Ashmeet Singh Bhatia vs M/S Three C Properties Private Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.2021 of 2024 & I.A. No.7583 of 2024 (Arising out of Order dated 09.08.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench (Court-II) in I.A. No. 3816/2022, I.A. 6240/2023, I.A. 1452/2024, I.A. 3753/2024 and in Company Petition No. (IB)-597(PB)/2021)

IN THE MATTER OF: Mr. Ashmeet Singh Bhatia ...Appellant Versus Three C Properties Pvt. Ltd. (Through its Resolution Professional) & Ors. ...Respondents

Present:

For Appellant : Mr. Gaurav Mitra, Mr. Sonam Sharma, Ms. Riddhi Jain, Ms. Lavanya Pathak, Advocates.

For Respondent : Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Advocates for RP. Mr. Abhijeet Sinha, Sr. Advocate with Mr. Kumar Mihir, Mr. Athul Joseph, Advocates for R-2 to 35. Mr. Raj Kamal and Mr. Aseem Atwal, Advocates for R-55.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal has been filed challenging order dated 09.08.2024

passed by National Company Law Tribunal, New Delhi Bench (Court-II),

by which order Section 7 application filed by Financial Creditor in class

has been admitted and IA No.3753 of 2024 and IA No.6240 of 2023 filed

by the Applicant were rejected and IA No.1452 of 2024 and IA No.3816 of

2022 were disposed of.

Company Appeal (AT) (Insolvency) No. 2021 of 2024 1

2. Brief facts of the case necessary to be noticed for deciding the

Appeal are:

(i) The Corporate Debtor - M/s Three C Properties Pvt. Ltd. was

allotted a Commercial Plot No.H-10, Sector 98, Noida on

26.04.2011 measuring 24,000 sq. mtrs. The Noida

sanctioned a revised layout plan for the land in question

comprising five towers, two commercial and three residential,

sharing common facilities, amenities, roads etc. The

conditional permission letter dated 21.01.2017 obtained by

the Corporate Debtor for bifurcation of two sub-plots from

the Commercial Plot No.H-10. Permission was obtained on

21.01.2017 for bifurcation of the Commercial Plot No.H-10.

A Tripartite Sub-lease Deed dated 27.06.2017 was also

executed.

(ii) The commercial construction of the project was given to two

subsidiaries of the Corporate Debtor ("CD") and registration

was obtained by the Promoters in Uttar Pradesh Real Estate

Regulatory Authority ("UP RERA") as residential project

namely - Lotus Isle (Residential) on 11.08.2017. Builder

Buyers Agreements were executed by the Corporate Debtor,

allotting different units in the residential towers to be

constructed in the Plot in question. As per Builder Buyers

Agreement, the possession was to be handed over to the

allottees within 36 months. Commercial spaces were

Company Appeal (AT) (Insolvency) No. 2021 of 2024 2 constructed, however, the residential units were not

constructed within the time under which the possession was

promised to he handed over to the allottees.

(iii) A Section 7 application was filed by 51 allottees of the

residential project, holding 29 units in the Lotus Isle

(Residential) alleging default of an amount of

Rs.70,93,58,956/- and seeking initiation of Corporate

Insolvency Resolution Process ("CIRP") against the Corporate

Debtor, it having committed default.

(iv) The Appellant, who is not allottee of residential Tower or

commercial spaces, filed various applications in Section 7

application CP No. (IB)-597(PB)/2021 being IA No.3816 of

2022 under Section 60(5) r/w 65 of the Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to as the "IBC"),

IA No.1452 of 2024 and IA No.3753 of 2024.

(v) Section 7 application filed by Financial Creditors in class,

was opposed by the Corporate Debtor. The Adjudicating

Authority heard the Financial Creditor, Corporate Debtor as

well as the Applicant/ Appellant and by the impugned order,

admitted Section 7 application, recording finding of debt and

default. IAs filed by the Appellant being IA No.3816 of 2022

was disposed of holding that IA, does not satisfy the

requirement/ ingredients of Section 65 of the IBC. IA

Company Appeal (AT) (Insolvency) No. 2021 of 2024 3 No.1452 of 2024 was also disposed of by the Adjudicating

Authority and other two IAs were rejected.

3. We have heard Shri Gaurav Mitra, learned Counsel appearing for

the Appellant and Shri Abhijeet Sinha, learned Counsel appearing for the

Respondent.

4. Shri Gaurav Mitra, learned Counsel for the Appellant has raised

only one submission challenging the impugned order that the application

under Section 7 filed by creditors of class (allottees), does not fulfill the

threshold limit of 10% of allottees, which is required for filing an

application under Section 7. It is submitted that the allotment made by

Noida was of commercial plot measuring 24,000 sq. mtrs and as per the

revised sanctioned plan, only 60% was to be constructed as commercial,

whereas only 40% was permissible for development of residential

purpose. In the residential towers, 255 units have been allotted and the

Applicants, who claimed to have filed Section 7 application were only 29

unit holders. The Adjudicating Authority erred in holding the threshold

to be met only computing the number of units in the residential towers.

