AMIT KATYAL versus MEERA AHUJA AND OTHERS on 3 March 2022

[2022] 4 S.C.R. 389

AMIT KATYAL

v.

MEERA AHUJA AND OTHERS

(Civil Appeal No. 3778 of 2020)

MARCH 03, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Insolvency and Bankruptcy Code, 2016: s.7 – Respondentno. 4-corporate debtor came out with a housing project – However,could not complete the project even after a period of eight years –Respondent nos.1 to 3 (original applicants) who were the homebuyers preferred s.7 application before NCLT seeking initiation ofCIRP against Corporate Debtor – Original applicants sought refundof an amount of Rs.6,93,02,755/- due to an inordinate delay incompletion of project and failure to handover possession withinthe stipulated time – The said application was filed on 06.12.2018,i.e., prior to the amendment to s.7 of the IBC, which now permits100 or 10% of the home buyers/allottees to apply under s.7 of theIBC – NCLT admitted s.7 application and appointed the InterimResolution Professional (IRP) and declared a moratorium –Appellant challenged the order of admission of s.7 application beforethe NCLAT – During the hearing before the NCLAT, the appellanttried to settle the matter with the original applicants, however, thesettlement did not go through – By impugned order, NCLAT dismissedthe appeal and upheld the admission order and directedcommencement of CIRP – The IRP issued the public announcementon 10.11.2020 and constituted the Committee of Creditors on23.11.2020 – In the meantime, instant appeal filed – This Court,while issuing notice, stayed the operation and implementation ofimpugned order, subject to appellant depositing the amount ofRs.2,75,55,186/- with interest in the Registry of this Court –Appellant deposited an amount of Rs. 3,36,02,000/- with the Registry– Three home buyers preferred IA No. 105732 of 2021 forimpleadment – When the present appeal was taken up for furtherhearing on 04.02.2022, it was reported that the original applicantsas well as 79 other home buyers settled the dispute with theCorporate Debtor whereby it was agreed that the corporate debtor

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Ashall complete the entire project and hand over the possession tothe home buyers (who want the possession), within a period of oneyear – It was also submitted on behalf of the original applicantsthat they have also settled the dispute with the corporate debtorand they had agreed to refund the amount of Rs.3,36,02,000/- withapplicable/accrued interest to the original applicants – Therefore,Bit was requested to record the settlement and permit originalapplicants to withdraw CIRP proceedings pending before the NCLT– Pursuant to order dated 4.2.2022, the original applicants preferredIA No. 18679 of 2022 under Art.142 of the Constitution of India r/w rr.11 and 12 of the National Company Law Tribunal Rules, 2016,Cpraying for permitting original applicants to withdraw CIRPproceedings on their being paid a sum of Rs.3,36,02,000/- alongwith applicable interest, out of the amount deposited by the appellantin the Registry of this Court and also dismiss all matters pendingbetween the appellant and original applicants and close the CIRPproceedings – Held: In the peculiar facts and circumstances of theDcase, where out of 128 home buyers, 82 home buyers will get thepossession within a period of one year, as undertaken by theappellant and corporate debtor, coupled with the fact that originalapplicants have also settled the dispute with the appellant/corporatedebtor, this is a fit case to exercise the powers under Art.142 of theEConstitution of India r/w r.11 of the NCLT rules, 2016 and to permitthe original applicants to withdraw the CIRP proceedings – Thesame shall be in the larger interest of the home buyers who arewaiting for the possession since more than eight years – Even theobject and purpose of the IBC is not to kill the company and stop/stall the project, but to ensure that the business of the companyFruns as a going concern.

Disposing of the matters, the Court

Conclusion

Disposing of the matters, the Court

HELD: 1. The original applicants (respondent Nos. 1 to 3)now have moved before this Court by way of an interlocutoryGapplication No. 18679/2022, praying for permitting them towithdraw the CIRP proceedings initiated by them againstrespondent no.4 – Corporate Debtor by submitting, inter alia,that the appellant has agreed to pay to the original applicantsRs.3,36,02,000/- with applicable/accrued interest thereon andthey do not propose to thereafter proceed further with theH

insolvency proceedings. Similarly, 82 (79+3) home buyers out ofthe total 128 home buyers, who are also represented before thisCourt, have stated that they are satisfied with the undertakinggiven by the appellant and respondent no.4 before this Courtrecorded in the joint statement regarding the proposed settlementplan dated 3.2.2022, under which the appellant and respondentNo.4 (Corporate Debtor) have undertaken to complete the projectwithin a period of one year and to hand over the possession tothem. Thus, out of 128 home buyers of 176 units, 82 home buyers+ three original applicants have agreed to the settlement andagreed to withdraw the CIRP proceedings and/or have noobjection if the CIRP proceedings initiated by respondent Nos. 1to 3 are permitted to be withdrawn. [Para 5.1][399-D-H]

