Sujata Shekhar Shah vs Mirador Construction Private Limited

18. Edgar Sequeira, R/o Flat No.207, Cindrella Apartment, 602 Saghapir Street Camp, Pune-411 001

19. Gautami Vasudeo Dabholkar R/o A-102, Samkeet Co-operative Housing Society, Sant Janabai Road, Vile Parle East, Mumbai- 400 057

20. Govinda Raju R/o 648, 6th Main, ISRO Layout, Bengaluru-560111

21. Hariharan Venkatraman R/o Villa No.10, Covai Vhinmsysm,Thoppampatti Pirivu, Kariyakoundanur, Vadakkalur, Annur, Coimbatore- 641653

22. Harshil Kiran Shah R/o 2/12 Rekha Building No.2, 46 B.G. Kher Marg, Walkeshwar, Mumbai- 400 006

23. Jayashree Kumar R/o 3/2 Norton First Street, Mandavelipakkam, Chennai-600 028

24. Jean Marie Therese Correia R/o 287, Shahid Bhagat Singh. Road, Fort, Mumbai- 400 001

25. Jogadenu Kiranmai, R/0, 3/3. 3/3. Lakshmi Nilayam, 1st Main, Green Park Layout, Banaswadi, Bangalore- 560043

26. Ketki Shah Talati, R/o B702, Tower 1, Gulmohar, Adarsh Palm Retreat, Deverabisanahalli, Outer Ring Road, Near RMZ Ecoworld, Bengaluru, Karnataka- 560103

27. Kishore Wadhwa, R/o 364, Shastri Nagar, Near New State Bank Colony, Amritsar, Punjab 143001

28. Ladu Madhab Mishra S/o Late Nilakantha Mishra, R/o B501, Unique Towers,

Company Appeal (AT)(Ins) No.314 and 395 of 2021 5

Beside Assam Rifles Transit Camp. Khanapara, Guwahati-781022

29. Lalgudi Kalyanam Ganesan R/o Apt 304, Krishna Kamala Residency, Plot 117, Srinagar Colony, Hyderabad- 500073

30. Latha Jagannath R/o 404, G2 Orchard's Pride, 12th Main Road, Rajmahal Extension, Sadashivanagar, Vilas Bangalore-560080

31. Mangla Rajesh Jain C-1001, Rutuparna Society, Baner Road, Baner, Pune, 411045

32. 32. Manish Katariya, R/o 107, Building No. 4, The Gardens, Dubai, United Arab Emirates.

33. Mohammed Badruddin Khan Sayeed R/0 House No.8-2- 618/1/1, Hills, 500034. Banjara Hyderabad-

34. Mukesh Deshpande r/o 19/303, Mantri Residency, Bannerghatta Road, Bangalore-560 076

35. Nalini Krishnamurthy R/o D-320, Athashri Apts, 6th Cross Road, Prithvi Layout, Whitefield, Bangalore-560066

36. Neela R/o Gotekar Dilip C/o A-12, Co-operative Topiwala Society, Housing Station Road, Goregaon West, Mumbai-400 062

37. Palollathil Damodaran Nambiar R/o B 243, Vikasini CHS, Sector 8B, CBD, Belapur, Navi Maharashtra Mumbai-400 614,

38. Pradeep Dayaram Ozarde, karta, Pradeep

Company Appeal (AT)(Ins) No.314 and 395 of 2021 6

Dayaram Ozarde HUF, R/o 1104, BARCA, Hiranandani Estate, Patalipada, Thane-400607

39. Pradeep Kumar Singh, R/o T6/1001, The Orchard Residency, LBS Marg, Ghatkopar (W), Mumbai-400 086

40. Pramod Kumar Sinha, R/O, A403/404, Tribeca CHS Hiranandani Estate, Ghodbunder Road, Thane West- 400607

41. Prasadh TS Srinivasan R/o 21, 1st Closs Rajshree Layout, Munnekolala Marathahalli, Bangalore-560037

42. Priya Rajeev Shivdasani, R/o 51 Anjali, Opposite Radio Club, Colaba, Mumbai- 400 005

43. Rajesh Kantilal Jain C-1001, Rutuparna Society, Baner Road, Baner, Pune, 411045

44. Raju Sethi (HUF) Kart Raju Sethi R/o 11-A, Shri Nagar Annex, Indore-452018 (M.P.)

45. Rama Venkatesh R/o 4, Old No.100, 2nd Cross, 1st Stage, 1st Phase, Gokula, Bangalore-560054

46. Ravindra Bohra S/o Mohan Lal Bohra R/o E-44/45, Civil Lines, Tiger Hills, Badi Road, Udaipur-313001

47. Sanaa Rahman, R/o, 16-3-194/A/2, Malakpet, Hyderabad- 500036.

48. Sanjeev Chakravarthy, R/o 403-B, Om Siddhi Towers, Plot 15,16,17, Sector 27, Nerul, Navi Mumbai, 400706.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 7

49. Sharmila Chandan, A-6, Kailash Kunj, Shiv Mandir Road, Ambernath, 421501

50. Shruti Praveen Rege, R/o, Flat No. 16, Shivneri Apartments, Lane No. 1, Happy Colony, Kothrud, Pune, 411038

51. Shruti Vachasundar, 27A/402, Panchsheel Bldg., Bimbisar Nadar, Goregaon East, Mumbai, Maharashtra, 400065

52. Shyamal Sarkar S/o Shri Hem Chandra Sarkar R/o Flat No. B- 32, Manavsthali Apartments, Vasundhara Enclave, Delhi-110 096

53. Sonika Lakhera, R/o, Tower 6, Flat 114, Godrej Garden Enclave, Vikhroli East,

54. Sreenath Nagaraja R/o No.430, 11th Cross, Wilson Garden, Bangalore-560 027

55. Subrahmanya Manjunatha S/o V. Manunatha Aithal, R/o 4 123 C3, Gokula, Behind MGM Gurukula, Sagri, Kunjibettu-576102, Udupi Taluk & District

