2024 (2) TMI 675 - AT - Insolvency and Bankruptcy

Maintainability of Section 7 Application - threshold limit of 100 allottees for filing of Section 7 Application is not fulfilled in the Application - Financial Creditors have filed false, fabricated and forged documents and affidavits - Section 340 r/w Section 195(1)(b) of CrPC - HELD THAT - Section 7 Application was filed by 143 Applicants on 11.10.2021. The Appellant was impleaded as Respondent No.3 in Section 7 Application, who opposed the maintainability of the Application on the ground that threshold limit as required under Section 7 of the Code is not fulfilled and the Application is not made by 100 valid allottees. The said objection raised by the Appellant was rejected by the Adjudicating Authority vide its order dated 21.10.2022, against which order Company Appeal (AT) (Insolvency) No.1478 of 2022 was filed by the Appellant, which was decided by this Tribunal on 17.11.2023 2023 (11) TMI 782 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI . In the Appeal, one of the issues framed was whether Section 7 Application filed by the allottees fulfils the threshold as prescribed under the IBC. The Hon ble Supreme Court in the case of Amarsang Nathaji 2016 (11) TMI 1658 - SUPREME COURT has held that Court has to form an opinion that it is expedient in the interests of justice to initiate an inquiry into the offences of false evidence and offences against public justice and more specifically referred in Section 340(1) CrPC. The Adjudicating Authority has rightly not initiated proceeding under Section 340 of CrPC. In view of the facts of the present case, there are no error in decision of the Adjudicating Authority not to direct any action under Section 340(1) of the CrPC. Penalty under Section 65 of the Code can be imposed when there is fraudulent or malicious initiation of proceedings. In the present case, the Applicants who are allottees in real estate project have filed the Application to protect their rights and it is not disputed that they are allottees of the project, which is developed by the Appellant. There is no ground to hold that initiation of Section 7 proceedings by allottees was fraudulent or malicious. Hence, no error has been committed by the Adjudicating Authority in rejecting the prayer of the Appellant to impose the penalty under Section 65. The present is not a case that the Applications filed by the Appellant are rejected by the Adjudicating Authority on the ground of delay, rather the Adjudicating Authority has entered into the allegations and found the allegations not sufficient to grant any relief. Hence, the judgment of the Hon ble Supreme Court relied by the Appellant in AJIT KR. BHUYAN AND ORS VERSUS DEBAJIT DAS AND ORS 2018 (10) TMI 2021 - SUPREME COURT , does not help the Appellant in the present case. The Adjudicating Authority did not commit any error in rejecting IAs filed by the Appellant - The Adjudicating Authority has rightly observed that the intention of the Appellant is malifide and objections are only to delay the adjudication of Section 7 Application - there are no error in the impugned order, as no ground is made out to interfere with the order, the appeal is dismissed.

Summary

Issues Involved:
1. Maintainability of Section 7 Application.
2. Allegations of forged affidavits.
3. Request for proceedings under Section 340 CrPC.
4. Imposition of penalty under Section 65 of the Insolvency and Bankruptcy Code, 2016.

Summary:

1. Maintainability of Section 7 Application:
The Appellant contested the maintainability of the Section 7 Application filed by 143 homebuyers, arguing that the threshold limit of 100 allottees was not met. The Adjudicating Authority rejected this objection, and the decision was upheld by the Appellate Tribunal and the Hon'ble Supreme Court. The Tribunal confirmed that the application fulfilled the threshold limit prescribed under Section 7 of the Insolvency and Bankruptcy Code (IBC).

2. Allegations of Forged Affidavits:
The Appellant alleged that six affidavits filed by the Applicants were forged, as the individuals were residents of Australia and the affidavits were purportedly sworn in Gautam Buddh Nagar, UP. The Respondents countered that these affidavits authorized them to prosecute the application and fresh affidavits were filed by the six Applicants reiterating their authorization. The Tribunal found no merit in the Appellant's claims and observed that the allegations were an attempt to delay the proceedings.

3. Request for Proceedings under Section 340 CrPC:
The Appellant sought proceedings under Section 340 CrPC against the Financial Creditors for allegedly filing false documents. The Tribunal, relying on the Supreme Court judgment in Amarsang Nathaji v. Hardik Harshadbhai Patel, concluded that it was not expedient in the interests of justice to initiate an inquiry into the alleged false evidence. The Tribunal noted that the fresh affidavits filed by the six Applicants negated the need for any investigation under Section 340 CrPC.

4. Imposition of Penalty under Section 65 of the IBC:
The Appellant requested the imposition of a penalty under Section 65 of the IBC, alleging fraudulent or malicious initiation of proceedings by the Financial Creditors. The Tribunal found no grounds to hold that the initiation of Section 7 proceedings by the allottees was fraudulent or malicious and thus rejected the request for a penalty.

Conclusion:
The Tribunal dismissed the appeal, finding no error in the Adjudicating Authority's decision. It observed that the Appellant's actions were a dilatory tactic to delay the adjudication of the Section 7 Application, which had already been pending for over two years. The appeal was dismissed with no order as to costs.