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2019 (11) TMI 1212 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - debt due and payable or not - HELD THAT - the 'Corporate Debtors' are 'Corporate Guarantor', and also shown as 'Co-Borrowers'. In Annexure-II therein, the statement showing details of the loan and security documents have been mentioned which includes 'guarantee agreements' given by the aforesaid 'Corporate Debtors'. As the project will be developed on the land of five 'Corporate Debtors', as referred to above as per the township plan, they have rightly taken plea that simultaneous 'Corporate Insolvency Resolution Processes' should continue against them under the guidance of same 'Resolution Professional'. Group 'Corporate Insolvency Resolution Process' proceeding is required to be initiated against five 'Corporate Debtors' namely- 'Sachet Infrastructure Pvt. Ltd.'; 'Magad Realtors Pvt. Ltd.'; 'Mehak Realtech Pvt. Ltd.'; 'Sameeksha Estate Pvt. Ltd.' and 'Jamvant Estates Pvt. Ltd.' apart from the 'Corporate Insolvency Resolution Process' which has already been initiated against 'Adel Landmarks Limited'- ('Principal Borrower'). As the Adjudicating Authority has failed to appreciate the relevant fact that in the facts and circumstances, a group insolvency is to be initiated and in absence of simultaneous 'Corporate Insolvency Resolution Process' against five 'Corporate Debtors' namely- 'Sachet Infrastructure Pvt. Ltd.'; 'Magad Realtors Pvt. Ltd.'; 'Mehak Realtech Pvt. Ltd.'; 'Sameeksha Estate Pvt. Ltd.' and 'Jamvant Estates Pvt. Ltd.', the township project of Town and Country Planning, Haryana, will not be complete, we set aside the impugned order dated 7th March, 2019 and remit the case to the Adjudicating Authority - Adjudicating Authority will admit the applications under Section 7 filed by 'Edelweiss Asset Reconstruction Company Limited' against 'Sachet Infrastructure Pvt. Ltd.'; 'Magad Realtors Pvt. Ltd.'; 'Mehak Realtech Pvt. Ltd.'; 'Sameeksha Estate Pvt. Ltd.' and 'Jamvant Estates Pvt. Ltd.'.
Issues Involved:
1. Maintainability of Corporate Insolvency Resolution Process (CIRP) applications against Corporate Guarantors. 2. Applicability of the decision in "Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprises Ltd.". 3. Consolidation of CIRP for multiple Corporate Debtors involved in a joint project. 4. Group insolvency proceedings for the development of a township. Issue-wise Detailed Analysis: 1. Maintainability of CIRP applications against Corporate Guarantors: The appeals challenged the common order dated 7th March 2019, passed by the National Company Law Tribunal (NCLT), which dismissed the CIRP applications filed by the Appellant, Edelweiss Asset Reconstruction Company Limited, against nine Corporate Debtors who were Corporate Guarantors for loans disbursed to Adel Landmarks Limited (Principal Borrower). The NCLT held that once a CIRP is initiated against one Corporate Debtor (either Principal Borrower or Corporate Guarantor), a second application for the same claim cannot be admitted against another Corporate Debtor. 2. Applicability of the decision in "Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprises Ltd.": The NCLT relied on the decision in "Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprises Ltd." to dismiss the applications, stating that for the same set of claims, once a CIRP is initiated against one Corporate Debtor, a second application for the same claim and default cannot be admitted against another Corporate Debtor. The Appellant argued that their case was different from Piramal Enterprises Ltd., as the CIRP against only one Corporate Debtor (Adel Landmarks Limited) would not suffice for the completion of the project involving multiple Corporate Debtors. 3. Consolidation of CIRP for multiple Corporate Debtors involved in a joint project: The Appellant contended that the CIRP should be initiated against all nine Corporate Debtors, as they were landholders who collaborated with Adel Landmarks Limited to develop the area by constructing flats/shops for allottees. The completion of the project required the consolidated development of lands belonging to all nine Corporate Debtors. The NCLAT observed that the project would not be successful if the total township was not developed, and therefore, a group insolvency proceeding was necessary. 4. Group insolvency proceedings for the development of a township: The NCLAT found that the CIRP should continue against the five Corporate Debtors (Sachet Infrastructure Pvt. Ltd., Magad Realtors Pvt. Ltd., Mehak Realtech Pvt. Ltd., Sameeksha Estate Pvt. Ltd., and Jamvant Estates Pvt. Ltd.) whose lands were part of the township project. The NCLAT directed the Adjudicating Authority to admit the CIRP applications against these five Corporate Debtors and appoint a common Resolution Professional to ensure the consolidated development of the township. For the remaining four Corporate Debtors (Superlative Infrastructure Pvt. Ltd., Bhisham Infrastructure Pvt. Ltd., Neeleshwar Mines & Minerals (India) Pvt. Ltd., and Manogayan Estates Pvt. Ltd.), the matter was remitted back to the Adjudicating Authority to determine if they were part of the same project and if a common Developer was involved. Conclusion: The NCLAT set aside the impugned order dated 7th March 2019 and directed the Adjudicating Authority to admit the CIRP applications against the five Corporate Debtors involved in the township project and appoint a common Resolution Professional. The cases of the remaining four Corporate Debtors were remitted back to the Adjudicating Authority for further consideration based on the involvement of a common Developer.
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