56. Subramanyam Kotharu R/o Plot No.93, Kalyan Nagar, Phase 3, Opp. Bhargavi Motinagar Hospital, Post, Hyderabad-500 114

57. Sunil Kumar V, R/o No.20, G-2, Nandhi Pristine, 13th Main Road, BSK 1st Stage, 1st Block, Srinagar, Bangalore-560 050

Company Appeal (AT)(Ins) No.314 and 395 of 2021 8

58. Swatantra Roa R/o Flat No.2052, Sunbeam-2. Sobha Hillview Apartments, Thalaghattapura Post, Kanakapura Road, Bangalore, Karnataka - 560 062

59. V. Ananthakrishnan R/o 1A Kalpakam Nivas, 108, Luz Church Road, Mylapore, Chennai-600 004

60. Vaishali Khandekar R/o 177B Phase 1, Classic Orchards, Bannerghatta Road, Bangalore-560076

61. Vidya Krishna R/o C- 303, Ramky Utsav Apartments, Seenappa Layout, New BEL Road, Bangalore-560094

62. Vikram Dhawan, R/o, Divyashree, 77 Degrees East, Villa BW#36, Yemlur Bangalore, 560007,

63. Visvesvaraya Appala Pentakota R/o 2380 1st A Main 3rd Cross BDA Layout, HAL Stage, Bangalore- 560017

...Appellant

Versus

Mirador Constructions Pvt. Ltd. 109, 11th Floor, Lodha Supremus, Saki Vihar road, Opp MTNL Building, Sakinaka, Powai, Mumbai Maharashtra 400072 ...Respondents

Present: For Appellant : Mr. Himanshu Chaubey, Advocate

For Respondents : Mr. Dilip Annasaheb Taur, Advocate

With

Company Appeal (AT) (Ins) No. 395 of 2021

Company Appeal (AT)(Ins) No.314 and 395 of 2021 9

IN THE MATTER OF:

1. Sujata Shekhar Shah, 10-2 Urvashi Building, Nepeansea Road, Near Pethith Hall, Mumbai 400006.

2. Anand Purandare, 504, Sadhana Aeroview Co-op Housing Ltd, Nanda Patkar Road, Vile Parle (East), Mumbai 400037

3. Avnish Jagdish Mody, 242, 24th Floor, Tahnee Heights, 66, Nepean Sea Road, Mumbai 400006

4. Bharat Laljee Shah, A-203, Eksar Apartment, Behind Mayur Tower, Borivali (East), Mumbai 400092

5. Saroj Bharat Shah, A-203, Eksar Apartment, Behind Mayur Tower, Borivali (East), Mumbai 400092

6. Sudha Naren Sheth, Marathon era, ME-IV-1201, Ganpatrao Kadam Marg, Lower Parel (West), Mumbai 400013

7. Suman Sudhir Purandare, 504, Sadhana, Aeroview Coop Housing Ltd, Nanda Patkar Road,

Company Appeal (AT)(Ins) No.314 and 395 of 2021 10

Vile Parle (East), Mumbai 500057

8. Sudhr Dattatraya Purandare, 504, Sadhana, Aeroview Cooperative Housing Ltd, Nanda Patkar Road, Vile Parle (East), Mumbai 500057

9. Sudhir Dattatraya Purandare HUF, 504, Sadhana, Aeroview Coop Housing Ltd, Nanda Patkar Road, Vile Parle (East), Mumbai 500057 ...Appellant

Versus

Mirador Constructions Pvt. Ltd. Unit No.1109, 11th Floor, Lodha Supremus, Saki Vihar Road, Opp. MTNL Building,] Powai, Mumbai 400072 ...Respondents

Present:

For Appellant : Ms. Sharmistha Ghosh, Ms. Palak Nenwani, Ms. Aditi Sinha, Advocates

For Respondents : Mr. Dilip Annasaheb Taur, Advocate

JUDGEMENT

(24 th FEBRUARY, 2023)

JUSTICE RAKESH KUMAR, MEMBER (JUDICIAL)

In both the appeals same and similar order was assailed and as

such both the appeals were tagged together and after hearing learned Company Appeal (AT)(Ins) No.314 and 395 of 2021 11

counsel for the parties, judgement was reserved on 18.01.2023. In

both the appeals an order dated 23.02.2021 passed in CP(IB)

No.2054/2019 has been assailed. By the impugned order learned

National Company Law Tribunal, Mumbai Bench, Mumbai

(hereinafter referred to as the 'Adjudicating Authority') rejected the

application filed under Section 7 of the Insolvency & Bankruptcy

Code, 2016 (hereinafter referred to as IBC) as dismissed as

withdrawn considering the appellants as allottee on not meeting the

required minimum number. Since the order impugned was rejected

primarily on the ground of not meeting the required minimum

number of allottees as per amendment in Section 7 of the IBC and

also contractual dispute, we propose to reproduce the order

impugned as follows:

"Heard the counsel appearing for the applicant and

perused the record. The Corporate Debtor except filing

reply, neither addressed any oral arguments nor filed any

written submissions.

The above company Petition is filed under Section 7 of the

Code by the applicant, Sujata Shekhar Shah acting for self

Company Appeal (AT)(Ins) No.314 and 395 of 2021 12

and in the capacity of Authorized Representative of 14

other petitioners in the above company petition.

The respondent, Corporate Debtor strongly opposed the

admission of the above company petition contending that

the alleged disputes raised by the petitioner are purely

contractual disputes between the parties and the alleged

claims of the petitioners can never be treated as a debt in

the eyes of law and if at all at the very best the petitioner

would have recourse to the remedies in the civil law before

the competent court for their alleged claims. The

respondent further contends that M/s Karvy Wealth Pvt

Ltd, acted as facilitator in between the petitioners and the

respondent/corporate debtor. The respondent further

contends that in the event they were unable to pay the

secured amounts with interest to the petitioners, the

petitioners were given alternative facility to take

alternative flats from the corporate debtor subject to

payment of stamp duty and registration charges from their

end. The corporate debtor further contents that they were

Company Appeal (AT)(Ins) No.314 and 395 of 2021 13

orally and vial email with approval of M/s Karvy Wealth

Pvt Ltd offered petitioner the flats in the respondent

companies other projects near the same site but the

petitioners did not respond to that offer. Be that as it may

disregarding the contentions of both sides, the issue that

falls for consideration is;

Whether the above company petition filed by 14 individual

flat allottees in a real estate project is maintainable in view

of the recent amendment?

