National Company Law Appellate Tribunal
Sujata Shekhar Shah vs Mirador Construction Private Limited on 24 February, 2023
1
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH,
NEW DELHI
Company Appeal (AT) (Ins) No. 314 of 2021
(Arising out of judgement and order dated 23.02.2021 passed by
the National Company Law Tribunal, Mumbai Bench, Mumbai in
CP(IB) No.2054/2019)
IN THE MATTER OF:
01. Aditya Daftary,
1/23/Gobind Mahal,
86/B, Marine Drive,
Mumbai.
02. Aditya Daftary HUF
1/23/Gobind Mahal,
86/B, Marine Drive,
Mumbai.
03. Anant Atul Raniwala
R/o 603, 6th Floor,
Vivarea Tower,
B-1,
Sane Guruji Marg,
Hindustan Spinning & Wire Mills Compound,
Mahalakshmi,
Jacob Circle,
Mumbai 400011
04. Madhulata Raniwala
R/o 503, 5th Floor,
Vivarea Tower,
Company Appeal (AT)(Ins) No.314 and 395 of 2021
2
B-1,
Sane Guruji Marg,
Hindustan Spinning & Wire Mills Compound,
Mahalakshmi,
Jacob Circle,
Mumbai 400011
05. Alka Bipin Gupta,
R/0 601, Elegant, 8th Road,
Khar, West Mumbai 400052
06. Amita Upadhyaya
R/o 30, Akshaya,
Seegehalli,
Hoskote Main Road,
Witefield,
Kannamangala,
Bangalore 560067
Karnataka.
07. Amrita Pritam Lotey,
R/o Flat No.1201/1202, Shiv
Shankar, Plaza II,
Sector 7, Plot No.1
Airoli, Navi Mumbai 400078
Maharashtra
08. Anupama N R
R/o 430,
11th Cross, Wilson Garden,
Bangalore 560 027
09. Anusha Sriram
R/o Flat No.407, 440/2,
Riches Residencyh, NRI Layout,
Company Appeal (AT)(Ins) No.314 and 395 of 2021
3
Kalkere,
Bangalore 560043.
10. Archana Verma,
R/o Flat No.D-2/10:6
Millennium Towers,
Near Juinagar Railway Station,
Sector No.9
Sanpada, Distt. Thane,
Navi Mumbai 400705
11. Ashoo S. Mote
R/o G- 101, Acme Amay,
Vishweshvar Nagar Road, Off Aarey Road,
Goregaon (East), Mumbai-400 063.
12. Atul Apte R/o B1-602,
Orchid, Runwal Garden City, Balkum,
Thane (W) -400 608
13. Bhavik Kiran Shah R/o 2/12 Rekha Building No.2,
46 B.G. Kher Marg, Walkeshwar, Mumbai-400 006
14. Chanda Jain W/o Narendra Kumar Jain.
R/o D-702, Tower-3, Adarsh Palm Retreat,
Bellandur, Outer Ring Road, Bangalore-560 103
15. D Maruthi W/o D. Ravi Kumar R/o Villa No.4,
Concorde Cuppertino, Neeladri Road,
Electronic City Phase- 1, Bangalore-560 100
16. Dhananjay Sethi S/o Mr. Raju Sethi R/o 11- A,
Shri Nagar Annex, Indore-452018 (M.P.)
17. Dr. Venugopal Konanki r/o 14 Radha Gardens
Reserve Linrd, Madurai-625014
Company Appeal (AT)(Ins) No.314 and 395 of 2021
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18. Edgar Sequeira, R/o Flat No.207, Cindrella Apartment,
602 Saghapir Street Camp, Pune-411 001
19. Gautami Vasudeo Dabholkar R/o A-102,
Samkeet Co-operative Housing Society,
Sant Janabai Road, Vile Parle East, Mumbai- 400 057
20. Govinda Raju R/o 648, 6th Main,
ISRO Layout, Bengaluru-560111
21. Hariharan Venkatraman R/o Villa No.10,
Covai Vhinmsysm,Thoppampatti Pirivu,
Kariyakoundanur, Vadakkalur, Annur, Coimbatore-
641653
22. Harshil Kiran Shah R/o 2/12 Rekha Building No.2,
46 B.G. Kher Marg, Walkeshwar, Mumbai- 400 006
23. Jayashree Kumar R/o 3/2 Norton First Street,
Mandavelipakkam, Chennai-600 028
24. Jean Marie Therese Correia R/o 287,
Shahid Bhagat Singh. Road, Fort, Mumbai- 400 001
25. Jogadenu Kiranmai, R/0, 3/3. 3/3.
Lakshmi Nilayam, 1st Main,
Green Park Layout, Banaswadi, Bangalore- 560043
26. Ketki Shah Talati, R/o B702, Tower 1,
Gulmohar, Adarsh Palm Retreat,
Deverabisanahalli, Outer Ring Road, Near RMZ Ecoworld,
Bengaluru, Karnataka- 560103
27. Kishore Wadhwa,
R/o 364, Shastri Nagar,
Near New State Bank Colony, Amritsar, Punjab 143001
28. Ladu Madhab Mishra S/o Late Nilakantha Mishra,
R/o B501, Unique Towers,
Company Appeal (AT)(Ins) No.314 and 395 of 2021
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Beside Assam Rifles Transit Camp.
Khanapara, Guwahati-781022
29. Lalgudi Kalyanam Ganesan R/o Apt 304, Krishna
Kamala Residency, Plot 117, Srinagar Colony, Hyderabad-
500073
30. Latha Jagannath R/o 404, G2 Orchard's Pride, 12th
Main Road, Rajmahal Extension, Sadashivanagar, Vilas
Bangalore-560080
31. Mangla Rajesh Jain C-1001, Rutuparna Society, Baner
Road, Baner, Pune, 411045
32. 32. Manish Katariya, R/o 107, Building No. 4, The
Gardens, Dubai, United Arab Emirates.
