NCLT to Decide S.7(1) Compliance Before Admission When Dispute in Number of Allottees: NCLAT [Read Order]

The principal bench of the National Company Law Appellate Tribunal ( NCLAT ) has directed the National Company Law Tribunal ( NCLT ) to decide compliance with Section 7(1) of the Insolvency Bankruptcy Code, 2016 ( IBC ) before admission when there is a dispute in a number of allottees.

Parikshit Madanmohan Sharma, the appellant challenged the order passed by the Adjudicating Authority ( National Company Law Tribunal, Mumbai Bench ) by which an application filed under Section 7 of the IBC, 2016 by some home buyers against the K.D. Lite Developers Private Limited ( Corporate Debtor ) for the initiation of CIRP has been admitted Arihant Nenawati has been appointed as the IRP and a moratorium has been imposed.

Counsel for the Appellant has submitted that since some of the home buyers have filed this application, therefore, it was incumbent upon them to cross the threshold as provided in Section 7(1) Second proviso.

It was submitted that the appellant had raised various issues including the issue of threshold and the limitation but none of the issues have been decided by the Tribunal and therefore, the impugned order is a non-speaking order. Further contended that the total number of home buyers is 209 and therefore, the threshold of 10% is 21 whereas the application has been filed by home buyers less than that.

It was submitted that nowhere in the impugned order, a finding is recorded in respect of the issue as to whether the respondent had crossed the threshold as provided in Section 7(1) and that as to whether the application filed by the applicants before the Tribunal was within limitation.

“In such a circumstance, where there is a dispute on facts as to whether the number of allottees is 209 as stated by the appellant or 124 as stated by the Respondent nos. 1 to 20 except 9 and 12, the Tribunal should have decided this question of fact first then the question of law but there is no discussion regarding this fact as to whether the contention of the appellant is correct or not. In such circumstances, it is apparent that the impugned order is non-speaking and against the principle of natural justice.”, the two-member bench comprising Justice Rakesh Kumar Jain, Member ( Judicial ) and Mr. Naresh Salecha, Member ( Technical ).

The Tribunal set aside the Impugned order and the matter is remanded back to the Tribunal to decide again after hearing all the parties by giving them the opportunity of hearing and by passing a speaking order.

To Read the full text of the Order CLICK HERE

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