Judgment Summaries (Supreme Court)- Amit Katyal v. Meera Ahuja

  March 25, 2022

CASE SUMMARY

In the matter of Amit Katyal v. Meera Ahuja and Others

{Supreme Court; March 03, 2022}

FACTS: The Corporate Debtor could not complete a real estate project and as a result, the homebuyers filed a Section 7 Petition under the Insolvency and Bankruptcy Code, 2016 (“Code”) before the NCLT, New Delhi. The Appellant was the Promoter/Majority Shareholder of the Corporate Debtor and the NCLT admitted the Section 7 Petition initiating Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor. The Appellant challenged the NCLT’s order of admission before the NCLAT and the same order was upheld by the NCLAT. Aggrieved by the NCLAT order, the appellant approached the Supreme Court challenging the admission of Section 7 Petition against the Corporate Debtor.

When the matter was heard by the Supreme Court it was submitted that the home buyers had settled the dispute with Corporate Debtor and requested to withdraw CIRP Proceedings before the NCLT. By an order dated February 4, 2022, the Supreme Court stayed the order passed by the NCLT.

HELD: The Supreme Court observed that under Section 12A of the Code, the NCLT can allow withdrawal of Applications made under Sections 7, 9, and 10 on an application made by the applicant with approval of the Committee of Creditors (90% voting share). Further, it was observed that in the case of Brilliant Alloys Private Limited v. S. Rajagopal, it was held that Section 12A of the Code and Regulation 30A of the CIRP Regulations, 2016 are directory in nature.

The Supreme Court held that when an appropriate case is made out and the NCLT is satisfied with the settlement, it may permit the applicants to withdraw the Application to initiate CIRP against the Corporate Debtor. The Supreme Court opined that in the present case, under Article 142 of the Constitution of India read with Rule 11 of the NCLT Rules, 2016 the home buyers should be allowed to withdraw the Application initiating CIRP against the Corporate Debtor because the matter was settled, and it is in the larger interest of homebuyers who await possession of their respective flats. Hence, CIRP proceedings pending before the NCLT were dismissed as withdrawn.

Full text of the accessible here.

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