33. Mohammed Badruddin Khan Sayeed R/0 House No.8-2-
618/1/1, Hills, 500034. Banjara Hyderabad-
34. Mukesh Deshpande r/o 19/303, Mantri Residency,
Bannerghatta Road, Bangalore-560 076
35. Nalini Krishnamurthy R/o D-320, Athashri Apts, 6th
Cross Road, Prithvi Layout, Whitefield, Bangalore-560066
36. Neela R/o Gotekar Dilip
C/o A-12, Co-operative
Topiwala Society, Housing Station Road,
Goregaon
West,
Mumbai-400 062
37. Palollathil Damodaran Nambiar R/o B 243,
Vikasini CHS, Sector 8B, CBD, Belapur, Navi Maharashtra
Mumbai-400 614,
38. Pradeep Dayaram
Ozarde, karta, Pradeep
Company Appeal (AT)(Ins) No.314 and 395 of 2021
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Dayaram Ozarde HUF, R/o
1104, BARCA, Hiranandani Estate,
Patalipada, Thane-400607
39. Pradeep Kumar Singh, R/o T6/1001,
The Orchard Residency,
LBS Marg, Ghatkopar (W), Mumbai-400 086
40. Pramod Kumar Sinha, R/O,
A403/404,
Tribeca CHS Hiranandani Estate,
Ghodbunder Road,
Thane West- 400607
41. Prasadh TS Srinivasan R/o 21, 1st Closs Rajshree
Layout, Munnekolala Marathahalli,
Bangalore-560037
42. Priya Rajeev Shivdasani, R/o 51 Anjali,
Opposite Radio Club, Colaba, Mumbai- 400 005
43. Rajesh Kantilal Jain C-1001,
Rutuparna Society, Baner Road, Baner, Pune, 411045
44. Raju Sethi (HUF) Kart Raju Sethi R/o 11-A,
Shri Nagar Annex, Indore-452018 (M.P.)
45. Rama Venkatesh R/o 4, Old No.100,
2nd Cross, 1st Stage, 1st Phase, Gokula, Bangalore-560054
46. Ravindra Bohra S/o Mohan Lal Bohra R/o E-44/45,
Civil Lines, Tiger Hills, Badi Road, Udaipur-313001
47. Sanaa Rahman, R/o, 16-3-194/A/2,
Malakpet, Hyderabad- 500036.
48. Sanjeev Chakravarthy, R/o 403-B,
Om Siddhi Towers, Plot 15,16,17, Sector 27, Nerul, Navi
Mumbai, 400706.
Company Appeal (AT)(Ins) No.314 and 395 of 2021
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49. Sharmila Chandan,
A-6,
Kailash Kunj, Shiv Mandir Road, Ambernath, 421501
50. Shruti Praveen Rege, R/o, Flat No. 16,
Shivneri Apartments, Lane No. 1, Happy Colony,
Kothrud, Pune, 411038
51. Shruti Vachasundar,
27A/402,
Panchsheel Bldg.,
Bimbisar Nadar, Goregaon East,
Mumbai, Maharashtra, 400065
52. Shyamal Sarkar S/o Shri Hem Chandra Sarkar
R/o Flat No. B- 32, Manavsthali Apartments,
Vasundhara Enclave, Delhi-110 096
53. Sonika Lakhera, R/o, Tower 6, Flat 114,
Godrej Garden Enclave, Vikhroli East,
54. Sreenath Nagaraja R/o No.430, 11th Cross,
Wilson Garden, Bangalore-560 027
55. Subrahmanya Manjunatha S/o V. Manunatha
Aithal,
R/o 4 123 C3, Gokula, Behind MGM Gurukula, Sagri,
Kunjibettu-576102, Udupi Taluk & District
56. Subramanyam Kotharu R/o Plot No.93,
Kalyan Nagar, Phase 3, Opp. Bhargavi Motinagar Hospital,
Post, Hyderabad-500 114
57. Sunil Kumar V, R/o No.20, G-2,
Nandhi Pristine, 13th Main Road, BSK 1st Stage, 1st Block,
Srinagar, Bangalore-560 050
Company Appeal (AT)(Ins) No.314 and 395 of 2021
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58. Swatantra Roa R/o Flat No.2052, Sunbeam-2. Sobha
Hillview Apartments, Thalaghattapura Post, Kanakapura
Road, Bangalore, Karnataka - 560 062
59. V. Ananthakrishnan R/o 1A Kalpakam Nivas, 108, Luz
Church Road, Mylapore, Chennai-600 004
60. Vaishali Khandekar R/o 177B Phase 1,
Classic Orchards, Bannerghatta Road, Bangalore-560076
61. Vidya Krishna R/o C- 303, Ramky Utsav Apartments,
Seenappa
Layout, New BEL Road,
Bangalore-560094
62. Vikram Dhawan, R/o, Divyashree, 77 Degrees East, Villa
BW#36, Yemlur Bangalore, 560007,
63. Visvesvaraya Appala Pentakota R/o 2380 1st A Main 3rd
Cross BDA Layout, HAL Stage, Bangalore- 560017
...Appellant
Versus
Mirador Constructions Pvt. Ltd.
109, 11th Floor,
Lodha Supremus, Saki Vihar road,
Opp MTNL Building,
Sakinaka, Powai, Mumbai
Maharashtra 400072 ...Respondents
Present: For Appellant : Mr. Himanshu Chaubey, Advocate
For Respondents : Mr. Dilip Annasaheb Taur, Advocate
With
Company Appeal (AT) (Ins) No. 395 of 2021
Company Appeal (AT)(Ins) No.314 and 395 of 2021
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IN THE MATTER OF:
1. Sujata Shekhar Shah,
10-2 Urvashi Building, Nepeansea Road,
Near Pethith Hall, Mumbai 400006.
2. Anand Purandare,
504, Sadhana Aeroview Co-op Housing Ltd,
Nanda Patkar Road,
Vile Parle (East), Mumbai 400037
3. Avnish Jagdish Mody,
242, 24th Floor, Tahnee Heights,
66, Nepean Sea Road,
Mumbai 400006
4. Bharat Laljee Shah,
A-203, Eksar Apartment, Behind Mayur Tower,
Borivali (East),
Mumbai 400092
5. Saroj Bharat Shah,
A-203, Eksar Apartment, Behind Mayur Tower,
Borivali (East), Mumbai 400092
6. Sudha Naren Sheth,
Marathon era, ME-IV-1201,
Ganpatrao Kadam Marg,
Lower Parel (West),
Mumbai 400013
7. Suman Sudhir Purandare,
504, Sadhana, Aeroview Coop Housing Ltd,
Nanda Patkar Road,
Company Appeal (AT)(Ins) No.314 and 395 of 2021
10
Vile Parle (East),
Mumbai 500057
8. Sudhr Dattatraya Purandare,
504, Sadhana, Aeroview Cooperative Housing Ltd,
Nanda Patkar Road,
Vile Parle (East),
Mumbai 500057
9. Sudhir Dattatraya Purandare HUF,
504, Sadhana, Aeroview Coop Housing Ltd,
Nanda Patkar Road,
Vile Parle (East),
Mumbai 500057 ...Appellant
Versus
Mirador Constructions Pvt. Ltd.
