NCLAT held that the threshold requirement under Section 7 of the IBC was met by 10% of allottees from the same real estate project, and the Appellant, lacking locus standi, was not entitled to challenge the admission of the application.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench led by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal and observed that an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) can be admitted if 10% of the allottees of the same real estate project, as defined under RERA, file the application, and the threshold requirement is determined based on the number of allottees in the specific project, not including units from unrelated projects. Additionally, the appellant, who is neither an allottee nor a stakeholder in the relevant project, lacks the locus standi to challenge the order.
The Appellant filed an appeal challenging the order dated 09.08.2024 passed by the National Company Law Tribunal (NCLT), New Delhi Bench (Court-II), which admitted the Section 7 application filed by financial creditors in class. The NCLT also disposed of IA No. 1452 of 2024 and IA No. 3816 of 2022, while rejecting IA No. 3753 of 2024 and IA No. 6240 of 2023 filed by the Appellant.
The facts of the case reveal that M/s Three C Properties Pvt. Ltd. (the Corporate Debtor) had been allotted a commercial plot in Noida in 2011, which was later bifurcated into residential and commercial sections. The project was registered as "Lotus Isle (Residential)" with UP RERA in 2017, and the Builder Buyers Agreements indicated possession was to be handed over within 36 months. However, while the commercial spaces were completed, the residential units were delayed, prompting 51 allottees to file the Section 7 application alleging a default of Rs. 70.93 crore. The Appellant, who was neither an allottee nor involved in the residential or commercial aspects of the project, filed several applications, including a challenge to the threshold limit of 10% of allottees required to file a Section 7 application.
The Adjudicating Authority admitted the Section 7 application, finding both debt and default and rejected the Appellant's claims. The Appellant argued that the 10% threshold was not met as the number of applicants (29 out of 255 residential units) did not satisfy the prescribed percentage. However, the Respondent countered that the 10% threshold was correctly calculated for the residential project as per the provisions of the Insolvency and Bankruptcy Code (IBC). The Respondent also raised the issue of locus standi, asserting that the Appellant, having no stake in the project, had no right to challenge the order.
Upon review, the NCLAT found that the Appellant had no locus to file the appeal, as they were neither an allottee nor a stakeholder in the project. Furthermore, the NCLAT upheld the Adjudicating Authority’s finding that the Section 7 application met the 10% threshold required under the IBC. The application was filed by 29 out of 255 residential unit holders, which satisfied the conditions outlined in the relevant provisions. As a result, the appeal was dismissed, and the NCLT’s order was upheld.
Mr. Gaurav Mitra, Ms. Sonam Sharma, Ms. Riddhi Jain and Ms. Lavanya Pathak, Advocates represented the Appellant.
Mr. Abhishek Anand, Mr. Karan Kohliand Ms. Palak Kalra, Advocates appeared for the RP.
Mr. Abhijeet Sinha, Sr. Advocate with Mr. Kumar Mihir and Mr. Athul Joseph, Advocates appeared for Respondent No. 2 to 35.
Mr. Raj Kamal and Mr. Aseem Atwal, Advocates appeared for Respondent No. 55.
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REEDLAW 2024 NCLAT Del 11566
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