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2023 (6) TMI 415 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Confinement of CIRP to one project - absence of any Project financing being brought in by the Promotor - absence of any Project Wise Accounts - whether the Adjudicating Authority was justified in initially admitting the Section 7 Application against the Corporate Debtor and thereafter confining it to a single Project Dreamz Sumadhur Project only? HELD THAT - It is an admitted fact that the three Applicants/Homebuyers who had filed the Section 7 Application were related to Dreamz Sumadhur and subsequent to the calling of the Claims from all Homebuyers, there was lot of confusion and the IRP had filed multiple IAs before the Adjudicating Authority, subsequent to which, this Common Order dated 04.09.2020 was passed clarifying that the CIRP was with respect to one Project, namely Dreamz Sumadhur Project only - This Tribunal in the matter of Ram Kishor Arora Suspended Director of Supertech Ltd. Vs. Union Bank of India Anr. 2022 (6) TMI 720 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , passed by the Principal Bench, New Delhi has directed for Project Wise Resolution wherein the IRP was directed to separate the Claims received with regard to the Project. The scope and objective of the Code is to see that there is Resolution of the Corporate Debtor Company and seek maximization of Assets. A three-Member Bench of the NCLAT, Principal Bench, New Delhi in the matter of Majestic Towers Flat Owners Association Anr. Vs. Housing Development and Infrastructure Ltd. Ors. 2022 (1) TMI 166 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , has held that Project Wise Insolvency can be granted to bring about better Resolution and prevent Liquidation as the sufferers would be the Homebuyers who are thousands in numbers in different Projects and if there is a possibility of Project Wise Resolution, reasonable time could be allowed by the Adjudicating Authority to bring about a proper Resolution. The contention of the ERP/R-18 that another Bench of NCLT Bengaluru has erroneously admitted a Section 7 Application initiating CIRP against another Project namely Dreamz Sneh and that it has to be set aside, is completely unsustainable as the Order was passed in a separate Company Petition dated 15.02.2023, and is based on a different cause of action - Merely because the Adjudicating Authority had relied on Umang Realtech Pvt. Ltd. 2020 (2) TMI 1409 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI , wherein reverse Insolvency was a principle laid down by the NCLAT Principal Bench, New Delhi, and this Project did not have a Promotor to infuse funds, which was the case in Umang Realtech Pvt. Ltd., the principle of Project Wise Insolvency also discussed in Umang Realtech Pvt. Ltd., cannot be overlooked and requires considerable attention as it applies to the facts of this case. This Tribunal is of the earnest view that the Impugned Order has nowhere stated that the Promotor was interested in infusing funds into the Project and that reverse CIRP has to be undertaken. In fact, a reference was made to Umang Realtech Pvt. Ltd., decision to substantiate the advantages of Project Wise Resolution and to clarify that the CIRP was confined to Dreamz Sumadhur Project only. As regarding the different Applications filed by the RP seeking relief, this Tribunal is of the considered view that the Adjudicating Authority has rightly observed that most of the reliefs sought for were unrelated to Dreamz Sumadhur Project and are Civil in nature requiring adjudication in other fora as the Adjudicating Authority does not have jurisdiction to foray into matters of title and possession of land which are broadly matters of Civil Litigation and cannot be decided under the provisions of IBC. As initially the Section 7 Application was admitted against the entire Project and thereafter the clarifications were given by the Adjudicating Authority that the CIRP was confined to Dreamz Sumadhur Project, in the interest of justice, this Tribunal is of the view that the adverse comments made against the RP may be expunged. This Tribunal does not find any substantial grounds to interfere with the well-reasoned Order of the Adjudicating Authority, National Company Law Tribunal, Bengaluru Bench and hence application fails and is accordingly dismissed.
Issues Involved:
1. Whether the Adjudicating Authority was justified in confining the CIRP to a single project, Dreamz Sumadhur. 2. Whether the reliance on the judgment in 'Umang Realtech Pvt. Ltd.' was appropriate. 3. Whether the CIRP should be applied to all projects of the Corporate Debtor. 4. Whether the remarks against the RP were warranted. Summary of Judgment: Issue 1: Confinement of CIRP to Dreamz Sumadhur Project The Adjudicating Authority confined the CIRP to Dreamz Sumadhur Project only, despite the initial Section 7 Application being admitted against the entire Corporate Debtor. The Tribunal noted that the three Applicants/Homebuyers were related to Dreamz Sumadhur, and subsequent confusion arose from calling claims from all homebuyers. The Tribunal upheld the Adjudicating Authority's decision, emphasizing that the CIRP should be limited to Dreamz Sumadhur Project to prevent multiplicity of proceedings and ensure effective resolution. Issue 2: Reliance on 'Umang Realtech Pvt. Ltd.' Judgment The Appellant argued that the Adjudicating Authority wrongly relied on the 'Umang Realtech Pvt. Ltd.' judgment, which laid down the concept of Project Wise Insolvency. The Tribunal found that while the principle of reverse CIRP from 'Umang Realtech Pvt. Ltd.' was not applicable due to the absence of promoter funds, the principle of Project Wise Insolvency was relevant and justified in the current case. Issue 3: Application of CIRP to All Projects The Tribunal emphasized that the scope and objective of the Code are to maximize the assets of the Corporate Debtor and ensure resolution. It referred to other judgments supporting Project Wise Resolution to prevent liquidation and protect the interests of thousands of homebuyers across different projects. The Tribunal upheld the decision to confine CIRP to Dreamz Sumadhur Project, as extending it to all projects would lead to endless proceedings and defeat the Code's objectives. Issue 4: Remarks Against the RP The Tribunal acknowledged that the adverse comments against the RP were unwarranted, especially since the RP had followed the Adjudicating Authority's directions. The Tribunal decided to expunge the adverse remarks made against the RP, considering that the RP's actions were in line with the Adjudicating Authority's orders. Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's well-reasoned order to confine the CIRP to Dreamz Sumadhur Project only. The Tribunal also expunged the adverse comments against the RP, recognizing the RP's adherence to the directions provided. The connected pending Interlocutory Applications were closed.
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