ANAND MURTI vs. SONI INFRATECH PRIVATE LIMITED

NON­REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION  CIVIL APPEAL NOS.7534 OF 2021 ANAND MURTI     ...APPELLANT(S)   VERSUS SONI INFRATECH PRIVATE LIMITED  & ANR.    ...RESPONDENT(S) O R D E R  B.R. GAVAI, J.   1. The present appeal challenges the order passed by the National   Company   Law   Appellate   Tribunal,   Principal   Bench, nd New Delhi (hereinafter referred to as “the NCLAT”) dated 22 November, 2021, in I.A. No.1115 of 2020 in Company Appeal (AT)   (Insolvency)   No.   1507   of   2019,   thereby   rejecting   the Modification Application filed by the appellant herein.  Vide the 1 impugned order, the NCLAT observed that, in the meantime, if settlement takes place between the parties for completion of the housing project, the same can be filed under Section 12A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the IBC”) before the Adjudicating Authority.   The NCLAT also   directed   the   Interim   Resolution   Professional   (“IRP”   for short)/Resolution   Professional   (“RP”   for   short)   to   hold   the meeting of the Committee of Creditors (hereinafter referred to as “CoC”) within ten days from the date of order and decide the future course of action about a resolution for completion of the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) of the respondent No.1­company (hereinafter referred to as “the Corporate Debtor”).   2. The facts in brief giving rise to the present appeal are as under: 3. The   appellant   herein   is   the   Suspended   Director   of   the Corporate Debtor.   The respondent No.2 herein had booked a flat in the housing project launched by the Corporate Debtor. 2 st Subsequently,   vide   a   letter   dated   31   July,   2018,   the respondent No.2 cancelled the booking and demanded refund of the amount of Rs.32,27,591/­ from the Corporate Debtor.   4. On failure of the appellant in refunding the amount, the respondent No.2 filed an application under Section 7 of the IBC against the Corporate Debtor for initiation of CIRP before the National   Company   Law   Tribunal,   New   Delhi   (hereinafter nd referred to as “the NCLT”).   The NCLT vide order dated 22 November, 2019, admitted the said application and appointed an   IRP.     The   IRP   was   directed   to   initiate   the   CIRP   of   the Corporate Debtor as per the provisions of the IBC.   nd 5. The   appellant   being   aggrieved   by   the   order   dated   22 November,   2019,   filed   an   appeal   before   the   NCLAT,   being Company   Appeal   (AT)   (Insolvency)   No.1507   of   2019.     The th NCLAT vide its order dated 19  December, 2019, issued notice and passed an interim order, thereby directing the IRP not to constitute CoC.   3 6. It was submitted by the appellant herein before the NCLAT that he was ready and willing to settle the matter with the respondent No.2.   It was further submitted by him that the project was complete almost to the extent of 70­75% and that he had arranged the funds/private financier to complete the project.   In light of the submission made by the appellant herein, 7. st the NCLAT vide order dated 31   January, 2020, directed the appellant   herein   to   file   proposed   settlement   terms/plan disclosing all material particulars with regard to completion of the   housing   project.     Accordingly,   the   appellant   herein th submitted/filed   the   proposed   settlement   terms/plan   on   13 February, 2020.  The IRP had submitted his status report a day th prior, on 12  February, 2020, stating therein that most of the Allottees   decided   to   have   possession   of   the   flats.     In   the meantime, the appellant settled the matter with the respondent No.2 herein.  Despite the settlement with the respondent No.2 and   appellant’s   readiness   and   willingness   to   complete   the 4 th project,   the   NCLAT,   vide   order   dated   26   February,   2020, th modified   the   interim   order   dated   19   December,   2019   and directed the IRP to go ahead with the constitution of CoC and th carry forward the CIRP.   The said order dated 26  February, 2020   was   passed   by   the   NCLAT   on   the   ground   that   the settlement   arrived   at   by   the   appellant   was   only   with   the respondent No.2 and the settlement plan did not encompass all the Allottees.   The appellant therefore approached this Court by way of 8. th Civil Appeal No. 1928 of 2020.  