2. Immediately on constitution of COC, this Court hasstayed the impugned order. No further steps are taken by theIRP/COC pursuant to the admission of the CIRP proceedingsexcept the IRP was appointed and the COC was constituted.Under Section 12A of the IBC which has been inserted by theInsolvency and Bankruptcy (Second Amendment) Act, 2018 withretrospective effect from 06.06.2018, the Adjudicating Authoritymay allow the withdrawal of application admitted under Section 7or Section 9 or Section 10, on an application made by the applicantwith the approval of ninety per cent voting share of the COC, insuch manner as may be specified. [Para 6][399-H; 400-A-B]

3. In the present case, although the COC was constitutedon 23.11.2020, there has been a stay of CIRP proceedings on3.12.2020 (within ten days) and no proceedings have taken placebefore the COC. The COC comprises 91 members, of which 70%are the members of the Flat Buyers Association who are willingfor the CIRP proceedings being set aside, subject to the appellantand the Corporate Debtor – company honouring its undertakinggiven to this Court as per the settlement plan dated 3.2.2022.[Para 8][401-A-B]

4. Therefore, in the peculiar facts and circumstances of thecase, where out of 128 home buyers, 82 home buyers will get thepossession within a period of one year, as undertaken by the AB

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Aappellant and respondent No.4 – Corporate Debtor, coupled withthe fact that original applicants have also settled the dispute withthe appellant/Corporate Debtor, this is a fit case to exercise thepowers under Article 142 of the Constitution of India read withRule 11 of the NCLT rules, 2016 and to permit the originalapplicants to withdraw the CIRP proceedings. The same shall beBin the larger interest of the home buyers who are waiting for thepossession since more than eight years. [Para 9][401-B-D]

5. If the original applicants and the majority of the homebuyers are not permitted to close the CIRP proceedings, it wouldhave a drastic consequence on the home buyers of real estateCproject. If the CIRP proceedings are continued, there would be amoratorium under Section 14 of the IBC and there would be stayof all pending proceedings and which would bar institution of freshproceedings against the builder, including proceedings by homebuyers for compensation due to delayed possession or refund. IfDthe CIRP is successfully completed, the home buyers like allother creditors are subjected to the pay outs provided in theresolution plan approved by the COC. Most often, resolutionplans provide for high percentage of haircuts in the claims, therebysignificantly reducing the claims of creditors. Unlike otherfinancial creditors like banks and financial institutions, the effectEof such haircuts in claims for refund or delayed possession maybe harsh and unjust on homebuyers. On the other hand, if theCIRP fails, then the builder-company has to go into liquidation asper Section 33 of the IBC. The homebuyers being unsecuredcreditors of the builder company stand to lose all their moniesFthat are either hard earned and saved or borrowed at high rate ofinterest, for no fault of theirs. [Para 10][401-E-G]

6. Even the legislative intent behind the amendments tothe IBC is to secure, protect and balance the interests of all homebuyers. The interest of home buyers is protected by restrictingGtheir ability to initiate CIRP against the builder only if 100 or10% of the total allottees choose to do so, all the same conferringupon them the status of a financial creditors to enable them toparticipate in the COC in a representative capacity. Being alive H

to the problem of a single home buyer derailing the entire projectby filing an insolvency application under Section 7 of the IBC,the legislature has introduced the threshold of at least 100 homebuyers or 10% of the total home buyers of the same project tojointly file an application under Section 7 of the IBC forcommencement of CIRP against the builder company. [Para11][402-A-C]

7. In the present case, out of the total 128 home buyers of176 units, 82 homebuyers are against the insolvency proceedingsand the original applicants have also settled their dispute withthe appellant and corporate debtor. Even the object and purposeof the IBC is not to kill the company and stop/stall the project,but to ensure that the business of the company runs as a goingconcern. [Para 12][402-F-G]