Admittedly, all the above petitioners are investors in the

real estate project namely "Oasis Avani" launched by the

Corporate Debtor. The company petition was filed on 27th

May, 2019. Subsequently, Section 7 of the code was

amended through amendment which was published in

Official Gazettee dated 13.03.2020 prescribing minimum

100 allottees or not less than 10 percent of the total

number of such allottees under the same real estate project

whichever is less for filing petition under Section 7 of the

Code. Liberty is also given to single applicant in the

Company Appeal (AT)(Ins) No.314 and 395 of 2021 14

pending company petitions which are pending for

admission to bring the required number of remaining

applicants and continue the company petition within 30

days from the date of amendment came into force.

Admittedly, the petitioners are less than 100 members in

the present case and they have not brought the required

number of minimum allottees for continuing and admission

of the above company petition. In the light of the above

legal position, this tribunal is left with no option except to

dismiss the above company petition as withdrawn for

want of required minimum number of allottees as per the

amendment.

Even otherwise as rightly contended by the respondent the

alleged disputes raised by the petitioners are purely

contractual disputes which cannot be decided by this

Tribunal under Section 7 of the Code in a summary

proceedings.

For the foregoing reasons, the above company petition

stands dismissed without costs on both the counts.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 15

However, the above order does not preclude the petitioner

from initiating necessary recovery proceedings before

appropriate legal forum."

2. The short fact of the case as is evident from the Memo of Appeal

is that in the year 2015 one owner of non-agriculture piece of land

situated in Shahpur, Distt Thane, Maharashtra entered into a joint

agreement with sole respondent Mirador Construction Pvt Ltd

(Corporate Debtor) whereby the Corporate Debtor was entrusted with

planning, development, marketing and selling the said land in

phasewise manner, wherein both the parties floated their scheme

"Oasis Avani". The Corporate Debtor approached one Karvy Realty

Pvt Ltd to device a scheme for generating funds for construction of

the said project to float and market the said scheme. The Karby

Reality Pvt Ltd accordingly came up with a scheme of inviting

investment into the company vide an investment agreement. As per

the investment agreement the Corporate Debtor was to return the

principal amount alongwith a specific periodic assured return on the

investment. Thereafter appellants entered into investment

agreements with the Respondent/Corporate Debtor to invest and

Company Appeal (AT)(Ins) No.314 and 395 of 2021 16

advance a secured amount in order to infuse funds for developing the

project. In the Memo of Appeal for example an investment agreement

in between one of the appellant namely Mr. Anant Reniwala and

Respondent/Corporate Debtor has been brought on record. It is just

and proper to reproduce the investment agreement in between the

appellant and respondent as follows:

"This Agreement (Agreement)is made this_____day of

May, 2016

BETWEEN

MIRADOR CONSTRUCTION PRIVATE LIMITED, a

company incorporated under the Companies Act, 2013,

having its registered office at B-301 & 302, Damjl Shamji

Corporate Square, Kanara Business Center, Near Laxmi

Nagar. Ghatkopar (East) Mumbai - 400075 (hereinafter

referred as 'MC*), which expression shall unless it be

repugnant to the context or meaning thereof be deemed to

mean and include its successors or successor in interest

and assigns of the ONE PART;

Company Appeal (AT)(Ins) No.314 and 395 of 2021 17

AND

Anant Raniwala, Indian Inhabitant residing at Flat No.

603, Vivarea Tower, B-1, Sano Guruji Marg, Mahalakshmi

Circle, Jacob, Mumbai (hereinafter referred as the "AR*) PAN

No. AIGPV6305B, which expression shall, unless it be

repugnant to the context or meaning thereof, be deemed to

mean and include his/her heirs, representatives. executors,

administrators, successors, and permitted assigns of the

OTHER PART.

MC and AR are hereinafter individually referred as "Party"

and collectively referred as *Parties"

WHEREAS:

1. Mr. Ganesh Pandurang Raut("Owner") is well and

sufficiently entitled to and is seized and possessed of all the

ownership right, title and interest in the immovable

property, being pieces or parcels of Non Agricultural Lands

bearing Survey nos. 212. 2/4. 215 and 2/6 admeasuring

4H - 27A - 8P equivalent to 42,708 sq. mrs, lying and

Company Appeal (AT)(Ins) No.314 and 395 of 2021 18

situated at Revenue Village Bendecon, within the

Registration Sub-District of Shahapur, District Thane and

more particularly described in the SCHEDULE hereunder

written and which property is hereinafter referred to as "the

said property".

II. The Owner hereinabove has purchased and acquired the

said property with an intention to float and launch N. A. Plot

Scheme thereon and have obtained all requisite

permissions, sanctions, consents, grants, approvals, etc.,

including but not restricted to Non Agricultural Permission,

from such appropriate statutory of regulatory authority(s).

III, MC is a Company engaged inter alia in the business of

buying and selling of land, contracting, etc., and has the

relevant and required skills and expertise in development of

immovable properties including expertise in development.

construction, financial management, marketing etc.

IV.The Owner and MC have entered into a Joint Venture

Agreement dated 03.06.2015 registered with the Sub

Registrar of Assurance at Shahapur on 03.06.2015 at serial

Company Appeal (AT)(Ins) No.314 and 395 of 2021 19

no. SHP - 2663 - 2015 for floating such N. A. Plot Scheme on

the said property under the name and style of "OASIS

AVANI" in the phasewise manner. Under the said

Agreement, the Owner has entrusted the work relating to

planning, making arrangements for development,

marketing and sale of the N.A. Plots in the said property to

MC in phasewise manner (hereinafter referred to as the

"Project. Land"). Phase I land admeasures about 11 acres

which has currently been launched under such N. A. Plot

Scheme.

