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2025 (3) TMI 434 - AT - IBCAdmission of Section 7 application filed by Punjab Sind Bank - application was filed by a person duly authorized to initiate such proceedings or not - HELD THAT - The Hon ble Supreme Court in Anand Murti vs. Soni Infratech Pvt. Ltd. Anr. 2022 (4) TMI 1304 - SUPREME COURT clearly provides that in appropriate case promoters can be permitted to complete the project. However for passing appropriate order the facts on each case need to be noticed and considered. The present is a case where Appellant has submitted three different settlement plans backed by three different investors. Last investor- Apex Heights Pvt. Ltd. has been out of insolvency only on 24.07.2024. Punjab Sind Bank who has initiated Section 7 proceeding and other two lenders Bank of Maharashtra and Punjab National Bank has out rightly rejected the settlement proposals. YEIDA who has claimed of Rs.751 Crores has also expressed its reservation to the proposal and in its affidavit has submitted that the proposals deserve to be rejected. When there are huge liabilities on the corporate debtor and lenders are not expressing their agreement with the proposal and having unanimously rejected the settlement proposal and further the registered association of homebuyers and another set of homebuyers who had earlier initiated Section 7 proceedings against the corporate debtor in the year 2020 are opposed to any settlement plan. Looking to the huge liabilities against the corporate debtor it is satisfied that present is not a case where this Tribunal may interfere with the order passed by the Adjudicating Authority admitting Section 7 application. Present is a case where resolution of the corporate debtor is required to be found in accordance with statutory scheme under the IBC and the CIRP Regulations. In view of the interim order dated 29.07.2024 no further steps could be taken by the IRP except collation of the claims. The period from 29.07.2024 till today need to be excluded in the CIRP period. Conclusion - i) The Section 7 application was filed within the limitation period and by a duly authorized person. ii) The settlement proposals submitted by the appellant were not viable and were unanimously rejected by the financial creditors and other stakeholders. There are no merit in the appeal - appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Timeliness and Authorization of Section 7 Application The legal framework under the IBC requires that an application under Section 7 must be filed within the limitation period and by a duly authorized person. The Adjudicating Authority found that the application was not barred by time. The corporate debtor had acknowledged its debt in the balance sheets for the financial years 2018-19, 2019-20, and 2020-21, and had submitted One-Time Settlement (OTS) proposals in 2022, which were rejected. These acknowledgments served to extend the limitation period. The Authority also found that the application was filed by a person who was fully authorized to do so on behalf of Punjab & Sind Bank. The Court concluded that the application was complete and complied with all procedural requirements. 2. Existence of Debt and Default The Court examined the evidence, including financial statements, revival letters, and notices issued under the SARFAESI Act, to determine the existence of debt and default. It was undisputed that the corporate debtor had received a term loan of Rs.140 Crores, which was classified as a Non-Performing Asset (NPA) on 30.06.2018. The financial creditor claimed a default amount of Rs.216,92,87,046/- as of 30.06.2023. The Court found that there was a clear existence of debt and default, as evidenced by the documents submitted. 3. Viability of Settlement Proposals The appellant submitted three settlement proposals backed by different investors, which were rejected by the Joint Lenders' Meeting. The proposals were considered inadequate as they did not conform to the banks' recovery management policies and did not offer sufficient payment to cover the outstanding debts. The financial creditors, including Punjab & Sind Bank, unanimously rejected the proposals as they offered significantly less than the amount owed. 4. Protection of Homebuyers' Interests The appellant argued that allowing the completion of the real estate project under the supervision of the IRP would protect the interests of the homebuyers. However, the Court noted that the registered homebuyers' association and other groups of homebuyers opposed the settlement plans. The Court also considered the significant liabilities against the corporate debtor and the lack of agreement from the financial creditors and YEIDA, the land-owning authority. The Court concluded that the resolution of the corporate debtor should proceed under the statutory scheme of the IBC and CIRP regulations. SIGNIFICANT HOLDINGS The Court held that:
The Court dismissed the appeal, allowing the Corporate Insolvency Resolution Process (CIRP) to proceed as per the law, and excluded the period from 29.07.2024 until the date of the judgment from the CIRP period due to the interim order.
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