It is submitted that the project being one, allotment of the commercial

units was also required to be added for finding out the threshold. It is

submitted that project being one, bifurcating the commercial units, the

Applicants did not fulfill 10% threshold as prescribed by the IBC. Hence,

the application filed under Section 7, did not deserve admission. It is

submitted that order of admission being contrary to the provisions of the

IBC, deserve to be set aside. Learned Counsel for the Appellant further

Company Appeal (AT) (Insolvency) No. 2021 of 2024 4 submits that this contention of the Appellant that Applicants do not fulfill

the threshold of 10% was specifically raised before the Adjudicating

Authority, which has also been noticed, but has been erroneously

rejected. The learned Counsel for the Appellant further submits that the

Builder Buyers Agreement mentions the project as Lotus Isle. The

Promoters, however, got registered the project in UP RERA as Lotus Isle

(Residential).

5. Shri Abhijeet Sinha, learned Senior Counsel appearing for the

Respondent submits that the Appellant has no locus to file this Appeal.

The Appellant is neither allottee of the project Lotus Isle (Residential), nor

even allottee of commercial units, constructed on the plot in question. He

has no locus to challenge the order admitting Section 7 application filed

by Financial Creditors in a class. The Appellant having no concern with

the project in question, has been filing applications after applications in

the proceedings to cause delay and putting hindrance in the proceedings.

The Appeal is liable to be dismissed on the ground of lack of locus of the

Appellant to challenge order of Section 7 application. The Appellant in no

manner being affected, could not be allowed to challenge the impugned

order. It is submitted that Appellant has no concern with the project in

question. He claims to be a stakeholder in another sister company of

Corporate Debtor GGPPL, which has nothing to do with the project in

question. Shri Sinha submits that no submissions were advanced by the

Appellant on the applications, which have been filed by the Appellant,

except questioning the non-compliance of threshold in Section 7

Company Appeal (AT) (Insolvency) No. 2021 of 2024 5 application. Shri Sinha, however, submits that threshold in Section 7

application was fully complied. Registration of the project is in the name

of Lotus Isle (Residential) in UP RERA. Shri Sinha has referred to

Volume-4, page 898, where registration details of the project has been

filed by the Appellant, are on the record, which mentions project name as

- Lotus Isle (Residential). It is submitted that the project is a real estate

project as has been referred to in Section 7, sub-section (1) second

proviso, and the project was registered with UP RERA and contains the

definition as occurring in Section 7. For finding out threshold, the project

contains 255 units allotted in the residential project and application

under Section 7 has been filed by 29 unit holders. Hence, the threshold

was fully met and submission advanced by learned Counsel for the

Appellant has no legs to stand.

6. We have considered the submissions of learned Counsel for the

parties and perused the record.

7. The preliminary objection, which has been raised by learned

Counsel for the Respondent regarding the locus of the Appellant to file

this Appeal, needs to be first examined.

8. It is not the case of the Appellant that Appellant is allottee of any

unit in the Lotus Isle (Residential), which is a real estate project in

question. It is not the case of the Appellant that Appellant is even allottee

of any commercial unit, which have been constructed on the commercial

plot allotted to the CD. The Appellant claims to be a stakeholder in

Company Appeal (AT) (Insolvency) No. 2021 of 2024 6 another sister concern GGPPL. By the impugned order, the Adjudicating

Authority admitted Section 7 application filed on behalf of allottess,

Financial Creditor in a class, finding debt and default. 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. We, thus, found substance in

the submission of learned Counsel for the Respondent that the Appellant

has no locus to challenge the order admitting Section 7 application.

9. Learned Counsel for the parties having addressed submissions with

regard to threshold in respect of Section 7 application, to satisfy

ourselves, we have proceeded to examine the contention regarding non-

fulfillment of threshold.