V. MC has launched the Phase I of the said N.A. Plots for

sale to the prospective purchasers @ Rs. 750/- (Rupees

Seven Hundred and Fifty only) per sq. ft. and above

VI.With regards to the work relating to planning. making

arrangements for development, marketing and sale of the

N.A. Plots in the said property as envisaged, MC is presently

in need of funds to the extent of Rs. 18.00,000/-(Rupees

Eighteen Lakhs only) and has requested AR to advance and

facilitate the requisite funds against provision of such

Company Appeal (AT)(Ins) No.314 and 395 of 2021 20

security / for returns as envisaged by MC ("Secured

Amount"), as may be agreed between the Parties.

VII. At the specific request of MC, AR has joined in as a party

to this Investment Agreement for good and valuable

consideration and hereby expressly records, declares and

confirms that they have No Objection to invest monies as

required by MC by the creation of security on the N. A. Plots

which shall be made available to the AR @ Rs. 600/-

(Rupees Six Hundred only) per sq. ft. ("Secured Premises")

and the area of the said Secured Premises shall be

equivalent to the amount invested by the AR, to secure the

sums advanced by AR to MC.

VIII. In order to further ensure the Secured Amount as

envisaged in clause VII hereinabove, an additional area

equivalent to Secured Premises shall be kept reserved by

MC as an by way of additional performance guarantee for

the sum advanced by AR to MC. It is expressly agreed

between the Parties that the said additional area is just to

additionally secure AR and shall be released by AR, after

Company Appeal (AT)(Ins) No.314 and 395 of 2021 21

the expiry of the term of this agreement without any charge,

claim and demur.

IX. Acceding to the request of MC and relying on the

representations and declarations of MC. AR has agreed to

advance to MC an amount of Rs. 18,00,000/- (Rupees

Eighteen Lakhs only) against the provision of such security

and on the terms and conditions as set out in this

Agreement.

NOW THEREFORE, in consideration of the promises,

mutual covenants and agreements set forth herein, the

parties hereto agree as follows:

1. Relying on the representations and declarations of MC.

AR hereby advances to MC an amount of Rs. 18,00,000/-

(Rupees Eighteen Lakhs Only) vide cheque no. 327651

dated 15.04.2016 drawn on Axis bank (hereinafter referred

as the "Secured Amount) on the terms and conditions as set

out herein. MC hereby accepts and acknowledges receipt of

the Secured Amount from Rs. 18,00,000/-.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 22

2 MC doth hereby represent, declare and undertake as

under:

(a) MC have good right, full power and absolute authority to

enter into this Agreement and there is no impediment or

restraint or injunction against the MC from being able to do

so;

(b) The title of the Owner to the Secured Premises is clear

and marketable, free from any encumbrance, charge, lien,

claim or any third party right of any nature whatsoever;

(c) There are no outstanding or arrears payable in respect of

municipal taxes, arrears of land revenue and other charges

relating to the said property and all such charges payable

with respect to the Secured Premises till the time the entire

Secured Amount and other moneys due and repayable by

MC to AR in terms of this Agreement are fully repaid or

deemed to have been repaid in the manner envisaged in this

MOU, shall be paid in full without any delay or default.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 23

(d) The said property is in the sole and exclusive possession

of MC and there are no tenants and/or licensees in

occupation and/or possession of the Secured Premises or

any part thereof. AR undertakes not to deal in any manner

howsoever with the Secured Premises as also not to part

with the possession of the Secured Premises till the time the

entire Secured Amount and other moneys due and

repayable by MC to AR in terms of (his Agreement are fully

repaid or deemed to have been repaid in the manner

envisaged in this Agreement.

(e) There are no actions or proceedings pending against the

Owner and/or MC instituted by any party whomsoever in

respect of the said Property and/or the Secured Premises,

including any notice or action for nonpayment or recovery of

land revenue, municipal taxes, statutory outgoings, duties,

cess, charges, or any other government levies in respect of

the said property and/or the Secured Premises.

(f) Owner / MC have not at any time prior hereto, created

any mortgage, charge, claim, lien or any tax liability in

Company Appeal (AT)(Ins) No.314 and 395 of 2021 24

respect to the Property and/or the Secured Premises and

hereby undertakes not to encumber the Secured Premises

or create any right in favour of anyone whether by way of

trust or by way of any claim for maintenance whatsoever

till the time the entire Secured Amount and other moneys

due and repayable by MC to AR in terms of this Agreement

are fully repaid or deemed to have been repaid in the

manner envisaged in this Agreement.

(g) Neither Owner / MC have received any notice for

acquisition or requisition of the said property and/or the

Secured Premises or any portion thereof.

(h)Neither the said property nor the Secured Premises are

the subject matter of any pending suit or litigation or

attachment before or after judgment.

(i) There are no prohibitory orders or any attachment orders

or any litigation of or otherwise any liabilities in respect of

the Property or any part thereof, whereby the rights of AR

to deal with the Secured Premises, are in any way affected

or jeopardized.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 25

(j) This Agreement duly and validly executed and delivered

by MC and AR, would constitute legal, valid and binding

obligation, enforceable against MC and AR in accordance

with its terms.

3 The Secured Amount is advanced by AR to MC based

solely on the representation and undertaking of MC that the

Secured Amount has been invested by AR for a period of

two years and that upon the completion of the said period,

the MC would be liable to return back the Secured Amount

as follows:

a. Half yearly return on the principal amount of Rs.

