Ashok Kriplani vs Sri Suresh Kumar & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) TA No.79/2021 (Comp. App. (AT) (Insolvency) No. 851 of 2020) (I.A. Nos. 432/2021 & 191, 329/2023) (Under Section 61 of the Insolvency and Bankruptcy Code, 2016) (Arising out of the `Common Order' dated 04.09.2020 in I.A. Nos. 205-208, 213-218, 304-307, 309-311/2020, C.P. (IB) No.84/BB/2019, passed by the `Adjudicating Authority' National Company Law Tribunal, Bengaluru Bench)

In the matter of : Konduru Prasanth Raju Aged about 42 years, Resolution Professional M/s Dreamz Infra India Limited, B-804, Shriram Suhaana Apartments, Harohalli, Nagenahalli gate, Yelahanka, Bangalore - 560064. ....Appellant

Versus

1. Sri. V. Suresh Kumar R/ at. Venugopal Swamy Temple, Devarabisanahalli, Bellandur Post, Bengaluru - 560001. ....Respondent No. 1

2. The Chief Executive Officer, Karnataka Industrial Area Development Board, 49, 4th & 5th Floors, East Wing Mineral House, Race Course Road, Bengaluru - 560001. ....Respondent No. 2

3. Sri Sajjanraj No. 35, Anmol Shankar Park, Shankarapuram, Bengaluru - 560004. ....Respondent No. 3

4. Mr.B.M Balram

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Page 1 of 22 R/o No. 557, Kamakshipalya, Opp. BEML Lavout, Bengaluru - 560079. ....Respondent No. 4

5. M/s Apartment Buyers Consumer Association No. 31, Main Guraraja Layout, Behind Viadyapeeta Temple, Tyarajanager, Bengaluru - 560028. ....Respondent No. 5

6. Smt. Komala R/a No. 2010, 22th 'C' Cross, 1st Sector, HSR Layout, Bangalore - 560102. ....Respondent No. 6

7. Committee of Creditors of M/s Dreamz Infra India Ltd (Represented by Ramanan S Viswanathan) 10, 6th A Cross, Ramaswamy Palya, Vignana Nagar, Bangalore - 560037. ....Respondent No. 7

8. Shri Ramoji Gowga R/at No. 337/2, Hulimangala, Jigani Hobli Anekal Taluk, Bengaluru - 560106. ....Respondent No. 8

9. Shri V. Nama Keerthi No.2, VMV Grapes Garden, Kalkere Main Road, Horamavu, Bengaluru - 560047. ....Respondent No. 9

10. Dreamz Siddi-1 Apartment Owner Association Through its Vice President Shri Ramesh Golahalli-Veerasandra Road,

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Page 2 of 22 Electronic City Phase 1, Near Maharaja Public School, Bengaluru - 560100. ....Respondent No. 10

11. Shri Anjanappa Chambenhalli, Dommasandra Post, Sarjapura Hobli, Anekal Taluk, Bengaluru - 562125. ....Respondent No. 11

12. Shri K.W.L.A Khan R/a KMK Rice Mill's Compound, N.T Road, Shimoga, Karnataka. ....Respondent No. 12

13. Mr. Syed Yousuf, S/o Late Syed Hyder, R/a No.9, 4th Cross, 9th Main BTM Lavout 1st Stage, Bangalore - 560029. ....Respondent No. 13

14. The Manager ICICI Bank Ltd. R/a No. 5 P&T Colony, R.T Nager Main Road, R.T. Nager, Bengaluru Karnataka - 560094. ....Respondent No. 14

15. Ms. Disha Choudhary R/a 577/B, 2nd Floor, Outer Ring Road, Teacher Colony, Koramangala, Near Silk Board, Bengaluru - 560034. ....Respondent No. 15

16. Mr. Riyaz Ahmad Shariff Represented by his SPA Holder Mr. Maaz Ahmad Shariff R/a No. 548, 8th Main, Koramangala,

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Page 3 of 22 4th Block, Bengaluru - 560034. ....Respondent No. 16

17. Smt. Padmavathi Rudraruju Rep. by her GPA Holder NVS Ramachandra Raju No.9, 5th Main, Layout, Kadirehahalli Main Road, Near Tata Nager, Bangaluru-560054. ....Respondent No. 17

18. Ashok Kriplani Erstwhile Resolution Professional, M/s Dreamz Infra India Limited, S/o Late Sh. Tekchand, R/o 17/13 (G.F), Old Rajinder Nagar, New Delhi - 110060. ....Respondent No. 18

Present: For Appellant : Ms. Lakshmi Menon, Advocate.