8. In view of the aforesaid facts and circumstances, moreparticularly when the withdrawal of the CIRP proceedingsinitiated by the original applicants is allowable by the NCLT inexercise of its powers under Rule 11 of the NCLT rules, 2016and in the peculiar facts and circumstances of the case, instead ofrelegating the original applicants to approach the NCLT/Adjudicating Authority by moving an application under Section12A of the IBC, this is a fit case to exercise powers under Article142 of the Constitution of India as the settlement arrived atbetween the home buyers and the appellant and corporate debtorshall be in the larger interest of the home buyers and under thesettlement and as undertaken by the appellant/corporate debtor,out of 128 home buyers, 82 home buyers are likely to getpossession within a period of one year, for which they are waitingsince last more than eight years after they have invested theirhard earned money. This shall be in furtherance of the object andpurpose of IBC. [Para 13][402-G-H; 403-A-B]

Swiss Ribbons Private Limited and Another v. Union ofIndia and others (2019) 4 SCC 17 : [2019] 3 SCR 535;Kamal K. Singh v. Dinesh Gupta & Another (CivilAppeal No. 4993 of 2021, decided on 25.08.2021;Brilliant Alloys Pvt. Ltd. v. S. Rajagopal 2018 SCCOnline SC 3154 – referred to.

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[2019] 3 SCR 535referred toPara 4.2

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3778of 2020.BFrom the Judgment and Order dated 09.11.2020 of the National From the Judgment and Order dated 09.11.2020 of the NationalCompany Law Appellate Tribunal, New Delhi in COMP. APPEAL (AT)(INS) No.1380 of 2019.

With

I.A. No.105732 of 2021 and I.A. No.18679 of 2022.C

Adit S. Pujari, Ms. Sheena Taqui, Shiv Vinayak Gupta, DhvanitChopra, Ms. Akansha Saini, Mrs. Bina Gupta, Advs. for the Appellant.

K. V. Viswanathan, Nakul Diwan, Sr. Advs., Lokesh Bhola, ArchitUpadhyay, Ms. Bhargavi Kannan, Ms. Pracheta Kar, Amartya Sharan,DRahul Sangwan, Siddhant Buxy, Ms. Radhika Gupta, Hrishikesh Baruah,Shyam D. Nandan, M/s Dharmaprabhas Law Associates, Randhir KumarOjha, Yogesh Mittal, Amarjeet Singh, Advs. for the Respondents.

The Judgment of the Court was delivered by EM. R. SHAH, J.

1. Interlocutory Application No. 105732/2021 (for impleadment)is allowed in terms of the prayer made and they are ordered to beimpleaded as respondents in the instant appeal.

1A. Feeling aggrieved and dissatisfied with the impugned judgmentFand order dated 09.11.2020 passed by the National Company LawAppellate Tribunal, New Delhi (hereinafter referred to as the ‘NCLAT/Appellate Authority’) in Company Appeal (AT) (Insolvency) No. 1380of 2019, by which the Appellate Authority has dismissed the said appealpreferred by the appellant herein – Promoter/Majority Shareholder ofGthe Corporate Debtor – Jasmine Buildmart Pvt. Ltd. and has confirmedthe order passed by the National Company Law Tribunal, New Delhi(hereinafter referred to as the ‘NCLT/Adjudicating Authority’) inadmitting the petition under Section 7 of the Insolvency and BankruptcyCode, 2016 (for short, ‘IBC’), the appellant – Promoter/MajorityShareholder of the Corporate Debtor has preferred the present appeal.H

2. That respondent no. 4 herein – Corporate Debtor – JasmineBuildmart Pvt. Ltd. had come out with a Gurgaon based housing project,namely, Krrish Provence Estate (hereinafter referred to as the ‘Project’).That respondent no.4 herein – Corporate Debtor could not complete theproject even after a period of eight years. Therefore, respondent nos. 1to 3 herein (hereinafter referred to as the ‘original applicants’) whowere the home buyers preferred Section 7 application before theAdjudicating Authority/NCLT, Delhi being CP No. 1722/ND/2018 seekinginitiation of CIRP against respondent no. 4 – Corporate Debtor. That theoriginal applicants sought refund of an amount of Rs.6,93,02,755/- dueto an inordinate delay in the completion of the project and failure tohandover possession within the stipulated time. The said application wasfiled on 06.12.2018, i.e., prior to the amendment to Section 7 of the IBC,which now permits 100 or 10% of the home buyers/allottees to applyunder Section 7 of the IBC.