Unit No.1109, 11th Floor, Lodha Supremus,
Saki Vihar Road, Opp. MTNL Building,]
Powai,
Mumbai 400072 ...Respondents
Present:
For Appellant : Ms. Sharmistha Ghosh, Ms. Palak Nenwani, Ms. Aditi
Sinha, Advocates
For Respondents : Mr. Dilip Annasaheb Taur, Advocate
JUDGEMENT
(24 th FEBRUARY, 2023) JUSTICE RAKESH KUMAR, MEMBER (JUDICIAL) In both the appeals same and similar order was assailed and as such both the appeals were tagged together and after hearing learned Company Appeal (AT)(Ins) No.314 and 395 of 2021 11 counsel for the parties, judgement was reserved on 18.01.2023. In both the appeals an order dated 23.02.2021 passed in CP(IB) No.2054/2019 has been assailed. By the impugned order learned National Company Law Tribunal, Mumbai Bench, Mumbai (hereinafter referred to as the 'Adjudicating Authority') rejected the application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as IBC) as dismissed as withdrawn considering the appellants as allottee on not meeting the required minimum number. Since the order impugned was rejected primarily on the ground of not meeting the required minimum number of allottees as per amendment in Section 7 of the IBC and also contractual dispute, we propose to reproduce the order impugned as follows:
"Heard the counsel appearing for the applicant and perused the record. The Corporate Debtor except filing reply, neither addressed any oral arguments nor filed any written submissions.
The above company Petition is filed under Section 7 of the Code by the applicant, Sujata Shekhar Shah acting for self Company Appeal (AT)(Ins) No.314 and 395 of 2021 12 and in the capacity of Authorized Representative of 14 other petitioners in the above company petition. The respondent, Corporate Debtor strongly opposed the admission of the above company petition contending that the alleged disputes raised by the petitioner are purely contractual disputes between the parties and the alleged claims of the petitioners can never be treated as a debt in the eyes of law and if at all at the very best the petitioner would have recourse to the remedies in the civil law before the competent court for their alleged claims. The respondent further contends that M/s Karvy Wealth Pvt Ltd, acted as facilitator in between the petitioners and the respondent/corporate debtor. The respondent further contends that in the event they were unable to pay the secured amounts with interest to the petitioners, the petitioners were given alternative facility to take alternative flats from the corporate debtor subject to payment of stamp duty and registration charges from their end. The corporate debtor further contents that they were Company Appeal (AT)(Ins) No.314 and 395 of 2021 13 orally and vial email with approval of M/s Karvy Wealth Pvt Ltd offered petitioner the flats in the respondent companies other projects near the same site but the petitioners did not respond to that offer. Be that as it may disregarding the contentions of both sides, the issue that falls for consideration is;
Whether the above company petition filed by 14 individual flat allottees in a real estate project is maintainable in view of the recent amendment?
Admittedly, all the above petitioners are investors in the real estate project namely "Oasis Avani" launched by the Corporate Debtor. The company petition was filed on 27th May, 2019. Subsequently, Section 7 of the code was amended through amendment which was published in Official Gazettee dated 13.03.2020 prescribing minimum 100 allottees or not less than 10 percent of the total number of such allottees under the same real estate project whichever is less for filing petition under Section 7 of the Code. Liberty is also given to single applicant in the Company Appeal (AT)(Ins) No.314 and 395 of 2021 14 pending company petitions which are pending for admission to bring the required number of remaining applicants and continue the company petition within 30 days from the date of amendment came into force. Admittedly, the petitioners are less than 100 members in the present case and they have not brought the required number of minimum allottees for continuing and admission of the above company petition. In the light of the above legal position, this tribunal is left with no option except to dismiss the above company petition as withdrawn for want of required minimum number of allottees as per the amendment.
Even otherwise as rightly contended by the respondent the alleged disputes raised by the petitioners are purely contractual disputes which cannot be decided by this Tribunal under Section 7 of the Code in a summary proceedings.
For the foregoing reasons, the above company petition stands dismissed without costs on both the counts. Company Appeal (AT)(Ins) No.314 and 395 of 2021 15 However, the above order does not preclude the petitioner from initiating necessary recovery proceedings before appropriate legal forum."
2. The short fact of the case as is evident from the Memo of Appeal is that in the year 2015 one owner of non-agriculture piece of land situated in Shahpur, Distt Thane, Maharashtra entered into a joint agreement with sole respondent Mirador Construction Pvt Ltd (Corporate Debtor) whereby the Corporate Debtor was entrusted with planning, development, marketing and selling the said land in phasewise manner, wherein both the parties floated their scheme "Oasis Avani". The Corporate Debtor approached one Karvy Realty Pvt Ltd to device a scheme for generating funds for construction of the said project to float and market the said scheme. The Karby Reality Pvt Ltd accordingly came up with a scheme of inviting investment into the company vide an investment agreement. As per the investment agreement the Corporate Debtor was to return the principal amount alongwith a specific periodic assured return on the investment. Thereafter appellants entered into investment agreements with the Respondent/Corporate Debtor to invest and Company Appeal (AT)(Ins) No.314 and 395 of 2021 16 advance a secured amount in order to infuse funds for developing the project. In the Memo of Appeal for example an investment agreement in between one of the appellant namely Mr. Anant Reniwala and Respondent/Corporate Debtor has been brought on record. It is just and proper to reproduce the investment agreement in between the appellant and respondent as follows:
"This Agreement (Agreement)is made this_____day of May, 2016 BETWEEN MIRADOR CONSTRUCTION PRIVATE LIMITED, a company incorporated under the Companies Act, 2013, having its registered office at B-301 & 302, Damjl Shamji Corporate Square, Kanara Business Center, Near Laxmi Nagar. Ghatkopar (East) Mumbai - 400075 (hereinafter referred as 'MC*), which expression shall unless it be repugnant to the context or meaning thereof be deemed to mean and include its successors or successor in interest and assigns of the ONE PART;
Company Appeal (AT)(Ins) No.314 and 395 of 2021 17 AND Anant Raniwala, Indian Inhabitant residing at Flat No. 603, Vivarea Tower, B-1, Sano Guruji Marg, Mahalakshmi Circle, Jacob, Mumbai (hereinafter referred as the "AR*) PAN No. AIGPV6305B, which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include his/her heirs, representatives. executors, administrators, successors, and permitted assigns of the OTHER PART.