For Respondents : Mr. Ashok Kriplani, Advocate for R-18. Ms. D.N. Usha, Advocate for R-5. Mr. Tushar Singh, Advocate, For R-12 & R-16.

JUDGEMENT

[Per; Ms. Shreesha Merla, Member (Technical)]:

1. This `Appeal' is preferred by the Resolution Professional (`RP')

aggrieved by the `Impugned Order' dated 04.09.2020 passed by the

`Adjudicating Authority' (National Company Law Tribunal, Bengaluru

Bench), in the `Common Order' in IAs No.205-208, 213-218, 304-307,

309-311/2020, in C.P. (IB) No.84/BB/2019, by which common

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Page 4 of 22 `Impugned Order', the `Adjudicating Authority' has dismissed all the

`Applications', observing as follows:

"26. As per information furnished by the Applicant through Information Memorandum, aggrieved by the actions of Directors of the Corporate Debtor of the Company, several of people running into hundreds, have already filed Civil and Criminal cases against the Company and its Directors before various Civil/Criminal Courts and they are prosecuting their cases. And those people have absolute right to prosecute their cases before respective Courts for their remedy. Since they have already initiated before initiation of CIRP in question, the Aggrieved Parties and concerned Courts cannot be restrained by virtue of moratorium, from prosecuting their cases before the Courts. Only the aggrieved Parties of Flat Buyers and Creditors of Dreamz Sumadhur are deemed to be covered by the instant CIRP.

27. The Applicant/RP uses to file several Interim Applications seeking several directions. Earlier also I.A. Nos. 660, 661 and 662 of 2019 were filed by him and those were disposed of by common order dated 17.12.2019 by the Adjudicating Authority by directing the Applicant to discharge his duties as per extant provisions of the Code and rules made thereunder by granting liberty to him for filing necessary Application(s) with substantial evidence to seek any direction sand do not resort to file any casual application(s) covering his duties and seek advise and he can file Application only when there is legal right and entitled for such relief from the Adjudicating Authority. He was also directed not to incur money from Corporate Debtor in casual way and is responsible for all the expenditure he used to spend. In spite of that directions, the Applicant

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Page 5 of 22 without discharging his duties as per law, is again resorting to file several Applications raising so many issues, which are not all tenable and in fact several of those issues fall in the jurisdiction of the civil courts.

28. For the aforesaid reasons and circumstances of the case and the Law on the issue, we are of considered opinion that the Applicant has exceeded his jurisdiction and interpreted the CIRP in question, so as to suit him rather than to achieve object of Code, in terms of the order dated 20th August, 2019 passed in CP (IB) No.84/BB/2019, and thus initiated several actions and filed the instant Applications, which are not at all maintainable. Therefore, in the interest of justice and equity, the CIRP initiated by the Adjudicating Authority, vide its order dated 20.08.2019 should be interpreted and read in relation to the project Dreamz Sumadhur only and not in respect of all the projects of the Corporate Debtor, so that CIRP in question initiated by the Adjudicating Authority, would be concluded in terms of extant provisions of Code and the Rules thereunder. We are also supported in this regard by the judgement of the Hon'ble NCLAT in Flat Buyers v/s Umang Realtech Private Limited, as cited supra."

2. Learned Counsel for the `Appellant'/RP submitted that the IRP Sh.

Ashok Kriplani was replaced by the present `Appellant', Mr Konduru

Prasanth Raju vide `Order' dated 08.03.2021 and that pursuant to his

appointment, the RP had undertaken steps to perform his duties and filed

I.A.431/2021 to substitute himself. It is submitted that the `Adjudicating

Authority', while considering 17 `Applications' filed by the Erstwhile

Resolution Professional (`ERP') observed that 'in the interest of justice

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Page 6 of 22 and equity, the Corporate Insolvency Resolution Process (`CIRP')

