NCLAT rejects homebuyers' application for insolvency proceedings against Ansal Hi-Tech Township as it does not meet the threshold requirements of Section 7(1) of the IBC.Â
The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice M. Venugopal (Judicial Member) and Arun Baroka (Technical Member) was hearing an appeal and held that the Appellant's application for insolvency proceedings was not maintainable under the law due to failure to meet the threshold requirements of Section 7(1) of the Insolvency and Bankruptcy Code, 2016. The Appellate Tribunal upheld the Adjudicating Authority's decision to dismiss the application, emphasizing the need for applicants to satisfy the threshold criteria of allottees from the same real estate project when filing a petition under Section 7. Additionally, the NCLAT clarified the definitions of 'allottee' and 'real estate project' under the IBC and the RERA, highlighting the distinction between insolvency proceedings and civil litigation.
The case at hand revolves around an appeal filed by the Appellant, acting as the Authorized Representative of the Allottees, against the Impugned Order passed by the Adjudicating Authority, NCLT, which dismissed the Company Petition (CP) filed by the Appellant and others as Financial Creditors under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The main contention of the Appellant was that the Adjudicating Authority erred in dismissing the petition without considering that all applicants belonged to the same project, 'Sushant Megapolis', and were entitled to be heard to protect their financial interests. They argued that the Authority wrongly interpreted the RERA Act, 2016, and failed to conduct a fact-based assessment of the allotment agreements and the scope of the project.
The Respondent argued in favour of the Adjudicating Authority's decision, citing the provisos added to Section 7 of the IBC, 2016, and the Supreme Court's decision in Manish Kumar v. Union of India and Another, REED 2021 SC 01515, which upheld the constitutional validity of these provisos. They emphasized the threshold requirement of allottees from the same real estate project for filing a petition under Section 7.
In its judgment, the NCLAT analyzed the arguments presented by both parties. The Respondent's Counsel highlighted the constitutional validity of the provisos added to Section 7, aiming to protect the interests of stakeholders and prevent abuse of process. They emphasized the need to interpret key terms and provisions of the IBC and the RERA Act in line with legislative intent and scheme.
Additionally, previous cases such as Naresh Kumar Agarwal v. SNG Real Estate Pvt. Ltd. and BPTP Spacio Park Serene Flat Allottees Welfare Association v. Sudhansu Tripathi were referenced to support arguments regarding the threshold requirements under Section 7 of the IBC.
The Appellant argued that the entire 'Megapolis' constitutes a single real estate project, justifying the initiation of insolvency proceedings. They contested the Respondent's plea of force majeure and emphasized their agreements with the Respondent for units and surrounding facilities.
Ultimately, the NCLAT upheld the Adjudicating Authority's decision, finding that the Appellant's application for insolvency proceedings did not meet the threshold requirements of Section 7(1) of the IBC. The tribunal clarified the definitions of 'allottee' and 'real estate project' under the IBC and RERA, emphasizing the distinction between insolvency proceedings and civil litigation.
Conclusively, the appeal was dismissed, and no costs were awarded, with any pending interlocutory applications closed.