Company Appeal (AT) (Insolvency) No. 1422 of 2024

Appeals against admission of Section 7 application under the Insolvency and Bankruptcy Code, 2016 by allottees of a real estate project, seeking to initiate Corporate Insolvency Resolution Process against three corporate debtors.

Appellants, suspended directors of the corporate debtors, sought to set aside the NCLT order admitting the Section 7 application and initiating CIRP, and to have the application dismissed.

Appellants alleged that the Section 7 application was defective due to forged affidavits and failure to meet the statutory threshold of 100 allottees or 10% of total allottees, and that other proceedings (company petition under Section 230, FIR) should preclude admission.

NCLT order dated 21.10.2022 held the joint Section 7 petition maintainable; NCLAT order dated 17.11.2023 dismissed appeals against maintainability; Supreme Court order dated 11.12.2023 dismissed further appeals and directed expeditious hearing; NCLT order dated 05.01.2024 dismissed various applications (including those alleging fraud and seeking dismissal); NCLAT order dated 29.01.2024 dismissed appeal against 05.01.2024 order; Supreme Court order dated 29.01.2024 dismissed appeal as withdrawn; NCLT order dated 13.05.2024 dismissed IA No.1860 of 2024; NCLT order dated 27.02.2024 dismissed intervention petitions; NCLAT order dated 15.05.2024 dismissed appeal against intervention petition dismissal; NCLT impugned order dated 19.07.2024 admitted Section 7 application and rejected IA No.2497 and IA No.293.

The Section 7 Application contained forged and fabricated affidavits; an FIR No.102/2024 was registered, and a status report indicated 20 forged affidavits. The threshold of minimum 100 allottees or 10% of total 1500 units was not fulfilled. A Company Petition under Section 230 of the Companies Act, 2013 was filed for compromise and arrangement. The objective of the IBC is resolution, not CIRP; there are 1500 homebuyers and only 115 initiated CIRP. The Appellant was restrained by force majeure in carrying out the project.

The Adjudicating Authority by a detailed order dated 05.01.2024, all the Applications were dismissed. The Adjudicating Authority by the impugned order dated 19.07.2024 admitted Section 7 Application and rejected IA No.2497 of 2024 and IA No.293 of 2024. It is submitted that threshold of minimum 100 allottees or 10% has not been fulfilled in Section 7 Application, hence, it deserves to be rejected...

By Lease Deed dated 21.08.2008, Noida allotted land to Anand Infoedge Pvt. Ltd. for 90 years. The land owning company entered into a Collaboration Agreement dated 26.10.2012 with Mist Avenue for a project at Plot No. 1, Sector 143, Noida. Allotments were made in 2012 with a Builder Buyers Agreement promising delivery within 36 months. Due to lack of progress, a second Collaboration Agreement dated 27.07.2017 was entered with Mist Direct Sales Pvt. Ltd., cancelling the earlier one. Mist Direct Sales informed allottees of the change. In 2019, complaints were filed before UP RERA, which issued show-cause notice. A Writ Petition No. 15503 of 2019 was filed in Allahabad High Court over land issues. UP RERA deregistered the project on 07.12.2019; appeals were pending. 115 allottees filed a joint Section 7 application against three corporate debtors: Anand Infoedge Pvt. Ltd., Mist Avenue Pvt. Ltd., and Mist Direct Sales Pvt. Ltd. The NCLT, by order dated 21.10.2022, held the petition maintainable and listed for hearing. Appeals by the three CDs were dismissed by NCLAT on 17.11.2023. The Supreme Court, on 11.12.2023, dismissed further appeals and directed expeditious disposal. The developer filed applications seeking dismissal of the company petition and initiation of proceedings under Sections 340/195 CrPC and Section 65 IBC, alleging forged affidavits. These were dismissed by NCLT on 05.01.2024. An appeal to NCLAT was dismissed on 29.01.2024, and a subsequent appeal to the Supreme Court was withdrawn on 29.01.2024. Intervention petitions were dismissed by NCLT on 27.02.2024, and an appeal from one was dismissed by NCLAT on 15.05.2024. Another IA (1808/2024) was dismissed in limine on 02.05.2024. An FIR No. 102/2024 was registered on 21.03.2024 under IPC Sections 420/467/471/34 concerning alleged forged affidavits. The developer filed IA No. 293/2024 seeking to settle, offering 70% refund, but the allottees did not accept. A company petition under Section 230 of the Companies Act, 2013 (CA (CAA)/10/ND/2024) was filed. IA No. 1860/2024, relying on the FIR, was dismissed on 13.05.2024. IA No. 2497/2024 was filed with a demand draft of Rs. 22,10,43,647 towards principal and delay charges; after attempted settlement failed, the NCLT reserved orders on 29.05.2024. By the impugned order dated 19.07.2024, the NCLT admitted the Section 7 application, rejecting IA Nos. 2497 and 293 of 2024. The present appeals were filed by suspended directors of the three corporate debtors.

• Insolvency and Bankruptcy Code, 2016: Section 7, Section 65
• Companies Act, 2013: Section 230
• Indian Penal Code, 1860: Section 420, Section 467, Section 471, Section 34
• Code of Criminal Procedure, 1973: Section 340, Section 195(1)(b)