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TMI Blog2022 (3) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, where out of 128 home buyers, 82 home buyers will get the possession within a period of one year, as undertaken by the appellant and respondent No.4 Corporate Debtor, coupled with the fact that original applicants have also settled the dispute with the appellant/Corporate Debtor, this is deemed to be a fit case to exercise the powers under Article 142 of the Constitution of India read with Rule 11 of the NCLT rules, 2016 and to permit the original applicants to withdraw the CIRP proceedings. In the present case, as observed, out of the total 128 home buyers of 176 units, 82 homebuyers are against the insolvency proceedings and the original applicants have also settled their dispute with the appellant and corporate debtor. Even the object and purpose of the IBC is not to kill the company and stop/stall the project, but to ensure that the business of the company runs as a going concern - In view of the facts and circumstances, more particularly when the withdrawal of the CIRP proceedings initiated by the original applicants is allowable by the NCLT in exercise of its powers under Rule 11 of the NCLT rules, 2016 and in the peculiar facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder of the Corporate Debtor Jasmine Buildmart Pvt. Ltd. and has confirmed the order passed by the National Company Law Tribunal, New Delhi (hereinafter referred to as the NCLT/Adjudicating Authority ) in admitting the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short, IBC ), the appellant Promoter/Majority Shareholder of the Corporate Debtor has preferred the present appeal. 2. That respondent no. 4 herein Corporate Debtor Jasmine Buildmart Pvt. Ltd. had come out with a Gurgaon based housing project, namely, Krrish Provence Estate (hereinafter referred to as the Project ). That respondent no.4 herein Corporate Debtor could not complete the project even after a period of eight years. Therefore, respondent nos. 1 to 3 herein (hereinafter referred to as the original applicants ) who were the home buyers preferred Section 7 application before the Adjudicating Authority/NCLT, Delhi being CP No. 1722/ND/2018 seeking initiation of CIRP against respondent no. 4 Corporate Debtor. That the original applicants sought refund of an amount of ₹ 6,93,02,755/- due to an inordinate delay in the completion of the project and failure to handov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was reported by the learned Senior Advocates / counsel for the respective parties including the impleaders and the Association that the original applicants/respondent Nos. 1 to 3 herein as well as 79 other home buyers have settled the dispute with the Corporate Debtor and a settlement has been entered into, under which, it is agreed that the Corporate Debtor shall complete the entire project and hand over the possession to the home buyers (who want the possession), within a period of one year. It was also submitted on behalf of the original applicants that they have also settled the dispute with the appellant/Corporate Debtor and the appellant had agreed to refund the amount of ₹ 3,36,02,000/- with applicable/accrued interest to the original applicants. Therefore, it was requested to record the settlement and permit the original applicants to withdraw CIRP proceedings pending before the NCLT/Adjudicating Authority. This Court passed the following order on 04.02.2022: IA Nos. 131763/2020 and 130570/2021 stand disposed of with liberty in favour of the applicant(s) to avail any other remedy which may be available to them, as permissible under the law to protect their righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han, learned Senior Advocate has appeared on behalf of the three impleaders (IA No. 105732/2021), Shri Nakul Diwan, learned Senior Advocate has appeared on behalf of the Krrish Provence Flat Buyers Association, Mr. Yogesh Mittal, learned Advocate has appeared on behalf of the Resolution Professional and Ms. Radhika Gupta, learned Advocate has appeared on behalf of the intervenors. 3.1 Shri K.V. Vishwanathan and Shri Nakul Diwan, learned Senior Advocates appearing on behalf of the three impleaders respective home buyers and the Association and Shri Kapil Sibal, learned Senior Advocate appearing on behalf of the appellant have jointly submitted that a majority of the home buyers and the appellant and Corporate Debtor have settled the disputes and a joint statement regarding proposed settlement plan signed by the respective parties is filed under which, the appellant and respondent No.4 (Corporate Debtor) have undertaken that they shall complete the entire project within one year from the date of settlement and offer possession of the flats to the home buyers. Under the said agreement, the appellant and respondent No.4 (Corporate Debtor) have undertaken before this Court as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by this Court in the case of Kamal K. Singh v. Dinesh Gupta Another (Civil Appeal No. 4993 of 2021, decided on 25.08.2021), in which this Court has permitted the original applicants before the Adjudicating Authority to withdraw the CIRP proceedings in view of the settlement entered into between the parties. 