This Court vide order dated 5 March, 2020, permitted the appellant to approach the NCLAT th for modification of the order dated 26  February, 2020, so as to present the settlement plan covering all the Allottees. Vide the th said order of this Court dated 5  March, 2020, liberty was also granted to the appellant to approach this Court again in case the modification application was not allowed.  9. Pursuant   thereto,   the   appellant   filed   the   modification application being I.A. No.1115 of 2020 in Company Appeal (AT) 5 (Insolvency) No.1507 of 2019 before the NCLAT.  However, the nd NCLAT vide the impugned order dated 22   November, 2021, has rejected the said application for modification and passed the   order   as   aforesaid.     Being   aggrieved,   the   appellant   has approached this Court by way of present appeal.   10. We have heard Shri Shyam Divan, learned Senior Counsel appearing on behalf of the appellant, Shri D.N. Goburdhun, learned Senior Counsel appearing on behalf of the applicants­ home­buyers   and   Shri   Abhigya   Kushwah,   learned   counsel appearing on behalf of the respondent No.1/ IRP/applicant. 11. Shri Shyam Divan, learned Senior Counsel, would submit that  in  pursuance  to the  liberty  granted  by  this  Court, the appellant   had   moved   the   NCLAT   placing   on   record   the settlement with all the stakeholders. He submitted that not only that but in pursuance to an order passed by the NCLAT dated th 29   September, 2021, a special meeting of the stakeholders rd was   convened   on   23   October,   2021,   wherein   the   IRP,   the representatives of the Corporate Debtor, the financial creditors, 6 ten   representatives   of   home­buyers   and   the   lawyers representing home­buyers were present.  He submitted that the rd perusal of the minutes of the meeting dated 23  October, 2021 would show that there was a settlement between the appellant and the home­buyers almost on all counts.   It is submitted that, however, the NCLAT, without taking into consideration the minutes   of   the   said   meeting,   has   erroneously   passed   the impugned order, thereby holding that there was no settlement with   all   the   home­buyers   and   that   there   was   trust   deficit amongst the home­buyers.  He submitted that not only this but Shri Kashi Nath Shukla, the Promoter of the Corporate Debtor, has filed an undertaking on an affidavit, thereby undertaking to complete the project within the stipulated period.  He therefore submits that it is in the interest of the home­buyers that the reverse   CIRP   should   be   permitted   to   be   continued   in rd accordance with the decision taken in the meeting dated 23 October, 2021. 7 12. Shri   D.N.   Goburdhun,   learned   Senior   Counsel   strongly opposes   the   prayer   made   on   behalf   of   the   appellant.     He submits that the appellant is not at all interested in completing the   project.   He   submits   that   the   proposed   settlement terms/plan   is   not   a   bona   fide   one   but   only   to   delay   the completion of the project.   He submits that the initiation of CIRP proceedings would ensure the completion of the project   and would be in the interest of the home­buyers.  He therefore prays for dismissal of the present appeal.    Shri   Abhigya   Kushwah,   learned   counsel,   would   submit 13. that   most   of   the   home­buyers   are   interested   in   getting   the possession of the flats.   He therefore submits that this Court may   pass   appropriate   orders   taking   into   consideration   the interests of the purchasers of the flats.  A perusal of the record would reveal that after the order 14. th was passed by this Court on 5   March, 2020, the appellant th submitted a Revised Proposed Settlement Plan on 15  March, th 2021.  The IRP also submitted its Revised Status Report on 25 8 th March, 2021 before the NCLAT.  An email dated 9  July, 2021, addressed by Senior Investment Associate, SBI Cap Ventures Ltd.­SWAMIH Investment Fund to Shri Kashi Nath Shukla, the Promoter of the Corporate Debtor, was also placed on record before   the   NCLAT.     When   the   matter   was   listed   before   the th NCLAT   on   29   September,   2021,   the   NCLAT   directed   the IRP/RP,   who   was   present   before   the   NCLAT,   to   convene   a meeting   of   CoC   within   four   weeks   to   consider   the   modified Resolution Plan. The NCLAT further directed that home­buyers may nominate not more than 10 persons, who will participate in   the   meeting   and   represent   them.     