MC and AR are hereinafter individually referred as "Party"
and collectively referred as *Parties"
WHEREAS:
1. Mr. Ganesh Pandurang Raut("Owner") is well and sufficiently entitled to and is seized and possessed of all the ownership right, title and interest in the immovable property, being pieces or parcels of Non Agricultural Lands bearing Survey nos. 212. 2/4. 215 and 2/6 admeasuring 4H - 27A - 8P equivalent to 42,708 sq. mrs, lying and Company Appeal (AT)(Ins) No.314 and 395 of 2021 18 situated at Revenue Village Bendecon, within the Registration Sub-District of Shahapur, District Thane and more particularly described in the SCHEDULE hereunder written and which property is hereinafter referred to as "the said property".
II. The Owner hereinabove has purchased and acquired the said property with an intention to float and launch N. A. Plot Scheme thereon and have obtained all requisite permissions, sanctions, consents, grants, approvals, etc., including but not restricted to Non Agricultural Permission, from such appropriate statutory of regulatory authority(s). III, MC is a Company engaged inter alia in the business of buying and selling of land, contracting, etc., and has the relevant and required skills and expertise in development of immovable properties including expertise in development. construction, financial management, marketing etc. IV.The Owner and MC have entered into a Joint Venture Agreement dated 03.06.2015 registered with the Sub Registrar of Assurance at Shahapur on 03.06.2015 at serial Company Appeal (AT)(Ins) No.314 and 395 of 2021 19 no. SHP - 2663 - 2015 for floating such N. A. Plot Scheme on the said property under the name and style of "OASIS AVANI" in the phasewise manner. Under the said Agreement, the Owner has entrusted the work relating to planning, making arrangements for development, marketing and sale of the N.A. Plots in the said property to MC in phasewise manner (hereinafter referred to as the "Project. Land"). Phase I land admeasures about 11 acres which has currently been launched under such N. A. Plot Scheme.
V. MC has launched the Phase I of the said N.A. Plots for sale to the prospective purchasers @ Rs. 750/- (Rupees Seven Hundred and Fifty only) per sq. ft. and above VI.With regards to the work relating to planning. making arrangements for development, marketing and sale of the N.A. Plots in the said property as envisaged, MC is presently in need of funds to the extent of Rs. 18.00,000/-(Rupees Eighteen Lakhs only) and has requested AR to advance and facilitate the requisite funds against provision of such Company Appeal (AT)(Ins) No.314 and 395 of 2021 20 security / for returns as envisaged by MC ("Secured Amount"), as may be agreed between the Parties. VII. At the specific request of MC, AR has joined in as a party to this Investment Agreement for good and valuable consideration and hereby expressly records, declares and confirms that they have No Objection to invest monies as required by MC by the creation of security on the N. A. Plots which shall be made available to the AR @ Rs. 600/- (Rupees Six Hundred only) per sq. ft. ("Secured Premises") and the area of the said Secured Premises shall be equivalent to the amount invested by the AR, to secure the sums advanced by AR to MC.
VIII. In order to further ensure the Secured Amount as envisaged in clause VII hereinabove, an additional area equivalent to Secured Premises shall be kept reserved by MC as an by way of additional performance guarantee for the sum advanced by AR to MC. It is expressly agreed between the Parties that the said additional area is just to additionally secure AR and shall be released by AR, after Company Appeal (AT)(Ins) No.314 and 395 of 2021 21 the expiry of the term of this agreement without any charge, claim and demur.
IX. Acceding to the request of MC and relying on the representations and declarations of MC. AR has agreed to advance to MC an amount of Rs. 18,00,000/- (Rupees Eighteen Lakhs only) against the provision of such security and on the terms and conditions as set out in this Agreement.
NOW THEREFORE, in consideration of the promises, mutual covenants and agreements set forth herein, the parties hereto agree as follows:
1. Relying on the representations and declarations of MC.
AR hereby advances to MC an amount of Rs. 18,00,000/- (Rupees Eighteen Lakhs Only) vide cheque no. 327651 dated 15.04.2016 drawn on Axis bank (hereinafter referred as the "Secured Amount) on the terms and conditions as set out herein. MC hereby accepts and acknowledges receipt of the Secured Amount from Rs. 18,00,000/-.
Company Appeal (AT)(Ins) No.314 and 395 of 2021 22 2 MC doth hereby represent, declare and undertake as under:
(a) MC have good right, full power and absolute authority to enter into this Agreement and there is no impediment or restraint or injunction against the MC from being able to do so;
(b) The title of the Owner to the Secured Premises is clear and marketable, free from any encumbrance, charge, lien, claim or any third party right of any nature whatsoever;
(c) There are no outstanding or arrears payable in respect of municipal taxes, arrears of land revenue and other charges relating to the said property and all such charges payable with respect to the Secured Premises till the time the entire Secured Amount and other moneys due and repayable by MC to AR in terms of this Agreement are fully repaid or deemed to have been repaid in the manner envisaged in this MOU, shall be paid in full without any delay or default.
Company Appeal (AT)(Ins) No.314 and 395 of 2021 23
(d) The said property is in the sole and exclusive possession of MC and there are no tenants and/or licensees in occupation and/or possession of the Secured Premises or any part thereof. AR undertakes not to deal in any manner howsoever with the Secured Premises as also not to part with the possession of the Secured Premises till the time the entire Secured Amount and other moneys due and repayable by MC to AR in terms of (his Agreement are fully repaid or deemed to have been repaid in the manner envisaged in this Agreement.
