Case Note & Summary
The appeal arose from an order of the National Company Law Appellate Tribunal (NCLAT) rejecting a modification application filed by the appellant, who was the Suspended Director of the Corporate Debtor, Soni Infratech Private Limited. The appellant sought to complete a housing project after a homebuyer, respondent No.2, cancelled their booking and initiated Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The NCLT admitted the application and appointed an Interim Resolution Professional (IRP). The appellant's subsequent appeals to the NCLAT included requests for settlement terms to cover all homebuyers, which were initially met with resistance. However, after several meetings and submissions, including a Revised Proposed Settlement Plan, the NCLAT ultimately rejected the appellant's modification application, leading to the present appeal. The appellant argued that a settlement had been reached with most stakeholders and that the project was nearly complete. The NCLAT's failure to consider the minutes of a crucial meeting held on October 23, 2021, where most issues were resolved, was highlighted. The court found that the promoter had made significant commitments to complete the project without escalating costs and had arranged necessary funding. The court emphasized the importance of the homebuyers' interests and the promoter's undertaking to complete the project. Consequently, the Supreme Court allowed the appeal, quashing the NCLAT's order and permitting the appellant to proceed with the project under the agreed terms, while also mandating quarterly progress reports to the NCLAT.
Headnote
A) Insolvency Law - Corporate Insolvency Resolution Process - Settlement Terms - Section 12A of the Insolvency and Bankruptcy Code, 2016 - The court allowed the appellant to complete the housing project based on the settlement terms agreed upon with stakeholders, emphasizing the importance of homebuyers' interests and the undertaking provided by the promoter regarding project completion timelines and costs. Held that the interests of homebuyers were paramount and the proposed settlement was in their favor (Paras 21-24).
Issue of Consideration
Whether the appellant should be permitted to complete the housing project despite the ongoing Corporate Insolvency Resolution Process.
Final Decision
The Supreme Court allowed the appeal, quashed the NCLAT's order dated 22nd November 2021, and permitted the appellant to complete the housing project as per the settlement terms. The court mandated quarterly progress reports to the NCLAT and set a date for the first status report.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Corporate Insolvency Resolution Process
- settlement terms
- homebuyers' interests
