Dismissed

In the matter of Devnandan Infracon Private Limited [Inv. P. No. 09 of 2022 in Cp (Ib) No. 163 of 2022]

NCLT11 Oct 2023Inv. P. No. 09 of 2022 in CP (IB) No. 163 of 2022

Case brief

AI extract

What is this about?

The NCLT Ahmedabad Division dismissed an intervention petition filed by flat owners who sought to be impleaded and exclude mortgaged properties from a pending insolvency case. The court held that intervention is not required at the pre-admission stage and the application is premature. It clarified that only Financial and Corporate Debtors are necessary parties under Section 7.

What did the court decide?

Intervention Petition No. 09 of 2022 is dismissed as premature since CIRP has not been initiated and no third-party intervention is required at this stage.

In the matter of Devnandan Infracon Private Limited… — Insolvency and Bankruptcy | NCLT (2023)

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IN THE NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD DIVISION BENCH COURT - 1

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ITEM No.303

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Inv.P/9(AHM)2022 in C.P.(IB)/163(AHM)2022

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Order under Section 60(5) (C ) IBC,2016 r.w Rule 11 of NCLT,2016

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IN THE MATTER OF:

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MukeshKumar Jayantilal Parekh & Ors

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........Intervener/Applicants

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Order delivered on: 11/10/2023

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Coram:

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Mr. Shammi Khan, Hon’ble Member(J) Mr. Sameer Kakar, Hon’ble Member(T)

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PRESENT:

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For the Applicant : For the Respondent :

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ORDER

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The case is fixed for pronouncement of the order. The order is pronounced in the open court, vide separate sheet.

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-Sd-Sd- SAMEER KAKAR SHAMMI KHAN MEMBER (TECHNICAL) MEMBER (JUDICIAL)

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BEFORE THE ADJUDICATING AUTHORITY NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD BENCH

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(COURT-I)

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Inv. P. No. 09 of 2022 in CP (IB) No. 163 of 2022

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(Application under Section 60(5) (c) of the Insolvency and Bankruptcy Code, 2016 r/w rule 11 of NCLT Rules, 2016)

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Mr. Mukesh kumar Jayantilal Parekh & Ors. Flatowners of Devenandan Summit

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(Project of Devnandan Infracon Pvt. Ltd.)

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Intervener/Applicant

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IN THE MATTER OF: Omkara Assets Reconstruction Private Limited

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Registered office at: No. 9, M.P. Nagar First Street, Kongu Nagar Extension, Tirupur Coimbatore, Tamil Nadu.

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Petitioner/ Financial Creditor

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VERSUS

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Devnandan Infracon Private Limited Registered office at: 203, Ashirvad Complex, Dharnishar Derasar Road, Bhatta Paldi, Vasna, Gujarat

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Respondent/ Corporate Debtor

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Order pronounced on: 11.10.2023

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Page 1 of 6

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Inv. P. No. 09 of 2022 In CP (IB) No. 163 of 2022

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CORAM: SHAMMI KHAN (Member Judicial) SAMEER KAKAR (Member Technical)

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APPEARANCE:

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For the Applicant: Mr. Vishal Dave, Adv in Inv. P/9(AHM)2022 For the Respondent: Mr. Jay Kansara, Adv. for Wadia Ghandy & Co. in Inv.P/9(AHM)2022

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O R D E R

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An application under section 7 bearing C.P. No.163 of 2022 was originally filed by PIRAMAL CAPITAL & HOUSING FINANCE LIMITED (Formerly known as Dewan Housing Finance Corporation Limited [DHFL]) against DEVNANDAN INFRACON PRIVATE LIMITED – the Corporate Debtor for initiation of Corporate Insolvency Resolution Process (in short “CIRP”) for having defaulted in payment of loan amounting to Rs. 20 Crores/-. The said loan was then assigned to Omkara Assets Reconstruction Private Limited who is now the Financial Creditor in view of deed of assignment dated 10.01.2023.

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During the pendency of the above-mentioned Application, Applicant along with other residents of the project by Devnandan Infracon Private Limited (“Corporate Debtor”) filed the present application seeking intervention and impleadment in CP(IB) 163 of

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Page 2 of 6

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Inv. P. No. 09 of 2022 In CP (IB) No. 163 of 2022

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2022 and to remove properties of intervenors from the list shown as unsold units in Loan Agreement and mortgage deed dated 17.07.2015.

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Briefly the facts are that, the Corporate Debtor had entered into loan agreement and mortgage deed dated 17.07.2015 wherein flats of the Applicants were mortgaged to avail the loan facility of Rs.20 Crores. The said flats were sold to the Applicants between 2015 to 2020 without giving any rider with respect to loan facility.

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A public notice was issued on 09.07.2022 by Financial Creditor wherein it was stated that Corporate Debtor has defaulted in payment of loan of Rs.20 crores for which flats of Applicants were mortgaged. After the issue of said notice Applicants became aware about the default committed by Corporate Debtor and that their flats were mortgaged for said loan. Further, they were shocked to see that the mortgaged properties were stated as ‘unsold’.

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The main contention of the Applicants is that they are the rightful owners of the mortgaged properties and if the Corporate Debtor goes into CIRP then the properties of the Applicants would be considered as estate of Corporate Debtor which would cause huge trouble to the Applicants.

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Page 3 of 6

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Inv. P. No. 09 of 2022 In CP (IB) No. 163 of 2022

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We have heard the submissions made by the Learned Counsel for the Applicants. The Applicants are seeking exclusion of properties mentioned in Para 8 of the Application from CIRP process and to allow the Applicants herein to intervene in C.P. No. 163 of 2022.

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The counsel for the Applicants has relied upon the order passed in the case of CFM Asset Reconstruction Pvt. Ltd. Vs. Saudi Basic Industries Corporation Ltd. & Anr. in Company Appeal (AT) (Insolvency) No. 1231 of 2022 wherein specific circumstances were taken into consideration in which application was filed because the Appellant in that case had submitted that the Appellant is having exposure to extent of 99.19% of the debt of the Corporate Debtor and thus it has the right to intervene in the proceedings which has been initiated against the Corporate Debtor by the Operational Creditor. In those circumstances, it was held that “ We make it clear that our direction to permit the Appellants to intervene in Section 9 Applications has been passed on account of exceptional facts and circumstances, as noticed above and is not to be treated as any declaration of law that a Financial Creditor as a matter of right is entitled to intervene in proceedings initiated by Operational Creditor under section 9.” Further, reliance has also been placed

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on the decision in the matter of Ahluwalia Contracts (India)

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Page 4 of 6

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Inv. P. No. 09 of 2022 In CP (IB) No. 163 of 2022

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Limited Vs. Srishti Infrastructure Development Corporation Limited & Anr. in IVN.P. 7/KB/2021 in CP(IB) No. 2/KB/2021 in this case the application was filed for impleadment of Applicant to bring to the notice of the Tribunal the collusive and fraudulent initiation of CIRP sought by Operational Creditor vide the Company Petition. The said application was allowed only to the extent of intervention by applicant and it was further stated that “ we make it clear that this shall not construed as any manner expressing any opinion on the merits of CP 2/KB/2021.”

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In an application filed under section 7 of the IBC, the Financial Creditor and Corporate Debtor are the only necessary parties. The Adjudicating Authority, at pre-admission stage is only required to see if there is a financial debt and default on the part of Corporate Debtor. Therefore, there is no requirement for intervention of any other party before admission of application under section 7 of the Code. In view of the above facts and circumstances of the present case, the reliance placed by Counsel for the Applicants on the aforementioned decisions is totally misplaced.

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