(e) There are no actions or proceedings pending against the Owner and/or MC instituted by any party whomsoever in respect of the said Property and/or the Secured Premises, including any notice or action for nonpayment or recovery of land revenue, municipal taxes, statutory outgoings, duties, cess, charges, or any other government levies in respect of the said property and/or the Secured Premises.
(f) Owner / MC have not at any time prior hereto, created any mortgage, charge, claim, lien or any tax liability in Company Appeal (AT)(Ins) No.314 and 395 of 2021 24 respect to the Property and/or the Secured Premises and hereby undertakes not to encumber the Secured Premises or create any right in favour of anyone whether by way of trust or by way of any claim for maintenance whatsoever till the time the entire Secured Amount and other moneys due and repayable by MC to AR in terms of this Agreement are fully repaid or deemed to have been repaid in the manner envisaged in this Agreement.
(g) Neither Owner / MC have received any notice for acquisition or requisition of the said property and/or the Secured Premises or any portion thereof.
(h)Neither the said property nor the Secured Premises are the subject matter of any pending suit or litigation or attachment before or after judgment.
(i) There are no prohibitory orders or any attachment orders or any litigation of or otherwise any liabilities in respect of the Property or any part thereof, whereby the rights of AR to deal with the Secured Premises, are in any way affected or jeopardized.
Company Appeal (AT)(Ins) No.314 and 395 of 2021 25
(j) This Agreement duly and validly executed and delivered by MC and AR, would constitute legal, valid and binding obligation, enforceable against MC and AR in accordance with its terms.
3 The Secured Amount is advanced by AR to MC based solely on the representation and undertaking of MC that the Secured Amount has been invested by AR for a period of two years and that upon the completion of the said period, the MC would be liable to return back the Secured Amount as follows:
a. Half yearly return on the principal amount of Rs. 18,00,000/- @ 21% per annum in form of post dated Cheques;
b. Upon the expiry of the period as stipulated hereinabove. AR will be given a choice either to take the entire Secured Amount of Rs.18,00,000/- (Rupees Eighteen Lakhs Only)or to purchase any plot under the N.A. Plot Scheme @ 600/- (Rupees Six Hundred only) per sq. ft.
Company Appeal (AT)(Ins) No.314 and 395 of 2021 26 If AR agrees to purchase the any plot instead of taking back the Secured Amount, he/she will have to bear the entire cost of stamp duty and registration charges thereof.
It is agreed between the parties that MC shall, on the date of the execution of these presents, hand over total five post dated cheques, lo., four for the interest component as stipulated in clause 3(a) hereinabove to be enchased after the expiry of every 6 Month and one cheque consisting of Secured Amount, to be enchased on the expiry of the term of this agreement.
4 MC hereby transfers by way of security unto AR, the Secured Premises, as a security for performance of the Secured Obligation by MC, with a condition that upon fulfillment of the Secured Obligation, MC will transfer the Secured Premises from the security hereby created to AR. However, AR shall not be entitled to claim / sell the Secured Premises, under whatsoever circumstances. Company Appeal (AT)(Ins) No.314 and 395 of 2021 27 5 It is agreed between the parties that if MC is unable to return back the Secured Amount as stipulated in clause 3 hereinabove after the expiry of the period of two years from the date of the execution of these present, then in such case the Secured Premises shall be transferred to AR and/or forfeited by AR and provisions of clause VII & VIII of recitals shall attract. However, AR will have to bear the entire cost of stamp duty and registration charges thereof. 6 This Agreement shall not be amended or otherwise altered except pursuant to an instrument in writing signed by each of the parties hereto. This Agreement shall be binding upon and inure to the benefit of the successors and legal representatives of AR.
7 The MC agrees to indemnify and does hereby indemnify and keeps indemnified and harmless AR against any loss, damage, claim, costs, expenses, charges, demand, action, dispute of whatsoever nature incurred, suffered or sustained by AR arising from or out of or in connection with or in relation to the transaction contemplated in this MOU. Company Appeal (AT)(Ins) No.314 and 395 of 2021 28 8 Any notice and other communications provided for in this Agreement shall be in writing and shall be first transmitted by facsimile transmission and then confirmed by postage, prepaid registered post with acknowledgement due or by internationally recognized courier service, in the manner as elected by the Party giving such notice, at the addresses first hereinabove mentioned and shall be marked to the attention of Mr. Vijay Pawar in the case of MC and in case of AR marked to the attention of Anant Raniwala. All notices shall be deemed to have been validly given on (i) the business transmitted by facsimile transmission, or (i) the expiry of seven days after posting it sent by registered post, or (ill) the business date of receipt, if sent by courier. 'Any party may, from time to time, change its address or representative for receipt of notices provided for in this Agreement by giving to the other not less than fifteen (15) days prior written notice.
9 All disputes and difference between the parties in any way arising out of or relating to this MOU or any subsequent Company Appeal (AT)(Ins) No.314 and 395 of 2021 29 writing in terms of or in furtherance of this MOU shall be referred to arbitration of Miss. Swati Sagvekar, Advocate, having his / her office at Building No. 35, 2n Floor, Ambalal Doshi Marg, Opp. Hamam House, Near Dena Bank, Fort, Mumbai - 400 023, for adjudication thereof. The arbitration proceedings shall take place in accordance with the provisions contained in the Arbitration and Conciliation Act, 1996 or any statutory modification thereof. The arbitration proceedings shall be held at Mumbai and shall be conducted in English language only. The provisions of this clause shall survive the termination of this MOU for any reason whatsoever.
10 Unless otherwise set out in this MOU, no delay on the part of any of the parties in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any of the parties of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder. Company Appeal (AT)(Ins) No.314 and 395 of 2021 30 11 Any provision of this MOU which is held to be invalid or unenforceable for any reason shall be ineffective to the extent of such invalidity or unenforceability only, without affecting in any way the remaining provisions hereof. 12 Subject to the terms and conditions of this MOU, each of the parties hereto shall use all reasonable efforts to take, or cause to be takên, all action, and to do, or cause to be done, all things necessary or proper to fulfill its obligations under this MOU.
13 This MOU may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. In pleading or proving any provision of this MOU, It shall not be necessary to produce more than one such counterpart.
