National Company Law Appellate Tribunal
Mr. S. Sankaranarayanan And 32 Others ... vs Mr. Balakrishnan Venkatachalam Rp Of ... on 13 November, 2024
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) (Ins) No. 378/2024
(IA Nos. 1033 & 1061/2024)
(Arising out of the `Impugned Order' dated 13.09.2024 in IA No.569/2022
and IA No.570/2022 in CP(IB) No.167/BB/2018 passed by the 'Adjudicating
Authority', (`National Company Law Tribunal', Bengaluru Bench)
IN THE MATTER OF:
\
1. Mr. S. Sankaranarayanan,
Son of V. Subramani,
Creditor of Sovereign Developers and
Infrastructure Private Limited 1A,
Lakshmipuram 3rd Street,
Royapettah, Chennai - 600 014.
2. Mr. Ravi Gupta,
Son of R C Gupta Creditor of Sovereign
Developers and Infrastructure Private Limited
B1-413, Nishant Prime Apt,
Immidahalli Mn Rd Whitefield,
Bangalore 560 066.
3. Ms. Vandana Dinakar,
Daughter of Bhasker Uchil,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Vanditha Akshayanagar,
1st Blk 11th Cross Te Palya Main Road,
Ramamurthynagar,
Bangalore 560 016.
4. Mr. Shreekant Amble,
Son of Chandrashekhar Amble,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Flat no S 103. Tapti Kuteera,
2nd A main Road, OMBR Layout,
Near Greenview Park Layout,
Banaswadi, Bangalore 560 043.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 1 of 38
5. Mr. Athar Hussain,
Son of Mir Maqbool Ali,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
A-6, 5th Floor, 'Ali's Abode',
No.39, [Site No.13], 5th Cross,
Kanakanagar, Bengaluru - 560 032.
6. Mr. Paranji Gopalarathnam Govindan,
Son of Paranji Gopalarathnam lyengar,
Creditor of Sovereign Developers and
Infrastructure Private Limited
217, Ist 'E' Cross, 3rd Block, HRBR Layout,
Thomas Town Post, Bengaluru 560 084.
7. Mr. Omkar Mohallick,
Son of Purna Chandra Mohallick,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Flat No: 611, Srimitra Lifestyle,
Horamavu- Kalkere Main Road,
Opp Sunshine School,
Bengaluru-560 043, Karnataka.
8. Mr. Roopesh Soni,
Son of Rajendra Prasad Soni,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Flat P114, Ittina Mahaveer Apartment,
Neeladhari nagar, Electronic City, phase 1,
Bangalore - 560 100.
9. Ms. Anitha Mannan,
Daughter of G Radhakrishnan,
Creditor of Sovereign Developers and
Infrastructure Private Limited 943,
5th Cross, 9th H Main,
Hrbr First Block Ext,
Kalyan Nagar, Bangalore - 560 043.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 2 of 38
10.Ms. Ramya KG,
Daughter of G Radhakrishnan,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
1602, 5th A Cross, 17th Main,
Banashankari 1st Stage,
Bangalore - 560 050.
11.Mr. Dharmraj Patil,
Son of Shivasharanappa Patil.
Creditor of Sovereign Developers and
Infrastructure Private Limited,
T6, SV Meadows, 29th C Cross,
Kaggadasapura, Bangalore - 560 093.
12.Mr.Ajums Thankachan Thannimoottil,
Son of T.G Thankachan,
Creditor of Sovereign Developers and
Infrastructure Private Limited
D-304, Concorde Windrush,
Ramasagara, Electronic City Phase-2,
Bangalore-560 100, Karnataka.
13. Mr. Anilkumar Krishnankutty,
Son of Krishnankutty,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
002, Sri Balaji Emerald, Ist Main,
2nd Cross, Subramani Layout,
Ramamurthy Nagar,
Bangalore-560 016.
14.Mr. Abbas Ali Z
Son of A. Zeinulabudeen,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
45, Indraprastha Apartments,
Flat No. F4, Block-1, 5th Main Road,
OMBR Layout, Kasturi Nagar,
Bangalore - 560 043.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 3 of 38
15. Mr.Vinod Venkatesh Hariharan,
Son of V Hariharan,
Creditor of Sovereign Developers and
Infrastructtare Private Limited,
No 14.Omkaram, Ramachandra Garden,
3rd Cross, Shanthi Layout,
Ramamurthynagar,
Bengaluru - 560 016.
16. Mr. Shridhar Patil,
Son of Yashwantrao Patil,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
504, Nigam Regency, Ist C cross,
Kaggadaspura, CV Raman Nagar,
Bangalore - 560 093.
17. Mr. Nitin B Patil,
Son of Bharama N Patil,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
G 806, Sumadhura Eden Garden,
1st Main Road Off Sai Baba Ashram Road,
Doddabanahalli, Whitefield,
Bengaluru, Karnataka - 560 067.
18.Mr. Amit Kumar Mondal,
Son of Mahadeb Mondal,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Villa 415, Phase - 5, Upkar Royal Garden,
Zuzuvadi, Hosur, Tamilnadu - 635 126.
19. Mr. Himanshu Rai,
Son of Brijkishor Rai,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
2208 Kristal Citrine Apartment,
Kodigehalli Main Road, Hoodi,
Bengaluru - 560 048.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 4 of 38
20. Mr. Vijayakumar Chakravarthy,
Son of K Chakravarthy,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Flat A001, SLV HM SIGNATURE,
108/1 5th crs 13th Mn 4th Blk 1st Stg HBR LYT,
Bangalore - 560 043.
21. Mr. Krishnakumar Pujar,
Son of Mallanna,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
1830/c, 6th A cross, 2nd main,
HAL 3rd stage, New Tippasandra,
Bangalore - 560 075.
22. Ms. Ganga Swaminathan,
Daughter of Anantharaman K,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
A307, Krishna Ashraya Apts,
Ist Main, NRI Layout, Ramamurthy Nagar,
Bangalore - 560 016.
23. Mr. Sriram Anantharaman,
Son of Anantharaman K,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
A307, Krishna Ashraya Apts. 1st Main,
NRI Layout, Ramamurthy Nagar,
Bangalore - 560 016.
