Brig E S Krishnamurthy & Ors vs Bharath Hitech Builders Pvt Ltd

Brig. E. S. Krishnamurthy & Ors. ...Appellants

Versus

M/s Bharath Hi-Tech Builders Pvt. Ltd. ...Respondent

Present: For Appellants: Mr. Srijan Sinha, Advocate For Respondent:

ORDER

(Through Virtual Mode)

30.07.2020: Appellants claiming to be Financial Creditors on the basis of

having been Lenders of the Corporate Debtor, are aggrieved of the impugned order

dated 28th February, 2020 passed by the Adjudicating Authority (National Company

Law Tribunal), Bengaluru Bench by virtue whereof the Adjudicating Authority

disposed of the Company Petition with certain directions incorporated in Para 8 of

the impugned order which reads as under:-

"8. In view of the above narrated facts and circumstances of the

case, C.P. (IB) No. 188/BB/2019 is disposed of with the

following directions:

a. The Corporate Debtor is directed to settle the remaining

claims as expeditiously as possible, but not later than -2-

3 months, and communicate this decision to all the

concerned parties.

b. If aggrieved by the settlement process of the Corporate

Debtor, the remaining Petitioners, if any, would be at

liberty to approach the Adjudicating again, in

accordance with law.

c. No order as to costs."

2. After hearing learned counsel for the Appellant we find that the subject

matter being a Housing Project with stakeholders, inter alia, being the Allottees and

the Investors, the Company Petition came to be disposed of on the basis of Joint

Consent Terms dated 12th February, 2020 filed by the parties to the Company

Petition. Having regard to the Consent Terms, the Adjudicating Authority observed

that claims of 140 Investors have been fully settled by the Corporate Debtor and an

amount of Rs.27.25 Crore has been paid to them and 13 claims of the Petitioners

before the Adjudicating Authority have been settled, whereas 40 are in the process

of settlement and remaining 39 are pending settlement. The Adjudicating Authority

was of the view that the process of settlement appeared to be progressing in all

seriousness. So instead of examining all individual claims in detail, the

Adjudicating Authority deemed it appropriate to direct the Corporate Debtor to

Company Appeal (AT) (Insolvency) No. 649 of 2020 -3-

settle all the remaining claims within a definite time frame. It further appears that

three months' time was allowed for settlement of the claims by the Corporate

Debtor. The Adjudicating Authority observed that if any of the claimants be

aggrieved of the settlement process, they would be at liberty to approach the

Adjudicating Authority again.

3. It is manifestly clear that the application under Section 7 of the I&B Code

came to be disposed of at the pre-admission stage and no order of admission or

rejection of application was passed by the Adjudicating Authority keeping in view

the nature of claims which admittedly were relatable to a Housing Project. The

Adjudicating Authority appears to have been influenced by the fact that claims of

the maximum number of stakeholders have been settled which included some

claims settled at pre-admission stage before the Adjudicating Authority. In so far

as the remaining claims were concerned, the Adjudicating Authority allowed a

definite time frame viz. 3 months giving liberty to the claimant(s) whose claims

would remain unsettled after expiry of the given time frame, to come back and

re-agitate the matter.

4. Viewed in these circumstances, it cannot be said that the impugned order is

of such a nature which is prejudicial to the rights and interests of any of the

Company Appeal (AT) (Insolvency) No. 649 of 2020 -4-

stakeholders. The claimant(s) who may be dissatisfied or whose claims remain

unsettled during the given time frame can approach the Adjudicating Authority who

has not shut its doors. Assailing of the impugned order in appeal would not be the

appropriate course.

5. It is a fact that the given time frame has already elapsed but we take judicial

notice of the fact that normal business operations had been adversely affected by

the imposition of lockdown due to outbreak of COVID-19 which has been declared

pandemic. Even after unlocking, the pace of business operations is far from

normal. In these circumstances, some concession has to be given in adherence to

the timelines set in terms of the impugned order. Be-that-as-it-may, this situation

may also have to be addressed by the Adjudicating Authority, if approached by a

claimant whose claim has not been settled so far. It is not disputed that the

resolution of disputes relating to claims, more particularly of Allottees in Housing

Projects, has to be given primacy and pushing the Corporate Debtor into liquidation

would only be the last option.

6. In view of the foregoing discussion and also bearing in mind that the

settlement process set in motion at the pre-admission stage is supported by the

Consent Terms filed by some of the stakeholders, though it may not be all

encompassing, this appeal would not lie. We accordingly hold that the appeal is

Company Appeal (AT) (Insolvency) No. 649 of 2020 -5-

not maintainable. There being no legal infirmity in the impugned order, the appeal

is dismissed.

7. The dismissal of this appeal, however, will not preclude the Appellants from

approaching the Adjudicating Authority in terms of the impugned order, if their

claims are not settled by the Corporate Debtor.

[Justice Bansi Lal Bhat] Acting Chairperson

[Justice Anant Bijay Singh] Member (Judicial)

[Kanthi Narahari] Member (Technical) am/gc

Company Appeal (AT) (Insolvency) No. 649 of 2020