New Delhi [India]: The Supreme Court on Thursday refused to interfere with the National Company Law Appellate Tribunal (NCLAT) order and allowed Supertech’s promoters to raise funds on a priority funding basis and complete the projects.
A bench of justices Dinesh Maheshwari and Sanjay Kumar passed the order. The court was hearing two appeals filed by the Union Bank of India and Indiabulls Asset Reconstruction Company Ltd respectively, being the financial creditors of the corporate debtor – Supertech Ltd, against the order dated June 10 2022 passed by the National Company Law Appellate Tribunal (NCLAT, Principal Bench, New Delhi).
In the impugned order dated June 10, 2022, the Appellate Tribunal partly modified its order dated April 12, 2022 and issued interim directions, including the constitution of a committee of creditors (CoC) for Eco Village Project-II only; the said project to be completed with the assistance of ex-management whereas other projects, apart from Eco Village-II, were ordered to be continued as ongoing projects.
“In relation to the Eco Village-II project, since CoC was ordered to be constituted by the Appellate Tribunal in the impugned order dated June 10, 2022, we are not interfering with those directions too but, in our view, any process beyond voting on the resolution plan should not be undertaken without specific orders of this Court,” the top court said.
The top court clarified that the other propositions, including that of constituting a monitoring committee, are kept open, to be examined later, if necessary.
The court also said that the impugned order dated June 10, 2022, is allowed to operate subject to the final orders to be passed in these appeals and subject, of course, to the modification in respect of the Eco Village-II project that the process beyond voting on the resolution plan shall await further orders of this Court.
“The interim direction dated 27.01.2023 by this Court in these matters is modified in the manner that the NCLAT may deal with the offers said to have been received and pass an appropriate order thereupon but, the entire process shall remain subject to the orders to be passed in these appeals,” the top court said and listed the appeals for final hearing in the second week of July, 2023.
“We should adopt the course which appears to carry a lower risk of injustice, even if ultimately in the appeals, this Court may find otherwise or choose any other course,” the court said.
In that regard, the top court further said the element of balance of convenience shall have its own significance. “On one hand, is the position that the Appellate Tribunal has adopted a particular course (which it had adopted in another matter too) while observing that the project-wise resolution may be started as a test to find out the success of such resolution,” the top court said.
The result of the directions of the impugned order dated June 10, 2022, is that except Eco Village-II project, all other projects of the corporate debtor are to be kept as ongoing projects and the construction of all other projects is to be continued under the supervision of the IRP with the ex-management, its employees and workmen. Infusion of funds by the promoter in different projects is to be treated as interim finance, regarding which total account is to be maintained by IRP, SC said.
“If at the present stage, on the submissions of the appellants, CoC is ordered to be constituted for the corporate debtor as a whole in the displacement of the directions of the Appellate Tribunal, it is likely to affect those ongoing projects and thereby cause immense hardship to the home buyers while throwing every project into a state of uncertainty,” the top court said.
On the other hand, SC said, “As indicated before us, the other projects are being continued by the IRP and efforts are being made for infusion of funds with the active assistance of the ex-management but without creating any additional right in the ex-management.”
“In our view, greater inconvenience is likely to be caused by passing any interim order of constitution of CoC in relation to the corporate debtor as a whole; and may cause irreparable injury to the home buyers. In this view of the matter, we are not inclined to alter the directions in the order impugned as regards the projects other than Eco Village-II,” the top court added.
