Case Note & Summary
The Supreme Court dismissed civil appeals filed by erstwhile directors of corporate debtors against the NCLAT judgment which upheld the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 -- The NCLT had admitted a company petition filed by 141 allottees in a real estate project, finding them to be financial creditors with a debt and default, and that the threshold requirement under the second proviso to Section 7(1) of IBC was satisfied -- The corporate debtors failed to deliver possession of units, provide completion certificates, or execute tripartite sublease deeds as required -- The NCLAT dismissed appeals against this order, and the Supreme Court affirmed, holding that the allottees met the criteria under IBC, and the application for deposit of funds during appeal was not maintainable -- The Court emphasized the statutory requirements for insolvency initiation by real estate allottees and upheld the lower tribunals' decisions
Headnote
The Supreme Court dismissed civil appeals challenging the NCLAT judgment which upheld the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against M/s. Grand Venezia Commercial Towers Private Limited and M/s. Bhasin Infotech and Infrastructure Private Limited -- The appeals were filed by erstwhile directors of the corporate debtors -- The NCLT admitted the company petition filed by 141 allottees as financial creditors, finding a debt and default, and that the threshold requirement under the second proviso to Section 7(1) of IBC was met -- The NCLAT dismissed the appeals, and the Supreme Court affirmed, holding that the allottees qualified as financial creditors, the threshold was satisfied, and the corporate debtors failed to deliver possession or complete necessary formalities -- The Court rejected an application for deposit of funds filed during pendency of appeals as not maintainable -- The judgment emphasizes strict compliance with IBC provisions for insolvency initiation by real estate allottees
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Issue of Consideration: The Issue of Consideration was whether the NCLT and NCLAT correctly initiated corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the corporate debtors based on the petition filed by allottees as financial creditors, and whether the threshold requirement under the second proviso to Section 7(1) of IBC was satisfied
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Final Decision
The Supreme Court dismissed the civil appeals, upholding the NCLAT judgment and the NCLT order initiating corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the corporate debtors
