Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Online)(NCLAT) 1179

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Sharad Kumar Sharma, J
Sharon Hills Residents Association – Appellant
Versus
K. Parameswaran Nair – Respondent
Comp. App (AT) (CH) (INS) No. 192 of 2023 | Comp. App (AT) (CH) (INS) No. 214 of 2023 | Comp. App (AT) (CH) (INS) No. 215 of 2023 | Comp. App (AT) (CH) (INS) No. 212 of 2023

Advocates:
For the Appellants/Petitioners: Mr. Liju V. Stephen, Mr. Bijoy P. Pulipra, Mr. Kiran Gopi
For the Respondents: Mr. PV. Vinod, Ms. D. Reetha

The court emphasized that stakeholder interests must guide extensions of the insolvency resolution process timelines under the Insolvency and Bankruptcy Code.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 12, 30, 31, and 60(5) - Four Company Appeals challenging the rejection of applications for extension of time to complete insolvency resolution process - Impugned orders dated 26.04.2023 by the Adjudicating Authority declined to extend timelines for Corporate Insolvency Resolution Process (CIRP) - Denial of such extension may adversely affect Home Buyers, whose interests must be prioritized to prevent liquidation - Appeals allowed, orders quashed, and extension of 90 days granted for completion of insolvency proceedings. (Paras 2, 40, 50)

Facts of the case:
The appeals result from the refusal of the Adjudicating Authority to extend the timeline for completing the CIRP. The Corporate Debtor defaulted on loan repayments, leading to CIRP initiation. Home buyers filed applications post-acquisition of homes but faced rejection of resolution plans and extension requests.

Findings of Court:
Timelines must be adhered to; however, extensions may be granted where failure to complete the resolution process is not ascribed to stakeholders. The court emphasized the need to focus on the interests of home buyers over the corporate debtor.

Issues: The principal issues were whether the extension of the CIRP could be granted beyond 330 days and whether resolution plans were submitted and approved.

Ratio Decidendi: The Tribunal upheld that extensions might be permissible despite previous ones if justifiable reasons exist; interests of stakeholders are paramount in extending the process timelines to avoid liquidation.

Result: Appeals allowed.

Table of Content
1. home buyers' claims against corporate debtor. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. involvement of resolution professional and initiation of cirp. (Para 11 , 12 , 13)
3. rejection of home buyers' resolution plans. (Para 14 , 15 , 16)
4. appeal process regarding impugned orders. (Para 18 , 20 , 21 , 22)
5. claims by home buyers in cirp. (Para 23 , 24 , 25)
6. request for extension of time for completion of cirp. (Para 26 , 27 , 28)
7. arguments regarding extension beyond statutory limits. (Para 40 , 41 , 42)
8. principle on extending time beyond 330 days. (Para 45 , 46)
9. implication of past judgments on cirp processes. (Para 47 , 48)
10. conclusion and quashing of prior judgments. (Para 49)

JUDGMENT

(Hybrid Mode)

Justice Sharad Kumar Sharma, Member (Judicial):

These are four Company Appeals Viz. Comp. App (AT) (CH) (INS)No.192 / 2023, Comp. App (AT) (CH) (INS) No.214 / 2023, Comp. App (AT) (CH) (INS) No.215 / 2023 & Comp. App (AT) (CH) (INS) No.212 / 2023, which have been respectively preferred by the Appellants, being aggrieved, against the respective Judgments, passed by the `Adjudicating Authority’, thereby rejecting their Application, as preferred under Section 12 of I & B Code, 2016, for extension of time for the purposes of completion of the Insolvency Resolution Process.

2. As the facts in each of the cases are identical, for the purpose of brevity all the Appeals are being taken up together, in order to aptly deal with the facts as respectively argued by the respective Counsels for the Parties, it becomes inevitable for the `Tribunal’ to deal with the facts of each Company Appeals independently and precisely.

Comp. App (AT) (CH) (INS) No. 192 / 2023:

3. As far as the Comp. App (AT) (CH) (INS) No. 192 / 2023 of Sharon Hills Residents Association v. K. Parameswaran Nair, Resolution Professional is concerned, the challenge given by the Appellant herein is to the Impugned Order, dated 26.04.2023, as it was passed in IA(IBC)/157/KOB/2023 in CP(IBC)/5/KOB/2021, by virtue of the Impugned Order, the Application preferred by the Appellant for extension of time to complete `CIRP’proceedings, had been rejected.

4. The facts as stated by the Appellant in the instant Company Appeal are that the Corporate Debtor through an Advertisement, had invited the Prospective Applicants, i.e., the Home Buyers, for the purchase of apartments along with the undivided share in Sharon Hills Phase I project at Thiruvananthapuram.

5. It is contended by the Appellant that being allured by the Advertisement, that the 12 Home Buyers, had entered into Sale and Construction Agreement with the Corporate Debtor, for the purchase of apartment, along with the undivided share to an extent of 18.856 cents of land in Survey No.333/1-1 and 333/2-1 at Vattappara Village of Sharon Hills Phase I Project at Thiruvananthapuram.

6. It was further contended by the Home Buyers that by February 2015, they have paid the entire sale consideration, towards their respective residential apartments, proposed to be purchased by them and the undivided share over the land of the Corporate Debtor.

7. It is the case of the Appellant that in pursuance to the aforesaid transaction, the Corporate Debtor, had handed over the possession of the residential apartment and ever since then, the respective Home Buyers, are in exclusive possession and enjoyment of the respective apartments, for the past more than 7 years.

8. However, with an ulterior motive, the Corporate Debtor, had failed to execute the Registered Sale Deed, within the agreed time, with regard to the residential apartment and the undivided share over the land as promised, within the time period, as referred in the Deed, in relation to the said Project.

9. It has later came to the Notice of the Home Buyers that the Corporate Debtor during the period 2013 to 2016, had availed various Loan facilities from the Financial Creditors by fraudulent means, and by pledging few of the residential apartment over the Project land which

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2024 Supreme(Online)(NCLAT) 1179

The court emphasized that stakeholder interests must guide extensions of the insolvency resolution process timelines under the Insolvency and Bankruptcy Code.

Cases Referred (1)