5. We have heard learned counsel for the respective parties at length. 5.1 The original applicants (respondent Nos. 1 to 3 herein) now have moved before this Court by way of an interlocutory application No. 18679/2022, praying for permitting them to withdraw the CIRP proceedings initiated by them against respondent no.4 Corporate Debtor by submitting, inter alia, that the appellant has agreed to pay to the original applicants ₹ 3,36,02,000/- with applicable/accrued interest thereon and they do not propose to thereafter proceed further with the insolvency proceedings. Similarly, 82 (79+3) home buyers out of the total 128 home buyers, who are also represented before this Court, have stated that they are satisfied with the undertaking given by the appellant and respondent no.4 before this Court recorded in the joint statement regarding the proposed settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 SCC Online SC 3154, the said provision is held to be directory, depending on the facts of each case. 7.1 In the case of Swiss Ribbons Pvt. Ltd. (supra), it is held that at any stage before a COC is constituted, a party can approach NCLT/Adjudicating Authority directly and the Tribunal may in exercise of its powers under Rule 11 of the NCLT Rules, allow or disallow an application for withdrawal or settlement. Therefore, in an appropriate case and where the case is being made out and the NCLT is satisfied about the settlement, may permit/allow an application for withdrawal or settlement. 8. In the present case, as observed hereinabove, although the COC was constituted on 23.11.2020, there has been a stay of CIRP proceedings on 3.12.2020 (within ten days) and no proceedings have taken place before the COC. It is to be noted that the COC comprises 91 members, of which 70% are the members of the Flat Buyers Association who are willing for the CIRP proceedings being set aside, subject to the appellant and the Corporate Debtor company honouring its undertaking given to this Court as per the settlement plan dated 3.2.2022. 9. Therefore, in the peculiar facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e COC in a representative capacity. Being alive to the problem of a single home buyer derailing the entire project by filing an insolvency application under Section 7 of the IBC, the legislature has introduced the threshold of at least 100 home buyers or 10% of the total home buyers of the same project to jointly file an application under Section 7 of the IBC for commencement of CIRP against the builder company. The Insolvency Bankruptcy Code (Second Amendment) Bill, 2019 that proposed the amendment to Section 7 contained a statement of object and reasons, inter alia, stated as follows: 2. A need was felt to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency, in case the company goes into corporate insolvency resolution process or liquidation, to prevent potential abuse of the Code by certain classes of financial creditors, to provide immunity against prosecution of the corporate debtor and action against the property of the corporate debtor and the successful resolution applicant subject to fulfilment of certain conditions, and in order to fill the critical gaps in the corporate insolvency framework. It has become necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding appointment of IRP and constitution of COC are hereby quashed and set aside. Consequently, the impugned judgment and order passed by the NCLAT also stands quashed and set aside. As agreed between respondent Nos. 1 to 3 herein, the appellant and the corporate debtor, Consumer Case bearing CC No. 984 of 2019, filed by respondent Nos. 1 to 3 herein, which is pending before the National Consumer Disputes Redressal Commission, New Delhi and Criminal Complaint being Case No. 540/2021 filed by respondent Nos. 1 to 3 herein, pending before the learned Chief Metropolitan Magistrate, SED, New Delhi are hereby dismissed as withdrawn/quashed. Either of the parties to place a copy of the present order before the National Consumer Disputes Redressal Commission, New Delhi and in the Court of Chief Metropolitan Magistrate, SED, New Delhi to complete the record of the Courts. 15. The joint statement regarding the settlement plan dated 27.01.2022/03.02.2022 along with the list of the members of the Krrish Provence Flat Buyers Association who have accepted and agreed to take possession of the respective apartments, signed by the appellant, impleaders Akshat Seth, Sanjiv Puri Kaustav Mukherj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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