9911796707
TMI Blog2023 (3) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... ushbu Dubey, Ajoy Chourasia, Aparna Chourasia, Manaspreet Singh Sethi, Vidhi Sethi, Prakruthi Solitaire Project, Electronic City [Justice M. Venugopal] Member (Judicial) And [Naresh Salecha] Member (Technical) For the Appellant : Mr. Ricab Chand, Advocate For the Respondents / Caveator : Mr. Piyush Singh, Advocate JUDGMENT ( Virtual Mode ) NARESH SALECHA, MEMBER (TECHNICAL) The present 'Appeal', is filed against the 'impugned order' dated 20.10.2022, passed in CP No. 122/BB/2021, by the 'Adjudicating Authority' ('National Company Law Tribunal', Bengaluru Bench), whereby, the 'Adjudicating Authority', dismissed the 'Petition', filed under the 'Insolvency & Bankruptcy Code, 2016' ('in short I & B Code, 2016'). 2. Mr. Rupesh Anand is the Suspended Director of project name 'Prakruthi Solitaire' is the 'Appellant' herein and there are 39 Respondents who were 'Financial Creditors' of 'Prakruthi Solitaire' along with 40th Respondent Prakruthi Solitaire represented by IRP Mr. Vineet Gupta. 3. The 'Appellant' is a Director of M/s Nandhini Hotels Pvt. Ltd., incorporated on 10.05.1991, is engaged in various business including construction of Real Estate Projects M/s Nandhini Hotels P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Creditor No. 17 who did not produce authority letters along with the Petition. The Learned Counsel for the Appellant stated that they raised these objections in the Sur- Rejoinder, however the same had been ignored and overlooked by the 'Adjudicating Authority'. As per Learned Counsel for the Appellant the Petition filed by the Financial Creditors was defective and did not meet the threshold as required under Section 7 of the I & B Code, 2016. 10. The 'Appellant' alleged that all these vital points were not considered by the 'Adjudicating Authority' who reserved the order on 29.09.2022 and issued the 'impugned order' on 20.10.2022. 11. It is further the case of the 'Appellant' that the 'Respondents' herein did not execute the proper verifying Affidavits as required under NCLT, Rules 2016. 12. As per the 'Appellant', total number of flats of the 'Corporate Debtor' in the project 'Prakruthi Solitaire' were 338 flats whereas the application was filed by 19 'Financial Creditors' thereby not meeting the minimum threshold as required under Section 7 of the I & B, Code, 2016. 13. The 'Appellant' also assailed the 'impugned order' for not considering that 'Financial Creditors' were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Issue No. (I) Whether, the Application under Section 7 of the I & B Code, 2016 was complete and without defects and the same was considered accordingly, by the 'Adjudicating Authority'. Issue No. (II) Whether, the entire project should be considered as single project or different phases should be considered as separate projects for calculating the threshold requirements to meet the Section 7 of the I & B Code, 2016. Issue No. (III) Whether, the 'Joint Allottees', of an Apartment, should be treated as 'Single Allottee' or 'Multiple Allottees'. 24. Issue No. (I): ➢ It is the case of the 'Appellant', that 'No Authority Letters', were produced along with the Petition in respect of (i) Financial Creditor No. 20 Mr. Rahul Shinde (II) Financial Creditor No. 21 Bhoomika Shinde (iii) Financial Creditor No. 26 Subasri (iv) Financial Creditor No. 27 Sabaribalan Gandhi (v) Financial Creditor No. 16 Mr. Pradeep Verma (vi) Financial Creditor No. 17 Mousmi Verma (vii) Siva Kumar Verma (Financial Creditor No. 28) (viii) Financial Creditor No. 29 Ms. Suuhasini Verma. ➢ The 'Appellant' assailed that the 'Adjudicating Authority', had erred in not appreciating the 'Objection', ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r are in the form of letter/ email and therefore are not valid authority letters as required under Law. It is stated that Shri Anup Tripathi (Financial Creditor No.1) has signed on behalf of himself, Financial Creditors Nos. 2,3,20 and 21. However, no authority letter in Petition/ Rejoinder issued by Financial Creditor Nos. 20 and 21, and thus Financial Creditor No. 1 has no authority to sign on their behalf. It is stated that Financial Creditor No. 20 has already executed Sale Deed dated 22.10.2020 and having