initiated by the `Adjudicating Authority', vide `Order' dated 20.08.2019

should be interpreted to read in relation to Dreamz Sumadhur Project only

and not in respect of all the Projects of the Corporate Debtor'. It is

averred that despite the fact that there was no `Application' seeking

Project Wise Insolvency filed by the RP, the `Adjudicating Authority' has

Sou Moto passed this `Order'. It is submitted that the `Adjudicating

Authority' had passed the Admission under Section 7 against the entire

`Corporate Debtor' and not against the single Project and therefore the

`Impugned Order' amounts to a retrospective view which is

impermissible as the Court does not provide for any `Power of Review' to

the `Adjudicating Authority'. Dreamz Sumadhur Project has

approximately 300 Homebuyers, but the entire `Corporate Debtor' put

together has 2,000 plus Homebuyers.

3. It is brought to the notice of this Bench that in C.P. (IB)

No.148/2019, the `Tribunal' disposed of the Petition filed by the

Homebuyers of `Dreamz Sumadhur Project' of the `Corporate Debtor', by

stating that the Applicants can file their claims with the ERP who was

handling the CIRP of Dreamz Infra India Ltd. as a whole.

4. Learned Counsel for the `Appellant''/RP strenuously argued that

the `Adjudicating Authority' has wrongly relied on the Judgement of the

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Page 7 of 22 NCLAT Principal Bench, New Delhi in the matter of `Flat Buyers

Association Winter Hills-77, Gurgaon' Vs. `Umang Realtech Pvt. Ltd.

Through IRP & Ors.'1, whereby and whereunder the concept of Project

Wise Insolvency was laid down. It is argued that in `Umang Realtech

Pvt. Ltd.' (Supra), the Promotor had agreed to profit lending to the

`Corporate Debtor' to complete the Project in question and therefore the

Bench did not suggested Project Wise Resolution and reverse CIRP, but

in the instant case, there is no such offer by any Promotor to infuse funds

and moreover, the Promotor, Directors are in jail.

5. It is also submitted that Government of Karnataka passed a

`Notification' bearing No. RD-17-GRC 2017 dated 20.06.2019 notifying

the `Corporate Debtor' as one of the Companies which has engaged in

fraudulent transactions and failed to return deposits to the

depositors/Homebuyers, and hence the `Corporate Debtor' does not

qualify for application of reverse CIRP process, as all the Corporate

Debtor's assets are under severe stress and are subject to proceedings

under the Karnataka Protection of Interest of Depositors in Financial

Establishments Act, 2004 (`KPIDFE Act, 2004'). It is further argued that

on a separate question of law, the Hon'ble High Court of Karnataka is

seized of the issue in WP No. 1343/2021 and WP No.207/2022 as to

1 Comp. App. (AT) (Ins.) No. 926/2019

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Page 8 of 22 whether IBC or KPIDEF Act will prevail over the other, particularly in

the case of the `Corporate Debtor'. However, it is humbly submitted that

there is no impediment from these proceedings before the High Court to

the present Appeal. A decision from this Tribunal on the correct legal

position in the present matter will only in fact aid the Hon'ble High Court

of Karnataka in deciding the Writ Appeals ultimately. It is submitted that

the hearing on merits in these Writ Appeals has not yet commenced and

the tentative next date of Hearing is 23.05.2023.

6. Learned Counsel for the Appellant placed reliance in the matter of

`N. Kumar' Vs. `M/s. Tata Housing Finance Ltd.'2, in which the

`Adjudicating Authority' in para 9 has observed as hereunder:

"9. Heard the Learned Counsel for the Applicant and taking into account the facts of the present case, as well as the documents submitted by both the Applicant as well as the Dissenting Financial Creditor vis., M/s. Tata Capital Housing Finance Ltd. On a thorough reading of the IBC, 2016 read alongwith the regulations made thereunder envisages the insolvency of the Corporate Debtor and it can be seen that there is no concept of limited CIRP or CIRP for specific projects anywhere.

It can be further seen in the Hon'ble Supreme Court Judgement in `Pioneer Urban Land and Infrastructure Ltd.' Vs. `Union of India' [WP(Civil) No.43/2019), that the IBC, 2016 is a beneficial legislation which can be triggered to put the Corporate Debtor back on its feet in the 2 (2022) ibclaw.in 329 NCLT

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Page 9 of 22 interest of unsecured creditors like allottees, so that a replaced management may carry out the real estate project as originally envisaged and deliver the flat/apartment as soon as possible or pay late fees for late delivery.

