CIRP Plea Filed by 2 Allottees Was to be Quashed as Joint Plea u/s 7 Requires At Least 100 Alottees or 10% of Allottees

Case Details: Ms. Rita Malhotra v. Orris Infrastructure (P.) Ltd. - [2023] 154 taxmann.com 471 (NCLT-New Delhi)

Judiciary and Counsel Details

• • Ramalingam Sudhakar, President & Avinash K. Srivastava, Technical Member
  • Rajat Malhotra & Sunil Malhotra, Advs. for the Financial Creditor.
  • P. Nagesh, Ranjana Roy, Akshay Sharma & Shikhar Upadhyay, Advs. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor floated a scheme to develop/construct a commercial building/complex at Gurgaon. The applicants under the assured investment return plan submitted applications for allotment of office space/retail units and entered an agreement with the corporate debtor which guaranteed monthly assured return on investment.

Alleging that the corporate debtor breached the terms of the agreement and failed to make a payment towards return on investment, an instant petition under section 7 of the IBC was filed by applicants against the corporate debtor.

However, a settlement was reached between the parties and the instant petition was withdrawn in view of cheques issued for payment till June 2019. Thereafter, an instant petition was revived for a default amount of Rs. 3.6 lakhs.

It was noted that the instant application was filed by only 2 allottees whereas the total number of allottees was 504 and 366 nos of allottees were under the assured return scheme.

The NCLT observed that the applicants did not satisfy the threshold for filing an instant application under section 7 of the IBC. Further, the NCLT observed that since the corporate debtor had already issued demand drafts to the applicants in lieu of full and final payment of assured return and the same was also acknowledged by applicants, an instant application filed by applicants under section 7 for initiating the CIRP against the corporate debtor was to be dismissed.

NCLT Held

The NCLT held that an application for initiation of the CIRP against the corporate debtor shall be filed jointly by not less than one hundred such allottees/creditors in the same class or not less than 10% of the total number of creditors of the same class.