24. Mr. Sriram Kolathu,
Son of S K Manu,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
DS Max Sanskruthi Apartment,
Flat 123, Hanumanthe Gowda Road,
K Narayanapura, Bangalore - 560 077.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 5 of 38
25. Mr. Deepak Kumar Sinha,
Son of Late JP SINHA,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
No.64, 4th A main, 8th cross,
MV Nagar, Bangalore - 560 016.
26. Mr.Pritam Dey,
Son of Priotosh Dey,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Flat C-232, IDs Max Sankalp Manor,
Kane Road, Horamavu Agara,
Bengaluru - 560 043.
27. Mr. Suraj Ashok Doddannavar,
Son of Ashok Hirachand Doddannavar,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
Sai Nandana Presidency,
Flat No.SF202, 11th Cross, 3rd Main,
Vijaya Bank Layout, Bilekahalli,
Bangalore - 560 076
28. Mr. Devarajan Ethirajan,
Son of S. Ethirajan,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
14, 1st Main, Byreshwara Layout Hennur,
Bangalore - 560 043.
29. Mr. DL Sujai Kumar,
Son of DN Lakshmi Narayana,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
IEC 230, BDA Layout, 3rd Block,
Hennur Road, Bangalore - 560 084.
30. Mr. Sanjay Kumar Sinha,
Son of J. P. Sinha,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
54, 2nd Main Road, 8th Cross,
Subramaniyam Layout,
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 6 of 38
RM Nagar, Bangalore - 560 016.
31. Mr. Ankush Kumar Shukla,
Son of Prahlad Kumar Shukla,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
66E, 1st Main Road, Sai Nagar,
Phase II, Chikkabettahalli Post,
Vidyaranyapura, Bangalore - 560 097.
32. Mr. Bikram Bholla (Deceased),
Rep by Legal Heir Tejeswini Baliarsingh,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
G 107, Amrutha Value Apartment,
Borewell Road, Nallurahalli,
Bangalore - 560 066.
33. Mr. Jagadeesh. G,
Son of Gopala Nair,
Creditor of Sovereign Developers and
Infrastructure Private Limited,
FF 4, Anaadi Comforts, Richid Garden Road,
Ragavendra Nagar, Bangalore - 560 016. ...Appellants
V
1. Mr. Balakrishnan Venkatachalam,
RP of M/s. Sovereign Developers and
Infrastructure Pvt. Ltd.
C-420, 3rd Floor, Kempe Gowda Underpass Road,
(5th Main), Ramamurthy Nagar,
(Opposite to Aditi Eloquent Apartments).
Bangalore, Karnataka - 560 016. ... Respondent
Present:
For Appellants : Mr. AG Sathyanarayana, Advocate
For Respondent : Mr. P.S. Raman, Senior Advocate
For Mr. Gautam S. Raman, Advocate
Mr. Avinash Wadhwani, Advocate,
For Proposed Respondent
WITH
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 7 of 38
Company Appeal (AT) (CH) (Ins) No. 384/2024
(IA Nos. 1045, 1046, 1057, 1078 & 1085/2024)
(Arising out of the `Impugned Order' dated 13.09.2024 in IA No.569/2022
in CP(IB) No.167/BB/2018 passed by the 'Adjudicating
Authority', (`National Company Law Tribunal', Bengaluru Bench)
IN THE MATTER OF:
\
1. Mr. Balakrishnan Venkatachalam,
RP of M/s. Sovereign Developers and
Infrastructure Pvt. Ltd.
C-420, 3rd Floor, Kempe Gowda Underpass Road,
(5th Main), Ramamurthy Nagar,
(Opposite to Aditi Eloquent Apartments).
Bangalore, Karnataka - 560 016. ... Appellant
Present:
For Appellant : Mr. P.S. Raman, Senior Advocate
For Mr. Gautam S. Raman, Advocate
WITH
Company Appeal (AT) (CH) (Ins) No. 386/2024
(IA Nos. 1048, 1049, 1079 & 1086/2024)
(Arising out of the `Impugned Order' dated 13.09.2024 in IA No.570/2022
in CP(IB) No.167/BB/2018 passed by the 'Adjudicating
Authority', (`National Company Law Tribunal', Bengaluru Bench)
IN THE MATTER OF:
\
1. Mr. Balakrishnan Venkatachalam,
RP of M/s. Sovereign Developers and
Infrastructure Pvt. Ltd.
C-420, 3rd Floor, Kempe Gowda Underpass Road,
(5th Main), Ramamurthy Nagar,
(Opposite to Aditi Eloquent Apartments).
Bangalore, Karnataka - 560 016. ... Appellant
Present:
For Appellant : Mr. P.S. Raman, Senior Advocate
For Mr. Gautam S. Raman, Advocate
WITH
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 8 of 38
Company Appeal (AT) (CH) (Ins) No. 397/2024
(Arising out of the `Impugned Order' dated 13.09.2024 in IA No.569/2022
in CP(IB) No.167/BB/2018 passed by the 'Adjudicating
Authority', (`National Company Law Tribunal', Bengaluru Bench)
IN THE MATTER OF:
\
1. Anand Kumar lyer,
Al, Annexe Block, Samhita Creek &
Annexe Apartments 16th Cross,
Pai Layout, Bengaluru - 560 016.
2. S R Narayanan,
(Represented by POA Promod TP)
Residing at F-723, Sena Vihar,
Kammanahalli Bengaluru - 560 043.
3. Rajnish Kumar,
Residing at T-302, Mantri Webcity
Apartments, Kothanur
Hennur Main Road, Bengaluru- 560 077.
4. Rima Baranwal,
Residing at T-302,
Mantri Webcity Apartments,
Kothanur Hennur Main Road,
Bengaluru - 560 077.
5. Vasim Ahmed Siddiqui,
Residing at E-702,
Sumadura Shikahram,
Ashram Road,
Seegehalli Gate,
Bengaluru - 560 067.
6. Gaurav Gupta,
(Represented by POA Promod T P),
Residing at 4111, ATS Dolce, Sector Zeta 01,
Greater Noida (U.P) 210 306.