18,00,000/- @ 21% per annum in form of post dated

Cheques;

b. Upon the expiry of the period as stipulated

hereinabove. AR will be given a choice either to take

the entire Secured Amount of Rs.18,00,000/- (Rupees

Eighteen Lakhs Only)or to purchase any plot under the

N.A. Plot Scheme @ 600/- (Rupees Six Hundred only)

per sq. ft.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 26

If AR agrees to purchase the any plot instead of taking

back the Secured Amount, he/she will have to bear

the entire cost of stamp duty and registration charges

thereof.

It is agreed between the parties that MC shall, on the

date of the execution of these presents, hand over total

five post dated cheques, lo., four for the interest

component as stipulated in clause 3(a) hereinabove to

be enchased after the expiry of every 6 Month and one

cheque consisting of Secured Amount, to be enchased

on the expiry of the term of this agreement.

4 MC hereby transfers by way of security unto AR, the

Secured Premises, as a security for performance of the

Secured Obligation by MC, with a condition that upon

fulfillment of the Secured Obligation, MC will transfer the

Secured Premises from the security hereby created to AR.

However, AR shall not be entitled to claim / sell the Secured

Premises, under whatsoever circumstances.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 27

5 It is agreed between the parties that if MC is unable to

return back the Secured Amount as stipulated in clause 3

hereinabove after the expiry of the period of two years from

the date of the execution of these present, then in such case

the Secured Premises shall be transferred to AR and/or

forfeited by AR and provisions of clause VII & VIII of recitals

shall attract. However, AR will have to bear the entire cost

of stamp duty and registration charges thereof.

6 This Agreement shall not be amended or otherwise altered

except pursuant to an instrument in writing signed by each

of the parties hereto. This Agreement shall be binding upon

and inure to the benefit of the successors and legal

representatives of AR.

7 The MC agrees to indemnify and does hereby indemnify

and keeps indemnified and harmless AR against any loss,

damage, claim, costs, expenses, charges, demand, action,

dispute of whatsoever nature incurred, suffered or

sustained by AR arising from or out of or in connection with

or in relation to the transaction contemplated in this MOU.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 28

8 Any notice and other communications provided for in this

Agreement shall be in writing and shall be first transmitted

by facsimile transmission and then confirmed by postage,

prepaid registered post with acknowledgement due or by

internationally recognized courier service, in the manner as

elected by the Party giving such notice, at the addresses

first hereinabove mentioned and shall be marked to the

attention of Mr. Vijay Pawar in the case of MC and in case

of AR marked to the attention of Anant Raniwala. All notices

shall be deemed to have been validly given on (i) the

business transmitted by facsimile transmission, or (i) the

expiry of seven days after posting it sent by registered post,

or (ill) the business date of receipt, if sent by courier. 'Any

party may, from time to time, change its address or

representative for receipt of notices provided for in this

Agreement by giving to the other not less than fifteen (15)

days prior written notice.

9 All disputes and difference between the parties in any

way arising out of or relating to this MOU or any subsequent

Company Appeal (AT)(Ins) No.314 and 395 of 2021 29

writing in terms of or in furtherance of this MOU shall be

referred to arbitration of Miss. Swati Sagvekar, Advocate,

having his / her office at Building No. 35, 2n Floor, Ambalal

Doshi Marg, Opp. Hamam House, Near Dena Bank, Fort,

Mumbai - 400 023, for adjudication thereof. The arbitration

proceedings shall take place in accordance with the

provisions contained in the Arbitration and Conciliation Act,

1996 or any statutory modification thereof. The arbitration

proceedings shall be held at Mumbai and shall be

conducted in English language only. The provisions of this

clause shall survive the termination of this MOU for any

reason whatsoever.

10 Unless otherwise set out in this MOU, no delay on the

part of any of the parties in exercising any right, power or

privilege hereunder shall operate as a waiver thereof, nor

shall any waiver on the part of any of the parties of any

right, power or privilege hereunder operate as a waiver of

any other right, power or privilege hereunder.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 30

11 Any provision of this MOU which is held to be invalid or

unenforceable for any reason shall be ineffective to the

extent of such invalidity or unenforceability only, without

affecting in any way the remaining provisions hereof.

12 Subject to the terms and conditions of this MOU, each of

the parties hereto shall use all reasonable efforts to take, or

cause to be takên, all action, and to do, or cause to be done,

all things necessary or proper to fulfill its obligations under

this MOU.

13 This MOU may be executed in one or more counterparts,

each of which shall be deemed an original and all of which

together shall constitute one and the same instrument. Each

counterpart may consist of a number of copies hereof each

signed by less than all, but together signed by all of the

parties hereto. In pleading or proving any provision of this

MOU, It shall not be necessary to produce more than one

such counterpart.

All that pieces or parcels of Non Agricultural Lands bearing

Survey nos. 2/2, 2/4, 2/5 and 2/6 admeasuring 4H - 27A

Company Appeal (AT)(Ins) No.314 and 395 of 2021 31

- 8P equivalent to 42,708 sq. mrs., lying and situated at

Revenue Village Bendecon, within the Registration Sub-

District of Shahapur, District Thane

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE

CAUSED THIS AGREEMENT TO BE DULY EXECUTED

AND DELIVERED AS OF THE DAY, MONTH AND YEAR

FIRST ABOVE WRITTEN."