The   NCLAT   further directed   that   the   promoters   and   the   authorized   persons   of Edelweiss   Asset   Reconstruction   Company   Ltd.     (Financier) would also participate in the meeting so that they can explain the   elements   of   the   modified   Resolution   Plan   to   the   home­ buyers.     The   IRP/RP   was   directed   to   place   on   record   the minutes of the meeting after the meeting was convened. The 9 th matter was thereafter directed to be listed for hearing on 15 November, 2021.   15. In accordance with the directions issued by the NCLAT, a rd meeting was convened on 23  October, 2021.  A perusal of the rd minutes of the meeting dated 23  October, 2021 would reveal that the ‘Modified Resolution Plan’ submitted by the Promoter was presented on a Digital Screen.   During the presentation, some home­buyers requested for further modification of some contentious   points   of   the   ‘Modified   Resolution   Plan’.       The perusal of the minutes of the said meeting would further reveal that most of the concerns as expressed on behalf of the home­ buyers were taken care of by the statement made on behalf of the Promoters.   It is further to be noted that the Status Report came to be 16. rd filed by the IRP before the NCLAT on 3  November, 2021.  The said Status Report of the IRP would reveal that the Promoter, Shri Kashi Nath Shukla had informed that he would file an addendum   to   his   ‘Modified   Resolution   Plan’   to   include   the 10 points   of   home­buyers   and   to   amend   the   plan   as   per discussions in the Meeting.  nd 17. However,  by the impugned  order dated 22   November, 2021, the NCLAT has rejected the application for modification and directed the CIRP to be continued.   It could thus be seen that though a meeting of various 18. rd stakeholders   was   conducted   on   23   October,   2021   in th pursuance to the directions issued by the NCLAT dated 29 September, 2021 and in which meeting most of the issues stood resolved, the NCLAT has failed to take into consideration the rd minutes of the said meeting dated 23  October, 2021.  Not only that, but the NCLAT has also not taken into consideration the rd Revised Status Report dated 3  November, 2021 submitted by the IRP.   th 19. An additional affidavit  dated 27   December,  2021,  has now been filed by the Promoter, Shri Kashi Nath Shukla before 11 this Court. It will be relevant to reproduce the same, which is as under: “IN THE SUPREME COURT OF INDIA  CIVIL ORIGINAL JURISDICTION CIVIL APPEAL NO. 7534 OF 2021 IN THE MATTER OF: ANAND MURTI ... APPELLANT VERSUS Soni Infratech Pvt. Ltd  & Anr.    ... RESPONDENTS AFFIDAVIT “I   K.N.   Shukla   son   of   Sh   Kailash   Nath Shukla resident of C­35 Sector 30, Noida, UP 201301 around 68 Years age and the major share holder of M/S K N Consultant pvt Ltd. which is promoter of M/S Soni Infratech Pvt Ltd, (Corporate Debtor) Having its Registered office   at   517   A,   Narain   Manzil,   23, Barakhmbha   Road   Connaught   place,   New Delhi­110001, presently do hereby solemnly affirm and state as under: 1. That I am conversant with the facts of the case as such I am competent to affirm this affidavit.  2. That  I  am  the original land  owner and existing promoter of the Corporate Debtor and I say that I have purchased the land in 2007 for the development of the project of   the   corporate   debtor   i.e.   M/S   Soni Infratech Pvt Ltd.  12 3. That   I   have   given   the   land   for   the development to “SPIRE Group” to develop the project vide development Agreement. And   accordingly   the   Development   and management of the project transferred to erstwhile promoters i.e. Mr. Sunil Gandhi and Mr. Ashish Bhalla of “Spire Group”.  4. That   SPIRE   Group   has   launched   the project   and   collected   the   booking   from the home buyers for the said project and appointed   construction   company   ERA Group to complete the project.  5. That After construction of 30­40% work, ERA Group has stopped the work due to inter­se   dispute in the ERA group which lead   to   multiple   litigation   between   the erstwhile promoters.  6. That I have discussed about the delay of the   project  and   after   a  long   discussion and series of meeting, I managed to take back the management of the project in 2017.  