Amit Katyal Vs Meera Ahuja (Supreme Court of India)
Legislative intent behind the amendments to the IBC is to secure, protect and balance the interests of all home buyers. The interest of home buyers is protected by restricting their ability to initiate CIRP against the builder only if 100 or 10% of the total allottees choose to do so, all the same conferring upon them the status of a financial creditors to enable them to participate in the COC in a representative capacity. Being alive to the problem of a single home buyer derailing the entire project by filing an insolvency application under Section 7 of the IBC, the legislature has introduced the threshold of at least 100 home buyers or 10% of the total home buyers of the same project to jointly file an application under Section 7 of the IBC for commencement of CIRP against the builder company.
In the present case, as observed hereinabove, out of the total 128 home buyers of 176 units, 82 homebuyers are against the insolvency proceedings and the original applicants have also settled their dispute with the appellant and corporate debtor. Even the object and purpose of the IBC is not to kill the company and stop/stall the project, but to ensure that the business of the company runs as a going concern.
In view of the aforesaid facts and circumstances, more particularly when the withdrawal of the CIRP proceedings initiated by the original applicants is allowable by the NCLT in exercise of its powers under Rule 11 of the NCLT rules, 2016 and in the peculiar facts and circumstances of the case, instead of relegating the original applicants to approach the NCLT/Adjudicating Authority by moving an application under Section 12A of the IBC, we are of the opinion that this is a fit case to exercise powers under Article 142 of the Constitution of India as the settlement arrived at between the home buyers and the appellant and corporate debtor – company shall be in the larger interest of the home buyers and under the settlement and as undertaken by the appellant/corporate debtor, out of 128 home buyers, 82 home buyers are likely to get possession within a period of one year, for which they are waiting since last more than eight years after they have invested their hard earned money. This shall be in furtherance of the object and purpose of IBC.
In view of the above and for the reasons stated above, IA No. 18679/2022 in Civil Appeal No. 3778/2020 filed by respondent Nos. 1 to 3 herein (original applicants before the NCLT/Adjudicating Authority) is allowed.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Interlocutory Application No. 105732/2021(for impleadment) is allowed in terms of the prayer made and they are ordered to be impleaded as respondents in the instant appeal.
1A. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 09.11.2020 passed by the National Company Law Appellate Tribunal, New Delhi (hereinafter referred to as the ‘NCLAT/Appellate Authority’) in Company Appeal (AT) (Insolvency) No. 1380 of 2019, by which the Appellate Authority has dismissed the said appeal preferred by the appellant herein – Promoter/Majority Shareholder of the Corporate Debtor – Jasmine Buildmart Pvt. Ltd. and has confirmed the order passed by the National Company Law Tribunal, New Delhi (hereinafter referred to as the ‘NCLT/Adjudicating Authority’) in admitting the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short, ‘IBC’), the appellant – Promoter/Majority Shareholder of the Corporate Debtor has preferred the present appeal.
2. That respondent no. 4 herein – Corporate Debtor – Jasmine Buildmart Pvt. Ltd. had come out with a Gurgaon based housing project, namely, Krrish Provence Estate (hereinafter referred to as the ‘Project’). That respondent no.4 herein – Corporate Debtor could not complete the project even after a period of eight years. Therefore, respondent nos. 1 to 3 herein (hereinafter referred to as the ‘original applicants’) who were the home buyers preferred Section 7 application before the Adjudicating Authority/NCLT, Delhi being CP No. 1722/ND/2018 seeking initiation of CIRP against respondent no. 4 – Corporate Debtor. That the original applicants sought refund of an amount of Rs.6,93,02,755/- due to an inordinate delay in the completion of the project and failure to handover possession within the stipulated time. The said application was filed on 06.12.2018, i.e., prior to the amendment to Section 7 of the IBC, which now permits 100 or 10% of the home buyers/allottees to apply under Section 7 of the IBC.
2.1 That the NCLT/Adjudicating Authority admitted Section 7 application on 28.11.2019 and appointed the Interim Resolution Professional (for short, ‘IRP’) and declared a moratorium. That the appellant herein challenged the order of admission of Section 7 application before the NCLAT/Appellate Authority being CA (AT) (Insolvency) 1380 of 2019. It appears that during the hearing before the NCLAT/Appellate Authority, the appellant herein tried to settle the matter with the original applicants, however, the settlement did not go through. That by the impugned judgment and order, the NCLAT has dismissed the said appeal and has upheld the admission order and directed commencement of CIRP.