7. Rajeev Ranjan
Residing at 10, VG Layout, 2nd Cross,
Jayanti Nagar Extension Horamavu,
Bengaluru - 560 043.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 9 of 38
8. Promod TP,
Residing at 207,
Mounika Espancia,
Lepakshi Block, Banjara Layout,
Horamavu Agara
Bengaluru - 560 043.
9. Pramod Kumar,
(Represented by POA BK Nageswar),
Residing at 44/28, 3rd Cross,
4th Block Kumara Park West,
Seshadripuram, Bengaluru - 560 020.
10. Swarna Padma,
(Represented by POA BK Nageswar),
Residing at 44/28, 3rd Cross,
4th Block Kumara Park West,
Seshadripuram, Bengaluru- 560 020.
11. Rachit Garg,
Residing at C-602, BDA Kondasapura,
Phase 2 Bengaluru - 560 067.
("Homebuyers of Project Sovereign Unnati") ... Appellants
V
1. Sovereign Developers & Infrastructure and
Pvt. Ltd. (through Resolution Professional),
R/o. at No.16, 2nd Floor,
Jaladarshini Layout, New BEL Road,
Bengaluru - 560 054. ... Respondent
Present:
For Appellant : Ms. Sarah Abraham, Advocate
For Mr. A.K. Mylsamy, Advocate
WITH
Company Appeal (AT) (CH) (Ins) No. 398/2024
(Arising out of the `Impugned Order' dated 13.09.2024 in IA No.570/2022
in CP(IB) No.167/BB/2018 passed by the 'Adjudicating
Authority', (`National Company Law Tribunal', Bengaluru Bench)
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 10 of 38
IN THE MATTER OF:
\
1. Anand Kumar lyer,
Al, Annexe Block, Samhita Creek &
Annexe Apartments 16th Cross,
Pai Layout, Bengaluru - 560 016.
2. S R Narayanan,
(Represented by POA Promod TP)
Residing at F-723, Sena Vihar,
Kammanahalli Bengaluru - 560 043.
3. Rajnish Kumar,
Residing at T-302, Mantri Webcity
Apartments, Kothanur
Hennur Main Road, Bengaluru- 560 077.
4. Rima Baranwal,
Residing at T-302,
Mantri Webcity Apartments,
Kothanur Hennur Main Road,
Bengaluru - 560 077.
5. Vasim Ahmed Siddiqui,
Residing at E-702,
Sumadura Shikahram,
Ashram Road,
Seegehalli Gate,
Bengaluru - 560 067.
6. Gaurav Gupta,
(Represented by POA Promod T P),
Residing at 4111, ATS Dolce, Sector Zeta 01,
Greater Noida (U.P) 210 306.
7. Rajeev Ranjan
Residing at 10, VG Layout, 2nd Cross,
Jayanti Nagar Extension Horamavu,
Bengaluru - 560 043.
8. Promod TP,
Residing at 207,
Mounika Espancia,
Lepakshi Block, Banjara Layout,
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 11 of 38
Horamavu Agara
Bengaluru - 560 043.
9. Pramod Kumar,
(Represented by POA BK Nageswar),
Residing at 44/28, 3rd Cross,
4th Block Kumara Park West,
Seshadripuram, Bengaluru - 560 020.
10. Swarna Padma,
(Represented by POA BK Nageswar),
Residing at 44/28, 3rd Cross,
4th Block Kumara Park West,
Seshadripuram, Bengaluru- 560 020.
11. Rachit Garg,
Residing at C-602, BDA Kondasapura,
Phase 2 Bengaluru - 560 067.
("Homebuyers of Project Sovereign Unnati") ... Appellants
V
1. Sovereign Developers & Infrastructure and
Pvt. Ltd. (through Resolution Professional),
R/o. at No.16, 2nd Floor,
Jaladarshini Layout, New BEL Road,
Bengaluru - 560 054. ... Respondent
Present:
For Appellant : Ms. Sarah Abraham, Advocate
For Mr. A.K. Mylsamy, Advocate
JUDGMENT
(Hybrid Mode) 13.11.2024:
Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial):
These are a bunch of five Company Appeals which are factually interrelated to one another. Hence, for the purposes of brevity, they are being decided together.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 12 of 38
1. In Company Appeal (AT) (CH) (Ins) No.378/2024, the Appellants Mr. S. Sankaranarayanan and 32 Ors., 33 Homebuyers in total challenge the impugned order dated 13.09.2024 as it was rendered in IA/569/2022, as preferred in IA No.570/2022 in Company Petition (IB) No.167/BB/2018. The consequential effect of the Impugned Order under challenge is that the Application in IA No.569/2022 submitted by the Resolution Professional (RP) for condonation of delay of 352 days in filing the Application being IA No.570/2022 for approval of the Resolution Plan, was rejected, and consequentially the Resolution Plan too was rejected on the grounds of limitation.
2. In Company Appeal (AT) (CH) (Ins) No.384/2024, The Appellant being the Resolution Professional of the Corporate Debtor M/s. Sovereign Developers Infrastructure Pvt. Ltd. puts a challenge to the order dated 13.09.2024, as it was rendered by the National Company Law Tribunal in IA No.569/2022 preferred in CP(IB) No.167/BB/2018, by virtue of which the Application preferred by the Appellant for seeking Condonation of Delay of 352 days in filing the Application under Section 30 (6) of the I & B Code for approval of the Resolution Plan has been rejected.
3. In Company Appeal (AT) (CH) (Ins) No.386/2024, The Appellant / RP challenges the Impugned Order of 13.09.2024, rendered in IA No.570/2022 as it was preferred in CP(IB) No.167/BB/2018, which resulted into the rejection of the Application preferred by him for the Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 13 of 38 purposes of seeking an approval of the Resolution Plan of the Corporate Debtor (CD) under Section 30(6) of the I & B Code, 2016, on the grounds that the application for condonation of delay of 352 days chanced in filing this application has been rejected and hence the application IA No.570/2022 does not survive.