3. It is the stand of the appellants that similar separate investment

agreements were entered into between other appellants and

Respondent/Corporate Debtor. It is further case of the appellant that

as per investment agreement within 24 months the invested amount

was to be returned and also periodically during intervening period

interest at specific rate was to be given to the appellants by the

Respondent/Corporate Debtor. It is further clear that some interest

was paid. However, subsequently on failure on the part of the

Corporate Debtor in payment of interest and also refund of the

invested amount after 24 months despite repeated requests by the

appellants, the appellants were constrained to file an application

under Section 7 of the IBC before the Adjudicating Authority. On

Company Appeal (AT)(Ins) No.314 and 395 of 2021 32

examination of the application filed before the Adjudicating

Authority, copy of which has been brought on record as Annexure 6,

it is evident that during the period between February 2016 till 2017

the appellants/financial creditors had invested in the project to the

tune of Rs.4,57,00,000/-. The said debt was not cleared by the

Respondent/Corporate Debtor and as such as on 5th May, 2019 the

amount payable by the Corporate Debtor i.e. principal amount

alongwith interest had raised to about Rs.6,58,66,874/- (Rupees six

crores fifty eight lakhs sixty six thousand eight hundred seventy four

only). It is further case of the appellant that as per financial

statement of the Corporate Debtor about 311 investors were shown

under the column of short term borrowing and all the borrowers had

charge over the virtual premises whereas the plan as approved by the

Town Planning Authority in relation to project under construction

was only in relation to 81 plots. Meaning thereby that each plot was

booked by the Corporate Debtors. It is further case of the appellant

that even after appellant/investors were having charge over the said

plots three plots were already sold to third party and rest plots were

shown to be available for sale on various online portal. It is claimed

by the appellant that the Respondent/Corporate Debtor did not

Company Appeal (AT)(Ins) No.314 and 395 of 2021 33

dispute debt before the Adjudicating Authority but took the plea that

they were ready to transfer the charged property after accepting due

court fee stamp to be deposited by the appellant/investor.

4. Besides making oral submissions in both the appeals learned

counsel for the appellants have filed Notes of Written Submission.

We propose to indicate the relevant portion of the written submission

filed by the learned counsel for the appellant in Company Appeal

(AT)(Ins) No.314/2021 as follows:

A. Ld NCLT did not give any opportunity to Appellants to comply with the requirement of the amended Section 7 of the Code and has rather restricted there right to refile the matter. The matter was reserved for orders on 12.01.2021 after hearing the Petitioners The Hon'ble Supreme Court of India vide as Judgment dated 19.01 2021 held that the deemed withdrawal as envisaged under the proviso to Section 7, does not bar a fresh petition for the same cause of action, after complying with the requirements of the amended Section 7 (Manish Kumar Union of India, (2021)

5 SCC 1, para 429).

B.The Ld. Adjudicating Authority, vide the Impugned order, has dismissed the petition on merits, despite declaring it to be withdrawn for want of required minimum number of allottees (pg. 37, Appeal), thereby foreclosing the right of all the other creditors of the Respondent Corporate Debtor who wish to prefer an Application under Section 7 of the Code, against the Respondent. The Impugned Order directly affects and prejudices the petition, already preferred by some of the Appellants herein, before the Ld. Adjudicating Authority, against the Company Appeal (AT)(Ins) No.314 and 395 of 2021 34

Corporate Debtor, even though the same has been filed in compliance with the amended Section 7 of the Code. Since the agreements as entered into between the Appellants and the petitioners before the Ld. Adjudicating Authority are identical, the interpretation as given by Ld. Adjudicating Authority, has a direct bearing on the rights of the Appellants.

C. The Ld. Adjudicating Authority, erroneously held that the non-payment of dues by the Corporate Debtor to its creditors, is a Contractual dispute and thereby beyond the jurisdiction of the Tribunal.

D. The order as passed by the L.d. Adjudicating Authority is in contravention of the statutory rigors of the Code and the law laid down by the Hon'ble Supreme Court of India, with respect to the scope and extent of enquiry as can be made by the Ld. Adjudicating Authority in a petition under Section 7 of the Act. In a petition filed under Section 7 of the Code the adjudicating authority has to merely satisfy itself that a default has occurred, even if the default is disputed so long as it is due i.e. payable unless interdicted by some law or has not yet become due in sense that is payable at some future date. The moment the Adjudicating Authority is satisfied that a "Default" has occurred, the Application must be admitted (Innoventive Industries Ltd. v. ICICI Bank Ltd. reported in (2018) 1 SCC 407, para 28 and 31: E.S. Krishnamurthy & Ors. v. Bharath Hi-Tecch Builders Pvt. Ltd. reported in (2022) 3 SCC 161, para 31 and 32).

E.The interpretation of the terms of the Investment Agreement, as has been arrived at by Ld. Adjudicating Authority itself is flawed in its understanding of the Agreement and the nature of the transaction. The Observation of the Ld. Adjudicating Authority that the Appellants herein are Allottees is erroneous and they are Financial Creditors under Section 5(8)(a) of the Code.

Company Appeal (AT)(Ins) No.314 and 395 of 2021 35

(Nikhil Mehta and Sons versus AMR Infrastructure Ltd. 2017 SCC OnLine NCLAT 377, para 20 and 23).

F.The submissions as made by the Corporate Debtor, as recorded by the Ld. Adjudicating Authority, itself amounts to an admission of a Default on the part of the Corporate Debtor to pay the debt as due in favour of the Applicant Financial Creditor.(@ pg. 36, Appeal).

G.Clause 3 of the Investment Agreement stated that the Corporate Debtor would be liable to return back the amount invested after the completion of the period of investment, which was 2 years or 3 years (a pg. 42. Appeal). It was also liable to make payment of Half yearly and Quarterly payment of interest, under the agreements. Clause 5 of the Investment Agreements dealt with the contingency of a default on the part of the Corporate Debtor in paying the dues under the Investment Agreements. It stated in the said clause that in case the Corporate Debtor is unable to return back the Secured amount after the expiry of the period of investment, then it shall transfer the secured premises in favour of the Applicant @ pg. 43, Appeal)

H.The Corporate Debtor has specifically referred to Clause 5 of the Agreement to contend that the Applicant herein were offered transfer of the Secured Premises in favour of the Appellants (@pg. 9, Counter Affidavit).

I.Once the Corporate Debtor itself admits that the contingency for invoking Clause 5 of the Agreement has occurred, it admits that there is a default on its part in paying the debt due in favour of the Appellants. The natural consequence of the said admission, in light of the law as laid down by the Hon'ble Apex Court in Innoventive Case (Supra). is that the Petition under Section 7 is liable to be allowed by the Adjudicating Authority.