All that pieces or parcels of Non Agricultural Lands bearing Survey nos. 2/2, 2/4, 2/5 and 2/6 admeasuring 4H - 27A Company Appeal (AT)(Ins) No.314 and 395 of 2021 31
- 8P equivalent to 42,708 sq. mrs., lying and situated at Revenue Village Bendecon, within the Registration Sub- District of Shahapur, District Thane IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DAY, MONTH AND YEAR FIRST ABOVE WRITTEN."
3. It is the stand of the appellants that similar separate investment agreements were entered into between other appellants and Respondent/Corporate Debtor. It is further case of the appellant that as per investment agreement within 24 months the invested amount was to be returned and also periodically during intervening period interest at specific rate was to be given to the appellants by the Respondent/Corporate Debtor. It is further clear that some interest was paid. However, subsequently on failure on the part of the Corporate Debtor in payment of interest and also refund of the invested amount after 24 months despite repeated requests by the appellants, the appellants were constrained to file an application under Section 7 of the IBC before the Adjudicating Authority. On Company Appeal (AT)(Ins) No.314 and 395 of 2021 32 examination of the application filed before the Adjudicating Authority, copy of which has been brought on record as Annexure 6, it is evident that during the period between February 2016 till 2017 the appellants/financial creditors had invested in the project to the tune of Rs.4,57,00,000/-. The said debt was not cleared by the Respondent/Corporate Debtor and as such as on 5th May, 2019 the amount payable by the Corporate Debtor i.e. principal amount alongwith interest had raised to about Rs.6,58,66,874/- (Rupees six crores fifty eight lakhs sixty six thousand eight hundred seventy four only). It is further case of the appellant that as per financial statement of the Corporate Debtor about 311 investors were shown under the column of short term borrowing and all the borrowers had charge over the virtual premises whereas the plan as approved by the Town Planning Authority in relation to project under construction was only in relation to 81 plots. Meaning thereby that each plot was booked by the Corporate Debtors. It is further case of the appellant that even after appellant/investors were having charge over the said plots three plots were already sold to third party and rest plots were shown to be available for sale on various online portal. It is claimed by the appellant that the Respondent/Corporate Debtor did not Company Appeal (AT)(Ins) No.314 and 395 of 2021 33 dispute debt before the Adjudicating Authority but took the plea that they were ready to transfer the charged property after accepting due court fee stamp to be deposited by the appellant/investor.
4. Besides making oral submissions in both the appeals learned counsel for the appellants have filed Notes of Written Submission. We propose to indicate the relevant portion of the written submission filed by the learned counsel for the appellant in Company Appeal (AT)(Ins) No.314/2021 as follows:
A. Ld NCLT did not give any opportunity to Appellants to comply with the requirement of the amended Section 7 of the Code and has rather restricted there right to refile the matter. The matter was reserved for orders on 12.01.2021 after hearing the Petitioners The Hon'ble Supreme Court of India vide as Judgment dated 19.01 2021 held that the deemed withdrawal as envisaged under the proviso to Section 7, does not bar a fresh petition for the same cause of action, after complying with the requirements of the amended Section 7 (Manish Kumar Union of India, (2021)
5 SCC 1, para 429).
B.The Ld. Adjudicating Authority, vide the Impugned order, has dismissed the petition on merits, despite declaring it to be withdrawn for want of required minimum number of allottees (pg. 37, Appeal), thereby foreclosing the right of all the other creditors of the Respondent Corporate Debtor who wish to prefer an Application under Section 7 of the Code, against the Respondent. The Impugned Order directly affects and prejudices the petition, already preferred by some of the Appellants herein, before the Ld. Adjudicating Authority, against the Company Appeal (AT)(Ins) No.314 and 395 of 2021 34 Corporate Debtor, even though the same has been filed in compliance with the amended Section 7 of the Code. Since the agreements as entered into between the Appellants and the petitioners before the Ld. Adjudicating Authority are identical, the interpretation as given by Ld. Adjudicating Authority, has a direct bearing on the rights of the Appellants.
C. The Ld. Adjudicating Authority, erroneously held that the non-payment of dues by the Corporate Debtor to its creditors, is a Contractual dispute and thereby beyond the jurisdiction of the Tribunal.
D. The order as passed by the L.d. Adjudicating Authority is in contravention of the statutory rigors of the Code and the law laid down by the Hon'ble Supreme Court of India, with respect to the scope and extent of enquiry as can be made by the Ld. Adjudicating Authority in a petition under Section 7 of the Act. In a petition filed under Section 7 of the Code the adjudicating authority has to merely satisfy itself that a default has occurred, even if the default is disputed so long as it is due i.e. payable unless interdicted by some law or has not yet become due in sense that is payable at some future date. The moment the Adjudicating Authority is satisfied that a "Default" has occurred, the Application must be admitted (Innoventive Industries Ltd. v. ICICI Bank Ltd. reported in (2018) 1 SCC 407, para 28 and 31: E.S. Krishnamurthy & Ors. v. Bharath Hi-Tecch Builders Pvt. Ltd. reported in (2022) 3 SCC 161, para 31 and 32).
E.The interpretation of the terms of the Investment Agreement, as has been arrived at by Ld. Adjudicating Authority itself is flawed in its understanding of the Agreement and the nature of the transaction. The Observation of the Ld. Adjudicating Authority that the Appellants herein are Allottees is erroneous and they are Financial Creditors under Section 5(8)(a) of the Code. Company Appeal (AT)(Ins) No.314 and 395 of 2021 35 (Nikhil Mehta and Sons versus AMR Infrastructure Ltd. 2017 SCC OnLine NCLAT 377, para 20 and 23).
F.The submissions as made by the Corporate Debtor, as recorded by the Ld. Adjudicating Authority, itself amounts to an admission of a Default on the part of the Corporate Debtor to pay the debt as due in favour of the Applicant Financial Creditor.(@ pg. 36, Appeal).
