Summary
Homebuyers who initiated insolvency proceedings settled their refund claims, while a substantial majority of buyers accepted undertakings to complete the housing project. Although the committee of creditors had been constituted, further proceedings were stayed before it acted. In the peculiar circumstances, the Court exercised Article 142 to permit withdrawal, set aside the insolvency orders and require completion undertakings. It also directed payment of the deposited refund, withdrawal or quashing of specified related proceedings, and reimbursement of the resolution professional.
Issues
- Whether the Court should permit withdrawal of admitted insolvency proceedings to implement the settlement in these circumstances.
- How homebuyer interests and the inactive committee stage affected relief.
- What payment, project-completion and enforcement directions were required.
Provisions considered
- Article 142, Constitution of IndiaThe Court used its complete-justice power on the peculiar settlement and procedural facts to permit withdrawal directly rather than send the applicants back for a further application. (¶¶ 8-9, 12-15)
- Section 12A, Insolvency and Bankruptcy Code, 2016The Court noted the statutory withdrawal framework, including ninety-percent committee approval, but granted case-specific relief under Article 142 in the circumstances before it. (¶¶ 6-9, 13)
- Rule 11, National Company Law Tribunal Rules, 2016The inherent-power framework for withdrawal and settlement informed the relief; the Court itself exercised Article 142 rather than announcing a general replacement of statutory committee requirements. (¶¶ 7.1, 9, 13)
Held
- The original applicants had settled, and the majority of homebuyers sought completion and possession rather than continuation of insolvency. The committee had been constituted shortly before the stay, but had conducted no further proceedings or first meeting. These circumstances supported exceptional withdrawal relief. (¶¶ 5.1, 6, 8-9, 12-13)
- The insolvency application was dismissed as withdrawn and the NCLT orders, including appointment of the interim resolution professional and constitution of the committee, were set aside with the NCLAT decision. The original applicants were to receive Rs.3,36,02,000 with accrued interest from the court deposit. (¶ 14)
- The specified consumer case and criminal complaint between the settling original applicants, promoter and corporate debtor were dismissed as withdrawn or quashed as agreed. This direction did not dispose of every other homebuyer’s separate remedy. (¶¶ 2.5-2.6, 14)
- The promoter and company were required within one week to file separate company-resolution-backed undertakings: complete the entire project and offer possession within one year from 1 March 2022, provide agreed apartments and amenities, adhere to agreement-based demands and payments, continue maintenance and apply for an occupancy certificate within six months. (¶ 15)
- The settlement and undertakings were binding, breach would be viewed seriously, and homebuyers and their association could approach the Supreme Court in case of difficulty. The promoter was directed to pay the interim resolution professional six lakh rupees towards expenditure and litigation costs within two weeks. (¶ 15.1-16)
Result
Proceedings disposed of on settlement. The original insolvency application was permitted to be withdrawn and the NCLT and NCLAT orders set aside. Refund from the court deposit, specified related-case disposal, project-completion undertakings and six-lakh-rupee payment to the resolution professional were directed, with liberty to approach the Court on difficulty.