As far as the case laws relied on by the Applicant is concerned, this Adjudicating Authority is of the view that, the mechanism adopted by the Hon'ble NCLAT is too peculiar to the facts and circumstances of the Winter Hills Judgement and cannot be used as a precedent in the present scenario. Moreover, in the present case, as no promoters have put forward any funds to avoid CIRP, the process of project-wise CIRP cannot be followed here as how it was followed in the Winter Hills Judgement and the decision in Rajesh Goyal."

7. Learned Counsel for the Appellant also placed reliance in the

matter of `Vistar ITCL (India) Ltd. & Ors.' Vs. `Satra Properties (India)

Ltd.'3, in which the Adjudicating Authority in para 41 has observed as

follows:

"41. I am unable to accept the submissions of the Ld. Sr. Counsel for the reason that the amount raised by the Corporate Debtor by issue of these debentures were not exclusively invested in the Jodhpur project alone but only the property of the jodhpur project was given as security by creation of mortgage. The record shows that the money raised by these debentures were utilized for general purpose and other projects also. Hence the submission of the Ld. Sr. Counsel is rejected."

3 2020 SCC OnLine NCLT 12430

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Page 10 of 22

8. It is argued by the Learned Counsel for the `Appellant' that the

`Impugned Order' is not in line with the spirit of the Code as restriction of

CIRP only to one Project has got the multiplicity of proceedings and

I.A.329/2023 is filed for production of additional documents which

include proceedings under the KPIDFE Act, 2004; proceedings before the

Hon'ble High Court of Karnataka and CIRP of the `Corporate Debtor' in

respect of other Projects. It is brought to the Notice of this Bench that in

C.P. (IB) No.83/BB/2019, Section 7 `Application' has been admitted

against another Project namely M/s. Dreamz Sneh Project Allottees

Welfare Association on 15.02.2023. It is submitted that the `Order' has

necessitated multiple Insolvency Resolution Proceedings initiated against

the same `Corporate Debtor' and that the concept of reverse CIRP is

inapplicable to the facts of this case as `Corporate Debtor' and its

Promotors have opened 50 different Bank Accounts where in deposits

from Homebuyers were accepted/transferred into. It is also submitted that

the `Appellant', as part of his report submitted to the Hon'ble High Court

of Karnataka in Writ Petition No.7500/2021, which was disposed of vide

`Order' dated 27.02.2023, that the Homebuyers lack Commercial Wisdom

to take the CIRP forward and that they have voted in the negative for

offer of refund; for construction of new homes etc. The RP filed the

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Page 11 of 22 Minutes of the Meeting of the 10th CoC stating that the CoC Members are

not interesting in Resolution.

9. The first Respondent filed his `Reply' stating that the first

Respondent does not have any nexus or direct relationship with the

`Corporate Debtor', namely M/s. Dreamz Infra India Ltd. except for the

fact that they are the absolute owners in possession of the property

bearing old SY No. 130/1, new SY No. 130/3, measuring to an extent of 1

Acres 6 Guntas situated at Doddabanahalli, Bidarahalli Hobli, Bangalore,

East Taluk, Bangalore, Urban District. The first Respondent and his co-

Purchaser had not entered into any venture of the `Corporate Debtor' and

submits that the said property belongs to Mr. Rajeshwara Reddy who

purchased the said property under the Sale Deed dated 13.07.2010, and is

absolute owner in possession and enjoyment of the said property without

any hindrances. Mr Rajeshwara sold the said property to Mr. Harish J

Naidu who converted the land from agricultural to non-agricultural

residential purpose and thereafter sold the land to M/s. Dreamz Infra India

Ltd. through Sale Deed dated 30.08.2016. It is further submitted that M/s.

Dreamz Infra India Ltd. had sold the subject property to the first

Respondent Mr. Suresh Kumar along with his co-Purchaser and they are

presently the joint owners who are in a possession and enjoyment of the

said property.

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Page 12 of 22

10. It is contended that the scheduled property is not a Project of

Dreamz Sumadhur and there is no occasion for the Applicant to involve

the individual property which is not an asset of the `Corporate Debtor'.