J. The Corporate Debtor itself has recognised the Appellants herein as the creditors of the Company in the

Company Appeal (AT)(Ins) No.314 and 395 of 2021 36

Audited Books of Accounts of the Corporate Debtor (@pg. 74, Appeal).

K. The Ld. Adjudicating Authority has further failed to appreciate that the default clause as relied upon by the Corporate Debtor only deals with the contingency of non- payment of Secured Amount. Secured Amount has been defined in Clause 1 of the Agreement as the principal amount invested by the investor (@) pg. 41, Appeal). Even on assuming. though not admitting, that transfer of the Secured Premises in favour of the investors will absolve the Corporate Debtor of its obligation to repay the Principal Amount, its obligation to pay the assured returns still remains, which admittedly has not been paid, thereby establishing the default as contemplated under the Code.

L. The finding of the Ld. Adjudicating Authority that any petition against the Corporate Debtor ought to have been filed by 100 such investors, is contrary to the language of the statute itself and is therefore liable to be set aside."

5. In both the appeals Respondent/Corporate Debtor has

appeared and filed almost similar reply. Learned Counsel for the

Respondent/Corporate Debtor opposing the appeals has argued that

the Learned Adjudicating Authority has committed no error in

dismissing the application filed under Section 7 of the IBC by the

appellants. Learned Counsel for the Respondent by way of referring

to Clause 7 of the Investment Agreement tried to highlight that the

appellants were allottee and since the application was not filed either

Company Appeal (AT)(Ins) No.314 and 395 of 2021 37

by minimum 100 of the allottees or 10% of the total allottees the

learned Adjudicating Authority has committed no error in rejecting

the application filed under Section 7 of the IBC. Clause 7 of the

Investment Agreement can be seen from the Investment Agreement

which we have incorporated hereinabove. Learned Counsel for the

Respondent/corporate debtor has further drawn our attention to

Clause 3(b) of the Investment Agreement which is reproduced

hereinbelow:

"b. Upon the expiry of the period as stipulated

hereinabove. AR will be given a choice either to take

the entire Secured Amount of Rs.18,00,000/- (Rupees

Eighteen Lakhs Only) or to purchase any plot under

the N.A. Plot Scheme @ 600/- (Rupees Six Hundred

only) per sq. ft."

6. In sum and substance it has been argued by learned counsel

for the Respondent/Corporate Debtor that the application filed under

Section 7 of the IBC by the appellant was not in consonance with

amended provisions of Section 7 of the IBC and as such the learned

Company Appeal (AT)(Ins) No.314 and 395 of 2021 38

Adjudicating Authority has committed no error in dismissing the

application.

7. Besides hearing learned counsels for the parties we have

perused the entire material available on record. In so far as

observations of the Adjudicating Authority in respect of considering

the appellant as allottee is concerned we are prima facie of the view

such observation by the Adjudicating Authority was erroneous.

Investment agreement in between the appellant and Corporate

Debtor in categorical term states that the appellant under the said

agreement had invested the amount for a time period of 24 months

and even before expiry of period of 24 months as agreed the

Corporate Debtor was required to make payment of interest to the

appellant. It is also admitted by the Respondent in its reply that to

some extent interest was also paid which is evident from para 4(j) of

the affidavit in reply of the Corporate Debtor in Company Appeal

(AT)(Ins) No.314/2021. It has been specifically stated that the

Respondent Company has paid the interest from time to time and

performed its part of contract. It is further clear from stand taken by

the Corporate Debtor in para 4(g) that as per instructions of the

Company Appeal (AT)(Ins) No.314 and 395 of 2021 39

Karvy, the Respondent Company through its director had entered

into an investment agreement with the appellants who had invested

money as secured in Respondent(Corporate Debtor) for two years and

upon expiry of the said period the appellant were in choice either to

take the entire secured amount or to take secured premises. It has

also been admitted that Corporate Debtor had handed over post

dated cheques towards the payment of accrued interest and principal

amount. Whereas it is specific case of the appellant that since some

post cheques were dishonoured it was financial debt for which the

appellants being financial creditor filed application under Section 7

of the IBC jointly for total outstanding debt which was more than

Rs.4 crores.

8. Learned counsel for the appellant has also argued that even

though the application was not required to be dismissed by the

Adjudicating Authority on the ground of not meeting the minimum

number, the Adjudicating Authority has committed serious error in

not granting time to remove the error, if any, in the light of judgement

of the Hon'ble Supreme Court in Manish Kumar Vs Union of India

reported in (2021) Volume V SCC Page 1. It was submitted by the

Company Appeal (AT)(Ins) No.314 and 395 of 2021 40

learned counsel for the appellant that application under section 7 of

the IBC was filed by the appellant in the month of May, 2019 and it

was adjourned on number of dates. However, in the meanwhile on

28.12.2019 Union of India promulgated the Insolvency & Bankruptcy

Code (Amendment) Ordinance, 2019. The amendment as inserted

mandated that in a petition preferred by a class of creditors as

referred to in Section 21(6)(a) and (b) of the IBC ought to be jointly

filed by 100 or 10% of the total number of such creditors. The

amendment further provided that any petition as pending before the

Adjudicating Authority which has not yet been admitted was also be

modified to comply with such amendment. The said amendment was

challenged before the Hon'ble Supreme Court vide WP(C) No.26 of

2020. In the said appeal while directing for issuance of notice the

Hon'ble Supreme Court directed that "Status Quo, as of today, with

respect to the pending applications, shall be maintained in the

meanwhile." It was further submitted by the learned counsel for the

appellant that Hon'ble Supreme Court finally by a detailed judgement

on 19.01.2021 upheld the said amendment. However, while

upholding the amendment extended two months time from the date

of the order of Hon'ble Supreme court to comply with provisos to

Company Appeal (AT)(Ins) No.314 and 395 of 2021 41 Section 7(1) of the IBC. It has been argued that though the Hon'ble

Supreme Court granted liberty for curing defects within two months

from the date of order i.e order dated 19.01.2021 the Learned

Adjudicating Authority before expiry of two months for curing the

defects has passed the impugned order on 23.02.2021.