executed the same, Financial Creditor Nos. 20 and 21 could not have been made party to this Petition. Further, Shri Uttam Kumar Dubey (Financial Creditor No. 34) has signed on behalf of himself, Financial Creditor Nos. 35, 4, 5, 28 and 29. However, no authority letter was given to him by Financial Creditor Nos. 28 and 29 and thus cannot be treated as Parties to this Petition." ➢ At this juncture, this 'Tribunal', adverts to the ingredients of Section 7 of the I & B Code, 2016, which reads as under :- "7. Initiation of corporate insolvency resolution process by financial creditor- (1) A financial creditor either by itself or jointly with 2[other financial creditors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3): [Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.] (5) Where the Adjudicating Authority is satisfied that - (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nandhini Hotels Pvt. Ltd. Under Section 7 of the IBC, 2016. Accordingly, moratorium is declared in terms of Section 14 of the Code." (emphasis supplied) ➢ This 'Tribunal', aptly points out the decision of the Hon'ble Supreme Cout of India in Surendra Trading Co. vs. Juggilal Kamlapat Jute Mills Co. Ltd., (2017) 16 SCC 143, wherein it is observed and held that the time provided for rectifying the 'Defective Application', under Section 9 (5) of the 'I & B Code 2016', is directory in nature, and in the given circumstances, the 'Adjudicating Authority' ('Tribunal'), can provide 'more than 7 days' time, to rectify the defect. The Hon'ble Supreme Court, has held that; "5. One of the conditions, with which we are concerned, is that application under sub-section (2) has to be complete in all respects. In other words, the adjudicating authority has to satisfy that it is not defective. In case the adjudicating authority, after the scrutiny of the application, finds that there are certain defects therein and it is not complete as per the provisions of sub-section (2), in that eventuality, the proviso to sub-section (5) mandates that before rejecting the application, the adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible. 25. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and not mandatory in nature. However, we would like to enter a caveat. 28. In fine, these appeals are allowed and that part of the impugned judgment of NCLAT which holds the proviso to subsection (5) of Section 7 or the proviso to sub-section (5) of Section 9 or the proviso to sub-section (4) of Section 10 to remove the defects within seven days as mandatory and on failure, applications to be rejected, is set aside. No costs. 26. We are also conscious of the fact that sometimes applicants or their counsel may show laxity by not removing the objections within the time given and may take it for granted that they would be given unlimited time for such a purpose. There may also be cases where such applications are frivolous in nature which would be filed for some oblique motives and the applicants may want those applications to remain pending and, therefore, would not remove the defect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndant and also be placed on record in writing, howsoever briefly, by the court on its being satisfied. Extension of time may be allowed if it is needed to be given for circumstances which are exceptional, occasioned by reasons beyond the control of the defendant and grave injustice would be occasioned if the time was not extended. Costs may be imposed and affidavit or documents in support of the grounds pleaded by the defendant for extension of time may be demanded, depending on the facts and circumstances of a given case." (emphasis supplied) ➢ In this connection, this 'Tribunal', takes into consideration, the ratio laid down, by the Hon'ble Supreme Court of India, in the case of Ravi Yashwant Bhoir vs. District Collector, Raigad & Ors. [(2012) 4 SCC 407], where a 'speaking order', has been held, to be of 'utmost importance'. "Further, the expanding horizon of the principles of natural justice provides for requirement to record reasons as it is now regarded as one of the principles of natural justice. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can by its silence, render it virtually impossible for the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
