Gammon India Ltd vs Neelkanth Mansions And Infrastructure ...

(Arising out of Order dated 23rd August, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai, in T.C.P. (IB)377(MB)/2017)

IN THE MATTER OF:

Gammon India Ltd. ...Appellant

Vs

Neelkanth Mansions and Infrastructure Pvt. Ltd. ....Respondent

Present:

For Appellant: Mr. Rudreshwar Singh, Mr. Anirudh Singh and Ms. Awantika Manohar, Advocates.

For Respondent: Mr. Arun Kathpalia, Senior Advocate with Mr. Mahesh Agarwal and Ms. Aastha Mehta, Advocates.

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

The Appellant- 'Gammon India Ltd.' filed petition under Section 433

(e) & (f) read with Section 434 of the Companies Act, 1956 before the

Hon'ble High Court of Bombay for winding up of 'Neelkanth Mansions and

Infrastructure Pvt. Ltd.'- ('Corporate Debtor') on the ground that the

'Corporate Debtor' defaulted in making repayment of Rs. 54,86,09,635 with

interest @ 15% p.a. as on 15th August, 2016 till its realization.

2. After the enactment of the Insolvency and Bankruptcy Code, 2016

('I&B Code' for short), the case was transferred from the Hon'ble High Court

Company Appeal (AT) (Insolvency) No. 698 of 2018 2

of Bombay to the Adjudicating Authority (National Company Law Tribunal),

Mumbai Bench, Mumbai, pursuant to Rule 5 which relates to "Transfer of

pending proceedings of Winding up on the ground of inability to pay debts".

3. The Appellant thereafter, filed Form-5 under Section 9 of the 'I&B

Code' for initiation of 'Corporate Insolvency Resolution Process' against the

'Neelkanth Mansions and Infrastructure Pvt. Ltd.', the Adjudicating

Authority by impugned order dated 23rd August, 2018, dismissed the

application under Section 9 on the ground that the application under

Section 9 is not maintainable against the partnership firm.

4. The case of the Appellant is that by an agreement dated 17th June,

2005, they entered into partnership to be known as 'M/s. Gammon

Neelkanth Realty Corporation' between the 'Neelkanth Mansions and

Infrastructure Pvt. Ltd.' and two other entities namely-- 'M/s. Neelkanth

Realtors Pvt. Ltd.', a company under the Companies Act, and 'Gammon

Housing and Estates Developers Ltd.', a group company of the Appellant.

5. Subsequently, a contract was entered between the partnership firm

and 'Gammon Neelkanth Realty Corporation' and the Appellant herein for

completing construction of seven residential buildings with facilities and

amenities (being Phase-I of the 'Neelkanth Kingdom Project' of 'Gammon

Neelkanth Realty Corporation') for a tender price of Rs. 88.75 crores stating

completion date as 31st December, 2007. Thereafter, on 23rd April, 2008,

another supplementary agreement was entered into mentioning that the

Appellant completed work of the value of Rs. 29,76,08,230. Subsequently,

on 1st April, 2009, another supplementary agreement was arrived at Company Appeal (AT) (Insolvency) No. 698 of 2018 3

determining increase of rates mentioning the timeline of 12 months within

which that work should be completed. While this work was in progress, the

'Neelkanth Mansions and Infrastructure Pvt. Ltd.' filed Suit No. 830/2010

on 17th March, 2010 before the Hon'ble High Court of Bombay against

various persons including the Appellant as Defendant No-10 seeking relief

against the Appellant in respect to 22 flats wrongly transferred by 'Treetop'

(the company belonging to the Appellant).

6. Further, the case of the Appellant was that during the suit was

pending, these three partners i.e. 'Neelkanth Mansions and Infrastructure

Pvt. Ltd.' and other two partners including the company belonging to the

Appellant on 2nd and 18th July, 2011 entered into consent terms with a

covenant that balance work to be executed is podium, club house,

swimming pool, etc. valued at Rs. 41.49 crores. However, according to the

Respondent, the Appellant abandoned the work incomplete.

7. On behalf of the 'Corporate Debtor' it was contended that the amount

of bill raised against a firm by stating that the Appellant has started

working in the site since January, 2013, though the Appellant did not carry

out the work in satisfactory manner, the firm was compelled to take charge

of the incomplete work.

8. It was also submitted on behalf of the Respondent that various

complaints have been received from the customer for inferior work carried

out by the Appellant. In view of the same, it was contended by learned

counsel for the Respondent that the bills sent by the Appellant to the

Respondent about the abandoned work, were not entertained as the Company Appeal (AT) (Insolvency) No. 698 of 2018 4

Appellant did not attend to the quality disputes raised in the partnership

firm against the Appellant.

9. As noticed, the Adjudicating Authority on going through the record

held that the Respondent is a partnership firm by associated companies of

the Appellant of which the Respondent is one of the partner. Therefore, it

was held that the application under Section 9 of the 'I&B Code' against the

Respondent, one of the partner of the partnership firm is not maintainable.

10. Learned counsel appearing on behalf of the Appellant relied on

definition of firm under Section 79 (16) of the 'I&B Code' and submitted

that the firm means a body of individuals carrying on business in

partnership whether or not registered under Section 59 of the Indian

Partnership Act, 1932, therefore, according to him, a definition make it

abundantly clear that only when a firm is comprised of individuals, that is

to say natural persons only, the provisions of Part III of the 'I&B Code' will

get attracted. In case, two or more persons (whether artificial or legal) and

who are not individuals, are carrying on a business in partnership, then

application for insolvency resolution against such partnership cannot be

entertained by the Adjudicating Authority due to lack of jurisdiction. In that

view of the matter, the application under Section 9 was filed against one of

the partner which is a legal entity (corporate body) and not an individual.

11. It is not in dispute that the amount due to the Appellant is from

'M/s. Gammon Neelkanth Realty Corporation'. The bill was raised against

the said partnership firm namely-- 'M/s. Gammon Neelkanth Realty

Corporation'. 'M/s. Neelkanth Realtors Pvt. Ltd.', 'Gammon Housing and Company Appeal (AT) (Insolvency) No. 698 of 2018 5

Estates Developers Ltd.' and 'Neelkanth Mansions and Infrastructure Pvt.

Ltd.' are the partners, therefore, even if one of the partners or more than

one partner is the 'Corporate Debtor' as the amount is due from the

partnership firm, the application under Section 9 of the 'I&B Code' against

one of the partners of such partnership firm will not be maintainable.

12. In view of the aforesaid position of law, we hold that the Adjudicating

Authority has rightly held that the application under Section 9 was not

maintainable against one of the members of the partnership firm

(Respondent herein) and rightly rejected the said application. We find no

merit in this appeal. It is accordingly dismissed. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI

19th December, 2018

AR

Company Appeal (AT) (Insolvency) No. 698 of 2018