4. In Company Appeal (AT) (CH) (Ins) No.397/2024, the challenge has been given by the Appellants being 11 homebuyers, to the impugned order of 13.09.2024, passed in IA No.569/2022 in CP (IB) No.167/BB/2018, by which the Application being IA No.569/2022 preferred by the RP seeking condonation of delay of 352 days in filing the application by the RP, seeking approval of the Resolution Plan as submitted by the Resolution Applicant was rejected
5. And lastly, in the Company Appeal (AT) (CH) (Ins) No.398/2024, the Appellants, being 11 homebuyers, seek to challenge the order passed by NCLT on 13.09.2024 in IA No.570/2022, as preferred in CP (IB) No.167/BB/2018 by virtue of which the application IA No.570/2022 filed by the Resolution Professional by invoking the provisions contained under Section 30(6) of the I & B Code to be read with Regulation 39(4) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, seeking approval of the Resolution Plan has been rejected on the ground that since IA 569/2022 seeking condonation of delay has been rejected, Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 14 of 38 the instant application IA No.570/2022 does not survive and no orders are required to be passed on the same.
6. A few other facts which are germane to be referred to in the instant Company Appeals are, that almost all the appeals they are accompanied with various pending applications. They are described below:-
(a) Impleadment Application being IA No.1061/2024, has been preferred in Company Appeal (AT) (CH) (Ins) No.378/2024, which has been filed by the Financial Creditor / Phoenix ARC Private Limited.
Though the Financial Creditor / Phoenix ARC Private Limited is not a necessary party, who is required to be heard while deciding these company appeals, for the reason being that, the Resolution Plan was approved by the Committee of Creditors with the voting of 88.86% of the members of the Committee of Creditors, but for the purposes of better elucidation the said application IA No.1061/2024, with the consent is being treated as to be an Intervention Application, where the Applicant therein, that is the Financial Creditor / Phoenix ARC Private Limited would be heard, in this appeal.
(b) The Company Appeal (AT) (CH) (Ins) No.384/2024, too is listed on three Impleadment Applications, being IA No.1057/2024, IA No.1078/2024 and IA No.1085/2024. IA No.1057/2024 has been preferred by the Applicant, Karthikesan Srinivasan Iyer along with two others, who have pleaded, that they may be permitted to be Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 15 of 38 impleaded, because they are the home buyers and their rights are also likely to be affected if any adjudications are made in this Appeals on merits, pertaining to the aspect of delay or even aspect pertaining to the approval of the Resolution Plan without hearing them. The Application thus preferred being IA No.1057/2024, though being an Impleadment Application with their consent is being treated as to be an Intervention Application and the applicants thereof would be heard during the course of the proceedings.
The second application being IA No.1078/2024, has been preferred by Mr. Brigadier Rajesh Malhotra (Retd), a Home Buyer, who intends himself to be impleaded in the appeal to safeguard his interest in the capacity of being the home buyer. The said application too would be treated as to be the Intervention Application and the Applicant would be heard at the stage when the appeal is being considered on merits.
The third application being IA No.1085/2024 has been preferred by the Financial Creditor / Phoenix ARC Private Limited contending thereof that it happens to be one of the Financial Creditors, and even though it is a minority in the CoC, it may be heard at the stage when the aspect of delay and the consequential aspect of approval of the Resolution Plan is being considered by this Appellate Tribunal. As far as this Application is concerned, this too would be treated as to be an Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 16 of 38 Intervention Application, and the Appellant who is represented by his Counsel would be heard on the merits of the Appeal.
(c) Company Appeal (AT) (CH) (Ins) No.386/2024, too is accompanied with the two Impleadment Applications being Impleadment Applications IA No.1079/2024, and IA No.1086/2024, IA No.1079/2024 which has been preferred by Mr. Brigadier Rajesh Malhotra (Retd.) claiming his status, to be that of the home buyer and praying that he may be impleaded on the premises that any decision on the lis would be, having an effect on the approval of the Resolution Plan and his rights are likely to be affected. Looking at the nature of the dispute, we are of the view that, as far as Mr. Brigadier Rajesh Malhotra is concerned, his interest is being safeguarded by the Appellants herein i.e., Resolution Professional and the other home buyers in the connected appeals, but still in order to avoid any future complications, this application is being treated to be an Intervention Application and he would be heard during the course of the arguments of this appeal.
IA No.1086/2024, has been preferred yet again by the minority Financial Creditor i.e., Phoenix ARC Private Limited, who has pleaded to be heard during the proceedings when the aspect of limitation and the consequential effect of it on the aspect of approval of the Resolution Plan are being considered. This Application too would Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 17 of 38 stand disposed of with directions therewith that the said applicant is to be heard, when the appeal is being decided on merits.
7. Facts of all these company appeals are identical. In that eventuality, since the consequential effect too happens to be identical in all these five appeals, for the purposes of brevity, we will be dealing only with the facts of Company Appeal (AT) (CH) (Ins) No.378/2024.
8. The facts as it has emerged for consideration in the instant Appeal are that M/s. Sovereign Developers and Infrastructure Pvt. Ltd., which would be herein after referred to be as the Corporate Debtor, was admitted to the CIRP Proceedings by an order of 16.07.2019 by Learned NCLT, Bengaluru, pursuant to an application filed by M/s. Phoenix ARC Private Limited under Section 7 of the I & B Code and as a result thereto, moratorium was ordered under Section 14 and one Mr. Guruprasad Makam was appointed as Interim Resolution Professional (IRP) to oversee the process. Upon his appointment in the said capacity as the IRP, he proceeded to invite claims vide 'Form A' by way of public announcement by carrying out publications in two local newspapers called as Financial Express and Hosadigantha (a Kannada Newspaper) on 19.07.2019 .
9. Based on the said publication, IRP invited claims from the public at large and the persons who were likely to be affected by the CIRP Proceedings of the Corporate Debtor, and the last date fixed for submission of such claims with respect to the Corporate Debtor was fixed as 30.07.2019. Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 18 of 38 Further, as there were certain minor discrepancies in the said publication of 19.07.2019, the IRP issued a corrigendum by way of public announcement on 25.07.2019, by carrying out publication in the same newspapers as detailed above.
10. Pursuant to the aforesaid process, the IRP received claims from various class of creditors i.e, Home Buyers, Financial Creditors, Operational Creditors, and Workmen. He then proceeded to analyze the veracity of the claims received with the supporting documents, verified the claims of the Home Buyers with the respective agreement for sale, the addendum to agreement for sale, and such other related documents, visited the site and inspected the property and took stock of the situation including collecting the pictures and recording the statements of necessary parties.