2.1 That the NCLT/Adjudicating Authority admitted Section 7application on 28.11.2019 and appointed the Interim ResolutionProfessional (for short, ‘IRP’) and declared a moratorium. That theappellant herein challenged the order of admission of Section 7 applicationbefore the NCLAT/Appellate Authority being CA (AT) (Insolvency) 1380of 2019. It appears that during the hearing before the NCLAT/AppellateAuthority, the appellant herein tried to settle the matter with the originalapplicants, however, the settlement did not go through. That by theimpugned judgment and order, the NCLAT has dismissed the said appealand has upheld the admission order and directed commencement of CIRP.

2.2 The IRP issued the public announcement on 10.11.2020 andconstituted the Committee of Creditors (for short, ‘COC’) on 23.11.2020.In the meantime, the appellant preferred the present appeal. By orderdated 03.12.2020, this Court, while issuing notice in the appeal, stayedthe operation and implementation of the impugned order, subject to theappellant depositing the amount of Rs.2,75,55,186/- plus interest at therate of 6% per annum in the Registry of this Court within two weeksfrom that date. It is reported that the appellant had deposited an amountof Rs. 3,36,02,000/- on 17.12.2020 with the Registry of this Court, whichhas been invested in a Fixed Deposit Receipt, which is to mature on9.3.2022.

2.3 Krrish Provence Flat Buyers Association had filed a caveatbefore this Court apprehending that if any order is passed in the present AB

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Aproceedings, it may affect them as home buyers. Three other homebuyers, namely, Sanjiv Puri, Akshat Seth and Kaustav Mukherjee havepreferred IA No. 105732 of 2021 for impleadment.

2.4 The present appeal was adjourned from time to time on theground that the dispute between the appellant and respondent Nos. 1 toB3 herein (original applicants) is being settled and that the appellant/Corporate Debtor is prepared to complete the project within a period ofnine months, if the home buyers make payments, as scheduled.

2.5 When the present appeal was taken up for further hearing on04.02.2022, it was reported by the learned Senior Advocates/counselCfor the respective parties including the impleaders and the Associationthat the original applicants/respondent Nos. 1 to 3 herein as well as 79other home buyers have settled the dispute with the Corporate Debtorand a settlement has been entered into, under which, it is agreed that theCorporate Debtor shall complete the entire project and hand over thepossession to the home buyers (who want the possession), within a periodDof one year. It was also submitted on behalf of the original applicantsthat they have also settled the dispute with the appellant/Corporate Debtorand the appellant had agreed to refund the amount of Rs.3,36,02,000/-with applicable/accrued interest to the original applicants. Therefore, itwas requested to record the settlement and permit the original applicantsEto withdraw CIRP proceedings pending before the NCLT/AdjudicatingAuthority. This Court passed the following order on 04.02.2022:

“IA Nos. 131763/2020 and 130570/2021 stand disposed of withliberty in favour of the applicant(s) to avail any other remedywhich may be available to them, as permissible under the law toFprotect their rights.

It is reported that out of 128 home buyers of 176 units, 79 + 3 (i.e.82) home buyers have settled the dispute with the corporate debtorincluding the original applicants/respondent nos. 1 to 3 herein whohave initiated the IBC proceedings. It is reported that the originalGapplicants/respondent nos.1 to 3 herein as well as 79 home buyershave settled the dispute with the corporate debtor and a settlementhas been entered into under which it is agreed that the corporatedebtor shall complete the entire project and hand over thepossession to the home buyers (who wants the possession) withina period of one year from today.

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In that view of the matter, it is requested to dispose of the matter.As the respondent nos. 1 to 3 want to withdraw the originalproceedings in view of the settlement and in the peculiar factsand circumstances of the case and considering the fact that theorder passed by the NCLT has been stayed by this Court pursuantto the earlier interim order dated 3.12.2020 and the corporatedebtor has deposited the entire amount as directed by this Courtwhich is lying with the Registry and considering the provisions ofSection 12-A of the IBC read with Section 2 (11), let the respondentnos.1 to 3 herein/original applicants before the NCLT who hasinitiated the proceedings under Section 7, file an application forwithdrawal of the proceedings.

