Matter: Amit Katyal v. Meera Ahuja & Others
Order dated: 3 March 2022
Jasmine Buildmart Pvt. Ltd. i.e., the corporate debtor (Jasmine) introduced a Gurgaon based housing project i.e., Krrish Provence Estate. The homebuyers of Krrish Provence Estate made an application for initiation of corporate insolvency resolution process (CIRP) against Jasmine before the National Company Law Tribunal (NCLT) as Jasmine could not complete the project even after a period of eight years. Additionally, the homebuyers sought a refund of approximately INR 69 million on the grounds of inordinate delay. The NCLT admitted the said application and appointed an interim resolution professional (IRP) and declared moratorium.
Jasmine challenged the order of admission before the NCLAT and tried to settle the matter with the homebuyers during the course of the appeal. However, the settlement failed and the NCLAT affirmed the order of the NCLT. The IRP issued a public announcement and constituted the CoC. Thereafter, Jasmine preferred an appeal before the SC. During the hearing, the
homebuyers submitted that they have entered into a settlement with Jasmine on the following conditions (a) that it shall complete and hand over the possession of flats within one year and (b) it will refund an amount of approximately INR 33 million to the homebuyers. Accordingly, the homebuyers made an application under the provisions of the Constitution of India (Constitution) and the NCLT Rules, 2016 for withdrawal of the CIRP.
The SC noted that, (a) out of 128 homebuyers, 82 home buyers have agreed to the settlement with Jasmine and have no objection to the withdrawal of the CIRP proceedings, (b) as per the Insolvency and Bankruptcy Code, 2016 (Code), an application for withdrawal of CIRP may be allowed only with 90% approval of the CoC. However, the SC in another case held that the relevant provision regarding the withdrawal of CIRP is directory, depending on the facts of each case, (c) the CoC comprises 91 members, of which 70% are homebuyers who are agreeable for the CIRP proceedings being set aside, and (d) the legislative intent behind
the amendments to the Code is to secure, protect and balance the interests of all home buyers.
Considering the above, the SC opined that it was a fit case to exercise powers under the relevant provisions of the Constitution and the NCLT, Rules 2016, and permitted the withdrawal instead of relegating the matter back to the NCLT.