7. That I have terminated the Civil contract of ERA and appointed the new contractor i.e.   M/s   Indsao   Infratech   and   within   a period of 18 months we have managed to complete   approx   70%   of   total construction   of   the   project   by   mid   of 2018.   The   Enclosed   Construction   audit report by “Qonquest” confirms the stage as approx 70% completed. 8. That   I   have   approached   Financial Creditor M/s Edelweiss to grant further loan to complete the project. But Due to stay   granted   by   NCLT   in   CP   No. N0.175/241/242/(ND)/   2018   arises   in 13 the inter­se disputes between Mr. Sunil Gandhi and Mr. Ashish Bhalla, 50% of shares of the corporate Debtor could not be pledged in favour of M/s Edelweiss. Thus,   the   Edelweiss   has   not   disbursed the funds for the construction.  9. That   in   June   2019,   I   managed   to   get 100% share back after the Hon'ble NCLT decided   the   matter   in   CP   No 175/241/242/(ND)/2018.  10. That before I could arrange more funds, an application in case title Balram Singh Vs. Soni Infratech Private Limited vide its order dated 22.11.2019 for the CIRP got admitted.  11. That suspended Director has preferred an   Appeal   before   Hon'ble   NCLAT   and Hon'ble   NCLAT   vide   it   order   dated 19.12.2019 were pleased to grant stay on CIRP. 12. That as per the direction of the Hon'ble NCLAT,   i   have   filed   the   settlement terms/Resolution   Plan   with   all   details pertaining   how   this   project   will   be managed   to   be   completed   with   funds planning and repayment to all Creditors. 13. That I say that I will complete the stage wise construction within 6 months to 15 months (+/­ 3 Months) in phased manner from the date of Order.

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court   and   accordingly   arranged   Rs   10 Crore   to   start   the   project   immediately without any delay and I will ensure this will be started within 15­30 days.  15. That   I   have   already   agreed   in   my Resolution plan that the Cost of the Flat will not be escalated and agreed to honor the   BBA   signed   by   the   previous management. 16. That as per the data before the LD IRP only   9   home   buyers   out   of   452   Home Buyers   wanted   the   refund   and   in   my Resolution Plan I have agreed to refund the   amount   after   completion   of   the project of Phase­1. 17. That I have stated all relevant data and computation in details in my Resolution Plan that how the funds will be utilized and  how the  construction work  can be completed in time.  18. That I have stated in my last modified resolution plan that SBI Cap Vetures Ltd has   already   shown   interest   for   further Loan of 100 Crore to me.  19. That   as   per   the   direction   of   Hon'ble NCLAT I have attended the meeting with the   Representative   of   the   Home   Buyers and I have already accepted and agreed to   Incorporate   the   suggestions   and 15 objections   of   the   Home   Buyers   to   the Resolution Plan and the same has been recorded by the LD IRP in the Minutes of the Meeting dated 23.10.2021. 20. That I have also given my consent to make a team of 5 person, 2 from buyer side   and   2   from   management  side   and will be monitored by Ld IRP 21. That   this   affidavit   to   the   additional documents   in   the   present   Civil   Appeal have been read by me and are found true and correct to my knowledge and belief.  22. That the Annexures are true copies of their respective originals. 23. That   the   facts   stated   in   the   above affidavit   are   true   and   correct   to   my personal knowledge and belief. 24. That No part of the same is false and nothing   material   have   been   concealed there from. DEPONENT VERIFICATION I, the above named deponent do hereby verify that the facts stated in the above affidavit  are  true  to  my  knowledge   and belief which I believe to be true.  No part of the same is false and nothing material has been concealed there from. th Verified at New Delhi, on this 27  day of December, 2021. DEPONENT” 16 20. The Promoter, Shri Kashi Nath Shukla has also filed an undertaking,   thereby   undertaking   to   return   the   money   with interest at the rate of 6% per annum of seven applicants in I.A. No.11358 of 2022 (for impleadment) in the present appeal, who were   objecting   to   the   Settlement   Plan   submitted   by   the appellant.  The   same   is   taken on  record  and   marked  ‘X’ for identification.  