Put up on 16.02.2022.”

Put up on 16.02.2022.”

2.6 Pursuant to order dated 4.2.2022, the original applicants havepreferred IA No. 18679 of 2022 under Article 142 of the Constitution ofIndia read with Rules 11 and 12 of the National Company Law TribunalRules, 2016, praying for permitting the original applicants to withdrawCIRP proceedings on their being paid a sum of Rs.3,36,02,000/- alongwith applicable interest, out of the amount deposited by the appellant inthe Registry of this Court. It is also further prayed to dismiss all matterspending between the appellant and respondent Nos. 1 to 3 herein (originalapplicants) mentioned in paragraph 7 of IA No. 18679 of 2022 and closethe CIRP proceedings of respondent No. 4 – Corporate Debtor initiatedby respondent Nos. 1 to 3 herein (original applicants).

3. Shri Kapil Sibbal, learned Senior Advocate has appeared onbehalf of the appellant, Shri Lokesh Bhola, learned Advocate has appearedon behalf of respondent Nos. 1 to 3 herein, Shri K.V. Vishwanathan,learned Senior Advocate has appeared on behalf of the three impleaders(IA No. 105732/2021), Shri Nakul Diwan, learned Senior Advocate hasappeared on behalf of the Krrish Provence Flat Buyers Association, Mr.Yogesh Mittal, learned Advocate has appeared on behalf of theResolution Professional and Ms. Radhika Gupta, learned Advocate hasappeared on behalf of the intervenors.

3.1 Shri K.V. Vishwanathan and Shri Nakul Diwan, learned SeniorAdvocates appearing on behalf of the three impleaders – respectivehome buyers and the Association and Shri Kapil Sibal, learned SeniorAdvocate appearing on behalf of the appellant have jointly submittedthat a majority of the home buyers and the appellant and Corporate A

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ADebtor have settled the disputes and a joint statement regarding proposedsettlement plan signed by the respective parties is filed under which, theappellant and respondent No.4 (Corporate Debtor) have undertaken thatthey shall complete the entire project within one year from the date ofsettlement and offer possession of the flats to the home buyers. Underthe said agreement, the appellant and respondent No.4 (Corporate Debtor)Bhave undertaken before this Court as under:

“That the appellant and respondent No.4 (Company) shallundertake before the Hon’ble Court the following: -

1. Complete the entire project within 1 year from the dateCof settlement and offer the possession to the Homebuyers.

2. Complete the entire project including all the apartments,common areas, amenities, etc. as specified in the ABA.

3. All demands be raised and timely paid, strictly in termsof ABA.

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4. Company commits to continue the provisions of allmaintenance services as per the ABA.

5. Company will make the application for obtainingOccupancy Certificate within 6 months, before theCompetent Authority.E

4. Learned counsel on behalf of the respective parties havereported that out of the total 128 home buyers of 176 units, 79 + 3 homebuyers have settled the dispute with the Corporate Debtor and haveaccepted the joint statement regarding proposed settlement plan dated3.2.2022 and have agreed to the proposal/undertaking by the appellantFand the Corporate Debtor that they shall complete the project and handover the possession to the home buyers within a period of one year.Learned counsel appearing on behalf of the respective parties thereforehave prayed to exercise the powers under Article 142 of the Constitutionof India read with Rules 11 and 12 of the National Company Law TribunalGRules, 2016 and permit the original applicants to withdraw the CIRPproceedings which shall be in the larger interest of the majority of thehome buyers who want the possession and under the settlement theywill get now the possession after waiting for eight to nine years.

4.1 Learned counsel appearing on behalf of the respective partiesHhave also submitted that after the COC was constituted on 23.11.2020

by the IRP, no further steps are taken either by the IRP and/or even theCOC and even the first meeting of the COC has also not been convenedand before any further CIRP proceedings are proceeded, this Hon’bleCourt has stayed the impugned order. It is submitted therefore that thereshall not be any impediment in permitting the original applicants towithdraw the CIRP proceedings.

