MUMBAI BENCH, COURT V

Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 And Rule 11 of NCLT

Rules, 2016

Filed by

Meeti Developers Private Limited

…Applicant

vs.

Edelweiss Asset Reconstruction Co. Ltd.

…. Respondent

In the matter of

Edelweiss Asset Reconstruction Co. Limited

…Petitioner/Financial Creditor

vs.

Meeti Developers Private Limited

…Corporate Debtor

Order Dated: 05.04.2024

Coram

Hon’ble Reeta Kohli, Member (Judicial)

Hon’ble Madhu Sinha, Member (Technical)

Appearances (PH)

For the Applicant: Senior Adv. Mr. Gaurav Joshi

For the Respondent: Adv. Amir Arsiwala

ORDER

1. The above Interlocutory Application Number 5704 OF 2023 is preferred by Meeti Developers Private Limited (hereinafter referred to as the “Applicant”) seeking direction against Edelweiss Asset Reconstruction Company Limited (hereinafter referred to as the “Respondent”) under Section 65 of the Insolvency and Bankruptcy Code, 2016 And Rule 41 R/W Rule 11 of NCLT Rules, 2016 (hereinafter called as “the Code”), praying for following reliefs:

a. To impose maximum penalty of Rs.1,00,00,000/- (Rupees One Crore Only) on the Financial Creditor who have acted in violation of Section 65 of IBC.

b. To dismiss the present Company Petition filed by the Financial Creditor against the Corporate Debtor.

c. To take on record of this Hon’ble Tribunal the documents as mentioned in Paragraph No. 5 of the present Application;

d. Pass any other and further relief as this Hon’ble Tribunal may deem fit;

e. Costs for the Application.

Brief facts of the application

1. The Present Application bearing I.A. no. 5704 OF 2023 is preferred by Meeti Developers Private Limited seeking dismissal of the Company Petition No.624 of 2023 filed by the Financial Creditor against the Corporate Debtor i.e. the present applicant.

2. It is submitted that the Applicant, a company registered under the Companies Act, is the Corporate Debtor in Company Petition (IB) 624 of 2023 filed under Section 7 of the Insolvency and Bankruptcy Code. ("Code")

3. It is submitted that by a sanction letter dated 14th October, 2016, the Original Lender i.e., ECL Finance Limited had subscribed to the NCDs (Non- Convertible Debentures) issued by the Applicant (MDPL) on the terms and conditions more specifically stated therein. Thereafter, a Debenture Trustee agreement was executed between the Corporate Debtor and Catalyst Trusteeship Limited. Three years thereafter, the original lender through an Assignment Agreement assigned its rights, title, interest, and benefits under the facility/ NCD’s in favour of the Financial Creditor (Edelweiss Asset Reconstruction Company Limited) on the terms and the conditions set out. The entire debt was recalled by Default notice cum innovation of guarantee notice dated 01st January, 2020 wherein the applicant (MDPL) was asked to pay the entire outstanding.

4. To appreciate the present controversy, it is necessary to state certain relevant background facts in brief-

a. Proceedings under Section 7 of the Code were initiated by the Respondent in the present IA i.e. (Edelweiss Asset Reconstruction Company Limited).

b. Vide order dated 5^th March 2021 in CP 783 of 2020 CIRP process was initiated against the Applicant by the Hon’ble National Company Law Tribunal.

c. Thereafter, on 08th July 2022 the Financial Creditor i.e. the Respondent in the present IA and Ajmera Realty & Infrastructure India Limited (ARIIL) executed a Transfer Agreement to purchase the NCDs from the applicant (MDPL) for a sum of Rs. 31,66,00,000/- along with rights, title, interests, claims and cause of action available to the applicant on the terms and conditions stated therein.

5. Subsequent to the above, on the payment of the first instalment i.e. an upfront payment of Rs. 3,26,00,000/- was made to the Financial Creditor leading to the withdrawal of the Company Petition by way of order dated 8th August, 2022 and the Hon’ble Bench permitted the withdrawal.

6. However, when ARIIL defaulted to the terms agreed with the Respondent/

Org. Pe