2024 (11) TMI 1142 - AT - IBC

Locus of the Appellant to file the Appeal - nonfulfillment of threshold for filing a Section 7 application under the Insolvency and Bankruptcy Code (IBC). Whether the appellant has locus to file this Appeal? - HELD THAT - By admission of Section 7 Application, the Corporate Debtor or allottees of project may have any grievance, a person, who is neither allottee of the project, nor has any stake in real estate project, which is subject matter of the insolvency, cannot be allowed to challenge the order admitting Section 7 application. Section 7 application has been admitted on account of debt and default by the Corporate Debtor, who committed default in delivering the possession of the unit to the allottees. There are substance in the submission of learned Counsel for the Respondent that the Appellant has no locus to challenge the order admitting Section 7 application. Nonfulfillment of threshold for filing a Section 7 application under the Insolvency and Bankruptcy Code (IBC) - HELD THAT - Section 7 application filed by the Financial Creditors in class is dated 25.09.2021, is much subsequent to the registration of the project Lotus Isle (Residential). The Applicants in the application under Section 7 have given relevant facts. The copy of the application is filed as Annexure A-44, which clearly mentions that the project was bifurcated by permission dated 31.01.2017. Section 7 application was filed by the Financial Creditor in a class alleging default committed by the Corporate Debtor in giving possession of the units, within the time given in the Builder Buyers Agreement. Several amounts have already been disbursed by the Financial Creditors in a class in residential units consisting three towers wherein total allotted units are 255, out of which 29 unit holders were Applicants in Section 7 application. The Adjudicating Authority has returned a finding in paragraph 17 that 10% allottee of the real estate can maintain a petition. It is not a dispute between the parties that total units for the residential project are 255 and the application was filed by 29 unit holders - the application filed by Financial Creditors in a class, fulfill the threshold as provided under Section 7, second proviso and the submission advanced by the learned Counsel for the Appellant that application did not fulfill the threshold limit, cannot be accepted. There are no ground to interfere with the impugned order - The Appeal is dismissed.

Summary

Issues Involved:
1. Locus of the Appellant to challenge the order admitting Section 7 application.
2. Fulfillment of the threshold requirement for filing a Section 7 application under the Insolvency and Bankruptcy Code (IBC).

Issue-wise Detailed Analysis:

1. Locus of the Appellant:

The primary issue raised was whether the Appellant had the locus to challenge the order admitting the Section 7 application. The Appellant was neither an allottee of the residential project "Lotus Isle (Residential)" nor of the commercial units constructed on the plot in question. The Appellant claimed to be a stakeholder in another sister company of the Corporate Debtor, which had no connection to the project in question. The tribunal concluded that since the Appellant was not directly affected by the order admitting the Section 7 application, he lacked the standing to challenge it. The tribunal emphasized that only parties with a direct stake in the real estate project, such as the Corporate Debtor or the allottees, could have a grievance against the admission of the Section 7 application.

2. Fulfillment of the Threshold Requirement:

The Appellant contended that the Section 7 application filed by the creditors in class (allottees) did not meet the required threshold of 10% of allottees, as mandated by the IBC. The Appellant argued that the project was a mixed-use development, comprising both commercial and residential units, and that the threshold should be calculated based on the total number of units, including commercial ones. However, the tribunal found that the project was registered as a residential project with UP RERA, and the Section 7 application was filed by 29 unit holders out of a total of 255 residential units. The tribunal referenced the Supreme Court's judgment in Manish Kumar vs. Union of India, which clarified that the threshold requirement pertains to the same real estate project. Consequently, the tribunal held that the threshold was satisfied as the application was filed by more than 10% of the residential unit allottees.

The tribunal dismissed the appeal, concluding that the Appellant had no locus to challenge the order and that the threshold requirement under Section 7 was duly met. No further submissions were made by the Appellant, and the tribunal found no grounds to interfere with the impugned order. All pending applications were disposed of without any order as to costs.