11. After conducting the aforesaid process, the IRP prepared the list of creditors, constituted the Committee of Creditors in accordance with the claims received, and allocated voting rights to each creditor/class of creditors. He also submitted the Report to Learned NCLT on 08.08.2019 regarding constitution of the CoC.
12. In the CoC thus constituted included the Financial Creditor, the Phoenix ARC, who has been the applicant to the Impleadment Applications herein dealt with above, and who had admittedly participated in the voting, when the Resolution Plan was being considered. The notice of the 1 st CoC meeting was issued on 10.08.2019 and was circulated amongst all the Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 19 of 38 eligible creditors. In pursuance to the aforesaid notice, 1st meeting of CoC was conducted on 16.08.2019 and the process of preparing the Resolution Plan was initiated.
13. The 2nd CoC meeting was held on 24.08.2019 and after detailed deliberations, the CoC resolved to appoint Mr. Balakrishnan Venkatachalam as the Resolution Professional (RP). After his appointment as a Resolution Professional, he conducted a series of meeting of CoC, invited expression of interest for Resolution Plans, received 18 applications, evaluated them as against the criteria set by CoC and finalized a list of 5 Resolution Applicants who were asked to submit resolution plans. In the 15th CoC meeting held on 30.08.2021, the Resolution plan thus submitted by the consortium of VR Facilities Management Services Bangalore Private Limited and Mr. K.C. Vijaykumar was presented before CoC for consideration. It would be relevant at this juncture that, the intervenor, the Financial Creditor / Phoenix ARC Private Limited also did participate in the proceedings of the 15th CoC meeting, which is a fact that is admitted by the Counsel representing its cause during the course of arguments. The said Resolution Plan was discussed in detail by with the Committee of Creditors on 30.08.2021, with the Resolution Applicants. Based on feedback and suggestions from the members of the Committee of Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 20 of 38 Creditors, the Resolution Applicant submitted an Addendum to the Resolution Plan with necessary annexures.
14. After this, the RP after due verification of the eligibility of RA as per section 29A of the I & B Code and the conformity of the Resolution Plan with Section 30(2) of the Code and other allied Regulations, placed the same Resolution Plan with the addendum before the Committee of Creditors, (CoC) in its 16th CoC meeting on 11.10.2021 for consideration and for voting. The e-voting was carried on for 48 hours between 18.10.2021 to 20.10.2021 in which the Applicant intervenor, Phoenix ARC had voted against the plan, but 88.86% of CoC voted in favour and thus the Resolution Plan got approved by virtue of the majority voting. Thereafter, the RP filed the Application under Section 30(6) of the Code read with Regulation 39(4) of IBBI (Insolvency Resolution for Corporate Persons) Regulations 2016 read with Rule 11 of NCLT Rules 2016 before the Learned Adjudicating Authority on 17.11.2021 for approval of the Resolution Plan. The Registry of NCLT, Bengaluru Bench, observed certain defects on the said Application and communicated the same to the RP. RP filed a fresh application in IA No.570/2022 along with an application in IA 569/2022 to condone delay of 352 days on 23.11.2022. The Learned NCLT dismissed IA 569/2022 on 13.09.2024 and as a consequence, IA 570/2022 dismissed as not maintainable. Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 21 of 38
15. During the initial phase of arguments, certain doubts were expressed with regard to the date as to when the first application was moved for approval of the Resolution Plan before the Learned Adjudicating Authority. In order to clarify the same, this Appellate Tribunal had passed an order calling upon a report from the NCLT, Bengaluru, by an order dated 25.10.2024. In compliance thereto the report has been submitted by the Registrar of NCLT, Bengaluru, vide its communication of 25.10.2024, wherein he had provided with the following details. The report thus submitted is extracted hereunder: -
Report on the order Report on the order of the NCLAT Chennai Bench No. Company Appeal (AT) (CH) (Ins) No.378/2024 and 386/2024 dated 25.10.2024 The Hon'ble NCLT, Chennai vide order in Company Appeal (AT) (CH) (Ins) No.378/2024 and 386/2024 dated 25.10.2024 had ordered the NCLT, Bengaluru Bench to submit a report regarding and the same is furnished below:
Sl.No. Description Date of filing Remarks
/ Sending
1. IA for Approval of 18.11.2021 Objections raised
Resolution Plan (E-filing on 25.11.2021
No.2903111/01154/2021)
2. Whether the information 25.11.2021 Yes
was communicated
3. Mode of Communication 25.11.2021 By mail through
E-filing Portal
It is seen from the above report that the application for approval for Resolution Plan was e-filed on 18.11.2021, that objections were raised by the Registry on 25.11.2021 and the same was communicated by email to the Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 22 of 38 RP on 25.11.2021. However, the RP instead of rectifying the defects and refiling the same, filed a fresh Application with a delay of 352 days in IA 570/2022 along with a Condone Delay Application in IA No.569/2022.
16. It is the contention of the RP / Appellant in CA (AT) (CH) (Ins) No.384/2024 that he had filed the Application seeking approval of the Resolution Plan on 17.11.2021, that Learned NCLT passed order on 21.04.2022 in IA No.291/2021, extending the period of CIRP till the date of filing the said Application (Diary No.01154 dated 18.11.2021) that as per this order his application has been filed within CIRP period satisfying the requirements of Regulation 39(4) of IBBI Regulations, that defects were raised on the said application which he could not rectify in time because of inaction on part of his counsel and because he could not get proper Communication from the Registry of NCLT, that on account of upgradation and maintenance of the e-filing portal the original application/record could not be traced and hence had to be resubmitted, and that he had to file a fresh application in IA No.570/2022 along with a Delay Condonation Application in IA No.569/2022 as he was informed that a fresh application has to be filed for approval of the plan. He has further submitted that he was unaware of the un-numbering of the application by the Registry of NCLT, owing to the defects as lately pointed out, though the initial application was filed within time on 17.11.2021 and due to the reasons narrated above, he had to refile his Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 23 of 38 Application as fresh, that the delay chanced in the process ought to have been treated as delay in re-presentation only, that interests of hundreds of home buyers are likely to be affected if the Resolution Plan is not considered on grounds of delay and therefore the delay deserves to be condoned. He further submitted that on the above grounds, he had filed the application for approval of plan before the Learned Adjudicating Authority on 24.11.2022, along with the Delay Condonation Application, seeking a Condonation of delay as prayed for in the relief clause as extracted hereunder: -
"5. Relief Sought:
In light of the facts mentioned above, the Applicant prays that this Hon'ble Tribunal may be pleased to grant the following reliefs:
1. Pass necessary orders condoning the delay of 352 days from 17.11.2021 to 04.11.2022 in filing the fresh interlocutory application under section 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 for sanction of Resolution Plan;