9. Besides hearing learned counsel for the parties we have

thoroughly examined the materials available on record. On going

through the investment agreement which we have incorporated

hereinabove there is no difficulty in coming to the conclusion that

appellants had invested money for a specified period and that too for

some period they received interest as admitted by the

Respondent/Corporate Debtor in para 4(j) of it affidavit in reply. The

investment agreement was unambiguous for 24 months and in lieu

charge was created to the plots. In such situation there was no

reason for the adjudicating authority to treat the appellants as

allottees. We are of the opinion that the Adjudicating Authority has

further misunderstood the observation of the Hon'ble Supreme Court

in Manish Kumar case (Supra). It is evident that the fact remains

that after the amendment in section 7 was introduced appeal was

Company Appeal (AT)(Ins) No.314 and 395 of 2021 42

filed before the Supreme Court and Hon'ble Supreme Court by its

order dated 13.01.2020 while issuing notice directed to maintain

status quo with respect to pending applications. Though the Hon'ble

Supreme Court finally upheld the amendment, the Hon'ble Supreme

Court further extended time to cure the defects within two months

from the date of order of Hon'ble Supreme Court. For better

appreciation it is apt to reproduce the relief which was granted by the

Hon'ble Supreme Court in Manish Kumar case (Supra) which are as

follows:

"Relief:

447. We uphold the impugned amendments.

However, this is subject to the following directions, which

we issue under Article 142 of the Constitution of India:

447.1. If any of the petitioners move applications in

respect of the same default, as alleged in their

applications, within a period of two months from today,

also compliant with either the first or the second proviso

under Section 7(1), as the case may be, then, they will be

exempted from the requirement of payment of court fees, in

Company Appeal (AT)(Ins) No.314 and 395 of 2021 43

the manner, which we have detailed in the paragraph just

herein before.

447.2. Secondly, we direct that if applications are

moved under Section 7 by the petitioners, within a period

of two months from today, in compliance with either of the

provisos, as the case may be, and the application would

be barred under Article 137 of the Limitation Act, on the

default alleged in the applications, which were already

filed, if the petitioner file applications under Section 5 of

the Limitation Act, 1963, the period of time spent before the

Adjudicating Authority, the Adjudicating Authority shall

allow the applications and the period of delay shall be

condoned in regard to the period, during which, the earlier

applications filed by them, which is the subject matter of

the third 464 proviso, was pending before the Adjudicating

Authority.

447.3. We make it clear that the time limit of two

months is fixed only for conferring the benefits of

exemption from court fees and for condonation of the delay

Company Appeal (AT)(Ins) No.314 and 395 of 2021 44

caused by the applications pending before the

Adjudicating Authority. In other words, it is always open

to the petitioners to file applications, even after the period

of two months and seek the benefit of condonation of delay

under Section 5 of the Limitation Act, in regard to the

period, during which, the applications were pending before

the Adjudicating Authority, which were filed under the

unamended Section 7, as also thereafter.

448. The Writ Petitions and the Transferred Case will

stand dismissed subject to the aforesaid directions and the

observations contained in the Judgment, and we only

make it clear that the benefits of the directions, under

Article 142, will be available also to the petitioners in the

Transferred Case.

449. The intervention application (I.A.No.67473 of

2020 in WP (C)No.26 of 2020) is filed by allottees who have

465 filed application under Section 7 on 20.9.2019. I.A.

No.32863 of 2020 in WP(C) No.53 of 2020 is filed by the

allottee for impleadment. He has filed application under

Company Appeal (AT)(Ins) No.314 and 395 of 2021 45 Section 7 of the Code on 19.12.2019. I.A. No.32869 of 2020

WP(C) No.53 of 2020 is filed by the allottees who have filed

the same for impleadment. They have filed application

under Section 7 on 17.9.2019. I.A.No. 15425 of 2018 in WP

(C)No.26 of 2020 is filed by a corporate debtor for

impleadment. All the above IAs are disposed of in terms of

the judgment as aforesaid.

450.We however make it clear that the directions we

have issued under Article 142 regarding court fees and

about condonation of delay will apply to the applicants

who are allottees."

10. On examination of the aforesaid direction of the Hon'ble

Supreme Court it is clear that the impugned order of the Adjudicating

Authority fortfeits the right of the appellant to cure the defect in

compliance with the order of Hon'ble Supreme Court. It is not in

dispute that before amendment under Section 7 was brought by the

Govt of India, the application under section 7 filed by the appellant

was pending and during pendency of the said application the

amendment travelled upto the Hon'ble Supreme Court. Initially

Company Appeal (AT)(Ins) No.314 and 395 of 2021 46

Hon'ble Supreme Court directed to maintain status quo and finally

on 19.01.2021 while upholding the amendment provided two months

time from the date of the order of Hon'ble Supreme Court for curing

the defect. However, the Adjudicating Authority before expiry of two

months has passed the impugned order on 23.02.2021. Accordingly

there is no reason to allow the impugned order to continue.

11. In so far as other ground taken by the Adjudicating Authority

for rejection of the application in the impugned order is concerned

i.e. contractual dispute, we are of the considered opinion that in view

of specific averment made in the Investment Agreement and non-

raising of dispute by the Corporate Debtor on debt, there was no

reason to record that there was contractual dispute. We are of the

opinion that on this issue also the finding of the Adjudicating

Authority is erroneous.

12. The impugned order is hereby set aside and the matter is

remitted back to the Adjudicating Authority to hear the parties afresh

and pass appropriate order in accordance with law particularly

considering the time extended by the Hon'ble Supreme Court in

Company Appeal (AT)(Ins) No.314 and 395 of 2021 47

Manish Kumar case and unequivocal Investment Agreement entered

in between appellants and the Corporate Debtor.

13. With the above observations/directions both the appeals are

allowed.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical) bm

Company Appeal (AT)(Ins) No.314 and 395 of 2021