2022 (7) TMI 658 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - purchase of flats - Financial Creditors - existence of debt and dispute or not - HELD THAT - This petition is not maintainable because all these applicants who are stated to have booked their flats and deposited the amount with the Corporate Debtor have joined hands and made an association to file this application because individual applicants could not have filed any such application but since the claim of most of the applicants had become time barred, and since some of them are related to one of the Directors of the Corporate Debtor namely Prabhash Chandra, a letter was issued by that Director to bring all their claims within limitation. Letter dated 28th May, 2018, written by the said Director to all the applicants specifically referring to the agreement dated 17th July 2015 being agreement for purchase of flat with the builder. Clause 8 of the said agreement, however, specifically provided the amount of consideration to be paid by the applicants who booked their flats. With a view to give life to the dead claims of the applicants, most of whom were known to or related to the said Director, this application has been filed at the behest of the said Director Mr. Prabhash Chandra in collusion with all these applicants for mutual vested interest. The Corporate Debtor has placed before us the detailed facts and submitted that a petition C.P No. 92/2021 under section 241-242 of the Companies Act is also pending before this bench between the parties. If we exclude the time barred claims of the applicants, this petition is even otherwise not maintainable being below the threshold limit. The basic principle of law under the Indian Contract Act, 1872 is that, the parties to the agreement are equally bound to perform their respective parts and if a party does not perform its part, it cannot ask the other party to play its corresponding duty or part. The applicants in this matter have deposited the 10% amount or even loss with the Corporate Debtor pursuant to the agreement between them and except for the letter dated 28th May, 2018 which is disputed by the Corporate Debtor as having been issued by the company, which was based on the alleged decision taken by the board meeting of the company which was attended to only by one of the Directors Prabhash Chandra in the absence of the other Director, who has denied the issuance of that letter, it appears to a collusive petition. There are no bona fide substance in this petition and the petition is, therefore, dismissed.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Allegations of mismanagement and financial misconduct
3. Dispute between directors
4. Validity and maintenance of claims by financial creditors
5. Applicability of the limitation period

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, was filed by a consumer welfare society for initiating CIRP against the Corporate Debtor. The Financial Creditor alleged that the Corporate Debtor failed to deliver possession of flats in a housing project, leading to financial and mental distress. The Corporate Debtor's name was struck off from the register of companies, but the application was maintainable based on the precedent set by "Hemang Phophalia vs The Greater Bombay Co-operative Bank Limited and Anr."

2. Allegations of Mismanagement and Financial Misconduct:
The Financial Creditor claimed that the Corporate Debtor made numerous representations and assurances regarding the housing project but failed to deliver possession. The project was halted due to disputes between directors, and one director allegedly froze the company's bank account. The Corporate Debtor's director was accused of siphoning off funds and manipulating accounts. The Financial Creditor alleged that the Corporate Debtor acted with mala fide intention, causing financial losses and mental agony.

3. Dispute Between Directors:
The dispute between the directors of the Corporate Debtor was a significant factor in the case. One director accused the other of mismanagement, financial misconduct, and failing to provide proper accounts. The dispute led to the freezing of the company's bank account and halted the housing project. The Corporate Debtor's director claimed that the other director conspired with the applicants to file the petition and usurp the project.

4. Validity and Maintenance of Claims by Financial Creditors:
The Financial Creditor's claims were scrutinized for validity. It was argued that the applicants did not adhere to the payment terms of the agreement and failed to make the required payments. The claims were alleged to be time-barred and collusive. The Corporate Debtor argued that the petition was filed with mala fide intentions and in collusion with one of the directors. The court found that the claims were time-barred and collusive, and the petition was not maintainable.

5. Applicability of the Limitation Period:
The Corporate Debtor argued that the claims were barred by the limitation period, citing recent judgments. The court found that the claims were indeed time-barred and could not be extended based on the principle of acknowledgment. The petition was dismissed on the grounds that it was filed to revive time-barred claims and was collusive in nature.

Conclusion:
The court dismissed the petition, finding it to be collusive and time-barred. The claims were not maintainable, and the petition was filed with mala fide intentions. The court emphasized the principle that parties to an agreement must perform their respective parts and that time-barred claims cannot be revived through collusive actions. The petition was dismissed, and the order was signed on July 12, 2022.

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