2. Pass any other orders that this Hon'ble Tribunal deems fit in the interests of justice and equity".
17. The other Appellants / Homebuyers in the instant Appeal have submitted that the Resolution Plan has been approved by CoC with 88.86% majority, that the RP's action in not refiling the updated/rectified Application in time should not jeopardize their interest, and that liquidation should only be a last resort and therefore the impugned orders of Learned NCLT be set Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 24 of 38 aside and directions be issued to take up consideration of the Resolution Plan as passed by CoC.
18. The said application was opposed by the Impleader / Applicant Phoenix ARC Private Limited, on the grounds raised in the shape of a written submission that as per provision of I & B Code & relevant Regulation, the delay of 352 days cannot be condoned, that it has been submitted well after the expiry of CIRP period, and owing to the fact, that the Resolution Professional has not sought time for extension of the time period for submission of the Resolution Plan for its approval, that since under law, the time period prescribed for submission of the Resolution Plan before Learned Adjudicating Authority for its approval is on or before 15 days of the end of CIRP period and since that has expired much earlier, the delay ought not to be condoned and the Resolution Plan ought not to be taken up for consideration.
19. The aspect of limitation for the purposes of submission of the Resolution Plan for its approval before the Learned Adjudicating Authority, is contemplated under Sub-Regulation (4) of Regulation 39 IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016. The Sub-Regulation (4) of Regulation 39 which is extracted hereunder: -
"39....................
[(4) The resolution professional shall endeavour to submit the resolution plan approved by the committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process under section 12, Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 25 of 38 along with a compliance certificate in [Form H of the [Schedule I] and the evidence of a receipt of performance security required under sub- regulation (4-A) of regulation 36-B].]"
20. On a simpliciter reading, the Sub-Regulation (4), where it prescribes for that the plan has to be submitted for approval at least 15 days before the maximum period for completion of the CIRP for its approval. The legislature under Sub-Regulation (4) of Regulation 39 has used the following words "Resolution Professional shall endeavour". The legislature by use of the word 'endeavour', under Sub-Regulation (4) of Regulation 39, where limitation is prescribed, has provided flexibility to the act of submission of the Resolution Plan by the Resolution Professional, for its approval. In fact, there happens to be no rigidity in the provision itself for submission of the Resolution Plan, since there is no specific bar which has been created under law, that it cannot be submitted beyond the prescribed period, that is, the maximum period of the Corporate Insolvency Resolution Process as stipulated under Section 12 of I & B Code. The non-rigidity clause pertaining to limitation and the fact of there being no specific bar against the extension of the time period has to be reasonably construed depending upon the facts and circumstances of each case and particularly when it comes to an adjudication of the interest of a section of persons who were likely to be affected. In the instant appeal it is not in controversy, that the first submission of the Resolution Plan was made on 17.11.2021 well within Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 26 of 38 time, and the same was found to be defective. In this eventuality, in the set of circumstances, there arises question, as to when there is a direction for refiling of the document, after curing the defects as pointed out by the Registry whether the bar of limitation could be read in adverse to the interest of affected Applicant / Appellants. The said question was answered by the Hon'ble Principal Bench of the NCLAT in a bunch of Company Appeals with the main Appeal being Company Appeal (AT) (Ins) No.780/2022, where the larger bench was constituted upon a reference being made as to how the period of limitation has to be construed at the stage when it is refiled beyond the period of limitation. The said question in the context of determination of limitation on refiling has been answered in the manner that where the refiling is required to be made and there is a delay in refiling it would be exclusively an issue between the Applicant and the Tribunal itself and it may not give leverage to the opponent to oppose an application on the ground of delay in re-presenting the document after removing the defects. The aforesaid answer was extended by the Hon'ble Principal Bench in the Judgment of V.R. Ashok Rao & Ors., (Supra) by making reference to it in para 33 & 34 of the said Judgment which is extracted hereunder: -
"33. We, thus, are of clear opinion that limitation prescribed for filing an appeal under Section 61 and Section 421 of Companies Act cannot be imported while considering condonation of delay in refiling/ representation. We may, however, hasten to add that condonation of delay in refiling/re-Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 27 of 38
presentation has to be examined on case to case basis. As noticed above, the criterion for considering an application for condonation of delay under Section 5 may not be strictly applicable when question of condonation of delay in refiling/re-presentation arises. A party who is exercising its right to file a statutory appeal in time has not to be shut out on some procedural or technical defects and when defects notified have been removed although with some delay, question to be considered is as to whether there was justifiable cause for delay or not. The time period allowed for removal of the defects is only directory. Hon'ble Supreme Court in "Surendra Trading Company v. Juggilal Kamlapat Jute Mills Company Ltd. & Ors., (2017) 16 SCC 143" came to consider the proviso to Section 7(5), 9(5) and 10(4) of the Code which prescribed 7 days period for removal of defects in application for initiation of Corporate Insolvency Resolution Process. Appellate Tribunal has held that 7 days period is mandatory and rejected the application for non-compliance. Hon'ble Supreme Court has allowed the appeal and held that the period of 7 days cannot be held to be mandatory rather it is directory. Following was laid down in Paras 24 and 25:
"24. Further, we are of the view that the judgments cited by the NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority has to pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to sub-section (5) of Section 7, Section 9 or sub-section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 28 of 38
25. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and not mandatory in nature. However, we would like to enter a caveat."