G.Clause 3 of the Investment Agreement stated that the Corporate Debtor would be liable to return back the amount invested after the completion of the period of investment, which was 2 years or 3 years (a pg. 42. Appeal). It was also liable to make payment of Half yearly and Quarterly payment of interest, under the agreements. Clause 5 of the Investment Agreements dealt with the contingency of a default on the part of the Corporate Debtor in paying the dues under the Investment Agreements. It stated in the said clause that in case the Corporate Debtor is unable to return back the Secured amount after the expiry of the period of investment, then it shall transfer the secured premises in favour of the Applicant @ pg. 43, Appeal) H.The Corporate Debtor has specifically referred to Clause 5 of the Agreement to contend that the Applicant herein were offered transfer of the Secured Premises in favour of the Appellants (@pg. 9, Counter Affidavit). I.Once the Corporate Debtor itself admits that the contingency for invoking Clause 5 of the Agreement has occurred, it admits that there is a default on its part in paying the debt due in favour of the Appellants. The natural consequence of the said admission, in light of the law as laid down by the Hon'ble Apex Court in Innoventive Case (Supra). is that the Petition under Section 7 is liable to be allowed by the Adjudicating Authority. J. The Corporate Debtor itself has recognised the Appellants herein as the creditors of the Company in the Company Appeal (AT)(Ins) No.314 and 395 of 2021 36 Audited Books of Accounts of the Corporate Debtor (@pg. 74, Appeal).
K. The Ld. Adjudicating Authority has further failed to appreciate that the default clause as relied upon by the Corporate Debtor only deals with the contingency of non- payment of Secured Amount. Secured Amount has been defined in Clause 1 of the Agreement as the principal amount invested by the investor (@) pg. 41, Appeal). Even on assuming. though not admitting, that transfer of the Secured Premises in favour of the investors will absolve the Corporate Debtor of its obligation to repay the Principal Amount, its obligation to pay the assured returns still remains, which admittedly has not been paid, thereby establishing the default as contemplated under the Code. L. The finding of the Ld. Adjudicating Authority that any petition against the Corporate Debtor ought to have been filed by 100 such investors, is contrary to the language of the statute itself and is therefore liable to be set aside."
5. In both the appeals Respondent/Corporate Debtor has appeared and filed almost similar reply. Learned Counsel for the Respondent/Corporate Debtor opposing the appeals has argued that the Learned Adjudicating Authority has committed no error in dismissing the application filed under Section 7 of the IBC by the appellants. Learned Counsel for the Respondent by way of referring to Clause 7 of the Investment Agreement tried to highlight that the appellants were allottee and since the application was not filed either Company Appeal (AT)(Ins) No.314 and 395 of 2021 37 by minimum 100 of the allottees or 10% of the total allottees the learned Adjudicating Authority has committed no error in rejecting the application filed under Section 7 of the IBC. Clause 7 of the Investment Agreement can be seen from the Investment Agreement which we have incorporated hereinabove. Learned Counsel for the Respondent/corporate debtor has further drawn our attention to Clause 3(b) of the Investment Agreement which is reproduced hereinbelow:
"b. Upon the expiry of the period as stipulated hereinabove. AR will be given a choice either to take the entire Secured Amount of Rs.18,00,000/- (Rupees Eighteen Lakhs Only) or to purchase any plot under the N.A. Plot Scheme @ 600/- (Rupees Six Hundred only) per sq. ft."
6. In sum and substance it has been argued by learned counsel for the Respondent/Corporate Debtor that the application filed under Section 7 of the IBC by the appellant was not in consonance with amended provisions of Section 7 of the IBC and as such the learned Company Appeal (AT)(Ins) No.314 and 395 of 2021 38 Adjudicating Authority has committed no error in dismissing the application.
7. Besides hearing learned counsels for the parties we have perused the entire material available on record. In so far as observations of the Adjudicating Authority in respect of considering the appellant as allottee is concerned we are prima facie of the view such observation by the Adjudicating Authority was erroneous. Investment agreement in between the appellant and Corporate Debtor in categorical term states that the appellant under the said agreement had invested the amount for a time period of 24 months and even before expiry of period of 24 months as agreed the Corporate Debtor was required to make payment of interest to the appellant. It is also admitted by the Respondent in its reply that to some extent interest was also paid which is evident from para 4(j) of the affidavit in reply of the Corporate Debtor in Company Appeal (AT)(Ins) No.314/2021. It has been specifically stated that the Respondent Company has paid the interest from time to time and performed its part of contract. It is further clear from stand taken by the Corporate Debtor in para 4(g) that as per instructions of the Company Appeal (AT)(Ins) No.314 and 395 of 2021 39 Karvy, the Respondent Company through its director had entered into an investment agreement with the appellants who had invested money as secured in Respondent(Corporate Debtor) for two years and upon expiry of the said period the appellant were in choice either to take the entire secured amount or to take secured premises. It has also been admitted that Corporate Debtor had handed over post dated cheques towards the payment of accrued interest and principal amount. Whereas it is specific case of the appellant that since some post cheques were dishonoured it was financial debt for which the appellants being financial creditor filed application under Section 7 of the IBC jointly for total outstanding debt which was more than Rs.4 crores.
8. Learned counsel for the appellant has also argued that even though the application was not required to be dismissed by the Adjudicating Authority on the ground of not meeting the minimum number, the Adjudicating Authority has committed serious error in not granting time to remove the error, if any, in the light of judgement of the Hon'ble Supreme Court in Manish Kumar Vs Union of India reported in (2021) Volume V SCC Page 1. It was submitted by the Company Appeal (AT)(Ins) No.314 and 395 of 2021 40 learned counsel for the appellant that application under section 7 of the IBC was filed by the appellant in the month of May, 2019 and it was adjourned on number of dates. However, in the meanwhile on 28.12.2019 Union of India promulgated the Insolvency & Bankruptcy Code (Amendment) Ordinance, 2019. The amendment as inserted mandated that in a petition preferred by a class of creditors as referred to in Section 21(6)(a) and (b) of the IBC ought to be jointly filed by 100 or 10% of the total number of such creditors. The amendment further provided that any petition as pending before the Adjudicating Authority which has not yet been admitted was also be modified to comply with such amendment. The said amendment was challenged before the Hon'ble Supreme Court vide WP(C) No.26 of 2020. In the said appeal while directing for issuance of notice the Hon'ble Supreme Court directed that "Status Quo, as of today, with respect to the pending applications, shall be maintained in the meanwhile." It was further submitted by the learned counsel for the appellant that Hon'ble Supreme Court finally by a detailed judgement on 19.01.2021 upheld the said amendment. However, while upholding the amendment extended two months time from the date of the order of Hon'ble Supreme court to comply with provisos to Company Appeal (AT)(Ins) No.314 and 395 of 2021 41 Section 7(1) of the IBC. It has been argued that though the Hon'ble Supreme Court granted liberty for curing defects within two months from the date of order i.e order dated 19.01.2021 the Learned Adjudicating Authority before expiry of two months for curing the defects has passed the impugned order on 23.02.2021.