11. It is submitted by the first Respondent that the CIRP Proceedings

were initiated with respect to the `Corporate Debtor' only on 20.08.2019,

while the subject property was purchased by the first Respondent and the

co-Purchaser on 03.09.2016, which is much prior to the initiation of the

CIRP. It is submitted that the `Adjudicating Authority' has rightly

dismissed the `Applications' on the ground that they are `Civil' in nature.

12. The fifth Respondent, the Apartment Buyers Consumers

Association (R) filed their Reply stating that Dreamz Infra India Ltd.

failed to complete its Project namely Dreamz Sumadhur and has failed to

complete the Projects started by it and several Police Complaints were

lodged and cases were also filed before the Consumer Forum. It is

submitted that initially Section 7 was admitted against Dreamz Infra India

Ltd., though Mr. Pratap Chandra Padhy, Mr. Sujay Banerjee and Mr. M.S.

Ansari had booked flats in the Project Dreamz Sumadhur and had issued a

Legal Notice dated 21.01.2020 to the Appellant which was not placed

before the `Adjudicating Authority'. It is submitted that the RP has

wrongly invited all `Claims' from all Homebuyers from different Projects

frauded by Dreamz Infra India Limited. It is submitted that the `debts' of

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Page 13 of 22 the `Corporate Debtor' are specific to this Project only and that the

constitution of CoC of the Homebuyers ought to be with respect to

Sumadhur Project only. It is submitted that the Homebuyers of Sumadhur

Project did not accept the extension of the CIRP Arbitrarily done by the

RP including all Projects and hence did not pay the fee. It is further

argued that Members of the fifth Respondent Consumer Association are

not inclined to pay any fees as in the garb of CIRP for Sumadhur Project,

the RP has erroneously extended the proceedings to all Projects which is

in contempt of the NCLT `Order' dated 20.08.2019.

13. The sixth Respondent submitted that the CoC of Dreamz Infra

India Ltd. filed Writ Petition in W.P. No. 1108/2020, challenging the

`Order' dated 04.09.2021 passed by the NCLT in I.A. No.214/2020 and

other IAs filed by the `Appellant' in C.P.(IB) No.84/BB/2019, before the

Hon'ble High Court of Karnataka, at Bengaluru, it has granted an Interim

Order staying the `Order' dated 04.09.2020. The relief sought for in

I.A.214/2020 regarding R-6 is with respect to cancellation of a registered

document which cannot be granted in summary proceedings before the

`Tribunal' as the appropriate forum for the same would be a Civil Court.

It is submitted that this Respondent is not a party to the Company Petition

or to the `Application' and that I.A.214/2020 is not maintainable as it is

beyond the scope and ambit of the Section 60(5) of the Code. Further, the

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Page 14 of 22 JDA in question has been terminated on 13.07.2016 and that the

Cancellation Deed is a registered document and that this `Application' is

`time barred' as a period of Limitation as lapsed.

14. It is submitted by the twelfth Respondent that he is the co-Owner of

the scheduled property and along with other landowners entered into an

Memorandum of Understanding (`MoU') dated 10.11.2012 with the

`Corporate Debtor', whereby and whereunder the `Corporate Debtor' had

agreed to defraud the land belonging to the twelfth Respondent, for

building Residential Units and selling it to Potential Buyers. It is only on

account of the unwarranted procrastination in executing the JDA, that the

Project failing to kickstart, that the twelfth Respondent and other last

owners that no choice but to put to an end to the venture Plan with the

`Corporate Debtor' and therefore revoke the MoU dated 10.11.2012 vide

Termination Notice dated 10.05.2013. It is submitted that the `Impugned

Order' does not suffer from any infirmity and that CoC of the `Corporate

Debtor' challenges the `Impugned Order' before the High Court of

Karnataka vide W.P. No.11108/2020, whereby an Interim Stay was

granted. It is submitted that if the entire Project is brought under CIRP,

there would be multiple proceedings and the CIRP would go on forever

defeating the very objective of the Code. The `Order' dated 20.08.2019,

does not contain any direction to the Homebuyers of the `Financial

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Page 15 of 22 Creditor' of other Projects to file their `Claim' before the Interim

Resolution Professional (`IRP'). Therefore, it cannot be said that the

`Impugned Order' has deprived the Homebuyers of any of their rights.

