The Supreme Court has allowed one Builder to complete the housing project by staying CIRP by IBC as NCLT overlooked over settlement.
The Division Bench of Justice L Nageshwara Rao and Justice B R Gavai was adjudicating upon an appealagainst the NCLT order rejecting the Modification Application filed by the appellant.
In the impugned judgement, it was observed that, in the meantime, if settlement takes place between the parties for completion of the housing project, the same can be filed under Section 12A Insolvency and Bankruptcy Code, 2016 before the Adjudicating Authority. Importantly, the Interim Resolution Professional to continue and and decide the future course of action about a resolution for completion of the Corporate Insolvency Resolution Process.
Brief Facts of the Case
The appellant herein is the Suspended Director of the Corporate Debtor while the Respondent No.2 booked flat in the housing project launched by him. When on demand of refund, the appellant failed, application under Section 7 of the IBC was filed against him. The application was admitted by NCLAT.
In an appeal against the above, an interim order was passed to hault the CIRP. It was submitted by the appellant herein before the NCLAT that he was ready and willing to settle the matter with the respondent No.2. It was further submitted by him that the project was complete almost to the extent of 7075% and that he had arranged the funds/private financier to complete the project.
In a later order, the NCLAT directed the appellant herein to file proposed settlement terms/plan disclosing all material particulars with regard to completion of the housing project which was compied with. Alongside, a IRP submitted his status report stating therein that most of the Allottees decided to have possession of the flats. In the meantime, the appellant settled the matter with the respondent No.2 herein.
It has been pleaded that despite the settlement with the respondent No.2 and appellant’s readiness and willingness to complete the project, the NCLAT passed the impugned order on the ground that the
settlement arrived at by the appellant was only with the respondent No.2 and the settlement plan did not encompass all the Allottees.
Supreme Court's Analysis
The Court noted that when the matter was listed before the NCLAT, it directed the IRP/RP to convene a meeting of CoC within four weeks to consider the modified Resolution Plan. The NCLAT further directed that homebuyers may nominate not more than 10 persons, who will participate in the meeting and represent them. In accordance with the directions issued by the NCLAT, a meeting was convened and the ‘Modified Resolution Plan’ submitted by the Promoter was presented on a Digital Screen.
During the presentation, some home buyers requested for further modification of some contentious points of the ‘Modified Resolution Plan’. The perusal of the minutes of the said meeting would further reveal that most of the concerns as expressed on behalf of the homebuyers were taken care of by the statement made on behalf of the Promoters. However, by the impugned order the NCLAT has rejected the application for modification and directed the CIRP to be continued.
The Court ruled that, NCLAT failed to take into consideration, the minutes of meeting and Revised Status Report. The Court took on record, the undertaking filed by the Promoter to return the money with interest at the rate of 6% per annum of seven applicants in I.A.
In view of the above, the Court noted that in the interest of the homebuyers if the appellant/promoter is permitted to complete the housing project. It thus after taking into consideration, the salient features of the undertaking given on affidavit by the Promoter and the the fact that there are only seven out of the 452 homebuyers, who opposed the Settlement Plan, the Court allowed the appeal.
"It is pertinent to note that he has agreed that the cost of the flat will not be escalated. He has also given the time line within which the project would be completed. Not only this, but he has also undertaken to refund the amount paid by the seven objectors, if they so desire. He has further agreed that there shall be a team of 5 persons, 2 from the homebuyer’s side and 2 from the management side and that the entire process shall be monitored by the IRP."
The Court also pondered on the likely possibility of flat price surging if CIRP is permitted as against the Promoter's promise to hounour the BBA signed by the previous management and keeping the price static as decided.
Case Title: ANAND MURTI vs SONI INFRATECH PRIVATE LIMITED & ANR.
Case Details: CIVIL APPEAL NOS.7534 OF 2021
Coram: Justice L Nageshwara Rao and Justice B R Gavai
Read Order @LatestLaws.com:
Picture Source :