IMPORTANT POINT
The judgment establishes that the Insolvency and Bankruptcy Code does not extend to partnership firms or their directors, and filing a petition under Section 95 against them is non est and illegal.

ORDER :

The petitioner in W.P.No.26977 of 2023 is a firm - M/s Manyata Reality (‘the firm’ for short). Petitioners in W.P. No.27032 of 2023 and 27346 of 2023 are the Directors of the said firm. The common stream of challenge in all these petitions is filing of petition before the National Company Law Tribunal (‘the Tribunal’ for short) invoking Section 95 of the Insolvency and Bankruptcy Code (‘the Code’ for short).

2. Heard Sri C.K. Nandakumar and Sri Om Prakash, learned senior counsel appearing for the petitioners, Sri M.S. Shanthi Bhushan, learned Deputy Solicitor General of India appearing for respondent No.1 and Sri M.S. Shyam Sundar, learned senior counsel appearing for respondent No.2.

3. The petitioner/firm is a developer/Infrastructure Development business hub. On 23-12-2009 the firm enters into a memorandum of understanding between the land owners of certain properties with the 2nd respondent. The 2nd respondent is Buoyant Technology Constellation Private Limited (hereinafter referred to as ‘the Company’ for short). Between 2010 and 2015 the respondent/Company appears to have entered into distinct Joint Development Agreements on various dates for implementing the joint development of lands as contemplated under the memorandum of understanding. The dispute arose between the two. The petitioner and Manyata Infrastructure Development, a private entity issues a notice to the respondent/Company regarding termination of Joint Development Agreement, quantifying damages and calling upon the 2nd respondent to pay such damages, in view of the breach of agreement by the respondent/Company and the resultant losses suffered by the petitioners. The petitioner/firm then issues a notice for arbitration to the respondent/Company on 10.10.2022. On 17-10-2022 the respondent/Company replies nominating its Arbitrator for the purpose of arbitration. On 05-12-2022 the petitioner/firm files a claim before the Arbitral Tribunal and on 25-01-2023 the respondent/Company files its counter claim for repayment of the loan with interest in terms of a particular loan agreement of the year 2012. Objections to the counter claim and rejoinder to the objections were all filed before the Arbitral Tribunal.

4. When things stood thus, the respondent/Company causes a legal notice under Section 95 of the Code demanding the petitioner/firm and its partners for payment of huge sums of money against the alleged loan account. The petitioner/firm and its partners reply to the said notice denying all claims made by the respondent/Company, in the notice issued invoking Section 95 of the Code. These are put forth before this Court in Writ Petition No.16886 of 2023 by the respondent/Company which comes to be withdrawn. It is later, the respondent/ Company serves copy of the petition filed before the Tribunal under Section 95 of the Code depicting a particular filing number before the Tribunal. The respondent/Company on the ground that it has preferred a petition before the Tribunal files a memo before the Arbitral Tribunal seeking adjournment of arbitration proceedings sine die. In the light of filing of petition before the Tribunal, the petitioners are knocking at the doors of this Court in these petitions.

5. The learned senior counsel Sri C.K. Nanda Kumar and Sri Om Prakash representing the petitioners would in unison submit that the Code does not relate to insolvency resolution of individuals and partnership firms. The jurisdiction for the respondent/Company is to approach the Debts Recovery Tribunal or Debts Recovery Appellate Tribunal. Since no insolvency resolution of individuals and partnership firms are brought under the ambit of the Code the only exception that the Code projects is that personal guarantor to corporate debtor only can be brought under Section 90 of the Code and thereby conferring jurisdiction upon the Tribunal. Since the petitioners, the Directors in the other two petitions are not personal guarantors of the corporate debtor nor the petitioner/f