Keeping in view the nature of `Applications' filed by the RP before the

`Adjudicating Authority', it is submitted that the `Adjudicating Authority'

has rightly directed that the present CIRP be confined to Dreamz

Sumadhur Project only.

15. The 16th Respondent filed `Reply' stating that they are not a party

to the C.P. (IB) No.84/BB/2019 filed by the three Homebuyers of the

Dreamz Sumadhur Project and that the 16th Respondent had entered into

an MoU dated 11.09.2012 and subsequently a JDA dated 08.11.2012 with

the `Corporate Debtor', whereby and whereunder the `Corporate Debtor'

has agreed to build Residential Units and the Sale Proceeds would be

shared between the 16th Respondent and the `Corporate Debtor'. But the

`Corporate Debtor' never adhered to the terms of the MoU and that the

16th Respondent cannot be dragged into these proceedings. The

`Application' is filed by the RP are purely `Civil' in nature and submitted

that the `Adjudicating Authority' has rightly confined the CIRP to

Dreamz Sumadhur Project only. The `Applications' revolved around

disputed questions of fact which need proper adjudication only by a Civil

Court.

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Page 16 of 22

16. The 18th Respondent/ERP submitted that four criteria required for

reverse CIRP i.e., fresh financing of the Project, no haircuts, assets being

greater than liability, Project Wise Account are not satisfied in the instant

case and therefore the `Adjudicating Authority' has erroneously relied on

the Judgement of the NCLAT Principal Bench, New Delhi in the matter

of `Umang Realtech Pvt. Ltd.' (Supra).

17. It is submitted that CIRP was ordered against Dreamz Sneh Project

vide `Order' dated 15.02.2023 despite the fact that Hon'ble High Court of

Karnataka had stayed the CIRP against Dreamz Infra India Ltd. vide

`Order' dated 07.11.2022.

18. It is submitted that the observations made against the then RP/R-18

by the `Adjudicating Authority' is unwarranted and that the `Adjudicating

Authority' had initially no knowledge of the length and breadth of the

case, whereas, by 17.12.2019, the `Adjudicating Authority' had ample

knowledge of the case, but incorrect observations were made. R-18 has

prayed for setting aside the CIRP of the Sneh Project of the `Corporate

Debtor' and also to expunge the remarks passed against R-18, and to

reimburse the expenses of Rs.42,800/- incurred by him and further to

direct the `Adjudicating Authority' to decide all the `Applications' filed

by the ERP.

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Page 17 of 22 Assessment:

19. The main issue for consideration in this `Appeal' is whether the

`Adjudicating Authority' was justified in initially admitting the Section 7

`Application' against the `Corporate Debtor' and thereafter confining it to

a single Project Dreamz Sumadhur Project only. It is the main case of the

`Appellant'/RP that the `Adjudicating Authority' has wrongly relied on

the principle laid down by the NCLAT Principal Bench, New Delhi in the

matter of `Umang Realtech Pvt. Ltd.' (Supra), and has confined the

CIRP to one Project i.e., Dreamz Sumadhur, in the absence of any Project

financing being brought in by the Promotor, and in the absence of any

Project Wise Accounts.

20. It is an admitted fact that the three Applicants/Homebuyers who

had filed the Section 7 `Application' were related to Dreamz Sumadhur

and subsequent to the calling of the `Claims' from all Homebuyers, there

was lot of confusion and the IRP had filed multiple IAs before the

`Adjudicating Authority', subsequent to which, this `Common Order'

dated 04.09.2020 was passed clarifying that the CIRP was with respect to

one Project, namely Dreamz Sumadhur Project only.

21. This `Tribunal' in the matter of `Ram Kishor Arora Suspended

Director of Supertech Ltd.' Vs. `Union Bank of India & Anr.'4, passed

4 I.A. No.2387/2023 in Comp. App. (AT) (Ins.) No.406/2022

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Page 18 of 22 by the Principal Bench, New Delhi has directed for Project Wise

Resolution wherein the IRP was directed to separate the `Claims'

received with regard to the Project.