2.2 The IRP issued the public announcement on 10.11.2020 and constituted the Committee of Creditors (for short, ‘COC’) on 23.11.2020. In the meantime, the appellant preferred the present appeal. By order dated 03.12.2020, this Court, while issuing notice in the appeal, stayed the operation and implementation of the impugned order, subject to the appellant depositing the amount of Rs.2,75,55,186/- plus interest at the rate of 6% per annum in the Registry of this Court within two weeks from that date. It is reported that the appellant had deposited an amount of Rs. 3,36,02,000/- on 17.12.2020 with the Registry of this Court, which has been invested in a Fixed Deposit Receipt, which is to mature on 9.3.2022.
2.3 Krrish Provence Flat Buyers Association had filed a caveat beforethis Court apprehending that if any order is passed in the present proceedings, it may affect them as home buyers. Three other home buyers, namely, Sanjiv Puri, Akshat Seth and Kaustav Mukherjee have preferred IA No. 105732 of 2021 for impleadment.
2.4 The present appeal was adjourned from time to time on the ground that the dispute between the appellant and respondent Nos. 1 to 3 herein (original applicants) is being settled and that the appellant/Corporate Debtor is prepared to complete the project within a period of nine months, if the home buyers make payments, as scheduled.
2.5 When the present appeal was taken up for further hearing on 04.02.2022, it was reported by the learned Senior Advocates/counsel for the respective parties including the impleaders and the Association that the original applicants/respondent Nos. 1 to 3 herein as well as 79 other home buyers have settled the dispute with the Corporate Debtor and a settlement has been entered into, under which, it is agreed that the Corporate Debtor shall complete the entire project and hand over the possession to the home buyers (who want the possession), within a period of one year. It was also submitted on behalf of the original applicants that they have also settled the dispute with the appellant/Corporate Debtor and the appellant had agreed to refund the amount of Rs.3,36,02,000/- with applicable/accrued interest to the original applicants. Therefore, it was requested to record the settlement and permit the original applicants to withdraw CIRP proceedings pending before the NCLT/Adjudicating Authority. This Court passed the following order on 04.02.2022:
“IA Nos. 131763/2020 and 130570/2021 stand disposed of with liberty in favour of the applicant(s) to avail any other remedy which may be available to them, as permissible under the law to protect their rights.
It is reported that out of 128 home buyers of 176 units, 79 + 3 (i.e. 82) home buyers have settled the dispute with the corporate debtor including the original applicants/respondent nos. 1 to 3 herein who have initiated the IBC proceedings. It is reported that the original applicants/respondent nos.1 to 3 herein as well as 79 home buyers have settled the dispute with the corporate debtor and a settlement has been entered into under which it is agreed that the corporate debtor shall complete the entire project and hand over the possession to the home buyers (who wants the possession) within a period of one year from today.
In that view of the matter, it is requested to dispose of the matter. As the respondent nos. 1 to 3 want to withdraw the original proceedings in view of the settlement and in the peculiar facts and circumstances of the case and considering the fact that the order passed by the NCLT has been stayed by this Court pursuant to the earlier interim order dated 3.12.2020 and the corporate debtor has deposited the entire amount as directed by this Court which is lying with the Registry and considering the provisions of Section 12-A of the IBC read with Section 2 (11), let the respondent nos.1 to 3 herein/original applicants before the NCLT who has initiated the proceedings under Section 7, file an application for withdrawal of the proceedings.
Put up on 16.02.2022.”
2.6 Pursuant to order dated 4.2.2022, the original applicants have preferred IA No. 18679 of 2022 under Article 142 of the Constitution of India read with Rules 11 and 12 of the National Company Law Tribunal Rules, 2016, praying for permitting the original applicants to withdraw CIRP proceedings on their being paid a sum of Rs.3,36,02,000/- along with applicable interest, out of the amount deposited by the appellant in the Registry of this Court. It is also further prayed to dismiss all matters pending between the appellant and respondent Nos. 1 to 3 herein (original applicants) mentioned in paragraph 7 of IA No. 18679 of 2022 and close the CIRP proceedings of respondent No. 4 – Corporate Debtor initiated by respondent Nos. 1 to 3 herein (original applicants).
