order that addresses all issues raised by the parties, ensuring adherence to the principles of natural justice.
This ruling underscores the importance of scrutinizing the procedural aspects and compliance with the threshold requirements under Section 7(1) of the IBC before admitting applications for initiating CIRP. It also highlights the appellate tribunal’s role in ensuring that the adjudicating authority meticulously follows the legal provisions and principles, safeguarding the interests of all parties involved. The decision serves as a precedent for future cases, emphasizing the need for detailed and reasoned orders that consider all factual and legal contentions.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
This appeal is directed against the order dated 08.02.2023 passed by Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Mumbai) by which an application filed under Section 7 of the IBC, 2016 by some home buyers against the K.D. Lite Developers Private Limited (Corporate Debtor) for the initiation of CIRP has been admitted and Arihant Nainawati has been appointed as the IRP and moratorium has been imposed.
2. Sr. Counsel for the Appellant has submitted that since this application has been filed by some of the home buyers, therefore, it was incumbent upon them to cross the threshold as provided in Section 7(1) Second proviso. It is submitted that the appellant had raised various issues including the issue of threshold and the limitation but none of the issues have been decided by the Tribunal and therefore, impugned order is a totally non-speaking order. He has referred to para 2 and 3 of the impugned order to contend that the total number of home buyers are 209 and therefore, threshold of 10% is 21 whereas the application has been filed by home buyers less than that. It is argued that the Tribunal had only noticed Section 7(1) in paragraph 7 of the impugned order and a decision of this Tribunal rendered in the case of Tiger Logistics (India) Ltd. Vs. Jaguar Overseas Ltd. in which it has been held that threshold limit is to be seen on the date of filing of application under Section 9 of the Code and then appointed the resolution professional by admitting the application filed under Section 7. It is submitted that nowhere in the impugned order, a finding is recorded in respect of the issue as to whether the respondent had crossed the threshold as provided Section 7(1) and that as to whether the application filed by the applicants before the Tribunal was within limitation. It is also submitted that the other issues which were raised have not even been noticed in the impugned order.
3. Be that as it may, Counsel for the Respondents could not deny these facts that there is no finding recorded by the Tribunal on these issues raised by the Appellant.
4. On the other hand, Counsel for the Respondent nos. 1 to 20 except 9 and 12 has submitted that the contention of the appellant is incorrect because the total number of allottees are 124.
5. In such a circumstance, where there is a dispute on facts as to whether the number of allottees are 209 as stated by the appellant or 124 as stated by the Respondent nos. 1 to 20 except 9 and 12, the Tribunal should have decided this question of fact first then the question of law but there is no discussion in regard to this fact as to whether the contention of the appellant is correct or not. In such circumstances, it is apparent that the impugned order is non-speaking and against the principle of natural justice. Therefore, the present appeal is hereby allowed. Impugned order is set aside and the matter is remanded back by restoring CP (IB) No. 1420/MB-IV/2020 to the Tribunal who was seized of this matter, to decide it again after hearing all the parties by giving them opportunity of hearing and by passing a speaking order. The parties are directed to appear before the Tribunal on 12.02.2024 and raise all the issues. We request the Tribunal to make all endeavours to complete the hearing and pass the speaking order within a period of two months from the date of appearance of the parties before the Tribunal. All the pending applications are closed. It is made clear that all the contention has been kept open and no finding has been recorded on the merit of this case.
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