22. The scope and objective of the Code is to see that there is

`Resolution' of the `Corporate Debtor Company' and seek maximization

of Assets. A three-Member Bench of the NCLAT, Principal Bench, New

Delhi in the matter of `Majestic Towers Flat Owners Association &

Anr.' Vs. `Housing Development and Infrastructure Ltd. & Ors.'5, has

held that Project Wise Insolvency can be granted to bring about better

Resolution and prevent Liquidation as the sufferers would be the

Homebuyers who are thousands in numbers in different Projects and if

there is a possibility of Project Wise Resolution, reasonable time could be

allowed by the `Adjudicating Authority' to bring about a proper

Resolution.

23. The contention of the ERP/R-18 that another Bench of NCLT

Bengaluru has erroneously admitted a Section 7 `Application' initiating

CIRP against another Project namely `Dreamz Sneh' and that it has to be

set aside, is completely unsustainable as the `Order' was passed in a

separate Company Petition dated 15.02.2023, and is based on a different

cause of action.

5 Comp. App. (AT) (Ins.) No.980/2021

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Page 19 of 22

24. Merely because the `Adjudicating Authority' had relied on `Umang

Realtech Pvt. Ltd.' (Supra), wherein reverse Insolvency was a principle

laid down by the NCLAT Principal Bench, New Delhi, and this Project

did not have a Promotor to infuse funds, which was the case in `Umang

Realtech Pvt. Ltd.' (Supra), the principle of `Project Wise Insolvency'

also discussed in in `Umang Realtech Pvt. Ltd.' (Supra), cannot be

overlooked and requires considerable attention as it applies to the facts of

this case.

25. The Hon'ble Supreme Court has upheld the `Order' of NCLAT in

`Ram Kishor Arora Suspended Director of Supertech Ltd.' (Supra), and

observed that if CoC would be constituted for Supertech Ltd., as a whole,

it would cause hardship for the Homebuyers. The Hon'ble Apex Court

has observed that if at the present stage, CoC was ordered to be

constituted for the `Corporate Debtor' in displacement of the directions of

NCLAT, it would affect the ongoing Projects and cause immense

hardship to the Homebuyers sending every Project into uncertainty. The

Hon'ble Supreme Court refused to interfere with the directions given by

the NCLAT, Principal Bench, New Delhi and upheld the view that

`Project Wise Resolution' may be started under the supervision of the IRP

for effective Resolution.

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Page 20 of 22

26. This `Tribunal' is of the earnest view that the `Impugned Order'

has nowhere stated that the Promotor was interested in infusing funds into

the Project and that reverse CIRP has to be undertaken. In fact, a

reference was made to `Umang Realtech Pvt. Ltd.' (Supra), decision to

substantiate the `advantages of Project Wise Resolution and to clarify'

that the CIRP was confined to Dreamz Sumadhur Project only. As

regarding the different `Applications' filed by the RP seeking relief, this

`Tribunal' is of the considered view that the `Adjudicating Authority' has

rightly observed that most of the reliefs sought for were unrelated to

Dreamz Sumadhur Project and are `Civil' in nature requiring adjudication

in other fora as the `Adjudicating Authority' does not have jurisdiction to

foray into matters of `title' and possession of `land' which are broadly

matters of `Civil Litigation' and cannot be decided under the provisions

of IBC. We are also conscious of the fact that the CoC Meeting was only

with the Homebuyers of Dreamz Sumadhur Project. As initially the

Section 7 `Application' was admitted against the entire Project and

thereafter the clarifications were given by the `Adjudicating Authority'

that the CIRP was confined to Dreamz Sumadhur Project, in the interest

of justice, this `Tribunal' is of the view that the adverse comments made

against the RP may be expunged.

TA No.79/2021 (Comp. App. (AT) No. 851/2020/TR)

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27. This `Tribunal' does not find any substantial grounds to interfere

with the well-reasoned `Order' of the `Adjudicating Authority' `National

Company Law Tribunal, Bengaluru Bench' and hence TA No.79/2021

(Comp. App. (AT) (Ins.) No.851/2020) fails and is accordingly

`dismissed'. No `Costs'. The connected pending `Interlocutory

Applications', if any, are `Closed'.

[Justice M. Venugopal] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical) 01/06/2023 HA / TM

TA No.79/2021 (Comp. App. (AT) No. 851/2020/TR)

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