9. Besides hearing learned counsel for the parties we have thoroughly examined the materials available on record. On going through the investment agreement which we have incorporated hereinabove there is no difficulty in coming to the conclusion that appellants had invested money for a specified period and that too for some period they received interest as admitted by the Respondent/Corporate Debtor in para 4(j) of it affidavit in reply. The investment agreement was unambiguous for 24 months and in lieu charge was created to the plots. In such situation there was no reason for the adjudicating authority to treat the appellants as allottees. We are of the opinion that the Adjudicating Authority has further misunderstood the observation of the Hon'ble Supreme Court in Manish Kumar case (Supra). It is evident that the fact remains that after the amendment in section 7 was introduced appeal was Company Appeal (AT)(Ins) No.314 and 395 of 2021 42 filed before the Supreme Court and Hon'ble Supreme Court by its order dated 13.01.2020 while issuing notice directed to maintain status quo with respect to pending applications. Though the Hon'ble Supreme Court finally upheld the amendment, the Hon'ble Supreme Court further extended time to cure the defects within two months from the date of order of Hon'ble Supreme Court. For better appreciation it is apt to reproduce the relief which was granted by the Hon'ble Supreme Court in Manish Kumar case (Supra) which are as follows:
"Relief:
447. We uphold the impugned amendments.
However, this is subject to the following directions, which we issue under Article 142 of the Constitution of India:
447.1. If any of the petitioners move applications in respect of the same default, as alleged in their applications, within a period of two months from today, also compliant with either the first or the second proviso under Section 7(1), as the case may be, then, they will be exempted from the requirement of payment of court fees, in Company Appeal (AT)(Ins) No.314 and 395 of 2021 43 the manner, which we have detailed in the paragraph just herein before.
447.2. Secondly, we direct that if applications are moved under Section 7 by the petitioners, within a period of two months from today, in compliance with either of the provisos, as the case may be, and the application would be barred under Article 137 of the Limitation Act, on the default alleged in the applications, which were already filed, if the petitioner file applications under Section 5 of the Limitation Act, 1963, the period of time spent before the Adjudicating Authority, the Adjudicating Authority shall allow the applications and the period of delay shall be condoned in regard to the period, during which, the earlier applications filed by them, which is the subject matter of the third 464 proviso, was pending before the Adjudicating Authority.
447.3. We make it clear that the time limit of two months is fixed only for conferring the benefits of exemption from court fees and for condonation of the delay Company Appeal (AT)(Ins) No.314 and 395 of 2021 44 caused by the applications pending before the Adjudicating Authority. In other words, it is always open to the petitioners to file applications, even after the period of two months and seek the benefit of condonation of delay under Section 5 of the Limitation Act, in regard to the period, during which, the applications were pending before the Adjudicating Authority, which were filed under the unamended Section 7, as also thereafter.
448. The Writ Petitions and the Transferred Case will stand dismissed subject to the aforesaid directions and the observations contained in the Judgment, and we only make it clear that the benefits of the directions, under Article 142, will be available also to the petitioners in the Transferred Case.
449. The intervention application (I.A.No.67473 of 2020 in WP (C)No.26 of 2020) is filed by allottees who have 465 filed application under Section 7 on 20.9.2019. I.A. No.32863 of 2020 in WP(C) No.53 of 2020 is filed by the allottee for impleadment. He has filed application under Company Appeal (AT)(Ins) No.314 and 395 of 2021 45 Section 7 of the Code on 19.12.2019. I.A. No.32869 of 2020 WP(C) No.53 of 2020 is filed by the allottees who have filed the same for impleadment. They have filed application under Section 7 on 17.9.2019. I.A.No. 15425 of 2018 in WP (C)No.26 of 2020 is filed by a corporate debtor for impleadment. All the above IAs are disposed of in terms of the judgment as aforesaid.
450.We however make it clear that the directions we have issued under Article 142 regarding court fees and about condonation of delay will apply to the applicants who are allottees."
10. On examination of the aforesaid direction of the Hon'ble Supreme Court it is clear that the impugned order of the Adjudicating Authority fortfeits the right of the appellant to cure the defect in compliance with the order of Hon'ble Supreme Court. It is not in dispute that before amendment under Section 7 was brought by the Govt of India, the application under section 7 filed by the appellant was pending and during pendency of the said application the amendment travelled upto the Hon'ble Supreme Court. Initially Company Appeal (AT)(Ins) No.314 and 395 of 2021 46 Hon'ble Supreme Court directed to maintain status quo and finally on 19.01.2021 while upholding the amendment provided two months time from the date of the order of Hon'ble Supreme Court for curing the defect. However, the Adjudicating Authority before expiry of two months has passed the impugned order on 23.02.2021. Accordingly there is no reason to allow the impugned order to continue.
11. In so far as other ground taken by the Adjudicating Authority for rejection of the application in the impugned order is concerned i.e. contractual dispute, we are of the considered opinion that in view of specific averment made in the Investment Agreement and non- raising of dispute by the Corporate Debtor on debt, there was no reason to record that there was contractual dispute. We are of the opinion that on this issue also the finding of the Adjudicating Authority is erroneous.
12. The impugned order is hereby set aside and the matter is remitted back to the Adjudicating Authority to hear the parties afresh and pass appropriate order in accordance with law particularly considering the time extended by the Hon'ble Supreme Court in Company Appeal (AT)(Ins) No.314 and 395 of 2021 47 Manish Kumar case and unequivocal Investment Agreement entered in between appellants and the Corporate Debtor.
13. With the above observations/directions both the appeals are allowed.
(Justice Rakesh Kumar) Member (Judicial) (Dr. Alok Srivastava) Member (Technical) bm Company Appeal (AT)(Ins) No.314 and 395 of 2021