21. Taking into consideration the facts and circumstances of the present case, we find that it will be in the interest of the home­buyers if the appellant/promoter is permitted to complete the housing project. The salient features of the undertaking given on affidavit are as under: (a)That   the   project   will   be   completed   stage­wise   within   a period of 6 months to 15 months (+/­ 3 months) in a phased manner; (b)That   the   promoter   has   arranged   an   amount   of   Rs.  10 crores to start the project immediately without any delay 17 and that he will ensure that the project would be started within 15­30 days; (c) That the cost of the flat will not be escalated and that the promoter is agreeable to honour the BBA signed by the previous management; (d)That SBI Cap Ventures Ltd. has already shown interest for further loan of Rs.100 crore; (e) That the promoter has given his consent to make a team of 5 persons, 2 from home­buyer’s side and 2 from the management   side   and   that   the   entire   process   will   be monitored by the IRP.   22. Taking   into   consideration   the   salient   features   of   the undertaking given on affidavit by the Promoter, Shri Kashi Nath Shukla and the fact that there are only seven out of the 452 home­buyers, who opposed the Settlement Plan, we find that it will   rather   be   in   the   interest   of   the   home­buyers   that   the appellant/promoter   is   permitted   to   complete   the   project   as 18 undertaken by him.  It is pertinent to note that he has agreed that the cost of the flat will not be escalated.  He has also given the time line within which the project would be completed.  Not only this, but he has also undertaken to refund the amount paid by the seven objectors, if they so desire.  He has further agreed that there shall be a team of 5 persons, 2 from the home­buyer’s side and 2 from the management side and that the entire process shall be monitored by the IRP. We find that there is every possibility that if the CIRP is 23. permitted,   the   cost   that   the   home­buyers   will   have   to   pay, would be much higher, inasmuch as the offer made by the resolution applicants could be after taking into consideration the price of escalation, etc.  As against this, the Promoter has filed a specific undertaking specifying therein that the cost of the flat would not be escalated and that he would honour the BBA signed by the previous management.   24. In that view of the matter, we are inclined to allow the present appeal.  Accordingly, we pass the following order: 19 nd A. The   appeal  is   allowed.   The   impugned   order   dated   22 November,   2021   passed   by   the   National   Company  Law Appellate   Tribunal,   Principal   Bench,   New   Delhi   in   I.A. No.1115 of 2020 in Company Appeal (AT) (Insolvency) No. 1507 of 2019 is quashed and set aside;  th B. The   affidavit   dated   27   December,   2021   filed   by   Shri Kashi Nath Shukla, the promoter of the respondent No.1 – Corporate Debtor is taken on record and treated to be an undertaking given to this Court;  C. The   appellant/promoter   is   permitted   to   complete   the project   as   per   the   deliberations   that   took   place   in  the rd Minutes of the Meeting dated 23   October, 2021 and in th accordance with the affidavit­cum­undertaking dated 27 December, 2021 of the Promoter, Shri Kashi Nath Shukla; D. The modification application being I.A. No.1115 of 2020 in Company Appeal (AT) (Insolvency) No. 1507 of 2019 before the NCLAT accordingly stands allowed.  20 E. From the date of this order, the IRP shall submit quarterly reports to the National Company Law Appellate Tribunal, Principal Bench, New Delhi with regard to the progress of the housing project; F. The matter be listed before the National Company Law Appellate Tribunal, Principal Bench, New Delhi for such nd first Status Report on 22  August, 2022.  Application for impleadment is allowed.   Application for 25. clarification/directions   filed   on   behalf   of   the   IRP   does   not survive and is accordingly dismissed.  Application for vacation th of   stay/modification   of   order   dated   4   January,   2022   is rejected.  Pending application(s), if any, shall stand disposed of. There shall be no order as to costs.  …..….......................J. [L. NAGESWARA RAO]          …….........................J.        [B.R. GAVAI] NEW DELHI; APRIL 27, 2022. 21