Vikash Kumar Mishra & Ors vs Orbis Trusteeship Services Private Ltd ...

IN THE MATTER OF: Vikash Kumar Mishra & Ors. ...Appellant Vs. Orbis Trusteeship Service Pvt. Ltd. & Anr. ....Respondents Present:

For Appellants : Mr. Abhijeet Sinha, Mr. Piyush Singh, Mr. Akshay Srivastava, Ms. Heena Kochar, Advocates.

For Respondent : Mr. Krishnendu Datta, Sr. Advocate, Ms. Anindita Roy Chowdhury, Mr. Sushrut Garg, Ms. Neha, Advocates for R-1.

Mr. Usman G. Khan, Advocate for R-2

ORDER

Per: Justice Rakesh Kumar Jain (Oral)

22.05.2023: This appeal is directed against the order dated

01.02.2023 passed by the National Company Law Tribunal, New Delhi Court

-IV (hereinafter referred as to 'the Adjudicating Authority) by which an

application filed by the Appellant bearing Intervention Petition No. 07 of 2023

filed in CP (IB) No. 541/ND/2022, has been dismissed.

2. In brief, M/s.Orbis Trusteeship Service Pvt. Ltd. filed an application under

Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred

as to 'The Code') for initiation of Corporate Insolvency Resolution Process

(hereinafter referred as to 'CIRP') against M/s. Kindle Infraheights Pvt. Ltd on

account of its failure to resolve the debt of Rs. 268 Crores approximately.

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3. The Corporate Debtor/Respondent is engaged in the business of

construction and development of the Real Estate Project and in the present

case it is raising the project, namely, Sikka Kaamna Greens situated at Plat

No. GH-3(B), Sector -143 @ FNG & Expressway, Noida (hereinafter referred to

as the 'Project').

4. During the pendency of the application, four homebuyers (Appellant

herein) filed an application in question for intervention, inter alia, on the

ground that there is an order in their favour passed by the 'UP Real Estate

Regulatory Authority, Regional Office, Gautam Buddha Nagar' dated

12.12.2022. It is alleged that by order dated 12.12.2022 the following

directions have been issue:

"1. The opposite party is ordered to return the original amount allotted to the complainants. OC /CC, by March 2023 after completing all the facilities in the unit as per the contract. Also ensure to give physical possession of the unit and get the due stamp duty registered as per rule.

2. The opposite party will be liable to pay late interest on the amount deposited by the complainant from the date of handing| over the possession to the complainants as per the signed contract till the date of offer of possession or the date of receipt of OC whichever is later. Make sure to pay interest as MCLR+1 per cent."

5. Counsel for Appellant has submitted that the intervention application was

thus filed to support the case of the Respondent for dismissal of the

application filed under Section 7 of the Code by the Financial Creditor. It is

Company Appeal (AT) (Ins) No. 246 of 2023 3

argued that the said application has been dismissed only on the ground that

no rationale has been found by the Adjudicating Authority in filing and

maintaining the said application.

6. Counsel for the Appellant has relied upon an order passed by this Tribunal

in the case of 'Ashmeet Singh Bhatia Vs. Sundrm Copnsultants Pvt. Ltd. &

Anr. in Company Appeal (AT) (Ins) No. 557 of 2021' to contend that in the said

case, it has been held that the application under Section 65 of the Code, can

be filed even before the admission of the application filed under section 7 or 9

of the Code because the word used in Section 65 is initiation of the proceedings

and not the admission of the proceedings. He has also relied upon a decision

of this Tribunal in the case of 'CFM Asset Reconstruction Pvt. Ltd. (acting in

its capacity as trustee of CFMARC Trust-88) Vs. Saudi Basic Industries

Corporation Ltd. & Anr. in Company Appeal (AT) (Ins) No. 1231 of 2022'

decided on 14.11.2022 on the same analogy.

7. On the other hand, counsel for Respondent has submitted that the

application under Section 7 has been filed for the resolution of debt of Rs. 268

Crores and the application filed for intervention has been rightly dismissed by

the Adjudicating Authority because the Appellant had no locus to maintain

the said application at this stage when the proceedings are pending and no

order of admission has been passed. In support of his contention, he has relied

upon a decision of this Tribunal in the case of 'Surinder Pal Singh & Ors. Vs.

Spaze Towers Pvt. Ltd. in Company Appeal (AT) (Ins) No. 354 of 2023 in IA No.