4.2 Learned counsel for the respective parties have heavily reliedupon paras 82 to 87 of the decision of this Court in the case of SwissRibbons Private Limited and Another v. Union of India and others,reported in (2019) 4 SCC 17 and one another order passed by thisCourt in the case of Kamal K. Singh v. Dinesh Gupta & Another(Civil Appeal No. 4993 of 2021, decided on 25.08.2021), in whichthis Court has permitted the original applicants before the AdjudicatingAuthority to withdraw the CIRP proceedings in view of the settlemententered into between the parties.

5. We have heard learned counsel for the respective parties atlength.

5.1 The original applicants (respondent Nos. 1 to 3 herein) nowhave moved before this Court by way of an interlocutory applicationNo. 18679/2022, praying for permitting them to withdraw the CIRPproceedings initiated by them against respondent no.4 – Corporate Debtorby submitting, inter alia, that the appellant has agreed to pay to theoriginal applicants Rs.3,36,02,000/- with applicable/accrued interestthereon and they do not propose to thereafter proceed further with theinsolvency proceedings. Similarly, 82 (79+3) home buyers out of thetotal 128 home buyers, who are also represented before this Court, havestated that they are satisfied with the undertaking given by the appellantand respondent no.4 before this Court recorded in the joint statementregarding the proposed settlement plan dated 3.2.2022, under which theappellant and respondent No.4 (Corporate Debtor) have undertaken tocomplete the project within a period of one year and to hand over thepossession to them. Thus, out of 128 home buyers of 176 units, 82 homebuyers + three original applicants have agreed to the settlement andagreed to withdraw the CIRP proceedings and/or have no objection ifthe CIRP proceedings initiated by respondent Nos. 1 to 3 herein arepermitted to be withdrawn.

6. As observed hereinabove, immediately on constitution of COC,this Court has stayed the impugned order. No further steps are taken by A

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Athe IRP/COC pursuant to the admission of the CIRP proceedings exceptthe IRP was appointed and the COC was constituted. Under Section12A of the IBC which has been inserted by the Insolvency and Bankruptcy(Second Amendment) Act, 2018 with retrospective effect from06.06.2018, the Adjudicating Authority may allow the withdrawal ofapplication admitted under Section 7 or Section 9 or Section 10, on anBapplication made by the applicant with the approval of ninety per centvoting share of the COC, in such manner as may be specified. Therationale behind the insertion of Section 12A is contained in the InsolvencyLaw Commission Report, which is as under:

“29.1 Under Rule 8 of the CIRP Rules, NCLT may permitCwithdrawal of the application on a request by the applicant beforeits admission. However, there is no provision in the Code or theCIRP Rules in relation to permissibility of withdrawal postadmission of a CIRP application. It was observed by theCommittee that there have been instances where on account ofDsettlement between the applicant creditor and the corporate debtor,judicial permission for withdrawal of CIRP was granted. [….]Thus, it was agreed that once CIRP is initiated, it is no longer aproceeding only between the applicant creditor and the corporatedebtor but is envisaged to be a proceeding involving all creditorsof the debtor. The intent of the Code is to discourage individualEactions for enforcement and settlement to the exclusion of thegeneral benefit of all creditors.”

7. It is true that the procedure for preferring an application underSection 12A of the IBC is contained in Regulation 30A of the CIRPRegulations, 2016. However, as per the decision of this Court in theFcase of Brilliant Alloys Pvt. Ltd. v. S. Rajagopal, 2018 SCC OnlineSC 3154, the said provision is held to be directory, depending on thefacts of each case.

7.1 In the case of Swiss Ribbons Pvt. Ltd. (supra), it is held thatat any stage before a COC is constituted, a party can approach NCLT/GAdjudicating Authority directly and the Tribunal may in exercise of itspowers under Rule 11 of the NCLT Rules, allow or disallow an applicationfor withdrawal or settlement. Therefore, in an appropriate case and wherethe case is being made out and the NCLT is satisfied about the settlement,may permit/allow an application for withdrawal or settlement.H

8. In the present case, as observed hereinabove, although theCOC was constituted on 23.11.2020, there has been a stay of CIRPproceedings on 3.12.2020 (within ten days) and no proceedings havetaken place before the COC. It is to be noted that the COC comprises 91members, of which 70% are the members of the Flat Buyers Associationwho are willing for the CIRP proceedings being set aside, subject to theappellant and the Corporate Debtor – company honouring its undertakinggiven to this Court as per the settlement plan dated 3.2.2022.

