(Dhananjaya Y Chandrachud, C.J. and Pamidighantam Sri Narasimha and J.B. Pardiwala, JJ.)
BPTP Spacio Park Serene Flat Allottees Welfare Association (BAWA) ________________________________________________ Appellant;
v.
Sudhanshu Tripathi, Director, BPTP Limited and Others ______________________________________________ Respondent(s).
Civil Appeal No of 2023 [Diary No 40540/2022], decided on February 17, 2023
The Order of the court was delivered by
Order
1. RBCL Projects Private Limited, who was an Operational Creditor of BPTP Limited filed a petition under the Insolvency and Bankruptcy Code 20161. On 14 November 2022, the National Company Law Tribunal2 initiated the Corporate Insolvency Resolution Process3.
2. The appellant is an association comprised of home buyers aggrieved by the non-delivery of possession of units by the Corporate Debtor. The appellant had instituted a consumer complaint before the National Consumer Disputes Redressal Commission4 which ended in a consent order dated 22 October 2020. The appellant has instituted execution proceedings for enforcement of the order of the NCDRC.
3. Against the order of the NCLT dated 14 November 2022, both the appellant and the first respondent, who is an erstwhile Director, filed appeals before the National Company Law Appellate Tribunal5. The appeal filed by the appellant was Company Appeal (AT) (Insolvency) No 1392 of 2022, while the appeal filed by the first respondent was Company Appeal (AT) (Insolvency) No 1382 of 2022. While the first respondent challenged the very institution of the CIRP, the appellant was not aggrieved by the initiation per se of the CIRP, but contended that the process should be initiated project wise and not against the entirety of the assets of the Corporate Debtor. Both the appeals were tagged together.
4. During the pendency of the two appeals, a settlement was arrived at on 15 November 2022 between the Operational Creditor and the first respondent. The appeal which was filed by the first respondent was disposed of on 7 December 2022 by taking on record the terms of the settlement. The appeal which was instituted by the appellant before the NCLAT has been disposed of subsequently on 13 December 2022 on the ground that it has been rendered infructuous. Since the appellant informed the NCLAT that it has challenged the order dated 7 December 2022 before this Court, liberty was granted to the appellant to revive the appeal in the event that the order dated 7 December 2022 does not survive.
5. We have heard Ms. Nina R Nariman, counsel appearing on behalf of the appellant and Mr. K V Viswanathan, senior counsel for the first respondent.
6. The grievance of the appellant is that the proceedings before the NCLT are in rem. Hence, it is urged by Ms. Nina R Nariman that a settlement could not have been arrived at before the NCLAT between the Operational Creditor and the first respondent without notice to the appellant and giving the appellant an opportunity of being heard.
7. On the other hand, Mr. K V Viswanathan, senior counsel appearing on behalf of the first respondent urged that the interest of the appellant and that of the first respondent was not coextensive. Senior counsel submits that whereas the first respondent had challenged the very initiation of the CIRP, the appellant on the other hand was not aggrieved by the initiation of the CIRP per se, but was urging that it should be initiated only project wise and not against the Corporate Debtor as such. Hence, it has been urged that the appellant cannot step into the shoes of the first respondent, whose appeal before the NCLAT was disposed of in terms of the settlement. Moreover, it has been urged that the appellant does not have the threshold of one hundred allottees under the same real estate project in terms of the second proviso to Section 7(1) and hence it has no locus to institute insolvency proceedings. It has been submitted that the appellant has independent remedies either in the form of executing the order of the NCDRC or, if it is so advised, to adopt proceedings under the IBC provided that it crosses the threshold number of allottees.
8. Counsel appearing on behalf of the appellant is correct in the submission that the proceedings before the NCLT and, therefore, in appeal are in rem, particularly having regard to the decision of this Court in Swiss Ribbons Private Limited v. Union of India6. However, even if the submission of the appellant was to be accepted, the appeal which has been filed by the appellant before the NCLAT would have to be restored for hearing afresh. However, the interest which the appellant has sought to pursue is distinct from the claim of the first respondent in the companion appeal which was filed before the NCLAT. The first respondent who was a suspended Director was aggrieved by the initiation of the CIRP. On the other hand, the appellant was urging that the CIRP should be initiated project wise as opposed to the entirety of the Corporate Debtor and its assets.
9. In order to restore the appeal before the NCLAT, this Court must be satisfied that the appellant is in a position to meet the threshold requirement which is imposed by the terms of Section 7 for the initiation of the CIRP. Absent that demonstration, we are not inclined to allow the appeal at the behest of the appellant and restore the proceedings, the effect of which would be to revive the CIRP against the company. In the event that the appellant seeks to invoke the jurisdiction of the NCLT in terms of the provisions of Section 7 of the IBC, the appellant would be at liberty to do so in which case, the observations in the present order will not stand in its way as any adjudication on the merits or maintainability of such an application. The order of the NCLAT dated 13 December 2022 disposing of the appeal filed by the appellant, namely, Company Appeal (AT) (Insolvency) No 1392 of 2022 shall not come in the way of the appellant in taking recourse to its remedies before the NCLT in fresh proceedings, if so advised. In the alternative, since the appellant has a consent decree of the NCDRC, it would be at liberty to execute it in accordance with law. The execution proceedings before the NCDRC are expedited and may be taken up for early disposal.
10. Leaving it open to the appellant to pursue the remedies as available in law, the application for permission to file the civil appeal and the appeal are disposed of.
11. Pending applications, if any, stand disposed of.
———
1 “IBC”
2 “NCLT”
3 “CIRP”
4 “NCDRC”
5 “NCLAT”
6 (2019) 4 SCC 17