34. In view of the foregoing discussion, reasons and conclusions, we answer the two questions in following manner:
(a) The law laid down by this Tribunal in "Mr. Jitendra Virmani Vs. MRO-TEK Realty Ltd. & Ors" and three Member Bench Judgment in "Arul Muthu Kumaara Samy Vs. Registrar of Companies" that when the defects in appeal are cured after seven days and the same is refiled, it shall be treated as a fresh Appeal, does not lay down a correct law. The re-presentation of appeal after expiry of a period of 7 days or after extended period shall not be a fresh filing and shall only be refiling/representation.
(b) The limitation prescribed in filing an appeal under Section 61 of the Code or Section 421 of the Companies Act, 2013 shall not govern the period taken in an appeal for removal of the defects in refiling/re-presentation. Even if, there is a delay in refiling/re-
presentation which is more than the period of limitation prescribed for filing an appeal under Section 61 of the Code and Section 421 of Companies Act, 2013, the same can be condoned on sufficient justification.
The reference is answered accordingly".
21. Hence the issue as to whether, after the removal of defects, once the proceedings are refiled, whether at all, the Financial Creditor who has been determined to be a minority voter by the CoC, can raise an objection of limitation when the Resolution Plan is submitted for its approval after rectification of defects and particularly owing to the fact when its first submission of the Resolution Plan on 17.11.2021, was well within the statutory period prescribed under Sub-Regulation (4) of Regulation 39 of the IBBI Regulations of 2016. The answer was given in an affirmative Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 29 of 38 way by the aforesaid Judgment (Supra), that the period thus involved in the rectification of defect and refiling could be condoned and the Condonation of the same would lie at the discretion of the Tribunal depending upon the facts and circumstances involved in the particular case.
22. The Learned Counsel for the Appellant has further submitted that in the instant case, he would be entitled for grant of the benefit of limitation for the reason being that, the entire process of submission of the Resolution Plan beginning from 16th CoC meeting till the date it was first submitted i.e., 17.11.2021 and secondly when it was resubmitted on 04.11.2022 falls largely within the period of limitation as enforced by the directives of the Hon'ble Apex Court and owing to the Judgment as rendered in the Suomoto Writ Petition No.(C)3/2020 dated 23.03.2020, as reported in 2020 (19) SCC 10, the said period is to be exempted for determining the period of limitation owing to the "force majeure" condition due to Covid- 19 situation.
23. The Learned Counsel for the minority Financial Creditor who had voted against the plan in the CoC meeting had taken out a very peculiar and non-sustainable objection while opposing the motion of the appellant for Condonation of Delay, i.e., from the perspective that the application for condonation of delay itself is not sustainable, as it was referring to the provision contained under Section 198 of the I & B Code, 2016 to be read Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 30 of 38 with Rule 11 of the NCLT Rules, 2016. The provisions of Section 198 of I & B Code is extracted hereunder: -
"198. Condonation of delay - Notwithstanding anything contained in this Code, where the Board does not perform any act within the period specified under this Code, the relevant Adjudicating Authority may, for reasons to be recorded in writing, condone the delay".
24. Apart from it, if the arguments of the Learned Counsel for the Appellant are to be scrutinized from the view point of the provision contained under Section 198 of the I & B Code, it starts with a non-obstante clause which provides a leverage that irrespective of any limitation prescribed under the Code, where the provision does not envisage a strict adherence to the time period to do an act, the same could be brought within the ambit of Section 198 for the purpose of extension of the time period for doing an act because the provision of condonation of delay contemplated under Section 198 provides that if the act is not performed within the time period as specified under the Code, the relevant Adjudicating Authority may, for the reasons to be recorded, can extend the time period after condoning the delay, so as to meet the wider objective of the code.
25. He intends to derive an advantage that reference to a wrong provision i.e., under Section 198 of the code in the IA No.569/2022, itself would debar the Appellants from seeking a condonation of delay. It is not in debate as of now nor it's a question of Res integra, that reference of a wrong provision in an Interlocutory Proceedings, will not make the proceedings Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 31 of 38 itself bad in the eyes of law. The aforesaid principle has been settled by the Hon'ble Apex Court in the Judgment as reported in 2009 Volume 9 SCC Page 173 P.K. Palanisamy Vs N. Arumugham & Another in Para 27, 28 & 29 where it is stated that in order to meet out the ends of Justice, a hyper-technical objection pertaining to a wrong reference or wrong quotation of a provision of law will not create an obstacle in the effective dispensation of substantial Justice. Relevant Paras are extracted as under: -
"27. Section 148 of the Code. Section 148 of the Code is a general provision and Section 149 thereof is special. The first application should have been filed in terms of Section 149 of the Code. Once the court granted time for payment of deficit court fee within the period specified therefor, it would have been possible to extend the same by the court in exercise of its power under Section 148 of the Code. Only because a wrong provision was mentioned by the appellant, the same, in our opinion, by itself would not be a ground to hold that the application was not maintainable or that the order passed thereon would be a nullity. It is a well-settled principle of law that mentioning of a wrong provision or non-mentioning of a provision does not invalidate an order if the court and/or statutory authority had the requisite jurisdiction therefor.
28. In Ram Sunder Ram v. Union of India it was held: (SCC pp. 260- 61, para 19) "19.... It appears that the competent authority has wrongly quoted Section 20 in the order of discharge whereas, in fact, the order of discharge has to be read having been passed under Section 22 of the Army Act.
9. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 32 of 38 exist and can be traced to a source available in law.' (See N. Mani v. Sangeetha Theatre, SCC p. 280, para 9.) Thus, quoting of wrong provision of Section 20 in the order of discharge of the appellant by the competent authority does not take away the jurisdiction of the authority under Section 22 of the Army Act. Therefore, the order of discharge of the appellant from the army service cannot be vitiated on this sole ground as contended by the learned counsel for the appellant."
29. In N. Mani v. Sangeetha Theatre it is stated: (SCC p. 280, para 9) "9. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law.""