1157, 1195 of 2023 decided on 27.03.2023' and also relied upon the decision

Company Appeal (AT) (Ins) No. 246 of 2023 4

of this Tribunal in 'Prayag Polytech Pvt. Ltd. vs. Hind Tradex Ltd. 2019 SCC

Online NCLAT 1029 decided on 16.08.2019'. He has also referred to another

order of this Tribunal passed in Shrem Residency Pvt. Ltd. Vs. Shraman

Estates Pvt. Ltd. 2023 SCC Online NCLAT 70 decided on 11.01.2023'.

8. We have heard counsel for the parties and perused the record with their

able assistance.

9. The issue involved in this case is as to whether an application like the one

in hand could have been maintained at the instance of the Appellant before

the admission of the application under Section 7 of the Code?

10. There is no dispute that the Applicants/Appellants are the homebuyers

who have booked their units in the said project being developed by the

Corporate Debtor. However, as submitted by counsel for Respondent, the units

which has been booked by the Appellants are in the Tower "Joy and Spark"

which is far beyond completion. It is further the case of the Respondent that

there are large number of homebuyers and if all of them keep on filing the

application before the order of admission then the timeline which is provided

for the purpose of pursuing the application filed under Section 7 of the Code

shall be adversely affected as also the interest of the Financial Creditor who

has initiated the proceedings.

11. The judgment relied upon by Counsel for Appellant in the case of Ashmeet

Singh Bhatia (supra) is based upon the interpretation of Section 65 of the Code

because in the said case a prayer was made by the Applicant (who was also

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one of the homebuyers) that "Dismiss the present Company Petition, under

section 65 of the I& B Code, 2016 as it has been filed with malicious intent to

defraud this Hon'ble Tribunal and the thousands of innocent flat buyers,

including the Applicant". Dealing with the said prayer, before the admission of

the application, this Court has held that the word which have been used in

Section 65 of the Code is initiation of the insolvency process and not the

admission. Similarly, in the case of CFM Asset Reconstruction Pvt. Ltd. (Supra)

relied upon by the Appellant, this tribunal has taken into consideration the

specific circumstances in which the application was filed because the

Appellant in that case had submitted that the Appellant is having exposure to

extent of 99.19% of the debt of the Corporate Debtor and thus it has the right

to intervene in the proceedings which has been initiated against the Corporate

Debtor by the Operational Creditor. In those circumstances, it has been held

by this Tribunal that "We make it clear that our direction to permit the

Appellants to intervene in Section 9 Application has been passed on account of

exceptional facts and circumstances, as noticed above and is not to be treated

as any declaration of law".

12. On the other hand, the order passed in the case of Surinder pal Singh

(supra), this court was dealing with an application which was filed by

homebuyer as an Intervener in the proceedings under Section 7 of the Code

and held that the Application under Section 7 is not maintainable till the

application under Section 7 is admitted. However, a window was kept open for

the Applicant by observing thus "it shall be open to the Appellant to file

appropriate fresh application in the event application is admitted under Section

Company Appeal (AT) (Ins) No. 246 of 2023 6

7 IBC." In the case of Prayag Polytech Pvt. Ltd. (Supra) in that case it was held

that "In that view of the matter, we are of the view that there is no requirement

for intervention of any Directors or shareholders of the 'Financial Creditor' or

any other party before admission of Application under Section 7 of IBC. If the

application is admitted, it would be open to any aggrieved party to move before

this Appellate Tribunal." In the case of Shrem Residency Pvt. Ltd. (supra) this

court has held that the only thing which is to be taken into consideration at

the time of admission of section 7 of the Code that there is a debt and default.

13. In view of the aforesaid facts and circumstances of the present case, the

reliance placed by Counsel for Appellant on the decision rendered by this

Tribunal in case of Ashmeet Singh Bhatia (supra) and CFM Asset

Reconstruction (supra) is totally misplaced whereas the orders relied upon by

Counsel for Respondent in the case of Surinder Pal Singh (supra) and Prayag

Polytech (supra) answer the questions which have been posed in the earlier

part of this matter against them. No other point has been raised.

14. We do not find any merit in the present appeal and the same is hereby

dismissed though without any order as to costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Naresh Salecha] Member (Technical) Raushan/Ravi

Company Appeal (AT) (Ins) No. 246 of 2023