9. Therefore, in the peculiar facts and circumstances of the case,where out of 128 home buyers, 82 home buyers will get the possessionwithin a period of one year, as undertaken by the appellant and respondentNo.4 – Corporate Debtor, coupled with the fact that original applicantshave also settled the dispute with the appellant/Corporate Debtor, weare of the opinion that this is a fit case to exercise the powers underArticle 142 of the Constitution of India read with Rule 11 of the NCLTrules, 2016 and to permit the original applicants to withdraw the CIRPproceedings. We are of the opinion that the same shall be in the largerinterest of the home buyers who are waiting for the possession sincemore than eight years.

10. If the original applicants and the majority of the home buyersare not permitted to close the CIRP proceedings, it would have a drasticconsequence on the home buyers of real estate project. If the CIRPproceedings are continued, there would be a moratorium under Section14 of the IBC and there would be stay of all pending proceedings andwhich would bar institution of fresh proceedings against the builder,including proceedings by home buyers for compensation due to delayedpossession or refund. If the CIRP is successfully completed, the homebuyers like all other creditors are subjected to the pay outs provided inthe resolution plan approved by the COC. Most often, resolution plansprovide for high percentage of haircuts in the claims, thereby significantlyreducing the claims of creditors. Unlike other financial creditors likebanks and financial institutions, the effect of such haircuts in claims forrefund or delayed possession may be harsh and unjust on homebuyers.

On the other hand, if the CIRP fails, then the builder-companyhas to go into liquidation as per Section 33 of the IBC. The homebuyersbeing unsecured creditors of the builder company stand to lose all theirmonies that are either hard earned and saved or borrowed at high rateof interest, for no fault of theirs.

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A11. Even the legislative intent behind the amendments to the IBCis to secure, protect and balance the interests of all home buyers. Theinterest of home buyers is protected by restricting their ability to initiateCIRP against the builder only if 100 or 10% of the total allottees chooseto do so, all the same conferring upon them the status of a financialcreditors to enable them to participate in the COC in a representativeBcapacity. Being alive to the problem of a single home buyer derailing theentire project by filing an insolvency application under Section 7 of theIBC, the legislature has introduced the threshold of at least 100 homebuyers or 10% of the total home buyers of the same project to jointly filean application under Section 7 of the IBC for commencement of CIRPCagainst the builder company. The Insolvency Bankruptcy Code (SecondAmendment) Bill, 2019 that proposed the amendment to Section 7contained a statement of object and reasons, inter alia, stated as follows:

“2. A need was felt to give the highest priority in repayment to lastmile funding to corporate debtors to prevent insolvency, in caseDthe company goes into corporate insolvency resolution process orliquidation, to prevent potential abuse of the Code by certain classesof financial creditors, to provide immunity against prosecution ofthe corporate debtor and action against the property of thecorporate debtor and the successful resolution applicant subjectto fulfilment of certain conditions, and in order to fill the criticalEgaps in the corporate insolvency framework. It has becomenecessary to amend certain provisions of the Insolvency andBankruptcy Code, 2016.”

12. In the present case, as observed hereinabove, out of the total128 home buyers of 176 units, 82 homebuyers are against the insolvencyFproceedings and the original applicants have also settled their disputewith the appellant and corporate debtor. Even the object and purpose ofthe IBC is not to kill the company and stop/stall the project, but to ensurethat the business of the company runs as a going concern.

13. In view of the aforesaid facts and circumstances, moreGparticularly when the withdrawal of the CIRP proceedings initiated bythe original applicants is allowable by the NCLT in exercise of its powersunder Rule 11 of the NCLT rules, 2016 and in the peculiar facts andcircumstances of the case, instead of relegating the original applicantsto approach the NCLT/Adjudicating Authority by moving an applicationHunder Section 12A of the IBC, we are of the opinion that this is a fit case to exercise powers under Article 142 of the Constitution of India as thesettlement arrived at between the home buyers and the appellant andcorporate debtor – company shall be in the larger interest of the homebuyers and under the settlement and as undertaken by the appellant/corporate debtor, out of 128 home buyers, 82 home buyers are likely toget possession within a period of one year, for which they are waitingsince last more than eight years after they have invested their hard earnedmoney. This shall be in furtherance of the object and purpose of IBC.