26. Another objection which has been taken by the Intervenor/Phoenix ARC, with regards to the modulation of relief in IA No.569/2022, is that, the reference of the cut-off dates for which the limitations were being sought to be condoned yet again cannot be rigidly interpreted so as to create a restriction in considering the Delay Condonation Application, particularly when the reasons for the delay was owing to the fact of lack of communication and of delayed communication, the fact of the records gone missing in the e-filing portal of NCLT and the fact of directions to rectify defects. If these factors are conjointly taken into consideration, even if the wrong reference is made to the cut-off dates for which the limitation is being sought to be condoned, in order to meet out the ends of Justice and to uphold the law of equity, the courts are not handicapped, to modulate the relief for an effective adjudication of a case.Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 33 of 38
27. The aforesaid principle was determined by the Hon'ble Apex Court in the Judgment reported in 2020 Volume 1 Page 1, by the constitution bench of the Hon'ble Apex Court in the matters of M. Siddiq Vs Mahant Suresh Das & Ors., and the relevant paragraph, para 1225, which deals with the aforesaid proposition in the context of the Order VII Rule 7 of CPC, where the modulating of the relief would be permissible and in that eventuality, the days of delay, which has been sought to be condoned in the application thus preferred by the Appellant, before the Learned Adjudicating Authority for the period from 17.11.2021 to 04.11.2022, it has to be construed in the light of the fact that, limitation is not the rigid aspect in the proceedings, where a plan is required to be approved under Section 30(6) of I & B Code, 2016, and that is why it has to be read with Sub-Regulation (4) of Regulation 39 to give it a logical meaning.
Relevant para 1225 of M. Siddiq is extracted hereunder: -
"1225. The High Court on a finding that Hindus and Muslims were in joint possession directed a three-way bifurcation of the disputed site. one-third each being assigned to the Muslims, Hindus and Nirmohi Akhara. S.U. Khan, J. held that title follows possession and based on the provisions of Section 110 of the Evidence Act came to the conclusion that the disputed site should be equally distributed between the three parties. Sudhir Aggrawal, J. held that the area under the central dome of the disputed structure is believed to be and worshipped by the Hindus as the place of birth of Lord Ram. This part of the land, he held, constitutes the deity called "Sri Ramjanmsthan" which has specific significance to the Hindus. Insofar as the other land within the inner courtyard is concerned, Aggrawal, J. held that it has been continuously used by Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 34 of 38 members of both communities for prayer and worship, noticing that the prayer for relief in Suit No. 5 had been "worded in a manner showing that the same has not been asked from the Court but has been left to the discretion of the Court if it finds expedient". Aggrawal, J. held that in order to do complete justice and to avoid a multiplicity of litigation, it was open to the Court to mould the relief under Order 7 Rule 7 CPC. Aggrawal, J. therefore also joined in directing a three-way bifurcation in terms of a preliminary decree. D.V. Sharma, J., decreed Suit No. 5 in its entirety."
28. The entire controversy can be looked into from yet another perspective, that is, when a statute prescribes certain procedural acts to be done in a specified time frame, it has to be reasonably construed to be determined with the flexibility and in a manner that minor delays, if caused, may not deceive the very objective of the law.
29. That the procedural timelines are directory in nature and not mandatory is a principle which has been envisaged by the Hon'ble Apex Court in the Judgment reported in "Surendra Trading Company v. Juggilal Kamlapat Jute Mills Company Ltd. & Ors., 2017 Volume 16 SCC Page 143, "24. Further, we are of the view that the judgments cited by the NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority has to pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to sub-section (5) of Section 7, Section 9 or sub-section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 35 of 38
25. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and not mandatory in nature. However, we would like to enter a caveat".
This aspect has also to be determined in the context of the instant case in the light of the provision contained under Rule 28 of the NCLT rules, 2016, which provides for that the aspect of refiling or representation of the case or an application does not provide a strict limitation and power to allow a reasonable extension has been contained under Rule 28 of NCLT Rules. Having said so, if we scrutinize the Impugned Order under challenge, whereby the Delay Condonation Application has been rejected, it can be seen that a very straight-jacketed formula has been adopted by the Learned Adjudicating Authority while determining the implications of rejection of IA No.569/2022, without considering the entire consequences of the case and particularly in the context, what has been observed above. The reason which has been given by Learned NCLT is that, the applicant cannot be tasked and permitted to blame the counsel for the delayed supply of information for rectification of defects. It cannot be ruled out by experience, that there may be a situation which is true in nature and it normally chances where counsel gives a delayed information, or until or unless it is proved to the contrary by the person who intends to derive the benefit that, allegation of delayed information from the counsel was deliberate or intentional, which was not endeavoured to be established by the minority Financial Creditor, who opposes the Appeal seeking Condonation of Delay.
Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 36 of 38
30. It is seen that a passing observation has been made by the Learned Adjudicating Authority that, the allegation against the Counsel as regards the delayed information, is without an explanation and hence the same has been declined to be accepted. We should not be oblivious of the fact that for a certain act there may not be any evidence and that too when there is a privileged relationship between the litigant and the counsel, where the allegations and counter allegations are avoided to be leveled in accordance with the basic ethical objectives to sustain trust with each other, to dispense Justice and not to deny it.
31. Owing to the aforesaid reasons and having considered the reasons which have been given by the Learned Adjudicating Authority in the impugned judgment, we are of the view that the delay which has been chanced in preferring the application for approval of the Resolution Plan was not wanton or intentional. Coupled with the fact that since it is largely covered by the exemption of limitation prescribed by the Suo Motu Writ Petition of the Hon'ble Apex Court, due to Covid-19 situation, the delay would stand condoned. Accordingly, CA (AT) (CH) (Ins) No.378/2024 would stand allowed and the Impugned Order in IA 569/2022 rendered on 13.09.2022 will stand quashed.
32. As the Impugned Order in IA No.570/2022 dated 13.09.2024 derives its sustenance from the Impugned Order in IA No.569/2022 passed on the same date, consequent to quashing of the latter, the Impugned Order in IA Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 37 of 38 No.570/2022 will also stand to be set aside. Accordingly, the matter is relegated back to Learned Adjudicating Authority to reconsider the application IA No.570/2022 for approval of the Resolution Plan in accordance with law, except for its rejection due to delay in submission. All other 4 Company Appeals will also be disposed of accordingly. Pending Interlocutory Applications, if any, will also be closed.
[Justice Sharad Kumar Sharma] Member (Judicial) [Jatindranath Swain] Member (Technical) VG/TM/MS Comp. App (AT) (CH) (Ins) No. 378, 384, 386, 397 & 398/ 2024 Page 38 of 38