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2024 (5) TMI 727 - AT - Insolvency and BankruptcyImitation of CIRP - Admissibility of Intervention Petition - Homebuyers - Appellant claiming that they are holding 102 units in Festival City Project and they sought intervention in the Company Petition. - NCLT admitted the Section 7 application which was affirmed by the Supreme Court - HELD THAT - The Company Petition which has been filed in the year 2024 by Respondent No.6- M/s. Mist Direct Sales Pvt. Ltd., Counsel for the Respondent No.2 has produced the order dated 05.04.2024 of the Adjudicating Authority where petitioners have been asked to clarify various aspects. The petition under Section 230 for scheme by the corporate debtor is independent proceeding but filing of the said petition cannot be a ground to not permit the proceeding under Section 7 which are being halted and obstructed by one or other attempts by corporate debtor and other applicants as noted above. It is further noticed that the case of the corporate debtor as noticed from the record, it is clear that the RERA registration of the project has already cancelled and there is a dispute of title as claimed by the corporate debtor regarding the land. There are no substance in the submission of the counsel appearing for Respondent No.6 to accepts the submission that Section 7 application be further not proceeded with till application under Section 230 of the Companies Act filed by Respondent No.6 be finalised. Section 7 application has to be proceeded and decided in accordance with law and in the facts of the present case, Adjudicating Authority did not commit any error in rejecting the Intervention Petition - there are no error in the impugned order. The appeal is dismissed.
Issues Involved:
1. Maintainability of Section 7 Application. 2. Intervention Petition No. 12 of 2024. 3. Scheme under Section 230 of the Companies Act, 2013. 4. Allegations of delay tactics by Corporate Debtors. Summary: 1. Maintainability of Section 7 Application: The Section 7 application was filed by 215 homebuyers alleging default by the Corporate Debtors in completing the Festival City Project. The Adjudicating Authority, by order dated 21.10.2022, rejected objections regarding the maintainability of the Section 7 application. This decision was upheld by the National Company Law Appellate Tribunal (NCLAT) on 17.11.2023 and the Supreme Court on 11.12.2023, which directed the National Company Law Tribunal (NCLT) to expedite the disposal of the Section 7 application within two months. 2. Intervention Petition No. 12 of 2024: The Appellant, holding 105 units in the project, filed Intervention Petition No. 12 of 2024, seeking intervention in the Company Petition. The Adjudicating Authority rejected this petition on 27.02.2024, noting that previous attempts by the Corporate Debtors and other applicants to dismiss the Section 7 application were dismissed by both the NCLAT and the Supreme Court. The Tribunal found no merit in the intervention petition, viewing it as another attempt to delay the proceedings. 3. Scheme under Section 230 of the Companies Act, 2013: The Corporate Debtor filed a Scheme under Section 230, proposing to complete the project. The Appellant argued that the initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 7 would prejudice this Scheme. However, the Tribunal noted that the Scheme was still pending and had various objections. The Tribunal held that the filing of the Scheme could not be a ground to halt the Section 7 proceedings, which had already been delayed significantly. 4. Allegations of Delay Tactics by Corporate Debtors: The Tribunal observed that the Corporate Debtors had been filing multiple applications to delay the Section 7 proceedings. The Adjudicating Authority had previously dismissed applications alleging fraud and forgery by the Financial Creditors, noting that these were attempts to drag on the proceedings. The Tribunal affirmed that the intention behind these applications was malafide and aimed at delaying the adjudication of the Section 7 application. Conclusion: The NCLAT upheld the Adjudicating Authority's decision to reject Intervention Petition No. 12 of 2024, finding no error in the impugned order and dismissing the appeal. The Tribunal emphasized the need for an expeditious resolution of the Section 7 application, in line with the Supreme Court's directive.
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