14. In view of the above and for the reasons stated above, IA No.18679/2022 in Civil Appeal No. 3778/2020 filed by respondent Nos. 1 to3 herein (original applicants before the NCLT/Adjudicating Authority) isallowed.

As agreed, respondent Nos. 1 to 3 shall be paid an amount ofRs.3,36,02,000/- along with accrued interest, out of the amount depositedby the appellant, pursuant to the earlier order passed by this Court dated3.12.2020. Respondent Nos. 1 to 3 herein (original applicants before theAdjudicating Authority) are permitted to withdraw the application filedby them under Section 7 of the IBC, 2016 bearing CP No. 1722/ND/2018 pending before the NCLT, New Delhi. Hence, CP No. 1722/ND/2018 pending before the NCLT, New Delhi stands dismissed aswithdrawn. Consequently, all the orders passed by the NCLT, New Delhi,including appointment of IRP and constitution of COC are hereby quashedand set aside. Consequently, the impugned judgment and order passedby the NCLAT also stands quashed and set aside. As agreed betweenrespondent Nos. 1 to 3 herein, the appellant and the corporate debtor,Consumer Case bearing CC No. 984 of 2019, filed by respondent Nos.1 to 3 herein, which is pending before the National Consumer DisputesRedressal Commission, New Delhi and Criminal Complaint being CaseNo. 540/2021 filed by respondent Nos. 1 to 3 herein, pending before thelearned Chief Metropolitan Magistrate, SED, New Delhi are herebydismissed as withdrawn/quashed. Either of the parties to place a copyof the present order before the National Consumer Disputes RedressalCommission, New Delhi and in the Court of Chief MetropolitanMagistrate, SED, New Delhi to complete the record of the Courts.

15. The joint statement regarding the settlement plan dated27.01.2022/03.02.2022 along with the list of the members of the KrrishProvence Flat Buyers Association who have accepted and agreed totake possession of the respective apartments, signed by the appellant, A

B

C

D

E

F

G

H

Aimpleaders Akshat Seth, Sanjiv Puri & Kaustav Mukherjee and the officebearers of the Krrish Provence Flat Buyers Association are directed tobe taken on record. It is directed that if the original of the joint statementregarding the settlement plan dated 27.01.2022/3.2.2022 signed by therespective parties and their advocates is not placed on record, the samebe placed on record of the present proceedings, within a period of oneBweek from today. The appellant herein and respondent No.4 – JasmineBuildmart Pvt. Ltd. are directed to file separate undertakings before thisCourt, within a period of one week from today, specifically stating andundertaking that:

(1) they shall complete the entire project within one year fromC01.03.2022 and offer the possession to the respective homebuyers;

(2) they shall complete the entire project including all theapartments, common areas, amenities, etc. as specified inthe ABA;D

(3) all demands be raised and timely paid, strictly in terms ofABA;

(4) Company shall continue the provisions of all maintenanceservices as per the ABA; andE(5)Company will make the application for obtainingOccupancy Certificate within six months, before thecompetent authority.

The aforesaid undertakings shall be backed by the Resolution ofthe Company, which shall also be placed on record along with theFundertakings.

15.1. The appellant and respondent No.4 – Jasmine BuildmartPvt. Ltd. shall abide by the settlement plan recorded hereinabove andthe undertakings to be filed within a period of one week from today. Anybreach on the part of the appellant and respondent No.4 – JasmineGBuildmart Pvt. Ltd. shall be viewed very seriously. Liberty is reserved infavour of the home buyers and the Krrish Provence Flat BuyersAssociation to approach this Court, in case of any difficulty.

16. To do the complete justice in the matter and considering thefact that after the admission of the CIRP proceedings, IRP was appointedHand COC was constituted by the IRP and it is reported by the IRP that

he had incurred some expenditure, we direct the appellant to pay a sumof Rs.6,00,000/- to the IRP, to be paid towards the expenditure thatmight have been incurred by the IRP and also the litigation costs, whichshall be paid to the IRP by way of a Demand Draft within a period oftwo weeks from today.

17. The present proceedings stand disposed of accordingly, in termsof the above order. All other pending Interlocutory Applications standdisposed of.

Devika Gujral

Matters disposed of.

A

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E

F

G

H