10. From the materials brought on record, it is clear that allotment was

made vide Lease Deed dated 26.04.2011 of Plot No.H-10, Sector 98,

Noida. The Revised Sanctioned Plan approved by the Noida has been

brought on the record at page 761 of the Appeal as Annexure A-23, which

revised sanctioned plan dated 19.05.2015 refers to permissible norms of

development. Under the heading Permissible Norms of Development,

residential is provided 40% and Commercial is 60%. Table Permissible

Norms of Development is as follows:

Company Appeal (AT) (Insolvency) No. 2021 of 2024 7 PERMISSIBLE NORMS OF DEVELOPMENT DESCRIPTION % Permissible Area Proposed (SQM.) Area

A) Residential Max 40% 45,120.000 44,838.933

B) Commercial Max 60% 67,680.000 67,565.195

TOTAL SITE AREA 112,800.000 112,404.12 8

11. Thus, the commercial plot allotted was for mixed plan use, which

contained both, commercial use and residential use. The learned

Counsel for the Respondent has referred to registration of project with

RERA, which was registered on 11.08.2017. Registration details at page

898 of the Appeal paper book is as follows:

"Project Detail

Project Basic Information

Project Name LOTUS ISLE (RESIDENTIAL)

Registration Number UPRERAPRJ5442

Project Registration Date 11-08-2017

Project Type Ongoing

Project Cordinator Number 8505833393

Proposed Period 56

Original Start Date: 31-01-2015

Modified Start Date: 30-08-2016

Declared Date of 31-03-2021"

Completion

12. Section 7 application filed by the Financial Creditors in class is

dated 25.09.2021, is much subsequent to the registration of the project

Company Appeal (AT) (Insolvency) No. 2021 of 2024 8 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 argument,

which was advanced by the Appellant regarding non-fulfillment of

threshold has been noticed by the Adjudicating Authority and in

paragraph 12, said issue has been noticed in following words:

"12. The issue as to whether Applicants in the present application constitute 10% of the homebuyers is concerned, it can be seen from Annexure A-3 (Page 207) of the petition, that the total residential unit qua the project are 255, thus the allottees of 29 units would constitute 10% of total number of allottees."

13. The Adjudicating Authority has considered the submission and has

noticed the judgment of the Hon'ble Supreme Court in Manish Kumar

vs. Union of India - (2021) 5 SCC 1 in paragraph 17, which is as

follows:

"17. As has been noted hereinabove, in terms of the definition of the Real Estate Project given in clause (zn) of Section 2 of Real Estate (Regulation and Development) Act,

Company Appeal (AT) (Insolvency) No. 2021 of 2024 9 2016, Real Estate Project includes even the conversion of an existing building or a part thereof into apartments. Thus, the 10% allottees qua the Real Estate Project can maintain the present petition. The issue could be addressed by Hon'ble Supreme Court in Manish Kumar vs. Union of India 2021 (5) see 1. Para 176 and 177 of the judgment reads thus:

"176. We have referred to the definition of the word "allottee'' in Section 2(d) of the RERA. In regard to a real estate project, all persons, who are treated as allottees, as per the definition of allottee would be entitled to be treated as allottees, for the purpose of Section 5(8)(f) (Explanation) and also, for the purpose of the impugned provisos. All that is required is that the allottees must relate to same real estate project. In other words, if a promoter has a different real estate project, be it in relation to apartments, in the case of an application under Section 7, those would not be reckoned in computing one-tenth as well as the total allotments.

177. The rationale behind confining allottees to the same real estate project is to promote the object of the Code. Once the threshold requirement can pass muster when tested in the anvil of a challenge based on Articles 14, 19 and 21, then, there is both logic and reason behind the legislative value judgment that the allottees, who must join the application under the impugned provisos, must be related to the same real estate project. The connection with the same real estate project is crucial to the determination of the critical mass, which legislature has in mind, as a part of its scheme, to streamline the working of the Code. If it is to embrace the total number of allottees of all projects, which a promoter of a real estate project, may be having, in one sense, it will make the task of

Company Appeal (AT) (Insolvency) No. 2021 of 2024 10 the applicant himself, more cumbersome. It becomes a sword, which will cut both ways. This is for the reason that the complaints, relating to different projects, may be different. With regard to one project of a promoter of real estate project, maybe, in the advanced stage, the allottees in a particular project, may not have much of a complaint. The complaint, in relation to yet another project, may be more serious. If the complaint in respect of the latter, attracts the attention of a critical mass of allottees, and the proposed applicant is part of that project in the said project, then, it may be easier for the allottees to fulfil the statutory mantra in the impugned provisos, with the junction of likeminded souls. If, on the other hand, the requirement was to make a search for allottees of different projects, as would be the case, if the entirety of the allottees, under different projects, were to be reckoned, the task would have been much more cumbersome. The requirement of the allottees, being drawn from the same project, stands to reason and also does not suffer from any constitutional blemish, as pointed out."

14. 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. We, thus, are

satisfied that 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.

Company Appeal (AT) (Insolvency) No. 2021 of 2024 11

15. No other submissions have been made by the learned Counsel for

the Appellant, we in view of the above observations and conclusions, do

not find any ground to interfere with the impugned order. The Appeal is

dismissed. Pending IAs, if any, are also disposed of. There shall be no

order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI

22nd November, 2024

Ashwani

Company Appeal (AT) (Insolvency) No. 2021 of 2024 12